Caracas braces for steeper oil output drop in Aug

Venezuela is bracing for a steeper decline in oil production in August amid an extensive blackout around Lake Maracaibo, following another downturn in July.

Venezuela's official July output averaged 1.469mn b/d, a loss of 62,000 b/d from the previous month's production of 1.531mn b/d, according to official numbers reported directly to Opec by the energy ministry.

The official figure is 57,000 b/d lower than the 1.526mn b/d that PdV reported for last month, according to an internal PdV upstream report obtained by Argus.

Official Venezuelan monthly output numbers communicated to Opec by the energy ministry frequently differ from the numbers reported internally by PdV.

Venezuela's production has been declining steadily for years, but the trend has accelerated over the past year because of falling oil revenues, steep cuts in maintenance and investment, frequent power outages and labor flight.

The average of secondary sources, including Argus, cited in the August issue of Opec's monthly oil market report (MOMR) peg July output at 1.278mn b/d, down 47,000 b/d from a 1.325mn b/d average in June.

"There are many reasons to believe that production is a lot lower than they are saying," a PdV official said privately, referring the gap between the official and unofficial data.

With the exception of an extraordinary strike-related downturn in 2002-03, Venezuela's July crude production reported to Opec is the lowest monthly level recorded since April 1950 when the country's then-foreign owned oil industry booked average output of 1.441mn b/d, according to the energy ministry's monthly production reports dating back to 1938.

The secondary output estimate for July is the lowest since May 1949.

The blackout is impacting PdV's western division that currently produces about 300,000 b/d, or roughly a quarter of unofficial production. The outage was triggered by a 10 August fire on transmission lines tethered to a key bridge that runs across the lake.

Electricity minister Luis Motta said yesterday that the blackout could last through the end of August or longer, depending on the pace of repairs.

Severe flooding around the Orinoco river is so far not directly affecting PdV's Orinoco heavy oil division, industry officials say.