Venezuela facing compounding oil woes

Aug. 10 (UPI) — Venezuelan plans to stabilize crude oil production do little to address bottlenecks and the shortage of investments, an analyst said Friday.

Manuel Quevedo, the head of state-controlled Petróleos de Venezuela, or PDVSA, announced crude oil production has stabilized after a chronic decline and the country was looking to pick up the pace by tapping its mature assets.

Despite its vast reserves, corruption and international isolation have impacted oil production from one of the founding members of the Organization of Petroleum Exporting Countries. Secondary sources reporting to OPEC economists put Venezuelan production at 1.3 million barrels per day on average last month, down 38 percent from the 2016 average.

Adrian Lara, a senior oil and gas analyst at GlobalData, said in comments emailed to UPI that Venezuela has issues building up on issues, from actual production to refinery problems.

“So not only (do) the challenges remain, but they compound on each other on a path that could prolong and increase the decline rate of oil production in the Orinoco Belt,” he said.

The U.S. Geological Survey estimates the Orinoco Belt holds a mean volume of 513 billion barrels of technically recoverable oil reserves. An annual review of global reserves from Italian energy company Eni put Venezuela at the top of the list. While the United States was the top producer last year, its total reserves represented about 10 percent of Venezuela’s.

Lara said focusing on mature assets could be a sound strategy for Venezuela, but that would require significant investments in a country facing profound economic crises.

“Without details on the strategy it is difficult to assess how PDVSA can implement a plan where the loss of production in the Orinoco Belt can be compensated by these fields’ production,” he said.

In an outlook on Latin America, the International Monetary Fund noted real gross domestic product for Venezuela is on pace to drop 18 percent this year, the third year in a row for a double-digit decline in oil revenue was $22 billion last year, compared with about $70 billion in 2011. Total Venezuelan exports are 10 percent lower than 2016 levels.

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