OTTAWA: The price Venezuela receives for its mix of medium and heavy oil rose for a second straight week as oil prices strengthened on a November 30 OPEC agreement to cut production to 32.5 million barrels per day.
According to figures released by the Venezuela Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending December 2 was $40.47, up 64 cents from the previous week’s $39.83.
WTI in New York averaged $47.77 — up 19 cents — for the week, while Brent crude traded in London averaged $49.25 — up 68 cents from the previous week.
According to Venezuelan government figures, the average price in 2016 for Venezuela’s mix of heavy and medium crude is now $34.32 for the year to date.
Venezuela’s average oil price for 2015 was $44.65, down from 2014’s $88.42, below 2013’s $98.08, 2012’s $103.42 and 2011’s $101.06, 2010’s $72.43, and even 2009’s average price of $57.01.
In 2015, WTI averaged $48.86 — just over half of 2014’s $93.06 — while Brent averaged $53.66 — just over half of 2014’s $99.61.
Historically, Venezuela’s basket set its highest weekly average ever on July 18, 2008, when it hit $126.46 before economies around the world began crashing under the weight of expensive oil. The recent low was set January 22, 2016, when Venezuela’s basket averaged just $21.63.
The United States is the largest importer of Venezuela’s oil exports. According to the US Department of Energy, Venezuela was the fourth-largest supplier of imported crude oil and petroleum products to the United States behind Canada, Saudi Arabia, and Mexico. U.S. imports from Venezuela have been on an overall decline in recent years. In the month of October 2015, the United States imported an average of 802,000 barrels per day of crude oil and petroleum products from Venezuela, a decline of 49% from a decade ago.
Venezuela sends a large share of its oil exports to the United States because of the proximity and the operation of sophisticated U.S. Gulf Coast refineries specifically designed to handle heavy Venezuelan crude.
While U.S. imports of primarily crude oil from Venezuela have been on the decline, U.S. exports of petroleum products to Venezuela have increased largely because of Venezuela’s tight finances that leave it unable to invest and maintain its own domestic refineries.
Oil is the main export of Venezuela and provides most of the country’s foreign currency.
As of 2015, Venezuela had nearly 298 billion barrels of proved oil reserves — the largest in the world. The next largest proved oil reserves are in Saudi Arabia with 268 billion barrels and Canada with 173 billion barrels.
Venezuela reported to OPEC — where Venezuela is a founding member — that its production was 2.316 million barrels per day in October 2016. According to OPEC’s calculations, Venezuela had average production of 2.067 million barrels per day in October.
Under the November 30 OPEC agreement, Venezuela has agreed to cut its production by 95,000 bpd to 1.972 million bpd.
