What and who is threatened by the decline of oil production in Venezuela

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Чем и кому грозит снижение нефтедобычи в Венесуэле

Given the political situation in Venezuela and the country’s financial problems, the volume of oil in this Latin American country can drop drastically — even faster than the situation somehow will become better, according to Dow Jones, citing the Wall Street Journal.

For this reason the oil markets a little nervous, turning his gaze to the Venezuelan problems that also related to the fact that local authorities may be unable to ensure the smooth operation of all oil fields.

Currently, Venezuela daily produces about 1.9-2.2 million barrels per day., whereas two years earlier this figure was 2.5 million barrels per day. More country produced only until the coming to power of the late Hugo Chavez in 1999, daily oil production in Venezuela was 3.4 million barrels.

The situation in Venezuela, which is the largest country in the world in oil reserves, is that it has to import lighter grades of oil, then mix them with their own heavy varieties.

Problems in Venezuela are a great many: it and Finance, and public debt approaching $ 120 billion, and production. The list goes on. Earlier Venezuela had pledged to export “black gold” in Russia and China in payment of debt, but the problem is that after the supply of oil to the local market and pay for imports of oil from the authorities is only 600-800 thousand barrels of oil per day, with which it tries to generate net cash flow. This, in particular, reported the Center on global energy policy at Columbia University. The Venezuelan economy today is held solely by oil exports from its sale formed about 90% of all foreign exchange earnings.

It is therefore possible that in the near future Venezuela waiting for the next powerful wave of protests, and the country – or default, or rebellion, or the tightening of U.S. sanctions that are already almost “pulled the plug” to the Venezuelan authorities. As the American President Donald trump has almost openly threatens Venezuela direct military action. All this certainly will not contribute to increased production of oil in Venezuela in the foreseeable future.

And even if Venezuela will still be able to cope with internal problems, oil production may, at least, never fall again, but its significant growth can be expected. Investment in deposits has not been done for many years. And even if they come in the near future hardly will happen! – restoring production to previous levels seems unlikely even in the medium term. According to experts at Columbia University, this will not happen without a change of the current regime. But in any case, the losers will be themselves as Venezuelans and foreign consumers of Venezuelan oil.

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