Venezuela Won't Have Enough Oil To Export By 2019

Authored by Robert Rapier via OilPrice.com,

On May 21st President Donald Trump signed a new executive order prohibiting certain oil-related transactions with Venezuela. GlobalData, a leading data and analytics company, argues that the new sanctions are symbolic in comparison to the more targeted sanctions previously considered that would limit exports of Venezuelan crude oil to the U.S.

Adrian Lara, Oil & Gas Analyst at GlobalData stated:

“Crude oil production in Venezuela is practically falling at an average of 10% every quarter and has been since mid-2017. A scenario with oil production in the country losing at least another 500,000 barrels per day by the end of the year is not unrealistic. Having full additional sanctions imposed would certainly send a strong geopolitical message from the U.S. at the risk of generating more instability in the world supply markets.

GlobalData also forecast that Venezuelan crude oil production would fall to around one million barrels per day by the end of 2018. This is a steep decline from the three million barrels per day that Venezuela produced in 2011.

(Click to enlarge)

Venezuelan Crude Oil Production

Platts reported this week that Venezuela has already warned eight international customers that it wouldn’t be able to meet its crude oil commitments to them in June. Venezuela’s state oil company PDVSA is contractually obligated to supply 1.495 million barrels per day to those customers in June, but only has 694,000 barrels per day available for export.

Impacted U.S. oil companies reportedly include Chevron, “Conoco” and Valero. I suspect “Conoco” is really Phillips 66, the refining arm spun out of ConocoPhillips in 2012.

Venezuela also reportedly has a severe backlog of crude deliveries at its main terminals, and this could temporarily halt PDVSA’s supply contracts if they are not cleared soon. The company has told some customers it may declare force majeure if they do not accept new delivery terms, including higher-cost and riskier seaborne transfers. Brent crude prices moved higher on the news.

But if the GlobalData forecast is correct, then the temporary interruption of Venezuela’s exports may be permanent, as they will be plunging toward zero by the end of the year.

Comments

are we there yet cheka Wed, 06/13/2018 - 18:50 Permalink

From my companies customers that used to live in Venezuela I hear that the Maduro government is much closer to a Mafia criminal family structure than what we think of as government. The only real flow of money in Venezuela is criminal. Including Kidnaping, ransom, torture, extortion, expropriation. They tell me stories of people they know first or second hand.

In reply to by cheka

techpriest wadalt Wed, 06/13/2018 - 19:02 Permalink

I don't usually respond direct to the local spammer, but in this case...

The "abiotic" people are completely missing the point of the article. Even if the theory is correct, the issue has nothing to do with the available oil. Even if a large amount of oil is available just under the ground, if you do not have the capital to pull it out of the ground, then it is going to sit there.

Yes, capital, the nasty thing that forms the root of the word capitalism. Without saving and diverting resources to capital goods, which have no value other than to produce/extract things that do have value, then productivity drops to what you can directly make with your hands, and humanity quickly reverts to Malthusian conditions. That is the point of the article - PDVSA is so badly under capitalized that they are becoming unable to extract oil.

In reply to by wadalt

ravolla directaction Wed, 06/13/2018 - 20:47 Permalink

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In reply to by directaction

Kokito directaction Thu, 06/14/2018 - 04:18 Permalink

Rapier is either a Neconon stooge or simply has made a failed analysis (I suspect the former). Actually the oil production has increased since Jan 2018 within OPEC limits. Check “Venezuela oil production recovering, 1.9 mln bpd....” by REUTERS

The US "Deep State" with its access to an unlimited supply of FED Dollars created out of thin air by keystroke, simply paid ex-executives of PDVESA for many years to either halt production or manipulate the production data. These PDVESA ex-executives have been arrested & are under judicial investigation at the moment.

At the same time, the US blocked outgoing money transfers denominated in US Dollars, thus making it very difficult for the Venezuelans to import oil refinery replacement parts.

Rapier is another degenerate MSM prestitute & total delusional. Someone needs to stop spiking his coffee with hallucinogens and intern him along with Tyler Durden (whoever you are) in a "funny farm"

In reply to by directaction

Toxicosis techpriest Wed, 06/13/2018 - 19:19 Permalink

You're talking far too much sense here for most on this forum.  Physics and physical constraints mixed with economic constraints and misuse/misallocation of capital will cause the demise of our civilizations in more ways than one.  I'm with you here, but too many have difficulty in assessing reality via mathematical or other evidence based means.

