Venezuela: Oil Industry Registers Growing Output, Increased Exports

Caracas, November 12, 2024 (venezuelanalysis.com) – Venezuela’s crude production has continued its positive trend amidst heavy sanctions targeting the country’s energy sector.

The latest OPEC monthly report placed the Caribbean nation’s October output at 895,000 barrels per day (bpd), as registered by secondary sources. The figure represents a 7,000 bpd growth compared to September.

For its part, state oil company PDVSA reported 989,000 bpd produced in October, up from 943,000 the prior month.

Venezuela’s most important economic sector remains heavily hampered by US unilateral coercive measures. Since 2017, Washington has levied financial sanctions, an export embargo, secondary sanctions and a bevy of other measures in an effort to constrain Caracas’ main source of revenue.

Venezuela’s oil output plummeted from a production of 1.9 million bpd in mid 2017, before sanctions were imposed, to historic levels below 350,000 bpd in 2020. It has since slowly recovered, though the industry remains weighed down by operational disruptions and a lack of investment.

In October 2023, the US Treasury Department issued General License 44 (GL44), a six-month waiver that allowed Venezuela to sell crude to global customers without levying heavy discounts or requiring unreliable intermediaries. However, the Biden administration reimposed wide-reaching sanctions with GL44’s expiry after alleging that the Nicolás Maduro government had not fulfilled an agreement with the US-backed opposition.

Despite the return of restrictions in April, Venezuela remains on track to increase its revenues compared to 2023. According to specialized portal Petroguía, the country has earned US $11.3 billion from oil exports through the end of September, 12.5 percent more than in the same period last year.

Caracas has benefitted from higher export volumes and average prices. Reuters reported that October’s exports hit a four-year high at 947,387 bpd worth of crude and fuel. The Merey 16º API blend, Venezuela’s flagship crude variety, bounced back by 6 percent last month to halt a five-month slide.

The Maduro government has attempted to court foreign corporations in order to secure much-needed investment in the oil industry. Vice President Delcy Rodríguez recently visited India, where both state- and privately-owned companies have expressed interest in purchasing Venezuelan crude but held back fearing US secondary sanctions.

Since the April withdrawal of GL44, the US Treasury Department has warned companies to seek authorization before dealing with the Venezuelan oil sector.

Indian refining giant Reliance Industries has been the only company thus far, among a “high volume” of applicants, to secure a greenlight to purchase crude from PDVSA. During her trip, Rodríguez reportedly lobbied Reliance executives to expand their commercial agreement into investments in the industry.

Donald Trump’s return to the White House for a second term following his election earlier this month has raised questions over Washington’s Venezuela policy. The Trump administration ramped up sanctions as part of its “maximum pressure” campaign aimed at ousting the Maduro government.

The Republican president-elect is reportedly set to appoint Florida hardliner Marco Rubio as secretary of state. A longtime senator, Rubio has been an ardent supporter of regime change and repeatedly demanded that the Biden administration ramp up sanctions against Venezuela.

Venezuela’s US-backed opposition has requested that Washington withdraw the license issued to Chevron in October 2022. The US oil giant operates four joint ventures with PDVSA that presently pump around 200,000 bpd, holding minority stakes in all of them. Consultant Ecoanalítica has forecast a 25 percent output fall should Chevron’s license be revoked.

The Treasury’s Office of Foreign Assets Control (OFAC) could likewise harden sanctions enforcement to target shipping companies and intermediaries.

US authorities have recently arrested and indicted Turkish national Taskin Torlak for allegedly selling Venezuelan oil by re-flagging tankers and manipulating their vessel location tracking electronics.

Edited by José Luis Granados Ceja from Mexico City, Mexico.