Mérida, September 16, 2021 (venezuelanalysis.com) – Venezuelan oil output has failed to grow for a second consecutive month.
The latest OPEC monthly report had the Caribbean nation’s August crude production at 523,000 barrels per day (bpd) according to secondary sources, exactly the same level as in July.
The numbers reported directly by state oil company PDVSA stood slightly higher at 641,000 bpd, up from 614,000 the previous month.
Venezuela’s oil output has declined steeply in recent years from an average of 1.9 million bpd in 2017 all the way down to 500,000 in 2020. Production rebounded after hitting historic lows in the second half of 2020 but has since stagnated. The Nicolás Maduro government had set a 1.5 million bpd target for the end of the year.
The latest difficulties have stemmed from a shortage of diluents needed to blend the extra-heavy crude from the eastern Orinoco Belt into exportable grades. The scarcity led to a reduced output in PDVSA’s joint ventures with foreign oil corporations. However, Reuters reported the arrival of 620,000 barrels of condensate, a diluent, which may boost operations in the coming weeks.
Venezuela’s most important industry continues to be hampered by crushing US sanctions. Following financial sanctions in mid-2017, Washington imposed an oil embargo, secondary sanctions and a host of other measures aimed at choking off exports.
The US Treasury Department has likewise clamped down on fuel and diluent imports and swap deals, leading to widespread shortages of gasoline and diesel. Caracas has attempted to restart its refining industry with Iranian assistance but has faced setbacks and accidents.
In recent days, industry sources announced the reactivation of El Palito refinery in Carabobo State. The 140,000 bpd-capacity refinery, which had been paralyzed for months for repair work, will reportedly contribute 20,000 bpd of gasoline. Current demand reportedly stands at 120,00 bpd.
Venezuelan officials denounced the application of coercive measures against the oil industry during the visit of OPEC Secretary General Mohammed Barkindo this week on the occasion of the organization's 61st anniversary. Speaking to the press, Oil Minister Tareck El Aissami urged OPEC members to "adopt mechanisms" to confront "aggressions" from Washington.
US-led sanctions have been condemned by a range of multilateral organizations and international figures. United Nations (UN) Special Rapporteur Alena Douhan released her report on the "devastating" impact of unilateral coercive measures against the South American nation on Wednesday. Addressing the 48th session of the UN Human Rights Council, the Belarusian human rights expert reiterated her call for sanctions relief.
Opposition to Washington’s Venezuela policy has likewise grown louder on Capitol Hill. Several House Democrats, including Jesús “Chuy” García (D-IL), Ilhan Omar (D-MN) and Jim McGovern (D-MA) have spearheaded efforts calling on President Joe Biden to lift the “maximum pressure” measures left by his predecessor.
The US Chamber of Commerce was the latest actor to lobby for a change of direction. In a September 9 letter, the chamber’s Senior Vice President for the Americas Neil Harrington argued for “overhauling a counterproductive U.S. sanctions policy.”
“The broad set of punitive economic measures associated with ‘maximum pressure’ have proven to be more blunt instrument than surgical tool,” the letter read.
Despite acknowledging that sanctions have “deepened Venezuela’s dire economic and humanitarian crisis,” the business guild representative expressed more concern about the negative impact for US corporations.
Harrington lamented that companies have been driven away from Venezuela’s energy, agricultural, automotive and financial sectors. Furthermore, he complained that “adversaries” such as China, Iran and Russia had deepened alliances with Caracas, “strengthening their footholds in our hemisphere.”
“The U.S. business community stands ready to provide the administration recommendations on a revised policy,” the text concluded.