Staggering debt, crumbling equipment and infrastructure, and mass worker resignations, have set back Venezuela's oil industry decades, with experts saying they see scant prospects of any turnaround. Venezuelan crude output plummeted in December to 1.70 million b/d, according to the latest S&P Global Platts OPEC survey released Monday.
The output level represented a decline of 100,000 b/d from November and a low not seen for more than 15 years, when a major strike from December 2002 to February 2003 hobbled production. Not counting strike-affected months, Venezuela's production was last this low in August 1989, more than 28 years ago.
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Venezuela going over the Debt Cliff soon
Venezuela going over the Debt Cliff soon
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Venezuela going over the Debt Cliff soon
"The Venezuelan economy could collapse at any moment," said Torbjorn Kjus, oil market analyst with Norway's DNB Bank. "We could envisage scenarios spanning from outright civil war to a state coup, to a general strike or even just one more year of strangulating slow death for the economy. Neither of these outcomes bodes well for Venezuelan oil production."
Service company Baker Hughes, which tracks rig counts internationally, reported this week that Venezuela had 50 rigs drilling in December, up from 39 in October, which had been the fewest since 2003 during the worker strike.
Einstein Millan, an independent Venezuela-based analyst who formerly worked for PDVSA, estimated that the company would need 100 to 110 active rigs to reverse its production decline, let alone achieve a presidential directive of increasing oil output by 1 million b/d. The rig pullback and accelerating field decline rates will cause Venezuelan oil production to fall by another 300,000 to 400,000 b/d in 2018, analysts with Washington-based Rapidan Energy forecast.
Service company Baker Hughes, which tracks rig counts internationally, reported this week that Venezuela had 50 rigs drilling in December, up from 39 in October, which had been the fewest since 2003 during the worker strike.
Einstein Millan, an independent Venezuela-based analyst who formerly worked for PDVSA, estimated that the company would need 100 to 110 active rigs to reverse its production decline, let alone achieve a presidential directive of increasing oil output by 1 million b/d. The rig pullback and accelerating field decline rates will cause Venezuelan oil production to fall by another 300,000 to 400,000 b/d in 2018, analysts with Washington-based Rapidan Energy forecast.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group