Venezuela pumps below Opec target


As Venezuela’s dilapidated energy sector struggles to pump enough crude oil to meet the country’s Opec output target, rival producers within the exporters group have started to plug the gap, Opec and industry sources said.

The South American country’s oil output hit a 28-year low in October as state-owned oil giant PDVSA struggled to find the funds to drill wells, maintain oilfields and keep pipelines and ports working.

Venezuela’s oil production, which has been falling by about 20,000 barrels per day (bpd) per month since last year, is on track to fall by at least 250,000 bpd in 2017 according to numbers reported to the Organization of the Petroleum Exporting Countries (Opec), as US sanctions and a lack of capital hobble operations.

Some Opec members expect the fall to accelerate in 2018, reaching at least 300,000 bpd, Opec sources said. At a recent internal Opec meeting, Venezuelan officials were asked to give a clearer picture of the country’s declining output.

'A lot of questions have been raised by Saudis and others to the Venezuelans to present a real picture on the production status and decline,' one of the sources said. The topic could come up later this month at the group’s next meeting.

Saudi Arabia will not raise its output to compensate for this decline as Opec’s de facto leader is focused on reducing global oil stocks, one Opec source familiar with Saudi oil policy told Reuters this month.

But heavy oil from Opec member Iraq and non-Opec producers Canada and Brazil are already replacing Venezuelan barrels to key customers the United States and India, according to the sources and Thomson Reuters data.

Iraq has increased shipments of crude and condensate to India by 80,000 bpd this year as Venezuelan deliveries fell by 84,000 bpd. The second largest Opec producer also has exported 201,000 bpd more oil to the United States this year through October as Venezuelan shipments dropped about 90,000 bpd, according to the Reuters data.

Venezuela’s weaker output 'could be good for market rebalance and we could see price stay at $60 for a slightly longer time,' one Opec source said.

More Stories