Friday , August 19 2022

Venezuelan oil production will collapse after six days of power failure


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The main shortage of power in Venezuela will lead to a collapse of oil production, which has already been undermined by the crisis and US sanctions, which will soon lead to a loss of the main market.

After six days without stopping electricity and fuel, the horizon became even more difficult for this vital resource for the country's economy and the state-owned oil company PDSA.

As of April 28, North American citizens and companies will be banned from selling or buying Venezuelan raw material, which makes up 96% of the country's income.

Venezuelan reserves are among the largest in the world.

Although exports have already fallen, this decision is a blow to the government of President Nicolas Maduro because the United States accounts for 75 percent of the Venezuelan General Oil Corporation's revenue.

Maduro said that US sanctions, which ended diplomatic relations, cost the country 30 billion dollars.

The recent paralysis in Venezuela affects this fragile sector.

"There was not a single bore produced during power failure," said expert Luis Oliveros to AFP, predicting "much worse" than the current one.

The situation has prompted the International Energy Agency (IEA) to express concern Friday over the decline in oil production in Venezuela.

"Last week oil operations in the Venezuelan sector were seriously damaged and the current big losses could be difficult for the markets," she said in her monthly report.

"Although there are indications that the situation is improving, the deterioration of the situation in the electricity sector does not allow us to be sure that the repairs will be permanent," the agency added, advising consumers on their energy policy.

– Closed wells –

Crude oil production began to fall in February last year, retaining just over 1 million barrels a day, down 142,000 bpd less than the previous month's average, according to sources close to OPEC.

Ten years ago, exports amounted to 3.2 million barrels per day.

Economist Asdrubal Olivros, director of the Econometec Institute, warns that damage to buildings could reduce production by 500,000 bpd this year.

The national oil company has not yet reported power cuts. During the break, the company announced that it would deliver fuel to the interior of the country when long lines in front of the gas stations began to form.

"We have not stopped operations and they will not stop," the company said.

On Wednesday night, three warehouse stores of the company were set on fire in the state of Anzoatviga (northeast). As with power cuts, the government has accused the United States and the opposition of committing a "terrorist act".

Restarting the plant will not be easy as they are damaged.

"In some cases, damage to wells can be irreversible, and in other cases it will require huge restructuring investments, but the consequences will be very serious," said Luis Oliveros. The number of wells in the plant dropped significantly due to lack of maintenance, investment and corruption.

According to Baker Hughes, the 26 platforms still operated at the end of February compared to the 47 platforms a year ago and 74 in February 2014 in Venezuela.

– choking –

Maduro has accused the "electronic attack" of the main power plant that caused the disappearance of the current on March 7th. However, experts, which Agence France-Presse said, repeatedly recalled the failure. "The country's infrastructure is still getting worse," says Luis Oliveros.

The US administration froze the assets and assets of the Venezuelan state oil company and its subsidiary Sitgo and entrusted its leadership to opposition leader Huang Guidu, who has been recognized as the transitional president of some 50 countries.

Since the end of 2017, Washington has prevented its citizens and companies from negotiating a new debt from Venezuela and the National Oil Company, and its size is about $ 150 million.

Trump decided to extend these measures to the partners of the National Oil Company.

The US consulting firm Eurovision Group said Washington wants to extend sanctions to third parties to "undermine the largest funding" of Maduro's government.

This week, the Ministry of Finance imposed sanctions on Russian Evrovenas Mochnarbank for "providing assistance, care or financial, material or technological support" to the Venezuelan National Oil Company.

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