The oil industry of Venezuela has had a tumultuous year under sanctions from the United States, poor refining network, supply shortages as well as ongoing political and social challenges. The situation has gone from bad to worse for the once dominant member of OPEC. According to two workers at state owned oil company Petroleos de Venezuela (PDVSA), Venezuelans have begun stealing crude from the idled oilfields and distilling homemade gasoline.
A decade ago, Venezuela was the largest producer in Latin America, earning $90 billion a year from oil exports. Prior to sanctions from the United States in January of 2019 in an attempt to oust President Nicolas Madura, Venezuela’s production was 1.2 million barrels per day (bpd). Their output fell to 397,000 bpd in September and 359,000 in October and may continue to fall as PDVSA struggles to keep their refineries operational due to lack of funding for maintenance.
The amount of crude being stolen by the people of Venezuela is estimated to be less than 1,000 bpd when equals less than one percent of total output. According to an article written by Reuters who interviewed PDVSA workers and several people whose relatives engaged in theft from the oilfields, “thieves puncture pipelines, and, holding a blowtorch below the pipe, heat up the crude so it flows into smaller tubes they insert into the punctured hole. The thieves then boil the crude and pass it through copper tubes, then sell the liquid that drips out.”
The collapse of Venezuela’s oil industry is leaving behind a crippled economy and the situation could get worse for the South American country. According to David Voght, head of the IPD Latin America, “without drilling, without service companies and without money, it’s very difficult to maintain even the current levels of production. If the political situation in the country doesn’t change, you could go to zero.”