Even though Venezuela has the biggest oil reserves in the world, its oil production sector is now facing significant problems. One of the issues that will likely affect the Venezuelan oil industry in the near future is the chronic power shortages that have plagued the country during the last couple of weeks. A Financial Times report has shown that these outages have contributed to a decrease in oil production of 100,000 to 200,000 barrels per day during 2016.
Venezuela’s Guri dam is responsible for generating over one third of the country’s electricity. As water levels are now dangerously low, the site may be temporarily shut down in order to prevent damage to the turbines. Such a drop in electrical supply has the potential to negatively hit oil production numbers and may also force the country to redirect some of the oil set for export to domestic energy production and diesel generators. The Venezuelan government has been scrambling to put together electricity saving measures according to corporationwiki.com, such as decreeing every Friday to be a holiday for workers. Despite this, power cuts are becoming increasingly common throughout the nation, with many citizens expressing their displeasure at the way the government is managing the energy crisis.
A cutback on activities by US oilfield services giant Schlumberger last week due to payment problems has also contributed to a negative outlook on local oil production, with some experts believing that the cutback can expose over 20 percent of Venezuela’s oil output to steep declines.