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Venezuela’s crude oil production is set to fall further in the coming months, up to another 200,000 barrels per day, according to a source inside Venezuela’s oil industry, according to S&P Global Platts.
Venezuela’s oil production has already taken one on the chin, losing millions of barrels per day coming off a 1997 high of over 3.0 million bpd (EIA.gov). According to OPEC’s Monthly Oil Market Report, Venezuela’s production February 2018 oil production is 1.548 million bpd—the most current data available by OPEC. This compares to the 1.916 million bpd average Venezuela kicked out in 2017, and the 2.154 million bpd in 2016.
The S&P Global Platts source claims Venezuela’s output stands even lower, around 1.4 million bpd—a nearly half a million-barrel drop from last year’s average. The oil ministry’s worst-case scenario, according to the source, is forecasting further production losses, estimating that Venezuela will reach 1.2 million bpd by December this year.
The number of rigs in operation in Venezuela seem to correspond to the falling production. Venezuela had over 80 rigs in operation in mid-2013, but that number has now fallen to just above 40, according to the EIA.
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As for a short-term solution to Venezuela’s oil production problems, the source commented that there were none, citing its massive debt load, unrest in the workforce, hyperinflation, and failing equipment as some of the flies in the ointment.
According to the EIA, Venezuela’s production will continue to fall at least until the end of 2018. Analyst consensus is that Venezuela’s position is likely to worsen, with Venezuelan refineries expected to close as crude shortages and underinvestment continue to bite, according to S&P Global Platts.
Venezuela is arguably home to the world’s largest oil reserves, but Venezuela’s recent production declines have put Venezuela at the top of the list for most compliant OPEC members, at 248 percent.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.