Venezuela's Refusal To Pay Oil Contractors Will Accelerate The Decline In Its Oil Output

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Bloomberg: Venezuela’s Oil Output Decline Accelerates as Drillers Go Unpaid

* Service companies owed more than $1 billion scale back work
* Crude output could decline further from a six-year low

Venezuela’s oil output, already the lowest since 2009, is set to slide further this year as contractors scale back drilling after the cash-strapped country fell more than $1 billion behind in payments.

The Latin American nation’s oil production, which generates 95 percent of export revenue, will decline by about 11 percent to 2.1 million barrels a day by the end of the year, Barclays Plc estimates. Output is falling largely because oil-services companies aren’t being paid, according to the International Energy Agency.

Venezuela’s economy has been in crisis since crude prices slumped, with sporadic looting as the desperate population fights for food and other essentials. President Nicolas Maduro has pledged to continue payments to bondholders, while the partners of state-run oil company Petroleos de Venezuela SA, known as PDVSA, aren’t paid. Further output decline in the OPEC nation, combined with disruptions in fellow members Nigeria and Libya, could leave the oil market short of supply next year.

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WNU editor: I have a distant relative who runs an oil services company in Alberta. He told me last year that an official from state-run oil company Petroleos de Venezuela SA approached the company last year to find out if they were interested in doing business in Venezuela .... and according to him the terms of the contract were very appealing. They investigated it, but when they found out that other oil service companies were not being paid .... adios was their response.