Venezuela is following in Iran’s footsteps to once again begin to develop its crude reserves to ignore US sanctions on its oil industry. After stalling and losing out for years on international investment as well as significant revenues, Venezuela is set to ramp up its oil production, boosting ties with major export markets that risk US retaliation for the move. are ready for
In the past few weeks, Iran has worked on the foundation it built in 2021. Re-establishing its international position as a major oil producer, The move saw Iran develop important partnerships with China and Russia to lift US sanctions to restart its oil production and exports. Now it seems Venezuela is taking similar action, finding ways to ease its oil sanctions to help support its weakening economy.
Venezuela’s ruling political force, the Socialists United Party (PSUV), is working with China and Indonesia to kick-start the country’s oil industry after years of halted operations. But despite the fact that worldwide oil prices are rising as demand continues to grow, the U.S. Venezuela unlikely to lift sanctions While the current political power maintains its rule, even with the prospect of a correction in oil prices on Venezuela’s crude influx.
According to Lloyd’s List Intelligence, in 2020 about 150 ships transported Venezuelan oil to Asia, mainly via Malaysia to China and Indonesia. With the expectation of increasing demand for Asian oil an increase of 1.7 million bpd in 2022, this field is not so suitable where it comes from. If it can get low-cost and reliable oil imports from Iran or Venezuela, it will.
It is believed that China has 324 million barrels From Iran and Venezuela in 2021, a 53 percent increase in 2020, the highest volume since 2018. It has achieved this level of import through several means. First, approved oil often arrives on older ships that are scheduled for scrapyards. Secondly, oil arrives in tankers that have gone dark – their transponders are turned off to avoid detection. And, third, oil cargo is transferred from tanker to tanker over sea to avoid knowing where the oil came from. Imports from these countries have increased significantly since 2020, leading international officials to believe that the majority of oil has come from Oman and Malaysia.
China seems to be quite unaffected by the possible consequences Regarding buying approved oil. Private sugar refiners, AKA teapots, are the most common buyers of Iranian and Venezuelan crude. They benefit from lower prices and availability because US allies in Asia, such as Japan and South Korea, have stopped buying from sanctioned states.
In 2021, Venezuela is believed to have nearly doubled its oil output compared to the previous year. It comes as state-owned Petroleos de Venezuela (PDVSA) secured the support of several smaller drilling companies, thanks in part to reducing their debt. In addition, the firm imported a diluent from Iran to refine its extra-heavy crude after initially worrying lack of Why solvent? Total production in November stood at around 824,000 bpd, which is significantly higher than the previous months. And at the end of 2021, Venezuela reached 1 million bpd, a huge change, though nowhere near its 3.2 bpd peak in 1999.
But Francisco Monaldi, director of the Latin American Energy Program at Rice University’s Baker Institute in Houston, believes PDVSA has a cap on its production capacity. Large-scale foreign investment in the country in connection with ongoing US sanctions and a lack of drilling equipment means the firm has limited oil production capabilities. She telling, “The base production in 2021 was well below PDVSA’s production capacity.” And “we’re reaching that potential now. To see an increase in production during 2022, there is a need for investment in new wells and up-gradation of infrastructure,” he said.
Much of this success has been linked to the socialist country’s recent partnership with Iran. Dilutants such as naphtha procured from Iran are needed to reduce the viscosity of Venezuelan crude in the Orinoco heavy-oil belt. Thinner is taken from Iran to Venezuela on complicated routes to avoid US identification. Juan Fernandez, former Executive Director of Planning at PDVSA, telling“Oil production estimates for the belt currently range from 450,000 to 500,000 barrels a day and this is mainly due to help from Iran.”
Following in Iran’s footsteps, Venezuela is once again profiting from its long-established oil industry. But while its recent oil output looks promising, Venezuela still relies on the US to lift its sanctions on the country’s oil industry to gain more foreign investment and maintain its currently high oil production.
By Felicity Bradstock for Oilprice.com
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