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Page added on June 14, 2016
Venezuela’s Oil Production Tumbles as Economic Crisis Worsens
Hungry Venezuelans are rioting and looting amid worsening food shortages, but the OPEC country’s remote oil fields have been sheltered from the social unrest so far.
But Venezuela’s blistering economic crisis is hitting them full on.
Output in the country, which has the world’s largest oil reserves, dropped to 2.37 million barrels per day (bpd) in May, according to OPEC data provided by Venezuela.
That’s down some 5 percent from April and nearly 11 percent from 2015’s average, data showed on Monday, piling more stress 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.
Amid a cash crunch, Venezuela’s oil industry is suffering from shortages of spare parts, the retreat of oil services companies due to unpaid bills, maintenance issues, and crime, according to workers, union leaders, and foreign executives.
Oil workers earn only a few dozen dollars a month at the black market rate due to the bolivar currency’s rapid tumble on the parallel market. Many lives now revolve around the quest for food, fostering worker absenteeism and a brain drain.
“Workers’ moods are in the dumps,” said Francisco Luna, a union leader in the oil-producing area of Lake Maracaibo. “Every day it’s worse. Maintenance is lacking, equipment is lacking.”
Officials at state-run oil company PDVSA did not respond to a request for comment. The company has blamed problems on saboteurs and international smear campaigns.
Separately, Caracas is in talks with China to obtain a grace period in its oil-for-loans deal that would improve its capacity to make bond payments amid the crisis, sources told Reuters.
As Venezuela’s recession appears set to worsen, many wonder how much output could slide and whether unrest could encroach on operations.
Energy consulting firm IPD Latin America caused 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 massive oil strike.
Even production in the Orinoco Belt, a promising swath of extra-heavy crude deposits in the Venezuelan savannah, is down.
Beyond output, Venezuela’s refineries and ports have suffered problems due to equipment failures and power cuts. And payment delays led to less diluents for Venezuelan crudes.
Wall Street is also monitoring the lower output amid default fears, although President Nicolas Maduro insists 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,” said a U.S.-based fund manager.
35 Comments on "Venezuela’s Oil Production Tumbles as Economic Crisis Worsens"
george on Tue, 14th Jun 2016 12:48 pm
Send all donations for the Venezuela humane society to a communist near you.
shortonoil on Tue, 14th Jun 2016 2:56 pm
Venezuela collapsed because the the price of oil collapsed. Venezuela is corrupt, mismanaged and had set itself up to be one of the first to fail. Venezuela was the first, but it won’t be the last. What we are seeing is not the failure of some ideology; what we are seeing is the effects of advanced petroleum depletion. It won’t stop with Venezuela; depletion never sleeps!
Coming to your area soon!
Hello on Tue, 14th Jun 2016 3:35 pm
>>> short: What we are seeing is not the failure of some ideology
What we’re seeing is very clearly the failure of some ideology.
Davy on Tue, 14th Jun 2016 3:55 pm
What we are seeing is a little of both but primarily it is the collapse of oil prices that eliminated the leeway for poor governance. A country such as Norway has prepared better than Venezela taking their oil endowment and investing it wisely but they too will see this endowment evaporate.
CW on Tue, 14th Jun 2016 4:09 pm
I don’t think Venezuela will run out of oil any time soon 297 billion barrels of oil. At 3 million a day it would take 271 years.
onlooker on Tue, 14th Jun 2016 4:10 pm
Mixed in with a little tampering, manipulation and sabotage from your friendly Empire who does not like your way of governing.
shortonoil on Tue, 14th Jun 2016 4:12 pm
“What we’re seeing is very clearly the failure of some ideology. “
If the price of oil had not fallen 70%, Venezuela would still be trucking along as the same old corrupt, mismanaged mess it has always been. If you mean by failing ideology, funding $1 trillion in oil development for oil that should never have been taken out of the ground to begin with, with fictitious money off a CB printing press, you are right.
The failure in ideology began at the US FED; they did not see the implications of a declining resource base on an over populated, finite planet. Their presses could print an infinite amount of cash, but the world does not have an infinite supply of resources to back it up! The world’s oil supply, that was already in an advanced stage of depletion, was the first to go, and it took Venezuela with it.
Sissyfuss on Tue, 14th Jun 2016 4:15 pm
How much of Venezuelas’ relationship with China has added to the ruination of the country? Seems like they were doing alot of deals with their commie brethren before everything went to hell.
shortonoil on Tue, 14th Jun 2016 4:20 pm
” I don’t think Venezuela will run out of oil any time soon 297 billion barrels of oil. At 3 million a day it would take 271 years. “
No one is going to “run out of oil”. The world has at least 2,800 Gb of liquid hydrocarbons impressed in its crust. What the world will run out of is oil that is worth taking out of the ground. Venezuela has already come to that point.
Plantagenet on Tue, 14th Jun 2016 5:11 pm
When Venezuela modeled their economy on Cuba’s socialist model they somehow failed to notice that most Cubans almost starved to death during the “social period.”
Now Venezuela is having its own “special period.”
