Business & Economy

Venezuelan oil output now well short of Maduro’s lofty 2022 target

By Carlos Seijas Meneses

Caracas, Aug 25 (EFE).- Venezuelan oil production, which has fallen by 28 percent since last December after briefly recovering in the latter part of 2021, is slipping farther away from President Nicolas Maduro’s target of 2 million barrels per day by year’s end.

An increase of 218 percent above July’s level of 629,000 bpd is now required to reach that ambitious goal.

Despite the recent drop-off and the limited amount of time remaining in 2022, the leftist head of state still insists Venezuela will reach its objective “come rain or shine” and that the growth will continue apace until a level of 3 million bpd is attained next year.

Venezuela’s output had risen to 3.2 million bpd in 1997 – two years before Hugo Chavez, Maduro’s late mentor and predecessor took office – and the country’s oil production remained above 2 million bpd for the next two decades.

But the country’s lifeblood industry has seen its output collapse over the past five years due to a lack of investment, a reduction in qualified personnel, mismanagement, corruption and, more recently, devastating sanctions imposed by the United States, experts say.

Even as Maduro remains optimistic, Venezuelan authorities’ reports to the Organization of the Petroleum Exporting Countries (OPEC) indicate a sustained drop in output in recent months.

And that decrease has occurred even as much of the rest of the world is urging oil producing-countries to lift their output and help bring down gasoline prices, which have surged due to the war in Ukraine and the West’s sanctions on Russia.

Venezuela’s oil production in July was down by nearly 100,000 bpd from June and has fallen by 242,000 bpd from December’s level of 871,000 bpd.

Under the current scenario, achieving the government’s 2 million bpd production target is not possible by year’s end, the ex-president of Venezuela’s Petroleum Chamber, Reinaldo Quintero, told Efe.

“We need much more time. It’s an impossible target … you can steadily increase by 200 (thousand), 400,000 barrels per day, like we saw in 2021, (but) you need … an easing of the sanctions, which in turn is dependent on dialogue and negotiations,” the business leader said.

Venezuela could reach 2 million bpd in “two or three years” if sanctions are lifted and if the oil industry is buoyed by an injection of funds and an end to “self-sanctions,” Quintero said, referring to internal decisions such as a lack of maintenance.

The “coercive” measures the US has imposed on Venezuela over their “political differences” has had a cost, Quintero said, estimating they have caused output to fall by roughly 1 million barrels.

The US and Venezuela “need each other. Even so, they can’t buy and sell oil because there are political priorities that trump the strategic priorities. So they end up paying higher prices for gasoline there, and we end up selling it cheaper in China, when we could sell it for more to (the US) and they in turn could lower the price of their fuel,” he added.

Although diplomatic ties were severed in 2019 and US President Joe Biden continues, like his predecessor Donald Trump, to recognize opposition leader and former lawmaker Juan Guaido as Venezuela’s interim head of state, that mutual necessity was seen in recent talks in Caracas between Maduro’s administration and a high-level delegation sent by the White House.

But Venezuela’s production problems run deeper than the US sanctions.

Production would not rise quickly even if they were lifted due to run-down infrastructure and various other internal factors, recently apparent in the breakdown of refinery units used to process Venezuela’s heavy oil, petroleum specialist Luis Oliveros told Efe.

He said Venezuela lacks the funds to repair its energy infrastructure and requires investment that is hard to come by, noting that the country is not currently “an attractive destination for most of the world’s oil companies.”

Investment also is urgently needed to remedy the Caribbean nation’s crisis-hit electricity sector, whose problems have led to thousands of reported blackouts every month and interruptions to oil activity.

Reaching a production level of 2 million bpd is therefore “impossible,” he added, noting that the situation will not improve at all without “a significant influx of investment.” EFE

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