Since President Hugo Chavez won power, Venezuela’s daily oil production has fallen by a quarter, depriving his “Bolivarian Revolution” of much of the benefit of the global boom in oil prices.

According to the Daily Telegraph of London, “to win allies and forge an anti-American front, Mr. Chavez sells oil to friendly countries at low prices. Ironically, the only big customer buying Venezuelan oil at the full market price is the United States, which the president routinely denounces as the “Empire.”

In 1998, the state oil company, PDVSA, produced 3.2 million barrels per day, which was a year before Mr. Chavez won the presidency. But after a decade of increasing corruption and inefficiency, daily output has now fallen to 2.4 million barrels a day, according to OPEC figures. However, about half of this oil is now delivered at a discount to Mr. Chavez’s friends around Latin America. The “Petrocaribe” club, consisting of 18 nations founded in 2005, pays Venezuela only 30 percent of the market price within 90 days, and with the rest in installments spread over 25 years.

Meanwhile, the other half – 1.2 million barrels per day – is sent to America - Venezuela’s only genuinely paying customer.

As reported by the Telegraph, “all this means that Venezuela has missed much of the benefit from the oil boom and, now that prices are falling, Mr. Chavez faces huge financial problems. Nobody is sure at what point his government would be unable to pay its bills, but most sources consulted believe this would probably happen if oil falls to $80 a barrel. Yesterday, oil was trading at $79.80.”

To read the entire article from the Daily Telegraph, link here:

This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Comments (4)

Comment	smaller | bigger
Name
Write the displayed characters
Subscribe via email (Registered users only) I have read and agree to the Terms of Usage.
	Add Comment