Venezuela’s oil production sinks to lowest output in 77 Years

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By Agency Report

Crisis-wracked Venezuela’s relentless fall in oil production sunk to a new low in May, according to OPEC figures, a milestone in a decade of decline for the once-proud petroleum powerhouse.

Venezuela — heavily dependant on income from oil exports — produced just 570,000 barrels of oil a day, a drop of 54,000 bpd compared to one month earlier in April, according to Organization of the Petroleum Exporting Countries figures out Wednesday.

The OPEC number was also 162,000 bpd lower than official Venezuelan statistics.

Venezuela’s oil production peaked in 1970 at 3.7 million bpd, and even 12 years ago state oil company PDVSA — once among the world’s top five oil enterprises — was producing 3.2 million bpd.

Not counting a December 2002-March 2003 oil workers strike, the current output is the lowest since 1943, when Venezuela had a population of barely four million, compared to 30 million today.

Experts blame the production drop on government mismanagement, corruption, and failure over many years to invest in infrastructure upgrades and maintenance.

These problems have been amplified by US sanctions aimed at starving President Nicolas Maduro’s regime of a major source of funds in a bid to force him from power.

Between 2004 and 2015, Venezuelan oil exports raked in $750 billion, and the country had more than $42 billion in international reserves — now down to just $6.4 billion, according to the Central Bank.

Venezuela’s economy has been devastated by six years of recession, and it is experiencing the world’s highest inflation rate — all before the COVID-19 pandemic even struck.

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On April 24, Venezuelan crude prices plunged to $9.90 a barrel — its lowest in two decades, although it rebounded to $13.45 by May 1. The oil ministry has not published any figures since.

According to oil information firm S&P Global Platts, Venezuela was forced to scale back production in recent weeks due to storage limitations and a lack of light oil to process its heavy crude.

Yet even if Venezuela were pumping at capacity, oil prices are at their lowest in years due to a huge drop in global demand, a result of worldwide economic crisis unleashed by the COVID-19 pandemic.

AFP

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