Energize Weekly, July 11, 2018
Venezuelan oil production is increasing, being held up by its joint ventures with foreign oil companies from Russia, China and the U.S. Even with that, production and exports have plummeted, according to an assessment by the U.S. Energy Information Administration (EIA).
Output has been falling since a peak in the late 1990s, but it has been especially sharp in the last few years, the EIA study said. Crude oil revenues dropped 70 percent between 2011 and 2016 to $22 billion. Production was estimated as 2.2 million barrels a day of petroleum and other liquids.
Between 2016 and 2018, Venezuela slipped from third to eighth place among oil exporters to the U.S., being overtaken by Canada, Saudi Arabia, Mexico, Iraq and Colombia.
“As of the first quarter of 2018, EIA data show that U.S. imports from Venezuela reached their lowest levels since January 1993,” the analysis said. In 2007, the U.S. was importing an average 1.1 million barrels a day from Venezuela. By 2017, it was 409,000 barrels a day.
What production there is increasingly come from joint ventures, while the state-run oil company Petroleos de Venezuela S.A. (PdVSA) has been in turmoil.
“The industry has been mismanaged since the late 1990s,” according to the EIA assessment. “A somewhat recent anti-corruption campaign has resulted in the firing and jailing of dozens of officials and technical staff at the Petroleos de Venezuela … since last year. This has caused a near-complete paralysis at the company.”
Venezuela has become increasing reliant on its 41 joint venture partnerships to produce crude oil. In 2017, about half the oil production came from joint ventures, up from 30 percent.
The biggest partners are Russian Rosneft and Gazprombank, the China National Petroleum Corp. (CNPC), and Chevron Corp.
The largest of the joint ventures is Petropiar, which produced 146,600 barrels a day in 2017, with PdVSA holding a 70 percent share and Chevron a 30 percent share.
The next largest joint venture is Petrolera Sinovensa, whose 2017 output was 128,700 barrels a day and is a 60 percent PdVSA and 40 percent CNPC operation.
Other partners include Shell, Italian oil company Eni, and Indian producer ONGC Videsh. In 2018, however, the share provided by the joint ventures dropped, the EIA said.
Venezuela’s most prolific production area is the Orinoco Oil Belt (OOB), accounting for half the country’s 2017 oil production. The oil from this region is heavy and sour, and must be processed at special domestic and international refineries.
Venezuela had 1.3 million barrels a day of domestic nameplate crude oil refining capacity in 2017, which was all operated by PdVSA. The actual refining capacity was estimated at less than half that as “nearly all the facilities haven fallen into disrepair,” the EIA said. Others have suffered from fire damage and operational accidents. Some facilities lack sufficient feedstocks to run at more than 30 percent of capacity.
The country had another 1.4 million barrels a day of capacity in fractional ownerships of refineries operating in the Caribbean, the U.S., and Europe.
“The largest share of Venezuela’s foreign downstream operations is in the United States, followed by significant operations in the Caribbean and stakes in Europe,” the analysis said. But due to the financial pressures facing Venezuela, the country hasn’t been able to optimize its share in these operations.
