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2525

Venezuelan crude production falls amid coronavirus crisis

Venezuelan crude production falls amid coronavirus crisis

Caracas, May 11 - Neftegaz.RU. According to Menafn, Venezuelan oil production fell in March as the country faces the COVID-19 healthcare crisis. The latest report by OPEC placed the Caribbean country's March output at 660,000 barrels per day (bpd), down 100,000 bpd with respect to February, according to secondary sources.

The numbers reported directly by state oil company PDVSA stand higher, at 718,000 bpd, down from 865,000 bpd in February. The Venezuelan oil industry has seen output decline steeply from 1.911 mln and 1.354 mln bpd in 2017 and 2018, respectively, following the imposition of crippling US in August 2017.

Production was further hit by a US in January 2019. The measure was expanded in August to a on all transactions with Venezuelan state entities. The country's oil output fell throughout 2019 before stabilizing in the last trimester, with output averaging 796,000 over the year.

The US Treasury Department struck further blows to Venezuela's flagship industry by imposing secondary on 2 of Russian Rosneft for their dealings with PDVSA. With sanctions driving away foreign companies, Rosneft had been buying as much as 60 % of PDVSA's output before rerouting to other destinations.

In response to the US unilateral measures, Rosneft ended its operations in Venezuela and its assets to a company directly owned by the Russian government.

Oil operations were further paralyzed by a steep fall in global in recent weeks. For some of PDVSA's heavy oil extraction projects, some of them joint ventures with foreign companies, this has meant prices are now below production costs.

As a result of tightening US sanctions and declining crude output, Venezuela has seen worsened gasoline in recent weeks. The Maduro government has resorted to exchanging PDVSA cargoes directly for fuel as a way to sidestep Treasury measures.

Nevertheless, the Trump administration warned companies such as India's Reliance Industries that it would also target these kinds of agreements. According to, Washington has also told foreign companies not to supply fuel to Venezuela.

The crisis has led the Venezuelan government to implement a rationing plan, prioritizing vehicles such as ambulances and food-carrying trucks. President Nicolas Maduro recently vowed that the problem would be overcome in the coming weeks.

Venezuela's fuel shortages are owed both to reduced imports and output from its refineries. However, PDVSA announced that the El Palito refinery in Carabobo State had been reactivated following months of repair work by its workers. The refinery can process a maximum of 80,000 crude barrels a day, and will produce 35,000 daily drums of gasoline.

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