Venezuelan Production Could Boost ~200kbd Short-Term

Further on Venezuela situation:

• The sanctions easing by the Biden Administration towards Maduros regime will take near immediate effect and last for 6-months at present.
• Washington has given Maduro until the end of November to begin lifting bans on opposition presidential candidates and start releasing political prisoners and "wrongfully detained" Americans.
• As mentioned in the prior post, any failure to comply with the deal will lead to the US tightening sanctions again.
• The deal represents by far the biggest roll back of Trump-era restrictions on Venezuela.
• Venezuela’s ability to meaningfully lift output is limited because of years of underinvestment in both its fields and exporting infrastructure. Flows however that have primarily headed to China can instead make the shorter journey to places like the US Gulf Coast.
• On top of diverting current flows – Bloomberg reports that Venezuela has the ability to pump another ~200,000 bpd in the short term – a jump of 25% based on current levels. Venezuelan watchers believe this could come as soon as in the next 6-months.
• “We can easily add 200,000 barrels a day to 250,000 barrels a day, because we have the infrastructure already in place,” said Alexis Medina, a PDVSA.
• Quick imports of diluents, the condensate the country needs to mix with its heavy crude, are key to helping Venezuela ramp up output. Venezuela has been receiving much of this from other sanctioned nation Iran in recent years.
• Current Venezuelan output stands at around 750,000 and 800,000 bpd – well shy of the 3 mn bpd that made Venezuela a global energy force in the 1990s, but around double the levels it fell to in 2020.
• The size of volumes involved is unable to alleviate global market tightness in the short term, highlighted by the fairly muted drop in oil since the announcement.