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Venezuela’s economic and oil industry demise is likely to result in its crude oil exports to China plummeting to their lowest level in almost eight years in July, Reuters reported on Friday, citing shipping data and people with knowledge of the issue.
State-run PetroChina expects Venezuela cargoes loading in June for arrival in July to be half the usual volumes, two oil officials in Beijing told Reuters. The troubled state oil firm of Venezuela, PDVSA, has promised China that the gap in the July supply would be compensated in July cargo loadings expected to arrive in China in August or September, according to the officials.
The drastic plunge of exports to China—an important customer, creditor, and political ally—shows the desperate state of Venezuela’s oil industry.
“One of the best things about Venezuelan oil was its stable volumes for all these years and competitive prices,” a senior Chinese oil industry official with direct knowledge of the Venezuelan supply issues told Reuters. “But now they seem in very bad shape, not having the money to upgrade port facilities, no money even to remove the high water content in crude oil.”
Venezuela’s oil production has been plummeting over the past two years as the country grapples with its worst economic crisis and the world’s largest inflation rate, while leader Nicolas Maduro clings to power.
Venezuela’s production plummeted again in May, by 42,500 bpd to below 1.4 million bpd—1.392 million bpd, according to OPEC’s secondary sources.
Related: IEA: Oil Prices Could Rise Further As Shale Can’t Fill The Gap
Data and analytics company GlobalData expects that Venezuelan crude oil production would fall to around 1 million bpd by the end of 2018.
Meanwhile, Venezuela has been forced to start refining imported crude oil as its local production continues to fall.
At PDVSA, thousands of workers are fleeing because their heavy-toil jobs are no longer worth the salaries made worthless by hyperinflation, while desperate oil workers and thieves steal vehicles, vital equipment, pumps, and copper wiring to make some money, The New York Times reports in a feature on the desperate situation in Venezuela’s oil industry.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.