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Rivals Filling In for Venezuela Oil Output Gap

Heavy oil from Iraq, Canada and Brazil are already replacing Venezuelan barrels.Heavy oil from Iraq, Canada and Brazil are already replacing Venezuelan barrels.

As Venezuela’s dilapidated energy sector struggles to pump enough crude oil to meet the country’s OPEC output target, rival producers within the exporters group have started to plug the gap, OPEC and industry sources said.

The South American country’s oil output hit a 28-year low in October as state-owned oil giant PDVSA struggled to find the funds to drill wells, maintain oilfields and keep pipelines and ports working.

Saudi Arabia, OPEC's top producer, will not raise its output to compensate for this decline as OPEC’s de facto leader is focused on reducing global oil stocks, one OPEC source familiar with Saudi oil policy told Reuters this month.

But heavy oil from OPEC member Iraq and non-OPEC producers Canada and Brazil are already replacing Venezuelan barrels to key customers the United States and India, according to the sources and Thomson Reuters data.

Iraq has increased shipments of crude and condensate to India by 80,000 bpd this year, as Venezuelan deliveries fell by 84,000 bpd. The second largest OPEC producer also has exported 201,000 bpd more oil to the United States this year through October as Venezuelan shipments dropped about 90,000 bpd, according to the Reuters data.

Venezuela pumped 1.863 million bpd in October, undershooting its OPEC target by 109,000 bpd, according to an assessment that OPEC uses to monitor members’ output. Venezuela said it had pumped 1.955 million bpd, still below its output target of 1.972 million bpd.

 

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