Guayaquil, Ecuador, April 15, 2021 (venezuelanalysis.com) – Venezuela registered a slight oil production increase in March, according to the latest Organization of Petroleum Exporting Countries (OPEC) report.
The Caribbean nation produced 525,000 oil barrels per day (bpd), based on secondary sources, almost on a par with February’s 524,000 bpd. In contrast, the figures reported by state oil company PDVSA placed March’s output at 578,000 bpd, a 40,000 bpd rise compared to the previous month.
Despite the modest increase in recent months, production still hovers near record-lows as the industry remains heavily targeted by US sanctions. After levying financial sanctions against PDVSA in 2017, the US Treasury Department imposed an oil embargo in 2019 and a host of other restrictions since, including secondary sanctions and targeting shipping companies.
As a result, oil output, the nation’s main source of foreign income, has fallen steeply from an average of 1.911 million bpd in 2017 to 1.354 million, 796,000 and 500,000 bpd in 2018, 2019 and 2020, respectively.
The unilateral measures against the oil industry and other sectors have been classed as “collective punishment” and condemned by a host of multilateral organizations. UN Special Rapporteur Alena Douhan urged the US and allies to lift “devastating” sanctions after a recent visit to the country.
For their part, Venezuelan authorities have repeatedly declared that recovering oil output is a priority. In January, President Nicolás Maduro said the country aims to reach 1.5 million bpd by the end of the year.
However, these efforts have been hampered by an explosion in the gas pipeline supplying the Pigap II reinjection plant in El Tejero, Monagas state on March 20. The incident forced PDVSA to slash light crude production by at least 30,000 bpd. The repairs were estimated to finish on April 15, but neither PDVSA nor government officials have announced the restart of operations.
Likewise, unnamed official sources told Argus Media that output from the Orinoco Oil Belt has declined from 360,000 bpd in late March to less than 200,000 bpd in early April as PDVSA diverts limited diluent and light crude supplies to its recovering fuel refineries. The heavy crude extracted from the Oil Belt is blended with lighter varieties into exportable grades.
With US sanctions generating severe fuel shortages, authorities have been looking to reactivate the country’s refining industry with Iranian assistance. On April 3, PDVSA restarted the fluid catalytic cracker (FCC) and desulfurization unit at the 190,000 bpd capacity Puerto La Cruz refinery in eastern Venezuela. The facility, which had been paralyzed for more than four years, is producing at least 15,000 bpd of gasoline according to union leader José Bodas.
PDVSA also expects to resume operations in 146,000 bpd El Palito refinery before the end of April, potentially boosting total gasoline output to 65,000 bpd with the combined efforts of Puerto La Cruz and El Palito refineries and the Paraguana Refinery Complex (CRP). The latter is currently processing 180,000 bpd of crude out of a 940,000 bpd capacity.
US-led sanctions have forced PDVSA to rely upon fuel imports to satisfy internal demand, estimated to be around 250,000 bpd currently, between gasoline and diesel. The country entered an acute diesel shortage period after Washington put an end to crude-for-diesel swaps, a mechanism used by the Caribbean nation to circumvent sanctions, in October 2020.
The diesel shortages have severely affected food distribution, electricity generation and agricultural activity. A number of international actors, including US Democratic representatives, have urged the Biden administration to lift the ban on diesel swaps imposed by his predecessor.
Treasury measures had also contributed to an imminent natural disaster before US authorities allowed for operations to extract 1.3 million barrels of oil from a floating storage and offloading facility (FSO). On April 8, the Nabarima FSO, which is partially owned by Italy’s ENI, finished offloading crude trapped there since 2019 due to US sanctions. The facility had raised complaints from environmental groups for being a threat to the marine ecosystem, although Venezuelan officials denied any spills. The successful offloading could allow for output to resume in the Corocoro offshore oil field.
Edited by Ricardo Vaz from Mérida.