Behind Venezuela’s Increased Oil Production

Economic and political analysts look with suspicion at the data released and do not hesitate to point out that behind this increase there are interests at stake, such as “generating investment and giving credibility to Maduro’s regime.”

By La Prensa

HAVANA TIMES – The Venezuelan government, led by President Nicolas Maduro, announced last week that the State-Owned Oil Company (PDVSA) —sanctioned by the United States— managed to increase its oil production to one million barrels per day, a production that had not been achieved since 2018. However, analysts in economic and political issues view the data with suspicion and do not hesitate to point out that behind this increase there are interests at stake, such as generating some kind of investment and giving credibility to Maduro’s regime.

Oil Minister Tareck El Aissami —also sanctioned by the US— informed in a television message on December 24 that Venezuela had reached the average goal of one million barrels.

El Aissami emphasized that “this victory belongs to you, comrades, for having put your effort and soul to achieve this goal for the homeland, in pro of prosperity for our people.” In addition, the minister of Maduro’s oil portfolio took the opportunity to praise the courage of the Venezuelan people in the face of “sanctions and the criminal blockade of the United States government, here is a people standing up with dignity.”

For its part, PDVSA reported on its official Twitter account that the goal was achieved thanks to the “knowledge, expertise and patriotic sentiment” of workers who “continue forward showing that the oil industry remains active.”

What is behind it?

Bolivian analyst, Hugo Acha, explained to La Prensa that behind the increase in production, which in his opinion does not “impress,” there is “a logic” that seeks to sell that they are doing very well.

“There are many people who want to generate some level of investment, to help the Venezuelan government gain some credibility, to reassure the holders of debt bonds. There are a lot of factors that make El Aissami come out and say that,” analyzes Acha.

The specialized economic news agency Bloomberg detailed that according to the official Venezuelan registry, the production of 1,041,660 barrels of oil was distributed among the Orinoco Belt (577,000), Western (242,850 b/d), Eastern (211,740) and gas (10,070) fields.

Based on the official data, Bloomberg highlights that the number exceeded the production average reached in November, with 876,100 barrels per day, according to the oil minister. However, the Organization of Petroleum Exporting Countries (OPEP) recorded this data at 625,000 barrels per day, on December 13. In contrast, on November 2018, the figures reported by OPEP for Venezuela was up to 1,137,000 barrels per day, which caused an impact compared to the 3,120,000 barrels per day of crude oil produced in 1998, the year in which the late Hugo Chavez won the elections as the new president of Venezuela.

Hugo Acha emphasizes that “it is not a spectacular jump” and adds that “23 years ago Venezuela produced 10 times more with the same reserve, and its refining capacity was 100 times more, that makes it difficult to believe what El Aissami is saying is progress, when it is not, it is a simple way of boasting.”

“He Worship Lies”

Rafael Quiroz, an oil economic expert, explained to Voice of America (VOA) that El Aissami’s announcement undoubtedly “worships lies”. He believes this official information seeks to make people forget the promise of two million barrels per day that El Aissami predicted at the end of 2020.

He further stated, “it is time for Minister El Aissami to stop deceiving the Venezuelan population,” and he did not hesitate to warn that the Venezuelan oil industry is going through “dramatic conditions” as the New Year begins.

Likewise, economist Quiroz explained that Venezuela’s “alliance” with Iran was fundamental for the increase in production, with special emphasis on the operations in the Orinoco Oil Belt. “The alliance to exchange crude oil for naphtha with the Iranian government has allowed oil activity in the Belt to recover and production to increase,” he indicated.

The agency reported at the beginning of the month that PDVSA resorted to “desperate measures” to raise its production, such as awarding contracts to obscure companies or making payments through “backpacks filled with US dollars.”

In this sense, the economist and oil specialist, Luis Oliveros, does not differ from El Aissami’s announcement, however, he contrasts the announced data with Venezuela’s hydrocarbon production capacity, which has been declining for years.

“Venezuelan oil production reaches one million barrels per day. Barely 35% of what was produced in 2013. Almost three times what we produced in June 2020. One million was a reachable goal. PDVSA’s challenge is to continue to increase, with sanctions it is complicated,” he said on his Twitter account.

Oil, Maduro’s support

La Prensa published in November a report to understand how and why the government of Maduro has survived despite lacking legitimacy. Experts in International Law and political analysts consulted by this newspaper agreed in pointing out that Venezuela, unlike Nicaragua, is the South American country that possesses precious natural resources such as oil, gold reserves and the extraction of other minerals, which could be considered as the main support of Maduro, who has been president of that country since 2013.

Carlos Murillo Zamora, political analyst, expert in International Law and regional integration issues, said that the “secret” of Maduro’s regime has been and currently is oil. He said that without oil, neither his predecessor Hugo Chavez nor the current president, would have been in power for a such long time. “Oil has provided Maduro with a source of income for the subsistence of the population, for the groups close to his regime and to buy loyalties in the Army with rewards and in the Police with projects,” indicates the expert.

Murillo adds that without this income, which is becoming less and less, because “they have exhausted the oil infrastructure, the extraction and oil refinement capacity, which is why the economic situation of Venezuelans has become worse.”

In this sense, Alberto Cortes, political analyst and professor at the University of Costa Rica, emphasizes that Venezuela has “the world’s largest oil reserves. We are not talking about just any country. It is the strategic resource that the planet has today.” And he maintains that in addition “Maduro has the capacity to control the territory and the population that he governs without legitimacy as he controls the factors that allow the organization of the State. He also has the monopoly of force.”

The ties between Albanisa and PDVSA

The Alba de Nicaragua SA (Albanisa) company is part of an “international criminal network” linked to Petroleos de Venezuela SA (PDVSA) to create front companies for purposes of corruption and money laundering with the protection of leaders from the ALBA countries, according to an investigation carried out by US consultants Douglas Farah and Caitlyn Yates.

“In the Albanisa case, the money provided totaled between US $4 billion and $6 billion dollars in illicit funds over the last decade,” managed by “a small number of political elites” from the ruling Sandinista National Liberation Front (FSLN) party, the document says.

Albanisa is part of the Bolivarian Alliance for the Peoples of Our America – People’s Trade Agreements (ALBA), a political project of Chavez (now deceased) to counteract the political and economic influence of the United States in Latin America, replacing it with financial support from the oil agreement. At least that’s how it was sold.

Independent analysts have pointed out that the Ortega regime has used the so-called oil cooperation to finance his political project with some assistance programs.

On January 30, 2019, the then White House National Security Advisor, John Bolton, reported that the subsidiary company Albanisa, was also sanctioned by the United States government. “Through the PDVSA sanction, the United States also sanctioned Nicaragua’s ALBANISA, the government’s joint venture with PDVSA and the slush fund of Daniel Ortega’s corrupt regime,” Bolton said on his Twitter account.

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