(Oil Price) – Venezuela’s state oil firm PDVSA has started reducing oil production and has asked its joint ventures, including those with Chevron, to also cut output, as storage space is running out amid the U.S. naval blockade and oil export embargo.
PDVSA has asked Petrolera Sinovensa, its joint venture with China National Petroleum Corporation (CNPC), as well as its joint ventures with Chevron – Petropiar and Petroboscan, to reduce production via shutting off some wells and clusters, sources with knowledge of the operations have told Reuters.
Sinovensa was preparing to disconnect up to 10 well clusters on Sunday after being asked by PDVSA to cut output, according to one of Reuters’ sources.
Chevron’s joint ventures have not started cutting production yet. Petropiar has some storage space left, the sources said. Moreover, tankers continue to load crude pumped by Chevron and bound for the United States under a special license by the U.S. Treasury.
The U.S. blockade was aimed at intensifying pressure on Venezuela and cut off the main source of revenues for the Maduro government.
Now that Nicolas Maduro has been extracted by U.S. forces and arrested pending trial in New York, the United States will be using what it called an “oil quarantine” to force a change in how Venezuela’s oil industry is being run.
The United States will keep the oil quarantine on Venezuela. According to U.S. Secretary of State Marco Rubio, this quarantine is as far as the U.S. “running Venezuela” would go.
“We have a quarantine on their oil. That means their economy will not be able to move forward until the conditions that are in the national interest of the United States and the interests of the Venezuelan people are met,” Rubio told ABC in an interview on Sunday.
“So that leverage remains, that leverage is ongoing, and we expect that it’s going to lead to results here. We’re hope so – hopeful that it does – positive results for the people of Venezuela, but ultimately, most importantly, for us in the national interest of the United States,” the U.S. Secretary of State said.
By Charles Kennedy for Oilprice.com
