Venezuela: Pray for the people

[dan_s]

On 12/15/2017, Reuters reported an alleged crackdown on graft in Venezuela, seen by critics as an effort by President Nicolas Maduro to consolidate power, has sown panic across the country's energy industry and all but paralyzed state-run Petroleos de Venezuela SA, or PDVSA, according to people at the company and across the sector. Decisions at some joint ventures with foreign firms are delayed. A growing number of oil tankers sit idle because no one authorizes payments. Employees struggle to get approval for routine expenses, from taxis to training.

The ongoing purge, in which prosecutors have arrested at least 67 executives including two recently ousted oil ministers, now threatens to further harm operations for the OPEC country, which is already producing at near 30-year-lows and struggling to run PDVSA units including Citgo Petroleum, its U.S. refiner. Many of those detained have not yet been replaced, as the once world-leading company, already struggling with a brain drain, wants for qualified personnel. Executives that remain, meanwhile, are so rattled by the arrests that they are loathe to act, scared they will later be accused of wrongdoing. "In PDVSA, nobody dares sign anything now, not even a Christmas card," said one executive at a joint venture between PDVSA and a foreign firm in the Orinoco oil belt, asking to remain anonymous.

Combined, the woes are prompting analysts to question just how low Venezuela's oil production will fall. The International Energy Agency predicts output will fall at least 500,000 bpd to 1.5 million bpd in 2018. Analysis firm Medley Global Advisors forecasts a decline of as much as 550,000 bpd, citing risks including "PDVSA's militarization and purge of what remains of its technical capacity."
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The population of Venezuela is starving. The workers are caught in the cross hairs of a corrupt government and a failed state. Most people barely have enough food to survive. As this situation gets worse, it will be one of the reasons that OECD oil inventories continue to fall.

[dan_s]

Oil traders expecting steep production losses from one of the world’s largest producers are likely to be underestimating the severity of the country’s crisis, according to analysts at RBC Capital Markets. In a research note published Monday, analysts at the global investment bank said while oil production in Venezuela is poised to “plunge” in 2018, the extent of its losses could be far worse than investors were anticipating.

“Given the severity of the crisis, we think market participants would be unwise to assume that Venezuelan production losses will simply mirror the several hundred-thousand barrels per day losses seen in 2014,” Helima Croft, head of global commodity strategy at RBC Capital Markets, said in the note.

Instead, the analysts said Caracas’ production losses could be at least several hundred-thousand barrels per day higher — and may even plausibly approach levels last witnessed during the Venezuelan oil strike in 2002.

Read: https://www.oilandgas360.com/venezuelas ... rbcs-croft