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Venezuela oil production hits 13-year low

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Staff Writer | July 18, 2016
Venezuela oil production
Oil exploration   PDVSA cut its oil exports to Cuba by some 40 percent

Venezuela’s oil production fell to a 13-year low last month, declining by 170,000 barrels per day (bpd) since the start of 2016 to 2.18 million barrels per day (mb/d) in June.

This is according to the latest oil market report by the International Energy Agency (IEA).

The IEA said that “further losses” are expected in the second half of 2016, Caribbean News Now reports.

Meanwhile, Barclays estimates that Venezuelan oil production could fall as low as 1.7 mb/d before the end of the year.

Reuters recently reported that, during the first half of this year, Venezuela's state-run oil company, Petróleos de Venezuela SA (PDVSA) slashed its oil exports to Cuba by some 40 percent, citing the company's internal trade data.

On Tuesday, Luis Morillo, PDVSA's general manager in Cuba, denied this, instead blaming a “technical and engineering difficulty at the Cienfuegos refinery”.

"There has not been any issue or reduction with the supply of Venezuelan oil to Cuba,” Morillo said.

Nonetheless, some joint ventures and state-owned firms in Cuba were recently ordered to reduce power usage.

Cuba's minister for the economy, Marino Murillo, was removed from his post on Wednesday and reassigned to focus his efforts on tasks related to "updating the Cuban economic and social model."

Murillo has been replaced with Ricardo Cabrisas Ruiz, a veteran Cuban politician who was previously overseeing the country's recent debt restructuring.

During the past decade, Venezuela has supplied up to 100,000 bpd of crude oil to Cuba but, according to Reuters, that number declined to 53,500 bpd this year, a 40 percent drop from the first half of 2015

Cuba, which has received some four percent of Venezuela's total oil exports, has been the biggest beneficiary of the PetroCaribe oil diplomacy agreement pioneered by Venezuela's late socialist leader Hugo Chavez to win political support by sending oil on advantageous terms to a number of Latin American and Caribbean countries.

However, if exports to Cuba are being maintained as claimed, even as production declines, that figure would rise to almost six percent – something that becomes even more politically and economically unsustainable in the context of Venezuela’s current dire problems.

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