Venezuelan oil production at 33-year low
Caracas, 18 January (Argus) — Venezuela shed another 216,000 b/d of crude production in December, bringing official monthly output to just 1.621mn b/d, the lowest level since the mid-1980s, not including a 2002-03 labor strike, according to official Venezuelan data cited by Opec in its January 2018 monthly oil market report issued today.
The stunning data for December confirms a sharp acceleration in the decline trend, following losses of 118,000 b/d in November and 130,000 b/d in October.
The December data falls significantly below those of secondary sources, including an Argus estimate of a 151,000 b/d decline to around 1.686mn b/d, based on information from local industry officials. Other secondary sources had predicted a much smaller drop for December.
Official data historically exceeds secondary source estimates.
The new data shows that Venezuela lost almost 650,000 b/d or 28pc of production between the December 2017 average of 1.621mn b/d and the December 2016 average of 2.270mn b/d.
Almost two thirds of last year's decline, or 464,000 b/d, happened in the fourth quarter.
Local industry officials have previously told Argus that the declines are distributed across state-owned PdV's operations, including the traditional eastern and western divisions, and the Orinoco heavy oil belt.
The December data is the lowest for Venezuela since 1.5mn-1.6mn b/d in 1985-86, in the throes of a global supply glut. Production dwindled below 1mn b/d during a watershed 2002-03 oil strike, but that data is considered an aberration.
The new official data for December contradicts claims earlier this week by new energy minister and state-owned PdV chief executive Manuel Quevedo that output spiked to over 1.9mn b/d at the end of 2017, after dropping to 1.5mn b/d in November.
Quevedo, a national guard general without oil industry or corporate management experience who was named to the twin posts in November by president Nicolas Maduro, pledged this week that output would jump to 2.5mn b/d by next December.
"We have a recovery plan in place," Quevedo said in televised remarks.
A PdV upstream executive in the company's once-prolific western division told Argus this morning that Quevedo is "hallucinating", citing an exodus of oil workers.
Output "could decline by up to 1mn b/d in 2018" as thousands of skilled workers flee the company and oil services providers owed billions of dollars continue to reduce their operations in Venezuela, the executive said.
"PdV is dying and Venezuela is dying too, because oil exports account for 95pc of the country's dollar income," the executive added.
PdV anticipates that Venezuela's natural oil field depletion rates of over 20pc could shrink crude output by around 580,000 b/d this year, Quevedo acknowledged in the recent interview.
The general assured viewers that PdV would offset depletion this year and add at least 500,000 b/d of new output capacity by next December, boosting total crude production to 2.4mn-2.5mn b/d without violating the country's Opec commitments.
"General Quevedo either is being lied to, or he simply has no idea what he's saying when he spouts these numbers irresponsibly," the executive added.
PdV's upstream joint venture partners, including Russian state-controlled Rosneft and US major Chevron, have slashed capital expenditures as Venezuela's economic and political turmoil accelerates, the executive said. "They're not quitting Venezuela, but they are cutting back their investment spending."