President of Venezuela Nicolas Maduro has declared an oil emergency, announcing a commission to revamp state oil company Petroleos de Venezuela SA (PDVSA) in a bid to rescue the country’s collapsing oil industry.
According to a report in Bloomberg, the country’s Economy Vice President Tareck El Aissami will lead the commission, “which will focus on boosting crude production.”
“The sanctions, the blockade – I will not accept any more excuses,” Reuters quotes Maduro as saying. “I am signing a decree to declare an energy emergency in the hydrocarbons industry in order to adopt necessary and urgent measures to guarantee national energy security and protect the industry from imperialist aggression.”
This intervention comes a day after the U.S. imposed sanctions on a unit of Rosneft PJSC; the biggest exporter of Venezuelan crude, in a move that threatens Venezuela’s ability to export oil.
Boosting crude sales is essential to maintaining Maduro’s grip on power in the economically ravaged country. His regime has previously proposed giving majority shares and control of its oil industry to big international corporations, which would forsake more than a decade of state monopoly. Maduro said he had “investment offers” for more than $25 billion in oil production projects and refinery rehabilitations. He did not provide details, Bloomberg stated in its report.
According to the article, Maduro said the commission will issue measures to “guarantee national energy security and protect the industry from imperialist aggression.”
Venezuela has entered its seventh year of economic decline two years after Maduro vowed to increase oil production to 2 million barrels per day. Production fell to 733,000 barrels a day in January, a 36% drop from a year earlier, according to OPEC secondary sources.
January output from PDVSA’s joint ventures with international oil firms accounted for 56% of total oil and gas production, while the company alone produced 44%, according to PDVSA data seen by Bloomberg.
Rosneft Trading, Bloomberg said, accounted for “about half of Venezuela’s 874,649 barrels a day of exports in January.” It’s unlikely that other trading companies will step in and take charge of the volumes Rosneft traded following Wednesday’s imposition of sanctions, analysts reportedly said.
Bloomberg reported also that global benchmark Brent extended its longest rally in a year in the midst of tightening U.S. restrictions on Venezuelan crude.