The Strategist

Oil production in Venezuela plummets due to power outages

03/12/2019 - 11:31

Problems with energy supply in Venezuela resulted in a sharp drop in oil production, reports Bloomberg, citing a high-ranking source in the country's oil ministry.

Paul Lowry
Paul Lowry
According to the source, production has been completely suspended in some parts of the country, and oil wells are closed because the industry is directly dependent on energy supply. He did not go into details regarding level of production cuts, saying only that it is "significant."

Power outages in Venezuela have been going on for the fifth day in a row, which is why many enterprises are not working. According to the source, the consequences of blackout for oil production will be reflected in the reporting of the Ministry of Oil for March.

Venezuelan oil minister Manuel Quevedo will present an assessment of the situation in the sector this week, a source said.

In recent years, the oil industry in Venezuela has been experiencing enormous problems in the face of declining production, a lack of investment and an outflow of competent employees. Until recently, oil production in Venezuela was about 1.1 million barrels per day (bpd) compared to 2.4 million bpd five years earlier.

The recent imposition of US sanctions has become another blow to the Venezuelan oil industry. “The deterioration of the situation in the sector has accelerated,” Fatih Birol, executive director of the International Energy Agency (IEA), said in an interview with Bloomberg on Monday. “We expected a decrease in oil production in Venezuela by another 500,000 bpd even before this power supply problem occurred. I see no opportunity for this trend to change in the current context."

Oil production in the west of Venezuela has suffered the most, while production in some parts of the Orinoco river basin continues, agency sources say. The Orinoco River Basin accounts for about 50% of all oil production in Venezuela.