<article><p class="lead">Venezuela's crude production dropped below 1.3mn b/d in June, its lowest monthly production level in 69 years except for a two-month oil strike in December 2002-January 2003 when output briefly dipped below 1mn b/d, according to two upstream executives assigned to state-owned PdV's western and eastern divisions.</p><p>The two PdV officials told <i>Argus</i> separately that output in their respective divisions declined again in June as more skilled workers quit and essential oil field maintenance was curtailed because the company cannot pay for it.</p><p>"More production wells are being shut down, the skilled oilfield labor force declined in all upstream divisions by at least a combined 1,000 workers in June, and scheduled maintenance continues to be postponed," the western division official said. Earlier discussions with PdV officials suggest that the same trends are eroding production in the Orinoco heavy oil belt.</p><p>Venezuela's crude output continued falling in the first 11 days of July as more drilling rigs and production wells are shut down, the eastern division executive said. </p><p>If the downward trend is sustained, Venezuela's crude output could reach 1mn b/d before the end of 2018, the western and eastern division executives added. </p><p>PdV "is dying operationally," the eastern division executive said. But Venezuela's government is deliberately conflating upstream output numbers to "disguise the company's true situation," he added.</p><p>Venezuela's energy ministry officially reported average production of 1.531mn b/d in June, down only 2,000 b/d from May's output of 1.533mn b/d, according to numbers provided to Opec directly by the energy ministry in Caracas.</p><p>Secondary sources cited in the June issue of Opec's monthly market report published today pegged Venezuela's June output at 1.34mn b/d, a decline of 48,000 b/d from 1.388mn b/d in May.</p><p>A senior energy ministry official and the two PdV upstream executives maintain that the official monthly crude output numbers have been inflated since last April.</p><p>Energy minister and PdV chief executive Manuel Quevedo is "cooking the official data sent to Opec to hide the truth about PdV from president (Nicolas) Maduro and from the public," the energy ministry official said.</p><p>Opec's secondary output data is "more truthful than the ministry's numbers," the official added.</p><p>Quevedo, a national guard general named energy minister and PdV chief executive in November 2018, pledged on the sidelines of Opec's meeting in Vienna last month that PdV would raise Venezuela's crude output by up to 1mn b/d during second-half 2018.</p><p>But Venezuela's crude output since Quevedo's appointment to his twin posts in November 2017 has declined by 424,000 b/d from 1.955mn b/d in October 2017 to 1.531mn b/d in June 2018, according to official data.</p><p>Production data from secondary sources cited by Opec shows that Venezuela's upstream crude output has declined by 533,000 b/d on Quevedo's watch, from 1.873mn b/d in October 2017 to 1.340mn b/d in June 2018.</p><p>The energy ministry's official numbers are not supported by independent monthly rig count data.</p><p>The number of active drilling rigs in Venezuela fell again in June to 26 rigs from 28 active rigs in May, the lowest monthly total since March 2003, according to US drilling services firm Baker Hughes.</p></article>
