An empty Petroleos de Venezuela SA gas station in Caracas, Venezuela, on June 1. J Photographer: Carlos Becerra/Bloomberg

Venezuela’s oil production plunges to lowest level since 1945

An empty Petroleos de Venezuela SA gas station in Caracas, Venezuela, on June 1. J Photographer: Carlos Becerra/Bloomberg

Oil production in Venezuela, the country with the world’s largest reserves of crude, has fallen to a 75-year low with US sanctions continuing to cripple the country’s exports.

A member of the Bolivarian National Guard (GNB) holds a gun while standing guard outside a gas station in Caracas, Venezuela, on Monday, April 6, 2020.

Venezuela’s state-run oil company Petroleos de Venezuela SA lowered its production estimates to 374,000 barrels a day as of Wednesday, according to a document seen by Bloomberg, a level not seen since 1945. Its slide is a result of U.S. sanctions that have scared most of the world’s oil buyers away from Venezuelan crude, resulting in a storage glut that forced it to shut fields across the nation.

PDVSA’s production estimate is 57 per cent lower than planned output, according to the document. The projection — which takes into account oil wells performance registries — is also a stark contrast with the 550,000 barrels a day production reported by secondary sources to OPEC in May.

A motorist wearing a protective mask drives past a closed Petroleos de Venezuela SA (PDVSA) gas station in the Santa Fe neighbourhood of Caracas, Venezuela, on Sunday, March 22, 2020.

A PDVSA press official declined to comment.

The drop comes amid increased pressure from the U.S. government, with the Treasury Department threatening to sanction 50 vessels on top of previous banned companies operating ships lifting crude from Venezuela, including those belonging to PDVSA trading with Cuba.

The once-prolific Orinoco Belt has been hit the hardest, with an expected 79 per cent drop in output, according to the document. Production in the light crude fields of the Maracaibo basin has dropped 45 per cent.

(Photo: New York Times)

The impact has affected PDVSA’s joint ventures, such as Petrozamora with GBP Global Resources NV in the Maracaibo basin, according to people familiar with the matter who asked not to be identified because the information isn’t public. PDVSA shut joint venture oil fields in Bachaquero and Lagunillas this week, due to the lack of vessels lifting crude in the area, they said.

Petrozamora, one of Venezuela‘s most productive fields in the country, was down to 28,000 barrels a day on Wednesday, compared to 94,700 barrels a day a year ago, the people said. Boscan, run by PDVSA and Chevron Corp., halted production in early May, one person said.

Output at the Chevron-PDVSA joint venture Petropiar in the Orinoco Belt has fallen 70 per cent since January to 30,000 barrels a day, one person said.

Chevron defers questions on its Venezuela joint ventures to PDVSA, spokesperson Ray Fohr said in an email.

The situation isn’t likely to resolve soon. Two incoming vessels due to lift crude recently cancelled plans, according to one of the people.