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Venezuelan Output Drops To 28-Year Low In 2017

Venezuelan oil output dropped 13 percent in 2017, falling to a 28-year low, official figures released by the Organization of Petroleum Exporting Countries (OPEC) said on Thursday.

The Latin American country produced an average of 2.072 million barrels per day last year, compared to 2.373 million bpd in the year before, Reuters reports. The 300,000-bpd drop is the highest recorded amongst the OPEC nations, which agreed to collectively cut 1.2 million barrels per day of production.

Unlike Saudi Arabia or its allied Gulf nations, Venezuela’s production plummet was not voluntary. Caracas’ capital constraints make it difficult for the country to obtain the parts necessary to maintain its prized oilfields.

Lower figures from the latter half of 2017—after new U.S. sanctions kicked in and buyers started expressing their dissatisfaction with Venezuelan crude quality—likely dragged the annual production average down.

Oil production in Venezuela reportedly had jumped to nearly 1.9 million barrels per day earlier this week. If that figure is accurate, it suggests the Latin American nation’s output is on the road to recovery despite a lack of access to global credit markets.

Venezuela’s November production was 1.834 million bpd, according to OPEC secondary sources.

“The year 2018 will be one of recovery, after having touched a historic low. We are now near 1.9 million barrels of oil per day, thanks to the workers,” said Manuel Quevedo, oil minister and military general, speaking in a television interview, Reuters reported.

U.S. sanctions have also made it difficult for PDVSA to maintain its operations. The Trump administrations newest provisions prevent Citgo, the company’s U.S. subsidiary, from repatriating any earnings. They also make it impossible for Caracas to access American credit markets, which has prompted Maduro to seek deals with Russia and China to refinance crippling amounts of debt with payments looming several times a quarter.

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By Zainab Calcuttawala for Oilprice.com

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