Why One of the World’s Largest Oil Suppliers Might Be Shutting Wells

(Bloomberg) -- High inventories of oil and low prices are forcing Venezuela to consider shutting wells, adding a dire context for Nicolas Maduro’s handling of an economy already under stress from the coronavirus crisis.

Overall production plummeted to 464,000 barrels of oil a day last week, according to two people with access to the data who asked not to be named because the information is private. That’s down about 38% from February. Meanwhile, inventories of about 30.9 million barrels are sitting with no buyers on the coasts of Venezuela, Togo, Singapore, Malaysia, India and China.

That’s forcing Maduro’s government to consider shutting wells, one person said. It’s a decision that would come as ventures that make up more than half of Venezuela’s output have dwindled over the past weeks.

According to four people with knowledge of these operations, state-controlled Petroleos de Venezuela S.A. and Chevron Corp.’s Petropiar was at 50,000 barrels a day last week, down from 120,000 in January while Rosneft PJSC’s main venture, Petromonagas, dropped to 20,000 barrels a day last week, a quarter of their January production.

Expatriates and local employees at international oil companies including Chevron and Repsol SA were sent home in compliance with Maduro’s nationwide quarantine measures on March 12, according to two of the people.

Chevron declined to comment, while representatives for PDVSA, Rosneft and Repsol didn’t respond to requests for comment.

There are about 91 cases of the virus in Venezuela. Caracas and cities nationwide are in a lockdown and the only transportation allowed is for food, health, security and government business. Flights to Europe, Colombia and other destinations have been canceled.

©2020 Bloomberg L.P.