Venezuela has begun to proactively shut-in oil production to cope with nearly replete terminal storage. This will further accelerate an output decline and bring them closer to 1 million barrels per day or even less.
According to energy ministry official data communicated to Opec, Venezuela produced 1.533mn b/d of crude in May, up by 28,000 b/d from 1.505mn b/d in April. However, this May statistic was a lie. Average production cited by secondary sources published by Opec report Venezuela’s May output at 1.392mn b/d, down by 42,500 b/d from 1.434mn b/d in April. Argus estimates May production at around 1.45mn b/d.
Output in early June has dropped to 1.1 to 1.2 million barrels per day, according to three PdV officials.
PDVSA is contractually obligated to supply 1.495 million b/d to those customers in June, but only has 694,000 b/d available for export.
The New York Times reports that oil workers are fleeing their jobs in Venezuela but are taking vital equipment with them. Desperate oil workers and thieves are stripping the oil company of vital equipment, vehicles, pumps and copper wiring, carrying off whatever they can to make money.
The Venezuelan government and its oil company are in default on more than $50 billion in bonds after failing to make interest payments since late last year. China has refused to continue lending Venezuela money in return for future payments in oil.
World courts have ruled that ConocoPhillips could seize Venezuelan shipments at refineries and export terminals in several Dutch Caribbean islands.
Previously analysts had talked about Venezuela falling to 1 million barrels per day by the end of 2018. This now appears optimistic for Venezuela. Venezuela could fall to zero oil production before the end of 2018. Dropping below 1 million barrels per day seems certain in July.
The implosion and collapse of Venezuela oil production could be nearly complete by August or September. If stolen parts and equipment cannot be repaired fast enough, then there will be even less money to keep workers or to fix things.
In March, 2018, Nextbigfuture predicted that the Venezuelan Maduro government would be overthrown in a military coup by the end of 2018. North Korea has terrible but stable conditions. Venezuela conditions continue to worsen at an unsustainable level.
The rapid collapse of the Venezuelan oil industry is in line with that prediction. The military needs to be paid off and if there is no money they cannot be paid off.
There is scientific analysis for the risk of a military coup.
Economic growth is a key factor. A Venezuela without oil in 2018 would have nearly -50% GDP growth in 2018. Some GDP at the beginning of the year and then heading to zero without oil.
Without money the food and the medical crisis both become worse.
So if there is a successful military coup, then the new leaders would need to cut some deal with foreign powers to the oil industry fixed and to get basic food and medicine worked out.
SOURCES- New York Times, Argus Media, Penn State, Oilprice.com