LONDON, (Reuters) – Venezuelan oil output is set to fall by around a tenth this year due to power shortages, a cash crunch and a drop in activity at foreign oil service companies, the International Energy Agency said yesterday.
“Lower oil prices and sliding production are a double whammy for Venezuela, which is caught in the grip of an economic and political crisis,” the IEA, which advises industrialised nations on energy policies, said in a monthly report.
“As the cash crunch deepens, there is growing concern that acute shortages of food and medicine could trigger nationwide rioting,” it added.
Venezuela has said it hopes to keep output steady this year but the IEA said a drop of around 200,000 barrels per day looked “unavoidable” as international oil companies face repayment issues and daily operational challenges.
Since the start of the year, supply has fallen by 170,000 bpd to 2.18 million bpd in June, according to the Paris-based IEA.
“Although the worst may be over – electricity shortages that sparked a 120,000 bpd decline in the April-June period have eased – further losses are expected in the second half of 2016.”
It said it saw the biggest production losses in the mature fields in the east, while fields in the west around Lake Maracaibo were also suffering.
“Even when oil was above $100 per barrel, these ageing oilfields were already struggling due to years of under-investment and poor reservoir management. Natural declines have accelerated due to the power crisis and cash crunch”.
Even production in the southeastern Orinoco Belt is starting to dip due to a lack of light crude for blending and reduced investment from foreign partners, the agency said.
The decline in oil prices cut 2015 revenues at national company PDVSA by 41 percent to $72.2 billion, the IEA said.
