Oil production in Venezuela has fallen precipitously since 2016 due to a worsening economy highlighted by falling Venezuelan crude oil production, limited supplies of consumer goods, and hyperinflation. Between 2014 and 2018, crude production from the oil rich state dropped by more than 45% to an estimated 1.3 million b/ (Figure 1).
Reports of empty store shelves across Venezuela are widespread. Everyday staples, including food, toiletries and medicine, have been in short supply, fueling surging prices, desperation and rising political instability.
The recognition of Juan Guaido, the opposition leader of the Venezuela National Assembly, as interim president has thrust Venezuela’s politics onto the international stage. A number of western countries, led by the US and the EU, support Guaido; meanwhile, Russia and China continue to back Maduro. He was inaugurated to his second term in January 2019. Intensified demands for a new democratic election rang out within days of the inauguration.
In summary, Stratas Advisors expects Venezuelan oil production to continue falling, reaching a bottom of around 850,000 b/d by 2020. After the political turmoil settles (expected after 2020), production is projected to rise slowly as a result of the economic devastation and labor shortage. After 2030, resumed development efforts in the Orinoco Belt will start to improve prospects. By 2040, oil production in Venezuela could reach around 1.6 million b/d.
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