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Declining Production in Venezuela

General discussions of the systemic, societal and civilisational effects of depletion.

Declining Production in Venezuela

Unread postby PeakOiler » Fri 15 Jul 2016, 12:03:01

I posted this CNN Money reference in the members' S. America forum, and I thought I would re-post the link to the recent article again in this forum so non-members might see it:

Venezuela's Oil Production at 13-Year Low

At a time when most OPEC countries are ramping up oil output, Venezuela produced just 2.15 million barrels of crude oil per day in June, according to S&P Global Platts estimates. That's the weakest pace since February 2003, Platts said.
Venezuela's shrinking oil production is a reflection of the country's grim financial situation, which has caused rolling blackouts that have even left oil facilities in the dark. And because of how critical oil is to Venezuela's economy -- oil accounts for 96% of exports -- the declines threaten to exacerbate the already-dire situation, where a severe food shortage has led to waves of looting.
"It's coming together now in a perfect storm," said Thomas O'Donnell, a senior energy analyst at Wikistrat.
An internal report by PDVSA, Venezuela's state-owned and scandal-plagued oil giant, also showed a "steep fall" in oil output, Platts said.


I agree with the article that output will not get any higher any time soon.

Independent energy expert Cornelia Meyer says global supply could drop soon due to a lack of investment.
"This will start biting ... global oil companies invested $500 billion less in the last 12 months," she told CNNMoney.


I'll post a chart later showing production peaked decades ago. Meanwhile, readers can search the internet and see production charts that already exist.
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Re: Declining Production in Venezuela

Unread postby pstarr » Fri 15 Jul 2016, 12:48:37

Yes, Venezuela production peaked decades ago
Image

The article authors/media's bias is showing. Anything but peak oil.

Venezuela's shrinking oil production is a reflection of the country's grim financial situation, which has caused rolling blackouts that have even left oil facilities in the dark.

Venezuela's long oil-production decline, over-population, embargoes by the West, and insistent government controls is destroying its capacity to pump oil. Not the other way around.
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Re: Declining Production in Venezuela

Unread postby ROCKMAN » Fri 15 Jul 2016, 13:20:19

It really isn't that complicated: the Vz govt develop its oil reserves...foreign companies did. Then the Vz took the fields over and essentially the investment stream ended as the revenue was diverted to public support systems. And without external sources of investments production has declined...along with the revenue needed to finance social programs.

And now at a time when the Vz might try to lure foreign investments the lower oil prices are hurting such incentives. Had they pulled those foreign companies back in 10 years ago they would be in better shape today.
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Re: Declining Production in Venezuela

Unread postby pstarr » Fri 15 Jul 2016, 13:44:26

RM, it seems you want to explain away Venezuala's long time oil-production collapse with a critique of socialism. Perhaps the decline of its conventional fields and the near-impossibility of profit from its vast, but near-unworkable, sludge fields is more the cause.

After all, Venezuela does not benefit from the fancy market right next to its tar-sands operation. Like Canada. Perhaps Venezuala's neighors are not filthy rich, bored, and dumb like Canada's.
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Re: Declining Production in Venezuela

Unread postby StarvingLion » Fri 15 Jul 2016, 13:46:37

ROCKMAN wrote:It really isn't that complicated: the Vz govt develop its oil reserves...foreign companies did. Then the Vz took the fields over and essentially the investment stream ended as the revenue was diverted to public support systems. And without external sources of investments production has declined...along with the revenue needed to finance social programs.

And now at a time when the Vz might try to lure foreign investments the lower oil prices are hurting such incentives. Had they pulled those foreign companies back in 10 years ago they would be in better shape today.


Rockman Psychobabble Translator: "Venezuela can't do anything right unless the reserve currency operator, the US dollar, shows them how"

It is sucking the blood (oil) of every country it can dry via reserve currency economics and destroying every economy including its own in the process. Of course the reason Venezuela took over its fields is because there was no revenue for social programs.

