Without a parachute: Venezuelan economy continues in a tailspin

The economic cataclysm continues in Venezuela. The Organization of Petroleum Exporting Countries (OPEC) noted in its latest report that Venezuelan oil production fell by 4.5% compared to last April to 741,000 barrels per day (a decrease of nearly 40% with respect to December 2018). The internal problems in the refineries, together with the sharp drop in oil imports from the United States (especially of diluents for the production of gasoline) have been the main reasons for the decrease.

Faced with the difficulty of acquiring imported light crude to mix, the Venezuelan state oil company PDVSA will stop producing improvable crude oil exported to the US market and focus instead on its customers in Asia, especially China. The company Petropiar, a joint venture between PDVSA and Chevron and located in the north-eastern state of Anzoátegui, will be dedicated from July on to blending heavy, light and extra heavy crude oils to produce Merey crude, a grade of heavy crude oil whose price is used as a reference for the international market.

For its part, the industrial trade union CONINDUSTRIA reported in its qualitative for the first quarter of 2019 that the operational capacity of the industrial sector stood at 18%, a decrease of five percentage points compared to the last quarter of 2018. The report also indicates that industrial capacity was around 10% and that production decreased 57% according to respondents. A full 90% of respondents expect a negative economic outlook for the coming months (1).

  1. See: https://www.finanzasdigital.com/2019/06/conindustria-capacidad-operativa-de-la-industria-venezolana-sigue-en-descenso-bajo-de-23-a-18/

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