Caracas, December 11, 2019 (venezuelanalysis.com) – Venezuela’s oil output increased slightly in November for the second month running.
The monthly report of the Organization of the Petroleum Exporting Countries (OPEC) registered Venezuela’s November crude production at 697,000 barrels per day (bpd), as reported by secondary sources, up from 685,000 bpd in October.
State oil company PDVSA’s direct reporting to OPEC showed a bigger increase, from 761,000 to 912,000 bpd. Exports reportedly averaged over one million bpd as the oil giant drained stored crude.
Venezuela’s flagship industry has seen output fall precipitously from 1.911 million and 1.354 million bpd in 2017 and 2018, respectively, following the imposition of crippling US financial sanctions. PDVSA operations have likewise suffered from mismanagement, corruption, brain drain and lack of maintenance.
Before the trend was reversed in October and November, production had steadily plummeted following a US oil embargo imposed in January, which was expanded to a blanket ban on all business with Venezuelan state companies in August.
The August measures additionally authorized secondary sanctions against third party actors, leading several foreign companies to cancel oil shipments, including China’s state oil company CNPC. PDVSA has reportedly resorted to selling a large proportion of its crude output to Russian energy giant Rosneft, which then reroutes it to other destinations.
PDVSA’s modestly rising production levels comes as the firm resumes shipments to Indian customers such as Reliance Industries following a four month hiatus due to US threats. Dealings often involve exchanging crude for fuels or diluents so as to avoid sanctions. According to unnamed Trump officials cited by Bloomberg, the White House has ruled out sanctioning Indian firms at this time.
Analysts agree that recovering oil production is key to Venezuela’s economic recovery, but US Treasury sanctions create significant hurdles for foreign investment.
Reuters has recently reported that government and opposition figures are contemplating allowing private companies in joint ventures with PDVSA to operate oil fields themselves. The move would represent a reversal of a longstanding policy dating back to former President Hugo Chávez’s government which required that PDVSA retain operational control of oil operations. In an attempt to attract foreign investment, the Maduro government has also loosened the requirement that PDVSA hold at least a 60 percent stake in joint ventures, requiring only a majority stake in new dealings.
As part of ongoing talks, government representatives and several minority opposition parties have recently agreed to seek oil-for-food and oil-for-medicine agreements with international partners, but no further details are known at this time.
Edited by Lucas Koerner from Caracas.