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Venezuela’s President Nicolas Maduro announced that the government has granted the country’s central bank a concession for an oil bloc in the prolific Orinoco Belt in a bid to boost the country’s crude oil reserves, Reuters reports.
The Orinoco Belt is where most of Venezuela’s abundant heavy crude reserves are located, but simply awarding a concession to the central bank does not automatically mean the troubled country could boost its fast-falling oil production that has turned it into a major swing factor for international prices.
Earlier this month reports emerged that Venezuela’s Oil Minister Manuel Quevedo has discussed plans with state-held oil company PDVSA to raise the country’s crude oil production in the second half of the year. Maduro had earlier announced plans were to boost production by as much as 1 million bpd by the end of the year, adding, however, that the task would be difficult to complete.
China, a staunch ally of Caracas, could become instrumental for Venezuela’s efforts to reverse the inexorable fall in crude production, which has seen it lose more than 40,000 bpd every month for several months now. The latest OPEC monthly production report said Venezuela had shed another 47,500 bpd in June from May, with the daily average at 1.34 million bpd.
Earlier this month, Venezuela’s Finance Minister told media that the China Development Bank had approved a US$5 billion loan for the South American country’s embattled oil company, PDVSA, of which US$250 million were already authorized as a direct investment.
Venezuela has the largest oil reserves in the world, at over 300 billion barrels, but the plunging oil production is nearing the psychological threshold of just 1 million bpd as early as this year, analysts and industry experts say, and don’t see how production can be restored after years of underinvestment and mismanagement.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.