Crude oil exports from Venezuela inched up last month as traders rushed to sell Venezuelan crude to Chinese buyers ahead of the entry into effect of a new tax.
Reuters reports Venezuelan exports for Asia were most commonly masked as Malaysian oil, and the biggest portion of these entered Asia before June 12, when the new Chinese import tax entered into effect, raising the costs of fuel imports by as much as 40 percent.
Yet Venezuela also reported a rare increase in production last month, thanks to the restart of a crude upgrader under PDVSA’s joint venture with TotalEnergies and Norway’s Equinor. A blending plant was also restarted last month, contributing to the production increase.
According to shipping data cited by Reuters, PDVSA exported some 631,900 bpd of crude last month, up by 6.5 percent from May and as much as 66 percent from June 2020.
A couple of weeks ago, Venezuela’s oil minister, Tareck el Assaimi, told Bloomberg in an interview the government was investing in a reversal of its oil production decline and had plans to quadruple output by the end of the year. “Without any financing, with our own money, we’ve been able to invest enough to stop the slide and start a gradual recovery,” El Aissami said.
Venezuela boosting oil production to 1.5 million bpd by end-2021 is an “impossible” target, Francisco Monaldi, an expert on Venezuela’s oil industry at Rice University, told Bloomberg. “Even getting to that would be implausible in the medium term; production capacity has been falling since 2014 and there have been no oil rigs operating in Venezuela for a year,” Monaldi also said.
Earlier this year, state-owned PDVSA calculated it would need investments of $58 billion to boost production to where it was before Hugo Chavez rose to power in the late 90s. In 1998, Venezuela was pumping 2.3 million barrels of crude daily. The company said it planned to seek investments from both local and foreign companies to that end.