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Venezuela oil production hits 13-year low

Saturday, 16 July 2016 12:00 Written by  font size decrease font size decrease font size increase font size increase font size

By Caribbean News Now contributor

CARACAS, Venezuela -- Venezuela’s oil production fell to a 13-year low last month, declining by 170,000 barrels per day (bpd) since the start of 2016 to 2.18 million barrels per day (mb/d) in June, according to the latest oil market report by the International Energy Agency (IEA).

The IEA said that “further losses” are expected in the second half of 2016.

Meanwhile, Barclays estimates that Venezuelan oil production could fall as low as 1.7 mb/d before the end of the year.

Reuters recently reported that, during the first half of this year, Venezuela's state-run oil company, Petróleos de Venezuela SA (PDVSA) slashed its oil exports to Cuba by some 40 percent, citing the company's internal trade data.

On Tuesday, Luis Morillo, PDVSA's general manager in Cuba, denied this, instead blaming a “technical and engineering difficulty at the Cienfuegos refinery”.

"There has not been any issue or reduction with the supply of Venezuelan oil to Cuba,” Morillo said.

Nonetheless, some joint ventures and state-owned firms in Cuba were recently ordered to reduce power usage.

Cuba's minister for the economy, Marino Murillo, was removed from his post on Wednesday and reassigned to focus his efforts on tasks related to "updating the Cuban economic and social model."

Murillo has been replaced with Ricardo Cabrisas Ruiz, a veteran Cuban politician who was previously overseeing the country's recent debt restructuring.

During the past decade, Venezuela has supplied up to 100,000 bpd of crude oil to Cuba but, according to Reuters, that number declined to 53,500 bpd this year, a 40 percent drop from the first half of 2015

Cuba, which has received some four percent of Venezuela's total oil exports, has been the biggest beneficiary of the PetroCaribe oil diplomacy agreement pioneered by Venezuela's late socialist leader Hugo Chavez to win political support by sending oil on advantageous terms to a number of Latin American and Caribbean countries.

However, if exports to Cuba are being maintained as claimed, even as production declines, that figure would rise to almost six percent – something that becomes even more politically and economically unsustainable in the context of Venezuela’s current dire problems.

Venezuela faces a potential socially explosive environment as the social and economic stresses continue to worsen.

Looting incidents are higher each month, with 381 incidents in the first half of the year versus 132 incidents in the same period last year.

Food production shows a 25 percent year over year collapse between January and May.

Monthly food prices have risen 15 percent in the first quarter to now 30 percent currently. The annualized inflation rate is now close to four digits as forecast by the International Monetary Fund.

The majority of the population now buys goods from “bachaqueros,” people who stand in long lines to buy scarce products and then resell them at a markup. Last week, hundreds of desperate women rushed past border guards in order to buy food in Colombia.

The Venezuelan military was recently placed in charge of the nation’s major ports, distributing food and “controlling prices and stimulating production”.
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