Oil production in Venezuela tumbled by nearly a half last year to its lowest level since the 1940s, as the South American nation felt the effects of years of political uncertainties and chronic mismanagement of its giant reserves.
According to the latest Opec monthly bulletin published on Thursday, Venezuela produced 557,000 barrels per day of oil on average last year, down 45% from 1.013 million bpd in 2019.
Golden days gone
One of Opec’s founding members and home of the world’s largest proven oil reserves of about 300 billion barrels, Venezuela started production in 1914 when the first commercial well, Zumaque-1, was drilled in the Mene Grande field on the eastern shores of Lake Maracaibo.
Since then, Venezuela had been slowly developing its reserves and the country’s reached peak production in 1998 at 3.167 million bpd.
However, a lack of investments and long-running political turmoil that has led to heavy economic sanctions from the US have hammered production.
Back in 2017, Venezuela was still producing over 2 million bpd, but its demise as an oil producer began a couple of years ago when the US imposed sanctions on the country’s state-owned company PDVSA.
The move, which made it difficult for PDVSA to export heavy crude, happened after the 2018 presidential elections when Venezuelan President Nicolas Maduro was re-elected for a second six-year term despite numerous indications of fraud and irregularities.
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The country’s national assembly refused to validate Maduro’s victory, and its leader, Juan Guaido, in January 2019 proclaimed himself acting president with the backing of dozens of countries worldwide, including the US.
The political crisis helped drive down Venezuela’s oil production.
Many tanker owners were deterred from transporting either Venezuelan crude for exports or importing petroleum products into the country, forcing Maduro to rely on ties with Iran for transport logistics.
Exports of crude and refined products in Venezuela fell 37.5% in 2020 to an average of 626,000 bpd.
Consultancy IHS Markit wrote in August thatit would not be inconceivable that Venezuela production could soon be close to zero. The country produced only 441,000 bpd in December, said Opec.
Dispute with Guyana
In a fresh populist move, Maduro recently rejected a jurisdictional ruling by the International Court of Justice (ICJ) concerning the country’s territorial claims over oil-rich neighbour Guyana.
Maduro issued a decree claiming sovereignty over part of Guyana’s land and maritime areas, the latter harbouring the prolific Stabroek block, where US supermajor ExxonMobil has made a string of discoveries so far amounting to 9 billion barrels of resources.
The ICJ has ruled that it has jurisdiction to decide the case, rejecting Venezuela’s objections, allowing the case to proceed to the merits, with a final ruling expected within the next two to four years.