Socialismo O Muerte! Or maybe both!
Cheers!
Boat on Tue, 14th Jun 2016 5:34 pm
Plant,
The Cuba model has very few toilet seats. Now the proud Venezuelans can match that achievement.
Anonymous on Tue, 14th Jun 2016 5:39 pm
Plant, use your extensive network of contacts in the King Salmon Cartel.Maybe you could arrange to ship some of the King Salmon glut to those ‘starving’ Cubans and Venezuelans eh?
shortonoil on Tue, 14th Jun 2016 5:41 pm
Don’t mock the Cubans, at least they kept their toilets. That is better than Venezuela is likely to do. For them, its back to the coconut groves.
IPissOnLosers on Tue, 14th Jun 2016 5:46 pm
Venezuela tar sand are net energy negative. It means that Venezuela has to buy energy on the international market in order for them to create Venezuela synthetic crude oil. This is why Venezuela is bankrupted and cannot generates revenues from selling oil because their oil is net energy negative.
In others words EROEI is between 0 and 1.
Boat on Tue, 14th Jun 2016 5:49 pm
I propose we let Texas take over Venezuelans oil. They know how to how get oil out of rock. Then we train Venezuelans to eat Ramen soup. That’s what poor capitalists eat. No more high on the hog socialist meals.
shortonoil on Tue, 14th Jun 2016 5:53 pm
“Venezuela tar sand are net energy negative. It means that Venezuela has to buy energy on the international market in order for them to create Venezuela synthetic crude oil. This is why Venezuela is bankrupted and cannot generates revenues from selling oil because their oil is net energy negative.
In others words EROEI is between 0 and 1. “
Thanks, that’s almost exactly what we have been saying for the last three years:
http://www.thehillsgroup.org/
Plantagenet on Tue, 14th Jun 2016 6:31 pm
@anonymous
You are misinformed. The special period in Cuba has ended and Cubans are no longer starving there. In fact, Cuba is having a little economic boom because Raul has started a transition to a market economy and tourist dollars are flowing into Havana and other cities.
FYI I just visited Cuba last month—I scored some wonderful old Che posters for my socialist art collection.
Cheers! Or should I say Che!
shortonoil on Tue, 14th Jun 2016 7:28 pm
” FYI I just visited Cuba last month—I scored some wonderful old Che posters for my socialist art collection. “
No cigars??
We have long suspected that there was something seriously wrong with you!
makati1 on Tue, 14th Jun 2016 7:50 pm
A lot of US Koolaid spewing around in these comments. The US has the most successful propaganda system in the world and most of the above is proof. LOL
China and Russia could see this as an opportunity to move in and rescue Venezuela with loans and, now wouldn’t that be a kicker, military support. Cuban Missile Crisis 2016 anyone? After all they could claim it is defense against missiles from Easter Island. LOL
The US has stepped up it’s subversive activities in South America after years of neglect. Brazil, Venezuela, Chile, etc. Almost all of the South American countries are under attack by the Empire. They saw China and Russia moving in and panicked. China is spending it’s Charmin dollars everywhere in a case of use it or lose it. Russia is building ties around the world in prep for the next war that the Empire wants to start so badly. Are YOU prepping?
We live in a very, very complicated, interwoven and deadly world. Exciting isn’t it? Pass the popcorn.
Davy on Tue, 14th Jun 2016 8:12 pm
Makati Bill pretty funny how all your hopes and dreams have been squashed lately. No Bric breakout into stardom is one big one. No dollar death star explosion. Venezuela was a big story for you and now look at them. Where are their friends China and Russia. I can’t wait to see how much money China loses on that bad Venezuela bet. Why don’t you get back to reality Makati Bill and observe what is really happening in the world instead of your sci-fi perverted version.
I will pass on your popcorn and just laugh.
antaris on Tue, 14th Jun 2016 9:47 pm
Plant, Canadians have been going to Cuba for years and Cubans emigrating to Canada.
Your posters were probably printed in China to be sold to certain special new tourists.
Boat on Tue, 14th Jun 2016 10:44 pm
“Venezuela tar sand are net energy negative”
AT $1 per barrel demand would outstrip supply rather quickly. At $500 per barrel demand would fall rather quickly and supply would grow. The market is not perfect but naturally seeks balance.
If the market remains high for an extended period because of geopolitical, nature or depletion reasons the market will find an alternative source of energy. Capitalism 101.
dave thompson on Wed, 15th Jun 2016 12:10 am
Boat says;”the market will find an alternative source of energy.” What will replace the energy of gasoline,diesel, jet fuel and bunker fuel for transport shipping?? There is nothing i know of.
Lam on Wed, 15th Jun 2016 1:40 am
Communism is the factory of misery, and there is no solution to Venezuelans’ suffering when the animals are still dunging. Didn’t they want to copy Cuba’s?
makati1 on Wed, 15th Jun 2016 2:42 am
“Communism is the factory of misery, and there is no solution to Venezuelans’ suffering…”
Should read: “Capitalism is the factory of misery, and there is no solution to American’s suffering…”
“The SNAP of Doom -…Fifty million individuals, including one out of every five American children, receive food stamps … The SNAP, or EBT, card is how we deliver food assistance to people who otherwise would be in line at some government agency, lines whose size and desperation would dwarf anything seen in the Great Depression.”
