The glut of oil inventory that Venezuela has been nearly choking on in recent months appears to be finally draining, according to Reuters data, as the crisis-stricken country managed to send off 800,000 bpd of oil for a second month in a row.
But Venezuela's troubles are far from over.
Its list of oil buyers have shrunk to about a handful of loyal takers who are unwilling to kowtow to US pressure in the form of sanctions. The list includes China, Russia, and Cuba for the most part, although India's Reliance has recently resumed Venezuela oil imports as well, in a product swap that Reliance says is on the up-and-up.
For now, it seems, this has been enough to lift the Latin America's oil exports to 812,775 bpd, and enough to drain some of its excess inventory that have filled its storage to the brim and caused a blending unit, Petrosinovensa, to shutter as it had nowhere to put more product.
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Venezuela's October exports were still 3.7% below September's, and well below June's exports of 1.13 million bpd, according to Refinitiv Eikon data.
Still, the US sanctions on Venezuela have restricted Venezuela's output significantly, and many of its customers and tankers hired to move the project have been leery to move product, not just because they fear they may find themselves on the wrong end of the US stick, but because the banks they rely on are unlikely to continue doing business with anyone even remotely tied to PDVSA or Venezuela.
PDVSA announced plans last month to boost its production in 2020 to 1.2 million bpd, although it did not disclose any details of the plan, other than to suggest it would implement an "austerity campaign" on PDVSA employee expenses.
By Julianne Geiger for Oilprice.com
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Comments
Venezuela’s customers China, India, Russia, Turkey and scores of others have never stopped buying Venezuelan crude oil and will continue defying US sanctions and doing exactly that.
With Russia selling Venezuela crude and products to customers who would have shied away because of the sanctions and China helping Venezuela to increase production of crude and refined products, PDVSA was not only able to drain the bulk of its excess inventory but also to export more of its oil.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London