Days after President Donald Trump promised US oil companies would pour billions into Venezuela to increase production, the reality tells a different story: Venezuela’s state oil company is cutting output because it has nowhere to put the crude it’s already producing.
PDVSA has begun shutting down oilfields and asking joint ventures, including projects with Chevron and China National Petroleum Corporation, to cut back production as storage tanks fill to capacity, sources told Reuters.
The reason: Trump’s own oil embargo has brought Venezuela’s exports to a complete halt.
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After filling more than 45% of its 48-million-barrel onshore storage capacity, PDVSA began using tankers as floating storage. More than 17 million barrels now sit in ships offshore with nowhere to go, according to TankerTrackers.com.
No tankers were docked Sunday at Venezuela’s main export terminal. PDVSA is resorting to “extreme solutions,” including dumping residual fuel into oil waste pools to avoid shutting down refineries entirely.
“They have nowhere else to store,” one source told Reuters on December 31. “Without tanker departures, the situation is getting ugly.”
Even Chevron, the only US major still operating in Venezuela with Washington’s blessing, saw its shipments stop. Chevron-chartered tankers haven’t left Venezuelan waters since Thursday, shipping data showed.
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Venezuela’s oil exports in December fell to about half the 950,000 barrels per day shipped in November. Now exports have essentially stopped. Workers at Sinovensa were preparing on Sunday to disconnect up to 10 well clusters after “over-accumulation of extra heavy crude.”
Venezuela produced about 1 million barrels per day in November. That production is now being deliberately cut.
Trump’s aggressive Venezuela strategy — the December tanker blockade, seizure of oil cargoes, and Saturday’s military operation — achieved some level of regime change but strangled the very oil production he promised to unlock.
Delcy Rodríguez, now interim president, said last month Venezuela would “continue producing and exporting oil despite the US measures.”
Instead, Venezuela is cutting production and accumulating up to 25 million barrels in storage with nowhere to send them.
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One Response
Hmmmm, magical thinking once again with boastful promises….