CARACAS, May 3 (Reuters) - Venezuela’s oil output may fall to average some 2.35 million barrels-per-day this year, as the South American OPEC country’s cash crunch and shortages weigh on production, according to energy consulting firm IPD Latin America.
IPD’s prediction comes on the heels of its quarterly sector survey, which estimated Venezuela’s oil output tumbled 6.8 percent to 2.59 million bpd in the first quarter compared with the same period of 2015, due to drilling delays, insufficient maintenance, theft, and diluent shortfalls.
That estimate is a whisker above the 2.53 million bpd Venezuela produced in the first quarter, according to OPEC numbers. But it marks the first time since the third quarter of 2008 that production fell in all districts, including the extra-heavy crude Orinoco Belt, IPD added.
Given the operational woes, IPD has revised its 2016 output estimate for Venezuela, the country with the world’s largest oil reserves to 2.35 million bpd.
“Our original forecast for 2016 annual production of 2.62 million b/d could still be achieved with an oil price hike in the 70-80 US$/bbl range during the second half of the year,” the consultancy said in a statement.
Venezuela’s Oil Ministry and state oil company PDVSA did not immediately respond to a request for comment.
Official output figures are due later this year.
Longer well-completion times, re-routing of gas from well pressurization to power generation, delayed well maintenance due to “restriction of field services” and theft, as well as a diluent shortfalls as leading to the output slump between January and March, IPD added.
“(There is a) minimal correlation between power sector crisis and crude production fall,” in that quarter, the consultancy said, adding that PDVSA generates around 90 percent of the energy required by upstream operations.
Downstream, however, Venezuela’s key Paraguana Refining Center (CRP) and El Palito refineries are exposed to the growing energy squeeze, which has caused blackouts and rationing.
The estimates were making a buzz on Tuesday, as oil industry players pondered whether Venezuela would reverse the decline.
“Perhaps what is most concerning is IPD’s revision of production estimates for the year as a whole, indicating possible losses of around 500tbd over a twelve-month period,” said BofA Merrill Lynch Global Research in a report.
Venezuela is mired in a deep economic crisis which has led to shortages of spare parts, a brain drain, and major debts with service providers.
PDVSA often blames problems on saboteurs seeking to subvert the socialist government and an international smear campaign. (Reporting by Alexandra Ulmer; Editing by Bernard Orr)