November 13, 2017 / 2:32 PM / a month ago

Venezuela crude output hits 28-year low: OPEC

CARACAS/HOUSTON (Reuters) - Oil-dependent Venezuela’s crude output dipped last month below 2 million barrels per day, its lowest level in nearly three decades, global producer group OPEC said on Monday.

The output fall could not come at a worse time, with the economy in crisis and the socialist government struggling to pay its foreign debt. The government opens talks on Monday with creditors to renegotiate its debt and avert a default that would plunge its economy into deeper trouble.

Compounding the situation, another eight managers and employees of state oil company PDVSA in eastern Venezuela were arrested in recent days for fiddling production figures, chief prosecutor Tarek Saab told reporters.

In a major corruption sweep engulfing the oil sector, about two dozen high-level executives have already been arrested in recent weeks, ridding PDVSA of much of its top brass.

The Organization of the Petroleum Exporting Countries’ latest monthly data showed Venezuela reporting production of 1.955 million bpd in October, versus 2.085 million in September.

The figure was even lower based on secondary sources rather than what the government reports, at 1.863 million bpd in October, according to OPEC.

Venezuela depends on oil for more than 95 percent of hard currency export revenues, fuelling both social welfare programs and payment on some $60 billion of outstanding bonds.

Pumpjacks are seen in Lagunillas, Venezuela October 5, 2017. Picture taken October 5, 2017. REUTERS/Isaac Urrutia - RC1615E580C0

PDVSA is the financial motor for President Nicolas Maduro’s government, but has been suffering from the oil price drop, crippling operational problems, and internal corruption.

Houston-based Latin American oil expert Francisco Monaldi said the latest monthly drop in Venezuela’s oil production was “really extraordinary” and would likely only get worse.

A man walks past the corporate logo of the state oil company PDVSA at a gas station in Caracas, Venezuela November 13, 2017. REUTERS/Marco Bello

“If we extrapolate to annual numbers, we’d be talking about a similar impact to what we saw during the 2002-03 strike,” he said, referring to turbulent industrial action that hit the sector during the rule of Maduro’s predecessor Hugo Chavez.

Even though OPEC does not publish historical data on output reported by members as far back as the 1980s, the last time Venezuela produced less than 2 million bpd was in 1989 according to Oil Ministry figures.

Venezuela’s annual oil output was 2.373 million bpd in 2016 and 2.654 million in 2015, according to the data it gives OPEC.

Monaldi said the sector’s key indicators - such as numbers of active rigs, exports, and crude quality - were all deteriorating at an “alarming” rate. Next year could see another 10 percent fall in production, he said in an interview.

“And all of this when the country is trying to restructure its foreign debt and faces U.S. sanctions,” he added, referring to U.S. President Donald Trump’s measures aimed at preventing the Maduro government from contracting new debt.

Reporting by Andrew Cawthorne, Marianna Parraga and Alexandra Ulmer; Editing by Susan Thomas

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