OPEC data show Venezuela crude oil out­put in free fall

Business World - - WORLD BUSINESS -

CARA­CAS — Venezue­lan oil pro­duc­tion crashed to a new 30-year low of 1.5 mil­lion bar­rels a day in June, the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC) said on Wednes­day.

The South Amer­i­can na­tion earns 96% of its rev­enue through oil sales but a lack of for­eign ex­change has sparked eco­nomic paral­y­sis that has left the coun­try suf­fer­ing se­ri­ous short­ages of food and medicine.

The govern­ment of so­cial­ist Pres­i­dent Ni­co­las Maduro has told state oil com­pany PDVSA to in­crease pro­duc­tion in the coun­try which sits atop the world’s largest re­serves of crude.

Ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund (IMF), Venezuela’s eco­nomic col­lapse is one of the worst in mod­ern his­tory. The econ­omy has shrunk 45% since 2013 and the IMF ex­pects it to con­tract 15% in 2018 alone, with in­fla­tion reach­ing 13,800%.

Only once dur­ing the last 30 years did crude pro­duc­tion dip lower, but that was dur­ing a brief in­dus­try strike from De­cem­ber 2002 to Fe­bru­ary 2003.

Mr. Maduro’s govern­ment blames the cur­rent crash on PDVSA mis­man­age­ment amidst a spate of re­cent cor­rup­tion cases and a dip in in­vest­ments due to a lack of funds.

It also points the fin­ger at the US, which has im­posed fi­nan­cial sanc­tions on the coun­try and in­di­vid­ual com­pa­nies.

But ex­perts put de­clin­ing pro­duc­tion down to the govern­ment’s us­ing PDVSA rev­enues to plug its fis­cal deficit.

Last Novem­ber, sev­eral rat­ing agen­cies de­clared Venezuela and the PDVSA in par­tial de­fault. —

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