Venezuela’s oil infrastructure is collapsing
June 20, 2018 -- Venezuela’s crude oil production has fallen by 60% since June 2016 leaving state oil company Petróleos de Venezuela (PDVSA) unable to meet contracts for 1.5 million barrels per day, having only 694,000 bpd available for shipments.
The Organization of Petroleum Exporting Countries (OPEC) and allies meet on June 22-23 in Vienna to discuss whether to ease oil production quotas that Saudi Arabia wants to cut, as founding member Venezuela faces crumbling output.
In 2016 OPEC, with Russia, Kazakhstan and Mexico, agreed to cut output by 1.8 million barrels per day, driving prices from $28 to $80 a barrel. However, the supply gap left by Venezuela’s continued decline now amounts to 2.8 million bpd.
According to commodity pricing group S&P Global Platts, PDVSA will process just 499,000 bpd of crude at its domestic refineries in June, accounting for only 31% of its 1.6 million bpd of refining capacity.
Platts reported this week that Venezuela has already warned international customers that it wouldn’t be able to meet its crude oil commitments to them in June.
Venezuela’s rig count, a loose barometer of future production, has fallen to 28 in May from 36 in April, and 49 in January, according to Baker Hughes International Rig Counts.
Since November, when Venezuelan President Nicolas Maduro appointed Major General Manuel Quevedo, a former housing minister with no known energy experience, to head PDVSA, production has fallen by a further 530,000 bpd.