Venezuela oil flows tumbling, tensions spiral
Venezuela's oil production is tumbling and tensions are spiraling as the double blow of collapsed oil prices and coronavirus descends across the Opec country.
Crude output has now fallen to around 500,000 b/d, as some fields are shut in, others are curtailed and more workers abandon operations to shelter from contagion.
National oil company PdV and its minority partners had been sustaining production of around 700,000-800,000 b/d for months despite escalating US sanctions and related export and storage bottlenecks.
According to oil industry participants, at least 150,000 b/d of medium and heavy crude is at risk of closure around Lake Maracaibo, the heart of PdV's western division, because it is no longer economic to produce, oil industry participants tell Argus.
The western division has struggled to stay afloat for years because of a lack of stable power supply and a host of other operational problems such as labor flight and equipment theft.
The main surviving projects, PetroBoscan with minority partner Chevron and PetroZamora with Russian partners, are now winding down or closed altogether.
In PdV's eastern division headquartered in Monagas state, an explosion and fire at around 2:30am ET at a gas separation unit in the El Carito flow station at the Punta de Mata district has knocked out at least another 35,000 b/d, plus 150mn cf/d of gas.
The eastern division had already been subject to curtailments of around 150,000 b/d because of logistical constraints.
PdV's Orinoco division, which had been producing roughly 500,000 b/d of extra-heavy crude, is now down to as low as 200,000 b/d, Argus is told.
The Orinoco oil belt supplies upgrading and blending plants at the Jose complex. The only two of these plants that are still partially operating are PdV's PetroPiar upgrader with Chevron and PdV's PetroSinovensa blending plant with Chinese state-owned CNPC.
PdV's three other upgraders — PetroCedeno with Total and Equinor, PetroMonagas with Russia's state-controlled Rosneft and wholly owned Petro San Felix — have long been shut down.
Following years of mismanagement, corruption and sanctions, Venezuela is considered the least equipped of any Latin American country to control the spread of the coronavirus. The official caseload is still only in the double digits, while all large neighboring countries now have hundreds.
Looting has broken out in several Venezuelan cities, and fuel is running out, impeding limited food and aid delivery.
Talking to the enemy
Faced with potential catastrophe, quiet talks are underway between Venezuela's US-sanctioned government and neighboring Colombia to coordinate health assistance through international organizations, Argus has confirmed with two sources. The contacts are an extraordinary departure from years of hostility. Colombia is among the more than 50 nations that recognize Venezuelan opposition leader Juan Guaido as interim president, in place of Nicolas Maduro who maintains control on the ground.
The talks reflect growing dread in Bogota that a meltdown in Venezuela would reverberate in Colombia. The two countries share a porous border of more than 2,000km. An estimated 2mn Venezuelan migrants are already in Colombia, which closed its official border crossings with Venezuela earlier this month.
Despite overwhelming need, Venezuelan opposition efforts to bring in aid independently of the Maduro government are hamstrung by limited international recognition, political infighting and logistical hurdles.
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