A joint venture between troubled Venezuelan state oil company PDVSA and China’s CNPC in the South American country has doubled its oil production in the past seven months, Reuters reported today, quoting a unit of PDVSA, CVP.
The joint venture, Sinovensa, accounts for about a tenth of Venezuela’s oil production, which has been falling inexorably over the past few years under the triple burden of the oil price collapse, years of mismanagement and corruption, and U.S. sanctions.
CVP said in a Facebook post production at the Sinovensa project, in the Orinoco belt, totaled 130,000 bpd to date. That’s up from just 69,400 bpd in April. The project is the second-largest that involves a foreign company.
This particular foreign company has been expanding its share in Sinovensa, as well. In September, PDVSA sold CNPC an additional 9.9 percent in the project, which gave the Chinese company a stake of 49 percent. That’s the highest portion of foreign participation in a Venezuelan project, according to Reuters, as of end-2017.
China is Venezuela’s biggest creditor, having provided US$50 billion in loans already. Venezuela has undertaken to repay these with crude oil supplies but has struggled to fulfill its commitments because of falling production and lack of financial means to reverse the fall.
In November, Venezuela pumped 1.46 million bpd of oil, a slight increase from the 1.43 million bpd recorded for October but down from over 2 million bpd last year. To add to the country’s oil woes, PDVSA has seen a veritable exodus of qualified personnel, workers’ protests and increased crime activity at oilfields.
However, an analyst interviewed by Reuters believes the output increase at Sinovensa is a temporary thing. “They are managing to recover so-called ‘deferred output’ which they had lost due to issues like equipment theft,” Antero Alvarado from Gas Energy Latin America, said. “But this will have a short-term impact because output will fall again and they will need to drill more wells.”