Venezuela Oil Production May Soon Sink to 1m bpd

Venezuela’s plummeting oil production is nearing the psychological threshold of just 1 million barrels per day as early as this year, analysts and industry experts tell Platts.

Venezuela’s production plummeted again in May by 42,500 bpd from April to below 1.4 million bpd—1.39 million bpd, according to OPEC’s secondary sources in its latest Monthly Oil Market Report published earlier this week, Oil Price reported.

According to the United States EIA, Venezuelan production was 1.43 million bpd last month, down from 1.46 million bpd in April and from 1.98 million bpd in May of last year.

Lejla Villar, who works on projections for EIA’s monthly Short-Term Energy Outlook, currently expects Venezuela’s production to fall to 1 million bpd in the second quarter of 2019, but she is waiting to see June export numbers from Venezuela—if they are low, Venezuelan production could sink to 1 million bpd sooner than that.

“If the worst-case scenario for June production comes true, then we could see Venezuela’s production fall to 1 million b/d sooner,” Villar told Platts.

“Depending on what June does, this may or may not lead me to a more pessimistic view on Venezuela’s production outlook through the end of 2019.”

The International Energy Agency forecasts that Venezuela’s oil production could drop to just 800,000 bpd or even lower next year.

“For Venezuela, we assume no respite in the production collapse that has taken 1 mbpd off the market in the past two years,” the IEA said in its Oil Market Report this week.

According to Francisco Monaldi, a Latin American energy policy expert at Rice University, Venezuela’s production will see a “major drop” this month and next, as production plunges to the 1-million-bpd threshold by November or December this year.

Ed Morse, Global Head of Commodity Research at Citi Group, believes that the plunge to 1 million bpd is imminent, as current production is likely around 1.1-1.2 million bpd.

Venezuela’s rig count number is in the 20s, while it needs it into above-40 territory to sustain production flat, according to Morse.