Venezuelan Oil Output Drops To Lowest In 28 Years

Venezuela’s oil output dropped to its lowest in 28 years last month, according to new data released by OPEC on Monday.

The oil-dependent economy produced only 1.863 million barrels of oil per day in October according to OPEC’s secondary sources, likely due to costs related to replace damaged equipment and other financial restrictions.  Self-reported production came in slightly higher at 1.955 million bpd.

Caracas is currently in talks with creditors to discuss the future of massive debt payments that are getting more and more difficult to meet. To make matters worse, PDVSA has been ravaged in recent days by arrests of 8 of its senior employees and managers for cooking the books, Reuters reported.

The corruption scandal has ended the careers of roughly 25 officials, emptying out the state-run energy company’s C-suite.

Venezuela depends on the oil trade to provide over 90 percent of its government revenues, which are then funneled into social welfare programs and imports of daily goods from foreign countries.

Maduro went on state TV last Thursday and said that he would seek a restructuring of Venezuela’s debt, but his phrasing caused some confusion. As Bloomberg reported on Friday, he switched between “refinancing,” which is a more benign form of negotiation with bondholders, and a “restructuring,” a more technical term that tends to be associated with a default and stiffing creditors.

However, he said it would be the last time it paid creditors in full, and moving forward Venezuela wanted some sort of debt relief. "But after this payment, starting today, I decree a refinancing and a restructuring of the external debt," Maduro said on TV. Again, the implications of this are unclear.

News from the creditors summit with Maduro, scheduled to take place today, has yet to emerge.

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:

• OPEC Sees Oil Demand Soaring In 2018
• Is China Heading Toward An Energy-Debt Crisis?
• The War That Would Transform Oil Markets