Merida, June 7, 2018 (venezuelanalysis.com) – Venezuelan President Nicolas Maduro met oil workers Tuesday as he began to publicly take steps aimed at increasing Venezuela’s flagging crude production levels.
“We need to be producing more every day, we need to recuperate the capacity of every refinery… into which we have made immense investments these past years,” Maduro proclaimed in a televised meeting with oil workers in Caracas.
The event was held amid reports from London-based energy agency S&P Global Platts that Venezuela’s national oil company, PDVSA, will not be able to comply with its contractual export obligations this month.
According to an “unnamed source,” PDVSA has allegedly informed eight international customers that it is unable to sell the agreed 1.495 million barrels per day (bpd) during June, apparently only having 694,000 bpd available for these customers. Clients allegedly involved include Nynas, Tipco, Chevron, CNPC, Reliance, Conoco, Valero, and Lukoil.
Production of Venezuelan crude has plummeted in recent years, with OPEC reporting production levels of 1.41 million bpd in April, well down from the 2 to 2.5 million bpd which PDVSA maintained until late 2016.
To increase production and recuperate the industry, President Maduro called on oil workers to lead efforts, urging “production, discipline, and unity.”
“We need a revolution within PDVSA, and a revolution can only be achieved with the workers, the working class, the professionals,” stated the newly re-elected president.
Amongst the proposals discussed by the president and oil workers were the strengthening of Petrocaribe and strategic international alliances, the installation of a new organisational and leadership structure in PDVSA in which “the working class has the fundamental power,” and the promotion of a new work-ethic that addresses recent corruption scandals in the corporation.
For his part, Oil Minister Manuel Quevedo announced a plan which looks to boost production in 23,319 wells, potentially raising national production by 1.426 million b/d.
As part of this plan, the minister explained that PDVSA has identified 13,435 category II wells of light crude in the west of Venezuela which, if developed, have a potential to raise production by 360,000 bpd. Equally, and to contribute to this plan, in the Orinoco Belt (south-east Venezuela) there are 9,500 wells of heavy crude where the minister hopes to extract an extra 700,000 bpd.
Workers also expressed the need for PDVSA to update its machinery and equipment, as well as reduce bureaucratic barriers.
“We can recuperate up to 80% of lost production within six months to a year… if we are given the tools, materials, supplies, and minimal things which we need,” explained oil worker Ernesto Guerra at the event with the president.
At the meeting, Maduro also accused Washington and the US embassy in Caracas of “penetrating” and “infiltrating” the oil industry by allegedly promoting and financing corruption and the leaking of strategic information, conjuring up memories of Venezuela’s 2004 US-backed oil lockout. The head of state did not, however, cite evidence to back up his claims.
PDVSA has been the subject of a wide-reaching anti-corruption investigation this year with a series of high-profile arrests, including two former oil ministers as well as an Interpol capture order issued for former longtime company President Rafael Ramirez, who is currently fleeing the Venezuelan justice system.
Claims of US spying on Latin America’s oil firms is also nothing new, with whistleblower Edward Snowden revealing NSA spying on PDVSA and Brazilian oil giant Petrobras in the past.
In recent months, Venezuela’s state oil sector has also been hit by international legal action prompting attempted seizures of infrastructure and other assets, an exodus of industry professionals, as well as US financial sanctions which prevent PDVSA from refinancing its sizeable external debt, repatriating billions in profits from its US-based subsidiary, Citgo. Despite recent efforts to diversify Venezuela’s economy, oil exports continue to account for over 95 percent of export earnings, and falling production has had knock-on effects on state spending.