Venezuela’s oil production has been decreasing over the past decade due to inefficiency and corruption. A trend that has accelerated with the U.S. sanctions imposed since 2018.
OPEC figures show that the nation’s extraction volumes plummeted to the lowest levels in almost nine decades – except for the drop recorded during the oil strike of 2002-03, according to the production record kept by Venezuela’s Oil Ministry, which goes as far back as 1917.
Venezuela, which largely depends on revenue from oil exports, produced just 570,000 barrels per day in May, down by 54,000 bpd from the previous month.
— OPEC (@OPECSecretariat) June 17, 2020
Data from the regime of Nicolas Maduro assures production stood at 732,000 bpd, 162,000 barrels more than the amount reported by the cartel. However, this is still under the 3.5 million barrels per day that PDVSA produced when socialism took over in 1999.
An oil powerhouse?
Venezuela’s oil production peaked in 1970 with 3.7 million bpd. Just 12 years ago PDVSA was still producing 3.2 million bpd. Meanwhile, current production is the lowest since 1943, when Venezuela had a population of just 4 million, compared to today’s 30 million.
Between 2004 and 2015, Venezuelan oil exports raised $750 billion. During those years, the country had more than $42 billion in international reserves. Now, they barely reach $6.4 billion, according to the Central Bank of Venezuela.
Executives in the Venezuelan oil industry attribute this sharp drop to lack of storage, as well as the lack of the naphtha used to dilute the extra heavy crude that represents most of the OPEC member’s production.
No chance to recover
#PDVSA está utilizando el buque tanquero con bandera cubana María Cristina como depósito de almacenamiento flotante después de archivar un plan anterior para enviar un suministro de gasolina iraní a Cuba. María Cristina, anteriormente Carlota C, llegó a El Palito el 31 de mayo.
— Maibort Petit (@maibortpetit) June 14, 2020
But independent analysts attribute the decline to the government’s poor management, corruption, and failing to invest in infrastructure maintenance and updates for many years.
However, even if Venezuelan production were at maximum capacity, oil prices are at their lowest in years. The price fall stems from the low global demand, a result of the economic crisis caused by the COVID-19 pandemic.
Excuses, excuses, excuses
The regime of Nicolas Maduro – as was the regime of Hugo Chavez before him – has been very swift to produce excuses and reasons to explain this unprecedented and uncalculated debacle in a country that has the largest oil reserves in the Western Hemisphere.
The United States sanctions have even been used by Maduro to explain problems that occurred years before they came into effect. He has also used “the treacherous corruption” within the oil industry itself, from officials appointed by Chávez and Maduro, who “deviated from the revolutionary ideals.” This argument led to the removal, persecution, or arrest of several managers. Among these cases is the arrest of former PDVSA presidents Rafael Ramírez (who is outside the country) and Euloigio Delpino (in jail).
Maybe one of the most recalled episodes is the one that involved 6 Citgo managers, PDVSA’s subsidiary in the United States, and Venezuela’s greatest asset overseas.
Tomeu Vadell, Gustavo Cárdenas, Jorge Toledo, Alirio José Zambrano, and José Angel Pereira were imprisoned in Venezuela, without a trial, in November 2017. They were called to an urgent meeting in Caracas and were detained at the Maiquetia airport and transported to the dungeons of the country’s Military Counterintelligence Direction.
The officials were accused of fraudulent embezzlement, money laundering, association to commit a crime, and official deals with a contractor for allegedly agreeing to refinance the debt of this company.
As the coronavirus threatens to collapse the country’s medical system, case have been reported inside the prison facilities where they are being held. Family members say they are in “mortal danger,” they told The Washington Post.
Although the 6 former managers were appointed by the chavista regime, several became American citizens. Washington has insisted in their liberation and, despite attempts from Secretary of State Mike Pompeo to liberate these men, Maduro has shown no signs of ending this situation soon.
Venezuela’s production decline stems from an inadequate management by a directive of Maduro loyalists. But the sanctions imposed by the U.S. government have contributed to cutting the regime’s financial sources. And the Trump Administration is not willing to take a step back.
On Wednesday, the U.S. Transportation Department said it fined Copa Airlines 450,000. In detail, this Panamanian airline was accused of violating a ban and “illegally transporting” passengers between the United States and Venezuela.
Since May 2019, Washington has banned all air transport between the two countries. The nation sustains there are conditions “that threaten the safety of passengers, planes, and crew traveling to or from Venezuela.”
For more information, check Energía16