“Americans have lost faith in pretty much everything”
“Radical Islam Not Responsible For Vast Majority of Mass Shootings In America, Says Report”
“The typical American couple has only $5,000 saved for retirement”
“The Keynesian Blessing: Americans Are Broke”
“Saudi Arabia Has Funded 20% Of Hillary’s Presidential Campaign, Saudi Crown Prince Claims”
“The Pension Bubble: How The Defaults Will Occur”
“Multiple US States Get Educational Budget Cuts, Spark Protests”
“Chaos at Dallas Airport as Cop Shoots Man Armed With Rock, Police Say”
“Russia: We will respond to entry of U.S. naval vessel into Black Sea”
“Thousands protest against drones at U.S. Air Force base in Germany”
“Anti-US Base Demonstrators March On Tokyo”
“The New American Death: Overdoses and Accidents”
“States Attack a Severe Doctor Shortage”
http://ricefarmer.blogspot.fr/
peakyeast on Wed, 15th Jun 2016 4:08 am
@shortonoil: “What the world will run out of is oil that is worth taking out of the ground. Venezuela has already come”.
You can be right – if that oil has to support a too large useless population and the useless users in the country.
But if the oil only had to support the essentials surrounding the oil extraction the inflection point might be much lower.
In case they find their feet again it will be because they have shed some of the “parasites” on the industry. This is their first step down the staircase.
Of course, it might also be that they just implode.
Go Speed Racer on Wed, 15th Jun 2016 4:51 am
Who say Venezuela has economic trouble?
i say it does not.
Rioting and Looting are at all time highs.
The sky is the limit. The chart is up,
up, up. both looting and rioting are
cutting edge, complex, vibrant new industries.
Venezuela is leading the world in
rioting. Parallel related industries
like sale of rubber bullets, kevlar vests,
replacement police cars to replace the ones overturned, all excellent growth opportunities.
And everytime they burn down an empty grocery store, think of the construction
opportunities to build another one.
Thank goodness Venezuela has a strong rioting industry, otherwise they would be in economic trouble.
peakyeast on Wed, 15th Jun 2016 6:18 am
@GSP: You should read Harry Harrisons Stainless Steel Rat series.
There are parallels to your writings there – besides them being generally great fun to read.
shortonoil on Wed, 15th Jun 2016 6:19 am
“But if the oil only had to support the essentials surrounding the oil extraction the inflection point might be much lower. “
Petroleum must be able to drive as much economic activity as it cost to produce it. No one is going to spend $2 on petroleum to produce a $1’s worth of goods and services! It is not a magical substance; it has finite limits, and those limits are calculable.
Anyone who claims that oil is going to $500 must believe that the rest of the world is as stupid as they are. Oil is not worth $500; never has been, never will be. Oil now has a maximum price of about $60, anything above that level and enough people stop using it to bring the price back down.
There are people who believe that oil can go to $500; those are the same people who believe in Santa Clause and the Tooth Fairy. They put cookies out every evening on December 25th, and sit on their front porch all day December 26th wondering how they got the date wrong?
http://www.thehillsgroup.org/
Doro Arango on Wed, 15th Jun 2016 6:39 am
No wonder Yahoo is broken.
Hosting bad propaganda ouletes like this one.
Davy on Wed, 15th Jun 2016 6:52 am
“Ouletes” not learning to spell or speak right is a “broken” too. What is also broken is a one sentence comment. Say something that says something dumbass.
bob on Wed, 15th Jun 2016 11:32 am
First Chavez, now Maduro, and their henchmen and families have been stealing the country blind — stealing everything they can get their hands on from PDVSA — for more than 10 years now. And they won’t pay workers enough to keep the oil company operating efficiently. I felt sorry for Venezuelanos for many years, but then they keep re-electing these criminals and believing their lies.
Apneaman on Wed, 15th Jun 2016 11:49 am
bob, if only they had straight shooter leaders like us eh?
Davy on Wed, 15th Jun 2016 12:10 pm
“Nigeria Hyperinflation Looms As Central Bank Throws In The Towel, Devalues Currency”
http://www.zerohedge.com/news/2016-06-15/nigeria-hyperinflation-looms-central-bank-throws-towel-devalues-currency
“To others, such as Nigeria’s 175 million-strong population, this means that Nigeria is about become the next Venezuela, with imminent hyperinflation on deck, as prices soar to keep up with the collapse in the spot rate. The naira will probably trade in a range of 280 to 350 against the dollar after the central bank implements its decision, analysts at Johannesburg-based Rand Merchant Bank said in a note on Wednesday before the announcement.”
PracticalMaina on Wed, 15th Jun 2016 12:50 pm
I thought this ultimately had a lot to do with the drought, and oil prices-depletion, ditto for the Arab Spring, we can blame a form of government all we want, but when major hydroelectric generation is going away, your in for some serious pain.