But let the oil "experts" mumble some horse shit instead...
Last edited by StarvingLion on Fri 15 Jul 2016, 13:59:41, edited 1 time in total.
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Re: Declining Production in Venezuela

Unread postby vtsnowedin » Fri 15 Jul 2016, 13:55:46

StarvingLion wrote:But let the oil "experts" mumble some horse shit instead...
The experts will leave that up to you. You have so much more practice with it.
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Re: Declining Production in Venezuela

Unread postby PeakOiler » Fri 15 Jul 2016, 14:00:51

Perhaps the Chinese will increase investments in the oil extraction infrastructure in Venezuela in the future since other companies have withdrawn. The ocean shipment routes have, after all, been upgraded in Central America.

But perhaps not...
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Re: Declining Production in Venezuela

Unread postby ROCKMAN » Fri 15 Jul 2016, 14:19:12

pstarr - I didn't critisize socialism. Many countries do OK enough with their social programs THAT THEY CAN FUND. Norway is a good example. The problem with Vz is they 1) destroyed foreign investments by taking fields away from the companies and 2) didn't use enough of that usurped revenue to maintain production. There's no reason the social programs provided to Vz people couldn't be benefiting just as the Canadian people are benefiting. But imagine if companies investing in the oil sands (as well as US govt offshore leases) had their profits taken away many years ago: how much revenue would either govt be getting today? How many citizens of either country WOULD NOT be getting nice paychecks if the companies weren't investing in those plays?

Socialism only works when there's a sustainable source of revenue to pay the tab. Destroying the investment stream eventually destroys the govt revenue stream which eventually diminishes the social support system.
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Re: Declining Production in Venezuela

Unread postby pstarr » Fri 15 Jul 2016, 14:51:02

Yeah, RM. They need to upgrade their upgraders.
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Re: Declining Production in Venezuela

Unread postby StarvingLion » Fri 15 Jul 2016, 15:10:59

just as the Canadian people are benefiting


The entire non-tar sands oil business has collapsed. 100,000's in the oil patch canned for good. Almost all projects 1/2 way completed trashed and written off.

Milking the shit out of hydro is happening in cAnada as in V.

You don't have a clue what you are talking about.

But hey you're the Windmills in Texas great investment guy...LOL...go back and do your "wa wa wa I don't give a shit" routine
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Re: Declining Production in Venezuela

Unread postby rockdoc123 » Fri 15 Jul 2016, 15:42:26

RM, it seems you want to explain away Venezuala's long time oil-production collapse with a critique of socialism. Perhaps the decline of its conventional fields and the near-impossibility of profit from its vast, but near-unworkable, sludge fields is more the cause.

After all, Venezuela does not benefit from the fancy market right next to its tar-sands operation. Like Canada. Perhaps Venezuala's neighors are not filthy rich, bored, and dumb like Canada's.


sorry but Rockman is exactly right on this one. In the early nineties Venezuela opened up their industry to foreign participation after having been closed since the seventies when they first nationalized. There was a very large number of companies who showed up for the bid rounds and it was quite competitive. The whole idea of attracting foreign investment into a countries oil and gas industry is 1. technology transfer but more importantly 2. risked capital. Why spend your own money on risky ventures when you can have someone else do that and then take advantage of a good outcome (successful wells and increased production) and avoid a bad outcome (dry holes and failed operations). This was working well for Venezuela for a short term...their production increased in the heavy oil fields and there were even a few discoveries but then Chavez showed up. He effectively nationalized the industry once more but worse he demonized the vast majority of PDVSA management who fled the country under threat of imprisonment or worse. So in one fell swoop he chased out of the country not just foreign skilled oil thinkers and workers but also Venezuelan ones. As well oil and gas more so than any other business is capital intensive. It requires vast amounts of reinvestment to continue to run properly let alone grow which is why in general the return on capital in the oil and gas business is much lower than other industries. Chavez realized his main support was in the rural communities and to maintain that support he sought to invest heavily in social programs aimed at those areas. Unfortunately those increased investments were done at the expense of continued investment in oil and gas fields. Without foreign capital available (nationalized) Venezuela had to use their own money to support oil and gas which they could not do and still maintain the high level of social spending. Chavez chose to let the oil and gas fields suffer under poor management and low investments while maintaining social spending. Couple that with some of his gifts of oil to various countries and you have a recipe for disaster.

