Sanctions to squeeze Venezuela’s output
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The sanctions the US government has imposed against Venezuela aim to curb the Maduro government’s access to revenue from crude export. But impact could they have on state-run oil producer PDVSA and the country’s energy sector?
Ann-Louise Hittle, vice president Macro Oils, at global natural resources consultancy Wood Mackenzie said: “We estimate Venezuela’s production currently stands at 1.1 million barrels of oil per day (b/d).
“We believe production will likely fall to around 900,000 b/d under pressure from sanctions and a lack of materials for workovers, but we expect waivers will ease the full impact of the sanctions until they expire.”
Diluent restrictions from the sanctions will make developing the country’s largest resources challenging, Elena Nikolova, an analyst on Wood Mackenzie’s Latin America upstream team, said.
She added: “Compliance with sanctions will leave a void as international companies exit the country. Local service companies, which are small and nimble, will have to maintain production. A recovery [in production] will depend on how quickly the local service industry can respond.”
Ixchel Castro, principal analyst Latin American refining and oil products, added: “Gasoline shortages [within Venezuela] are likely to accelerate as limited storage, low utilisation of FCCs and a lack of blending components reduce the gasoline pool.”