Venezuela’s state oil company has made a pessimistic estimate for next year’s oil prices, expecting to make just $35 per barrel for the crude it exports, Reuters has reported. This compares with $60 per barrel estimated for this year.
U.S. sanctions on Caracas have made it hard for PDVSA to sell its oil abroad, so it has been forced to offer it at steep discounts. The latest oil price crisis has definitely not helped, either, slashing prices further. Since the start of the year, PDVSA’s most popular Merey blend, for example, has sold for an average of $27.93 per barrel.
Interestingly enough, PDVSA has plans to substantially increase its daily oil production in 2021, according to a draft budget seen by Reuters. The company eyes output of 1.8 million bpd, which would be a sizeable increase on the current production rate, which is less than 400,000 bpd as of September, according to the OPEC monthly oil market report.
The South American country that is home to the world’s largest reserves of crude oil has been struggling for years under spiraling hyperinflation combined with increasingly stifling U.S. sanctions aimed at cutting off the Maduro government’s access to cash, which, on Venezuela, comes mostly from oil exports.
Yet the government has proved—perhaps unsurprisingly—resilient. Oil revenues in Venezuela have fallen by as much as 99 percent since 2014, but Maduro is still standing at the helm despite months of protests and attempts by the main opposition party led by Juan Guaido to call new elections and take over. Even complete U.S. support for Guaido has not been able to help.
Meanwhile, U.S. companies have been forced by the sanctions to pull out of Venezuela, suffering hefty write-offs. Chinese and Russian partners are the only ones left to work with PDVSA to expand its oil production. Indeed, Reuters recently reported that PDVSA, in partnership with CNPC, had boosted production at the Petropiar upgrader for heavy crude to a six-month high.