The entire non-tar sands oil business has collapsed. 100,000's in the oil patch canned for good. Almost all projects 1/2 way completed trashed and written off.

well I guess you can choose to make stuff up but those of us in the real world would simply look at the data and say...hmm doesn't look like collapse to me. :roll:
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Re: Declining Production in Venezuela

Unread postby pstarr » Fri 15 Jul 2016, 17:16:15

Yes Rockdoc, thanks for the history.
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Re: Declining Production in Venezuela

Unread postby StarvingLion » Fri 15 Jul 2016, 17:32:04

rockdoc123 wrote:
RM, it seems you want to explain away Venezuala's long time oil-production collapse with a critique of socialism. Perhaps the decline of its conventional fields and the near-impossibility of profit from its vast, but near-unworkable, sludge fields is more the cause.

After all, Venezuela does not benefit from the fancy market right next to its tar-sands operation. Like Canada. Perhaps Venezuala's neighors are not filthy rich, bored, and dumb like Canada's.


sorry but Rockman is exactly right on this one. In the early nineties Venezuela opened up their industry to foreign participation after having been closed since the seventies when they first nationalized. There was a very large number of companies who showed up for the bid rounds and it was quite competitive. The whole idea of attracting foreign investment into a countries oil and gas industry is 1. technology transfer but more importantly 2. risked capital. Why spend your own money on risky ventures when you can have someone else do that and then take advantage of a good outcome (successful wells and increased production) and avoid a bad outcome (dry holes and failed operations). This was working well for Venezuela for a short term...their production increased in the heavy oil fields and there were even a few discoveries but then Chavez showed up. He effectively nationalized the industry once more but worse he demonized the vast majority of PDVSA management who fled the country under threat of imprisonment or worse. So in one fell swoop he chased out of the country not just foreign skilled oil thinkers and workers but also Venezuelan ones. As well oil and gas more so than any other business is capital intensive. It requires vast amounts of reinvestment to continue to run properly let alone grow which is why in general the return on capital in the oil and gas business is much lower than other industries. Chavez realized his main support was in the rural communities and to maintain that support he sought to invest heavily in social programs aimed at those areas. Unfortunately those increased investments were done at the expense of continued investment in oil and gas fields. Without foreign capital available (nationalized) Venezuela had to use their own money to support oil and gas which they could not do and still maintain the high level of social spending. Chavez chose to let the oil and gas fields suffer under poor management and low investments while maintaining social spending. Couple that with some of his gifts of oil to various countries and you have a recipe for disaster.

The entire non-tar sands oil business has collapsed. 100,000's in the oil patch canned for good. Almost all projects 1/2 way completed trashed and written off.

well I guess you can choose to make stuff up but those of us in the real world would simply look at the data and say...hmm doesn't look like collapse to me. :roll:
Image


I just said non-tar. How the tar sands fiasco stays afloat is beyond me. It certainly isn't because of this charade of capitalism that you believe in. Besides these bad money fiascos such as the tar sands and shale, the oil industry can't even afford itself.

Alberta is putting in place a carbon tax. The rest of the country is Pure GREEN COMMIE. And this Rockman guy says "look at canada"...I guess he must be blind.

In fact I can't think of any place on earth that isn't full of green communists. Certainly not the USA. Peakoilbarrel.com is full of anti-oil communists and their "renewables".

Where is your capitalism dream actually operating? I see no evidence of it.
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Re: Declining Production in Venezuela

Unread postby Hawkcreek » Sun 17 Jul 2016, 09:40:44

StarvingLion wrote:Where is your capitalism dream actually operating? I see no evidence of it.


Unregulated capitalism doesn't work anywhere for long. But the dream works everywhere. It's always nice to think that if I work hard enough, I will be sitting on easy street some day.
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Re: Declining Production in Venezuela

Unread postby AdamB » Sun 17 Jul 2016, 13:27:20

rockdoc123 wrote:
The entire non-tar sands oil business has collapsed. 100,000's in the oil patch canned for good. Almost all projects 1/2 way completed trashed and written off.

well I guess you can choose to make stuff up but those of us in the real world would simply look at the data and say...hmm doesn't look like collapse to me. :roll:
Image


DENIER!!!! How dare you fight back with..you know...data and empirical evidence and reality!!! It goes against everything we stand for here!!!

