22 C
Georgetown
Monday, January 25, 2021

Venezuela’s oil and gas sector sees worst crisis

Must Read

Liza Destiny FPSO among top 5 highest scoring vessels for safety in SBM Offshore’s global fleet

The Liza Destiny Floating Production Storage and Offloading (FPSO) vessel which is producing oil offshore the South American country...

Guyana accounts for US$15 billion in deepwater sanctioning since 2019

Global consultancy group Wood Mackenzie says it expects another year of around US$300 billion in upstream development spend, down...

BP delivers first gas cargo to customers in China

British multinational oil and gas company bp said on Monday that it has begun to directly supply gas customers...
OilNOW
OilNow is an online-based Information and Resource Centre which serves to complement the work of all stakeholders in the oil and gas sector in Guyana.

Venezuela’s oil and gas sector was already caught in a vicious cycle well before the Covid-19 outbreak created a world economic crisis.

Even though there are several international companies still remaining in the country, they are not investing in any relevant manner and have minimum personnel.

GlobalData Oil & Gas Analyst Adrian Lara notes that it is fair to assume that, for most of these operators, the best scenario would be to wait for a change in government that could kick-start the sector under renewed rules or laws and improve their partnership terms with PDVSA.

However, the political situation in the country seems to be going nowhere in the near future, and even with a change of regime, the oil and gas sector will require many years to recover.

Lara explains: “The country’s hydrocarbon sector has suffered from chronic underinvestment for years, with noteworthy kicks including 2019, when the US Government imposed sanctions on the country’s oil trade – its main source of revenue. This has effectively restricted the exporting capabilities of the country, created operational bottlenecks and left the Venezuelan Government, and its NOC PDVSA, with fewer and fewer means to invest in the sector. The outcome of all these events has been a continuous oil production decline since 2015, with a historic low output in May, reported at 570 thousand barrels per day (mbd), and with only one oil rig operating in the country.

“After the 2019 sanctions, exports to China and India somehow compensated the loss of US buyers. However, during 2020, both lower demand for crude worldwide and a tightening of sanctions have reduced export capability to its worse level to date. Lower exports have led to an increase in the storage capacity utilization of the country, which has a peak operating capacity estimated at less than 40 million barrels. In consequence, the Orinoco Belt has experienced additional production cuts. Production in this area is currently estimated at 161mbd, already three times lower than in 2019.

“As for natural gas, there were some promising projects announced to develop Venezuela’s vast offshore reserves. In fact, during the last five years. negotiations between the Venezuelan government with Russia’s and Trinidad and Tobago’s counterparts had put these projects back on track. However, after a worsening of the political and economic climate of the country these projects are currently on hold.” — Tradearabia News Service

Latest News

Liza Destiny FPSO among top 5 highest scoring vessels for safety in SBM Offshore’s global fleet

The Liza Destiny Floating Production Storage and Offloading (FPSO) vessel which is producing oil offshore the South American country...

Guyana accounts for US$15 billion in deepwater sanctioning since 2019

Global consultancy group Wood Mackenzie says it expects another year of around US$300 billion in upstream development spend, down 30% on pre-crisis levels and...

BP delivers first gas cargo to customers in China

British multinational oil and gas company bp said on Monday that it has begun to directly supply gas customers in China with gas from...

Oil and gas supply chain contract awards drop to 16-year low

Oil and gas supply chain companies have seen their profits squeezed since the E&P cost cuts of the previous downturn – and just as...

Twelve oil companies among those submitting information for Guyana’s 2nd EITI report

Twelve oil companies operating in Guyana are among those submitting information to the Guyana Extractive industries Transparency Initiative (GYEITI) National Secretariat for compilation of...

More Articles Like This