Venezuela: Oil Output, Exports Slide to Halt Months-Long Recovery

State oil company PDVSA is also working to tackle persistent fuel shortages across the country.
Oil output August
The Venezuelan government is hoping that renewed investment from China can boost crude upgrading at Petrosinovensa. (PDVSA)

Caracas, September 17, 2023 ( – The Venezuelan oil sector saw its production levels recede in August as a result of operational setbacks in its crude upgraders.

The latest report from the Organization of Petroleum Exporting Countries (OPEC) placed Venezuela’s output at an average of 730,000 barrels per day (bpd) last month, down from 772,000 in July, according to secondary sources.

In contrast, the figures reported directly by state oil company PDVSA stood at 820,000 bpd, up from 810,000 the previous month. OPEC data often gets updated in subsequent publications.

According to Reuters, several crude upgraders had maintenance issues or diluent shortages that forced them offline for extended periods, affecting output levels. Located in the Orinoco Oil Belt in eastern Venezuela, crude upgraders process extra heavy oil into exportable grades.

The production setbacks likewise affected exports, which fell 38 percent from a three-year high of 877,000 bpd in July.

The August fall reversed a recent trend that had seen PDVSA slowly increase its production despite being targeted by wide-reaching US sanctions. Since 2017, the US Treasury Department has hit Venezuela’s oil industry with financial sanctions and an oil embargo, as well as secondary sanctions and other measures targeting third parties involved with the sector.

As a result, output fell steeply from 1.9 million bpd before the first measures to under 350,000 bpd in the second half of 2020. PDVSA then managed to steadily ramp up its productive activities. July’s figures were the highest since February 2019.

Oil Minister Pedro Tellechea had set a 1 million bpd target before the end of 2022. However, after the latest slide, output would have to rise by 37 percent over the final four months of the year to reach the benchmark.

With the industry plagued by corruption, maintenance issues, input shortages and divestment, Caracas has looked to international allies to boost its most important industry. Venezuela and Iran currently have an extensive swap agreement that supplies the Caribbean nation with condensate, a key diluent to turn extra heavy crude into exportable grades.

Venezuelan President Nicolás Maduro recently led a high-level delegation to China which signed 31 cooperation agreements with Chinese counterparts, including on the oil sector.

The contents were not disclosed, but analysts point to the possibility of renewed Chinese direct investment in joint oil ventures. Since 2019, Beijing reduced its involvement and ceased to purchase oil cargoes directly to avoid US sanctions. Past credit lines from China involved repayment in crude shipments.

Specialized portal reported on an additional proposal on the table that would see Caribbean nations become stakeholders in Venezuela-based energy projects. The idea was put forward during the July summit between the European Union (EU) and the Community of Latin American and Caribbean States (CELAC) in Brussels.

Venezuelan law requires that PDVSA hold the majority of shares in joint oil ventures, whereas no such constraint exists for natural gas projects.

New projects with international partners are likely conditioned by licenses or tacit approval from the US Treasury Department. Apart from a limited license granted to oil giant Chevron, the Biden administration has kept its predecessor’s “maximum pressure” measures in place to extract concessions from the Venezuelan government.

The recent Maduro trip to China saw hardline US Senator Marco Rubio urge the White House to provide no lifting of sanctions and threaten retaliatory measures against Chinese entities that deal with Venezuela.

Apart from its crude production and export struggles, the Venezuelan government is also attempting to address growing fuel shortages across the country. Intermittent supply led to seldom-seen long queues in the capital Caracas.

The shortages are expected to ease in the coming days after PDVSA restarted the Cardón refinery’s catalytic cracker after a five-week maintenance operation. Venezuela’s four largest refineries are reportedly processing a combined 362,000 bpd of crude at present. The amount of yielded gasoline is not publicly known, with current demand estimated between 200,000 and 250,000 bpd.

Refining operations might get an additional boost from the revised terms in swap agreements between PDVSA and Italy’s Eni and Spain’s Repsol. After the two European corporations were initially authorized by Washington to lift Venezuelan crude cargoes as compensation for accumulated debt, PDVSA halted the deal to demand better conditions.

Caracas will now receive fuel or other refined products such as naphtha.