Venezuela has begun to proactively shut in oil production
According to energy ministry official data communicated to Opec, Venezuela produced 1.533mn b/d of crude in May, up by 28,000 b/d from 1.505mn b/d in April.
Average production cited by secondary sources published by Opec pegged Venezuela's May output at 1.392mn b/d, down by 42,500 b/d from 1.434mn b/d in April. Argus estimates May production at around 1.45mn b/d.
State-owned PdV officials consulted by Argus privately dismissed the official tally showing an increase in Venezuela's output last month.
Two PdV upstream executives say that May production averaged about 1.44mn b/d or 93,000 b/d less than the energy ministry's official figure of 1.533mn b/d.
So far in June, the outlook for Venezuelan production is grimmer. Venezuela was producing about 1.5mn b/d at the start of May, including roughly about 800,000 b/d in the Orinoco oil belt and a combined 700,000 b/d in the company's eastern and western divisions. But output in early June has dropped to 1.1mn-1.2mn b/d, according to three PdV officials.
"Eastern division land-based storage of 11mn bl is at full capacity, and western division storage capacity of almost 48mn bl will be filled to its operational capacity in a question of days," the western division executive said.
It was not immediately clear where PdV is closing taps to manage the storage restrictions.
An output decline to about 1.1mn b/d in June, the lowest monthly level in nearly 70 years, is "not unrealistic given current circumstance and restrictions on PdV's operations," the executive added.
A senior energy ministry official, a frequent government critic, says the gaps with the official data in May are a "reflection of increasing presidential palace pressures" on energy minister and PdV chief executive Manuel Quevedo to reverse Venezuela's upstream decline.
PdV management is inflating Venezuela's official data "to hide the truth of PdV's production debacle from President (Nicolas) Maduro, the country and oil markets," the ministry official said.