Mérida, September 17, 2020 (venezuelanalysis.com) – Venezuela’s crude output remained at historically low levels in August.
The monthly figures from the Organization of Petroleum Exporting Countries (OPEC) place the country’s August production at 340,000 barrels per day (bpd), barely up from 339,000 bpd in July, according to secondary sources.
The numbers reported directly by state oil company PDVSA stood slightly higher at 396,000 bpd, up 4,000 bpd compared to July.
Following the imposition of US financial sanctions against PDVSA in August 2017, Venezuela’s crude output declined steeply from 1.911 million bpd in 2017 to 1.354 million bpd in 2018.
The Trump administration hit the oil industry with further measures last year, including an embargo and a blanket ban on all dealings with Venezuelan state entities. After falling for much of the year, production stabilized in the last quarter to bring the 2019 average to 796,000 bpd.
Crude production took another hit after Washington levied secondary sanctions against two Rosneft subsidiaries. The Russian energy giant had been carrying a large percentage of Venezuela’s output before rerouting it to other destinations and was forced to cease its Venezuela operations and transfer its assets to a Kremlin-owned company.
Secondary sanctions, alongside low oil prices and contracted global demand due to the coronavirus pandemic forced PDVSA to halt several projects and joint ventures as the year went on. The White House then set its sights on shipping companies and vessels, forcing several companies to cease dealings with PDVSA in an effort to strangle oil exports.
While production remained at very low levels, exports were higher in August, allowing PDVSA to alleviate some of its storage problems. According to Reuters, Venezuela exported 216,000 bpd of crude last month to India’s Reliance Industries in a swap deal allowed by the US Treasury. The Indian multinational was one of PDVSA’s main customers in 2019 before threats of secondary sanctions forced it to wind down its dealings.
Venezuela’s main industry could be set for another boost following the arrival of an Iranian very large crude carrier (VLCC). The tanker allegedly had its Automatic Identification System tracker switched off en route before docking at the Jose Antonio Anzoategui oil terminal in east Venezuela on Sunday.
The Iranian ship reportedly unloaded 500,000 barrels of condensate at the Petropiar joint venture, which is run with US oil giant Chevron. The condensate is used to dilute Venezuela’s extra heavy crude into oil grades favored by Asian customers, particularly the Merey blend. The remaining content of the VLCC is currently unknown.
Reuters reported that Petrosinovensa, a joint operation with the China National Petroleum Corp, has also been reactivated after months of inactivity. The January 2019 oil embargo forced PDVSA to convert its extra-heavy crude upgraders in the eastern Orinoco Belt into blending facilities. However, operations have suffered heavily from a lack of diluents.
The Treasury sanctions blocking access to diluents have also generated acute fuel shortages throughout the country. The issue was exacerbated in recent weeks following the US seizure of four Venezuela-bound fuel tankers in international waters.
Iran has stepped up its cooperation in recent months, with five ships arriving in May and another three currently on the way. Additionally, Tehran has assisted in efforts to restart Venezuelan refineries, including the Paraguana Refining Complex in Falcon State. While several units have been reactivated, gasoline production remains short of meeting current demand.