Global Unrest

Venezuela’s Oil Production Takes A Nose-Dive As Economic Crisis Comes Apart At The Seams!

Written by JayWill7497

As Venezuela’s recession seems set to intensify, many question how much output could slide and whether unrest could encroach on operations.


Starving Venezuelans are rioting and looting in the middle of worsening food shortages, but the OPEC country’s remote oil fields are actually sheltered from the social unrest thus far.

But Venezuela’s scorching economic crisis is impacting them full on.

Output in the country, which has the world’s biggest oil reserves, dropped to 2.37 million barrels per day (bpd) in May, based on OPEC data supplied by Venezuela.

That’s down some 5 percent from April and nearly 11 percent from 2015’s average, data revealed on Monday, piling more pressure on oil-dependent Venezuela as it wrestles with the economic crisis. The drop could also help erode a supply glut that has weighed on prices.

In the midst of a cash crunch, Venezuela’s oil industry is having difficulties from shortages of spare parts, the retreat of oil services companies because of unpaid bills, maintenance problems, and crime, reported by workers, union leaders, and foreign executives.

Oil workers earn only a few dozen dollars a month at the black market rate because of the bolivar currency’s rapid drop on the parallel market. Many lives currently revolve around the search for food, fostering worker absenteeism and a brain drain.

“Workers’ moods are in the dumps,” stated Francisco Luna, a union leader in the oil-producing region of Lake Maracaibo. “Every day it’s worse. Maintenance is lacking, equipment is lacking.”

Officials at state-run oil company PDVSA didn’t reply to a request for comment. The company has ascribed issues on saboteurs and international smear campaigns.

Independently, Caracas is in discussions with China to acquire a grace period in its oil-for-loans deal that would improve its capacity to make bond payments in the midst of the crisis, sources informed Reuters.

As Venezuela’s recession seems set to intensify, many question how much output could slide and whether unrest could encroach on operations.

Energy consulting firm IPD Latin America induced waves earlier this year when it forecast that output could slip to 2.35 million bpd this year, a figure on par with last month’s output.

That would be even lower than average production in 2002 and 2003, when Venezuela was shaken by a enormous oil strike.

Even production in the Orinoco Belt, a possible line of extra-heavy crude deposits in the Venezuelan savannah, is down.

More than output, Venezuela’s refineries and ports have experienced issues because of equipment failures and power cuts. And payment delays led to less diluents for Venezuelan crudes.

Wall Street is likewise monitoring the lower output amid default fears, even though President Nicolas Maduro asserts Venezuela will honor all debts.

“In the short term, it will negate some of the recent oil price rise and make the bond payments in late-2016 and 2017 more difficult, though not necessarily impossible,” stated a U.S.-based fund manager.

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Reporter, Journalist, Blogger, Researcher. Committed to providing information by posting/archiving videos, articles, and links. I also investigate to raise awareness on numerous issues, inspire critical thinking, involvement, and hopefully to help make our world a better place for all. “The truth, always the truth at all costs”

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