Oil production in Venezuela dives as Guyana’s output poised to skyrocket

A new analysis by IHS Markit has shown that Venezuela—one of the world’s earliest and (at one time) largest oil producers, as well as a founding member of OPEC—could soon be producing close to zero barrels of oil.
In a report published recently, IHS Markit – a London-based global information provider – Venezuelan crude oil production is currently around 100,000 to 200,000 barrels per day (bpd) and falling. Production was around 650,000 bpd just a year ago and had been as high as 2 million barrels per day as recently as 2017. It is now conceivable that the country could soon be producing zero barrels, or very close to it.
“Never before has a former major oil-producing country seen output fall so low for so long. In Venezuela’s case, if there is any surprise it is that the disintegration did not happen faster,” said Jim Burkhard, Vice President and Head of Oil Markets, IHS Markit.
According to HIS Markit, never in the history of the oil industry has output from a former major producing country fallen so low. The analysis shows that Venezuela is now the third-smallest producer among OPEC’s 13 members, just ahead of Equatorial Guinea and war-torn Libya.
Venezuela’s production fall—the product of decades of decline and decay—has been exacerbated more recently by the COVID-induced oil price collapse of 2020, US sanctions and limited domestic oil storage.
HIS Markit said that given the size of the country’s reserves, restoration of production somewhere in the future is always a possibility. But the state of Venezuela’s infrastructure, ongoing US sanctions and lower global demand make it increasingly unlikely.
Meanwhile, just next door to Venezuela, Guyana, with several major oil discoveries over the past few months, is tipped to become one of the largest and most promising non-OPEC oil producers in the world.
The South American country is home to the biggest oil discovery in recent years. US oil giant, Exxon has estimated that there are eight billion barrels of recoverable reserves in the Stabroek Block, and until recently, it predicted that the country would produce 750,000 barrels of oil per day by 2025.
Director of the Inter-American Dialogue’s Energy, Climate Change and Extractive Industries Program, Lisa Viscidi had expressed that 750,000 barrels of oil per day would make it (Guyana) the fourth-largest oil producer in Latin America in current production growth, that would be behind Brazil, Mexico and Columbia.
The extractive industries expert had noted that in a couple of years, this would place Guyana as one of the largest sources of non-OPEC suppliers. There is still the potential for more reserves to be discovered.
Commenting on the oil discoveries here and how this will fit into the global oil supply picture at a time of vast oversupply, Viscidi asserted that Guyana has a competitive advantage and has the potential to encroach on other markets.
Just last week, Hess announced that it had completed drilling another well and discovered two high-quality reservoirs.
Additionally, ExxonMobil is hoping that once it is granted the necessary approvals by the Government, it would move ahead with the 220,000 bpd Payara project.
Meanwhile, Exxon, which is leading the Consortium with Hess and CNOOC, is now producing 98,000 barrels oil per day from the Liza 1 offshore well and it is hoping to meet its 120,000 barrels per day on August 10. The Liza Phase 2 development is still on schedule for 2022.