Venezuela plans to increase its oil production by 65,000 bpd by expanding the output of a joint venture between PDVSA and China’s CNPC, Reuters reports, quoting a statement by President Nicolas Maduro.
The venture, Sinovensa, is 49-percent owned by the Chinese state giant and 51-percent owned by PDVSA. It currently produces 100,000 bpd in the Orinoco belt. The crude is a medium grade of the Orinico superheavy that’s then mixed with light crude to make the Merey blend, which, along with other medium grades, are in high demand among Asian refiners, Reuters notes.
“Thanks always to China, for all of this effort and all of this cooperation,” Maduro said. He added that this will be the first of two production expansions, the second of which should bring production to 230,000 bpd.
In the latest Monthly Oil Market Report, OPEC’s secondary sources—the ones the cartel considers the official production figures—point that Venezuela’s crude oil production in June dropped by 16,000 bpd from May to stand at 734,000 bpd. To compare, Venezuela’s crude oil production in 2017 averaged 1.911 million bpd. According to IHS Markit, this could further fall below 500,000 bpd by 2020.
China, along with Russia, has stuck by Venezuela despite the U.S. sanctions and has continued providing cash to the government in exchange for crude oil. Earlier this week, media reported that a Chinese company would help Venezuela repair its ailing refineries, which have caused a fuel shortage that could shake the Maduro government further if it persists.
Washington’s latest move in the pressure against Venezuela was an executive order of President Trump that ordered the freezing of all assets owned by the Venezuelan government in the United States. A day later, in response to a warning by National Security Advisor John Bolton for China and Russia to stop helping Maduro, China’s Foreign Ministry spokeswoman said Washington should stop “bullying” Venezuela.
“China urges the US to… let the Venezuelan people decide their own future and immediately stop the bullying actions of suppressing other countries at every turn,” Hua Chunying said.
By Irina Slav for Oilprice.com
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