Venezuela’s oil production falls to less than 1 million bpd in March

Venezuela's oil production

Venezuela’s oil production fell to less than one million barrels per day in March. Independent estimates indicate that it stood at 900,000 barrel per day.

However, alternative projections say it is already nearing 500,000 bpd. In any case, it is the worst recorded in the last 16 years. The country has been affected by the sanctions imposed by the United States and recent blackouts.

Production dropping since the 2003 strike

In March, the country’s oil production dropped by 115,000 barrels per day to 900,000 bpd since February, according to independent analysts based on secondary sources and OPEC estimates.

This would put the Venezuelan oil industry at its worst since January 2003. That year, a strike organized by several sectors of society affected state-owned oil company Petroleos de Venezuela (PDVSA), a situation that saw production shrink to 630,000 barrels per day.

However, some estimates are even more pessimistic. According to PDVSA’s (unofficial) internal preliminary projections, average production in March could be as low as 500,000 bpd.

If this is true, production would stand at less than half of the average recorded in February. These calculations were based on the several production shutdowns caused by the collapse of the electrical network that feeds the Venezuelan oil industry.

The difference in the figures and the number of different sources is the result of the opacity (and the administrative units controlled by the Nicolas Maduro regime) with which PDVSA handles its financial and operative indicators.

Sanctions and blackouts add to the crisis in PDVSA

Venezuela's oil production had been falling even before March. In fact, so far in 2019 it accumulates 20 consecutive months in decline. Overall, PDVSA has lost more than half of its oil production in the last five years.

In January, the state company had been producing around 1.2 million bpd. This was before the United States imposed oil sanctions that same month on the 28. The sanctions forced PDVSA and its partners to start halting part of the production to face an accumulation of crude for exports.

This excess inventory was due to a shortage of naphtha to dilute its heavy crude and storage restrictions. By February, the extraction was slightly above one million barrels per day.

Jose oil terminal is one of the most affected

When the first major national power failure occurred on March 7, oil operations, already weakened, suffered another blow. The industry faced unplanned shutdowns at the Jose complex in the northeast region of the country. This is where PDVSA and its foreign partners improve and combine heavy Orinoco crude for export.

Jose's operations were restarted briefly in mid-March. Nonetheless, there was another forced shutdown when a new blackout affected the country on March 25. Since then, there have been repeated transformer failures. Energy supply in Venezuela is now, at best, intermittent.

The three operational upgraders led by PDVSA, PetroPiar with Chevron, PetroMonagas with Rosneft, and PetroCedeno with Total and Equinor, are suspended due to safety and equipment risks.

PDVSA's Sinovensa heavy crude blending plant, which is operated by Chinese state-owned partner CNPC, has managed to increase production; thanks to the limited independent power supply. The upgraders’ backup generators are out of service, which forces them to be supplied from the network.

In any case, and despite the diversity in numbers, the general consensus points to a significant drop in Venezuela's oil production in March.

For more information, check Energía16

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