In reply to by techpriest

serotonindumptruck techpriest Wed, 06/13/2018 - 19:27 Permalink

Nobody wants the high-sulpur low grade sour crude that Venezuela has to offer, which isn't much better in quality than the tar sands sludge of Alberta.

The EROEI on Venezuelan crude is three times the amount to crack than the sweet crude from the North Sea.

It's much better to allow the country to self-destruct, and pick up the pieces after cannibalism has run its course.

In reply to by techpriest

TGF Texas serotonindumptruck Wed, 06/13/2018 - 22:41 Permalink

US refiners are set up to refine the heavy sludge from Cansands and Venny. That's why most of the WTI from Texas is exported to Asia. Obama figured out pretty quickly that if he didn't lift the oil export ban, then the refiners would reconfigure the refineries to process the local supply, and that would make the US energy independent. 

If you think Obama lifted the oil export ban, to help big oil and fracking....

In reply to by serotonindumptruck

cheka TGF Texas Thu, 06/14/2018 - 00:57 Permalink

they can run sweeter crude.  just bypass or s/d the sulfur unit.  it converts the nasty stuff to sweet crude - which then feeds the whole plant.  they run the high sulfur because it's cheap.  and not all US refineries have sulfur units

the sulfur is hauled out in 18 wheelers, not used in any way

In reply to by TGF Texas

Petey4Prez techpriest Thu, 06/14/2018 - 03:03 Permalink

I would tend to disagree. Capital is a byproduct of labor. Because the State owns the productive energy of the resources, it is often wasted as governments are apt to do. Thus in order to pay for the excessive burdens debt occurs and taxes raised thereby ruining peoples purchases power and livelihood. As we both agree Venezuela is extremely resource rich and there are plenty of willing able bodied workers. The problem is with an over reaching government that enacts legal codes parceling off the land to those who would speculate or monopolize and eventually stealing land back in the false name of communism when dictatorships occur. This is no way to conduct business or to run a country! I say we need a separation of politics and economics!

In reply to by techpriest

ShrNfr are we there yet Wed, 06/13/2018 - 20:30 Permalink

As somebody who is currently interacting with a doctor in Venezuela, I have to agree with you. You either play with Maduro the way he wants you to play with him or you are going to get No medicine, no food, your possessions taken, and all the rest all the way to having your life taken. It is no longer a socialist state. It is very simply a thugocracy. That is the final stage of all governments, socialist, communist and even capitalist unless the folks who run the government are not purged to the last asshole from time to time. 

In reply to by are we there yet

Toxicosis cheka Wed, 06/13/2018 - 18:58 Permalink

That's right because just like the 'Caramilk' bar via abiogenesis, oil just magically replenishes itself.  Isn't make-believe fun.  Unfortunately for you, fossilized plant and animal matter that we have used up substantially to run our cars and industry is about to run lower.  But of course if we wish upon a star, hard enough, special things can happen. 

In reply to by cheka

pashley1411 Wed, 06/13/2018 - 18:53 Permalink

After oil, Venezuela's exports are gold and iron ore.   Imagine turning a tropical country with a large coastline into the economic equivalent of Siberia with palm trees.   

I imagine the Maduro gang has long since transitioned Venezuela's cash flow from investing in oil production, to investing in Miami condos.

MK ULTRA Alpha hxc Wed, 06/13/2018 - 21:41 Permalink

Why isn't the communist Pope working to relieve the hunger and suffering?

Or how about the Organization of American States, it was used to bad mouth the Americans who tried to get a discussion going of what to do. That was used as evidence the US caused the economic crash, refugee exodus and was planning to over throw the Cuban backed communist government.

The OAS won't lift a finger to help and the Pope has higher aspirations permitting homosexuality as the main church value and promoting a one world government socialist paradise.

The reason for the Argentinian Pope is because the main money comes from South America. Europe and the US are no longer the money cash cow, so it's business for the church.

In reply to by hxc

Last of the Mi… Wed, 06/13/2018 - 18:57 Permalink

Article states Venezuela won't have enough oil to export yada yada yada then goes directly to Trump prohibiting oil transactions. Although it does touch on it later in the article nothing is said about infrastructure problems having nothing to do with the US. 

Bait and switch article from hell. 

Herdee Wed, 06/13/2018 - 20:19 Permalink

Good example of what happens when any government tries to run anything. Now you know what's wrong with the United States. Ya, it's big government.