PortandTerminal.com, March 13, 2019
Caracas, Venezuela – Venezuela suffered a sweeping blackout last week, which threatens to cut off oil exports from the country. Venezuela’s oil revenues account for about 98 per cent of export earnings. The prolonged power blackout though has given Venezuela’s oil export volumes yet another hit.
Venezuela’s exports have been in decline for years due to underinvestment and failing infrastructure, but the loss of power means that state oil company PDVSA cannot operate its main oil loading terminal, the Jose Oil Port, according to Reuters.
Wellheads, upgrading plants and other petroleum infrastructure are also dealing with a loss of power, and Bloomberg reports that production has halted in some areas. The partial shutdown may have brought total output as low as 500,000 barrels per day, down from about 1.5 million bpd last year and 2.5 million bpd in 2014.
Venezuela is already dealing with American sanctions on its oil exports, which prohibit U.S. companies like PDVSA-owned Citgo from paying PDVSA directly for crude.
Put another way, the United States has cut Venezuela off at the knees financially. Venezuela has oil to sell and not much else.
Blackout has made it hard for PDVSA to see the writing on the wall
In a statement, the government-controlled PDVSA denied any difficulties. “We continue to work to ensure the efficient supply to the whole country, our inventories remain stable, we refute any shortage information,” the company said in a social media update. The blackout it seems has made it hard for them to see the writing on the wall.
The government of Venezuelan president Nicolas Maduro blames the United States for the blackouts, alleging that U.S. operatives have sabotaged the Guri hydroelectric plant via cyberattack. However, independent experts suggest that it is a power transmission system failure, and that Venezuela simply lacks the resources to maintain its grid.
The long-term outlook for Venezuelan production is grim. According to consultancy Fitch Solutions, it would take Venezuela’s oil sector at least a decade to recover to previous levels, and only then with assistance from international oil companies, which have the resources and expertise to bring its fields back to life.
Meanwhile, Venezuelans are now beyond desperate
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