COMPLY WITH HERDTHINK!!! OR ELSE!!! A career in in the industry in question and the ability to use google and you know...THINK...cannot stand against the herd!!

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Re: Declining Production in Venezuela

Unread postby Tanada » Sun 17 Jul 2016, 16:25:11

pstarr wrote:Yes, Venezuela production peaked decades ago
Image

The article authors/media's bias is showing. Anything but peak oil.

Venezuela's shrinking oil production is a reflection of the country's grim financial situation, which has caused rolling blackouts that have even left oil facilities in the dark.

Venezuela's long oil-production decline, over-population, embargoes by the West, and insistent government controls is destroying its capacity to pump oil. Not the other way around.


Actually Venezuela has the worlds largest reserves of heavy and extra heavy oil, this is not a situation you can just plunk the peak oil narrative into. The country and its oil industry have been horribly mismanaged for 15 years at least, and the current troubles are far more due to those factors than they are to even the current moderate prices.
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Re: Declining Production in Venezuela

Unread postby kublikhan » Sun 17 Jul 2016, 16:36:07

I liked this clip: Reasons Venezuela is a Total Disaster

It's a 5 minute rant about the mess Venezuela is in. It's from a comedian so don't expect indepth coverage. But it touches on a few important points.
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Re: Declining Production in Venezuela

Unread postby PeakOiler » Tue 16 Aug 2016, 16:36:59

Here's an update:

Going from Bad to Worse-Bloomberg Article

Venezuela Oil Exports Seen Falling as Economic Woes Worsen

The long decline in Venezuela’s oil production is becoming a supply risk for international markets, according to a report by Columbia University’s Center on Global Energy Policy.
Exports from the holder of the world’s largest crude reserves fell more than 300,000 barrels a day in June, compared with the 2015 average, according to the report written by Luisa Palacios, a senior managing director at Medley Global Advisors LLC. While Venezuela’s output has been declining all year, the impact is only now being felt on international markets because previous losses were offset by slumping domestic oil demand amid an unprecedented economic recession.
“Venezuela will represent a growing supply risk for oil markets in 2017,” the report said. “While on average crude oil exports in the first half do not yet show an important decline from the same period a year ago, the latest data point to a deteriorating trend.


Venezuela has been hit hard by the two-year slump in crude prices. Its economy is expected to shrink 10 percent this year, the largest contraction in more than a decade, while consumer prices rise more than 700 percent, according to the International Monetary Fund. The nation’s output dropped to a 13-year low in July as international oil services companies scaled back their activities after state-run Petroleos de Venezuela SA fell more than $1 billion behind in debt repayments.


Ouch!

No sine wave here. Move along. Move along...
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Re: Declining Production in Venezuela

Unread postby AdamB » Tue 16 Aug 2016, 20:39:36

PeakOiler wrote:No sine wave here. Move along. Move along...


go look at that past production curve. Sine wave already there, with 2 cycles on the graph. With the amount of technical recoverable resource they have...it is only a matter of price before you see the next, and perhaps largest peak. Or multiples of them, depending on the price cycle itself.

Venezuela is a no brainer in terms of sine wave production, the only question is will peak demand occur first, as the energy experts are discussing, in which case there may never be a price signal that causes the 3rd peak in Venezuelan production.
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Re: Declining Production in Venezuela

Unread postby tita » Wed 17 Aug 2016, 01:43:10

AdamB wrote:Venezuela is a no brainer in terms of sine wave production, the only question is will peak demand occur first, as the energy experts are discussing, in which case there may never be a price signal that causes the 3rd peak in Venezuelan production.

"Peak demand" is a whole subject which is not specific to venezuelan production. And it is highly speculative, as we never consumed so much oil as today, and there is no hint of a lower consumption in the 3 years to come.

Venezuelan oil production currently follows the same path as US oil production... Going down due to a lack of investments. The big difference being the state control dependence for one side and the public companies dependence for the other side.
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