Bloomberg: What is the current state of Venezuela's oil industry? What caused the sharp decline in Venezuela's oil industry?
Since reaching a peak of more than 3.2 million barrels per day at the end of the 1990s, Venezuela's crude oil production has plummeted by more than 70%. Today, Venezuela ranks 21st in the world for oil production. In the coming years, its output is likely to be surpassed by neighboring Guyana (an emerging oil producer) and Argentina, a major shale oil producer.
With the relaxation of U.S. restrictions, Chevron will resume oil sales to Venezuela.
Despite the decline in the oil sector, at least 95% of Venezuela's foreign earnings still come from oil sales.
What caused the sharp decline in Venezuela's oil industry?
The collapse of Venezuela's oil industry can be traced back to the early 21st century, when Chávez's socialist revolution increased state control over the industry, expelling experienced managers and foreign investment from the Venezuelan state-owned oil company (PDVSA).
Chávez dismantled PDVSA's elite management system and replaced it with political allies. A series of accidents plagued the oil pipelines and facilities, including a fatal explosion at the Caracas refinery (one of the largest refineries in the world) in 2012, which led to a sharp drop in oil production and forced this OPEC member country to import fuel to meet its own needs. Despite the surge in crude oil prices to over $100 per barrel in the mid-2000s, money laundering cases and the prosecution of executives by international courts further weakened the oil industry.
Venezuela's once-thriving overseas operations of PDVSA quickly collapsed, eventually losing its core asset - control of Citgo, a US-based refiner. Citgo operates three refineries. The company is currently undergoing an auction in Delaware court to repay PDVSA's creditors.
In addition, pressure from the United States also played a role. For over a century, the U.S. involvement in Venezuela's oil industry made Venezuela one of Washington's strongest allies in the region. As democratic backsliding and repression intensified, the U.S. imposed financial sanctions on PDVSA in 2017 and oil sanctions in 2019. These sanctions prohibit most oil trade and financing with PDVSA, allowing only a few licensed exceptions.
These restrictions have further deteriorated PDVSA's facilities, which heavily rely on U.S. technology that PDVSA is now prohibited from importing.
Original: toutiao.com/article/1853342771264524/
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