June 2, 2015- The Venezuela government led by Nicolas Maduro appears to have silently given up on its quest to persuade other members of the OPEC to bolster the falling oil prices with production cuts. In the wake of the falling prices of Oil, Venezuela has found it difficult to increase its production of oil or be able to adopt alternative revenue enhancing strategies.Yet, now it seems the Latin American nation is trying to create a new blend of crude oil which mixes the heavy Venezuelan oil with lighter oil varieties. Such a blend they believe would be desirable to the US refineries. While Nicolas Maduro has made repeated calls for the price of oil to be restored to the $100 per barrel, it seems the country with the largest oil reserves has started to adapt to the changing market demands.
The PDVSA’s push for finding a new blend comes when the oil prices that fell last year due to the increase in the supply of oil led by the US sent the prices falling down. This crisis increased when the largest member of the cartel and the unofficial head Saudi Arabia refused to cut its production to halt the slide of prices. This move was what many saw as the Saudi Arabia’s attempt to weaken the $100 a barrel price oil dependent economy of Iran.
According to Mr. Del Pino, the representative of Venezuela in Opec, the blending strategy that the country is going to adopt has no connection to the position that the country will take in the Opec. This blend strategy according to analysts is just an attempt by the PDVSA to make the most of the Venezuelan refiners in the US.
The US has continued to be one of the biggest ideological foes of Venezuela ever since the now dead Hugo Chavez was in power, his successor and vice president Nicolas Maduro is no different. Despite having their ideological differences, the US has been its largest oil export market. Yet the market prospects of the Venezuelan oil took a hit when the production of shale started to grow, with US refineries turning instead to importing heavy oil from Canada.
Mr. Del Pino believes that the strategy to blend oil is an ongoing one which is likely to work for the next three years. The Government of Venezuela has been in negotiations with governments of Angola, Qatar, Kuwait and Nigeria trying to convince them to collaborate with the PDVSA.
Ever since the rise of Hugo Chavez to power in 1999, the production of crude oil has considerably fallen. With the peak production of Venezuelan oil last recorded in 1997 as being 3.3m b/d.
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