Venezuela Output Declines in December as Funds Slow to Arrive

Venezuela’s oil production slid for an eighth consecutive month in December, a Bloomberg survey showed, as delays obtaining external financing hamper efforts by Petroleos de Venezuela SA to arrest production declines.

Venezuela, Latin America’s largest oil producer and exporter, produced 2.45 million barrels a day in December, down 235,000 barrels from November, according to a Bloomberg survey of oil companies, producers and analysts. Monthly output has been falling since April, the survey showed.

PDVSA’s ability to offset output declines at mature fields and invest in new developments is slowed by the state-run producer’s increasing financial commitments with the Venezuelan government coupled with delays obtaining financing from partners, said Carlos Rossi, president of Caracas-based EnergyNomics, in a telephone interview on Dec. 31.

“The economic situation in Venezuela is very bad and the non-petroleum sector is in desperate need of dollars, causing PDVSA to have to dedicate more money to the Venezuelan Central Bank,” said Rossi, who is also a former petroleum economist with the Caracas-based Venezuelan Hydrocarbon Association.

Venezuela, a founding member of the Organization of Petroleum Exporting Countries, holds the world’s largest oil reserves. The country expects to increase production to 6 million barrels a day by the end of 2019, of which 4 million will come from the Orinoco heavy-oil belt, PDVSA has said.

Investments Slow

PDVSA sold an estimated $47 billion to the central bank in 2013. The company also last year obtained $8.8 billion in financing from partners from San Ramon, California-based Chevron Corp. to China’s National Petroleum Corp. to increase production at four projects to 619,000 barrels a day from 365,000 barrels.

Repsol SA, Spain’s largest oil producer, will likely sign over $1.2 billion for a PDVSA production development early this year instead of finalizing the accord by year-end 2013, PDVSA President Rafael Ramirez said in December.

While PDVSA had a capital investment budget of $25.3 billion for 2013, the company invested less than one-third of that, or $7 billion, through June 30. PDVSA’s capital investment budget for 2014 will reach $25 billion to $26 billion, Ramirez said.

Venezuela’s oil production will probably average more than 3 million barrels a day in 2014, down from prior estimates of 4 million barrels, Ramirez said. Ramirez, who also is Venezuela’s oil minister, said the country will continue to work with other OPEC members to maintain a minimum oil price of $100 a barrel throughout 2014.

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