Impact of oil production decline and low oil prices: Venezuela

Venezuelan X’mas 2017 without petrol

Petrol lines are nothing new in Venezuela. But the problem is getting deeper and deeper:

Top Venezuelan refineries are running at 34% of their capacity
PUNTO FIJO, Venezuela/HOUSTON (Reuters) – Venezuela’s main refining complex, hobbled by a lack of oil and maintenance issues, is down to operating at about a third of its 955,000-barrel-per-day capacity, according to a union official and documents from the state-run oil company PDVSA

This is part 1 of articles on how Venezuela is hit by both declining oil production and the drop in oil prices since 2014. We start with:

Oil production

Please note that the data used in this article differ from source to source. Venezuelan government reports (PDVSA) will be on the high side. No effort was made to reconcile the numbers so every graph stands on its own.

Venezuela_oil_production_vs_consumption_1965-2016Fig 1: Double peak: drop in oil production since 2005. (PDVSA strike 2002/03)


Fig 2: Venezuela crude production by basin 1970-2014 (IESA)


Production started 100 years ago.  In 2012 Jean Laherrere calculated that discoveries were 63 Gb and cumulative production 42 Gb.

Assuming that since then another 2 Gb were produced the depletion level is 70%, making it a mature basin.


Fig 3: Oil fields in Maracaibo

With 1,000s of leaking, abandoned wells and corroding pipes in the lake, it is now an environmental disaster zone plagued by oil spills, subsiding coast lines and duck weed infestations (from sewage, fertilizers, industrial waste, chemicals).

Fig 4: Lake Maracaibo oil slicks, platforms and rigs

Maracaibo_oil_production_1996-2014Fig 5: Maracaibo conventional production is in long term decline

 Other areas

The 2nd peak in Fig 2 (1998-2008) was created by production from Venezuela’s eastern oil fields including the Orinoco extra heavy oil belt as shown in the next graph:

Venezuela_oil_production_by_area_1996-2015Fig 6: Venezuela’s oil production by basin 1996-2015 (PDVSA)

Production by type of oil

The following table shows the different types of crude oil, their gravity and sulfur content. The lower the API number, the heavier the oil.

Venezuela_crude_oil_APIFig 7: Venezuelan oil grades by API

Sincor’s Zuata extra heavy oil from the Orinoco belt (Sincrudos de Oriente) is upgraded in El Jose.

CrudesFig 8: Gravity and sulfur content of Venezuelan BCF-17 compared to other oils

We see Brent slightly under 40 degrees API with no sulphur, while BCF-17 from Venezuela’s Bachaquero field has only 16.5 degrees and a sulphur content of 2.5%

PDVSA_Historico_Produccion_1922_2012_extra_pesadoFig 9: PDVSA oil production history, P=pesado (heavy) XP=extra pesado

Heavy and extra heavy oil production started to increase from around 1990. Zooming into more detail:

Venezuela_oil_production_by_gravity_1994-2014Fig 10: Venezuela oil production by gravity (API< 10 heavier than water)

Orinoco heavy oil belt

FPO_2009Fig 11: Oil blocks and companies in the Orinoco belt (2009)

P and XP oil needs diluents (condensate, light oil, kerosene or naphtha) to be pumped in pipelines (diluted crude oil – DCO). For example, 0.6 barrels of 8.5º API extra-heavy crude can be blended with 0.4 barrels of 30º API Mesa crude, resulting in a blend known as 16º API Merey – still a heavy oil.

Heavy_oilFig 12: Venezuelan heavy oil

VEN_Heavy_crude_moleculeFig 13: Heavy oil molecular structure

The following sketch by a blogger describes how heavy oil is moved from the Orinoco oil field to upgrading plants and export terminals in El Jose.

Venezuelas Faja del Orinoco Fields and Oil HandlingFig 14: Transport and processing of extra heavy oil from Orinoco

Diluted crude oil is either exported directly or as upgraded crude oil. There is a huge refinery complex at El Jose, 30 km west of the city of Barcelona.

Jose_refinery_portFig 15: Upgrader refineries and tank farms in El Jose

The upgrading of extra heavy oil creates big mountains of petroleum coke as can be seen on the above google image

Coque2-1100x618Fig 16: De-coking unit in José Antonio Anzoátegui


Fig 17: Disposal of petroleum coke from processing X and XT Orinoco oil

Coque5-1100x619Fig 18: Mountains of petroleum coke are piled up, waiting to be exported

Venezuela_Petcoke_prod_1990-2014Fig 19: Venezuela petcoke production

It will not be easy to increase Orinoco production because of these complex handling and upgrading requirements.


Recent Jodi statistics show that production decline has accelerated in the last 2 years

Venezuela_crude_production_exports_Jan2002_Oct2017Fig 19: Venezuela’s crude production and exports – Jodi data

National oil output tumbled last year on the back of constant refinery outages, an outflow of talent, and shortages of basic equipment in oil fields and imported diluents needed for blending with Venezuela’s heavy crude.

To be continued