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Venezuela to reinvigorate oil production

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Reuters reports that the new management team at PDVSA, the state-owned oil company of Venezuela, is planning to increase its oil production to 1.17 million barrels per day (bpd) by the end of this year.

Despite having the world’s largest proven crude oil reserves, Venezuela has struggled to maintain its crude oil production due to underinvestment, corruption and sanctions aimed at the political regime in Caracas. Between 2014 and 2020, production dropped from 2.4 million bpd to just 500,000 bpd.

Relations with the United States have begun to thaw more recently following dialogue between opposition groups and the Maduro government, leading to the US Government giving Chevron, the maker of the Texaco lubricant range, a six-month license to resume its operations in Venezuela. This helped the country’s oil production to exceed 800,000 bpd in April. Chevron ultimately aims to be shipping up to 500,000 bpd of crude oil from Venezuela, but this first requires an inlet to be dredged.

The PDVSA is currently undergoing a shakeup that includes, in addition to the change in management, an audit of its finances and investigations to uncover corruption. The new management sees oil production increasing by 390,000 bpd, a rise of almost 50%, by the end of this year. The production of natural gas is also expected to increase substantially by 645 million cubic feet.

Refiners along the Gulf Coast will likely welcome the return of Venezuelan crude oil, because the supply of equivalent heavy crude grades has been affected by wildfires in Canada and sanctions on Russian crude.

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