Venezuela has more oil than any other nation in
the world, but it keeps pumping less and less.
Oil production fell in December to one of its lowest points in three
decades, further depriving the cash-strapped country of its only major source
of revenue and adding to the suffering of its people.
Venezuela produced 1.7 million barrels of oil a day, according to
S&P Global Platts, which polled industry officials, traders and analysts
and reviewed proprietary shipping data.
lowest since 2002, when a failed coup temporarily took hold of the
government-run oil company, PDVSA.
that, oil production is the lowest in 28 years. It's down 27% just since 2014,
when the country's economic crisis took hold, according to OPEC and S&P
The decline in
oil production is prolonging the misery for 30 million Venezuelans.
People there are losing weight
because of food shortages, and children are dying in hospitals
because basic medicine and equipment
deaths and maternal deaths have all increased significantly
figures show. The government uses money from oil exports to buy what little
food and medicine actually make it in.
It's also a
sign of mismanagement by the government of President Nicolas Maduro, who
succeeded the late Hugo Chavez in 2013. And it couldn't come at a worse time:
Venezuela has defaulted on some of its debt and owes a lot more.
Venezuela has defaulted on $1.2 billion, according to Caracas Capital, a firm
in Miami that tracks the country's debt. That's a relatively small sum in the
world of bonds. The trouble is that it's a sign of what's to come, experts say.
PDVSA owe bondholders more than $60 billion. So far, Wall Street is waiting to
get paid instead of fighting a long legal battle with Maduro's administration.
Experts say a
default on all Venezuela's debt would spell immediate trouble for Maduro's
regime. If enough investors of the defaulted debt trigger an
"acceleration" clause, meaning they want immediate repayment,
investors holding all other Venezuelan bonds can make the same claim.
used to late payments from Venezuela, which is notoriously behind schedule.
They wait because Venezuelan bonds pay hefty returns, with rates as high as
12.75%. By comparison, a typical 10-year U.S. bond pays 2.5% interest.
give up and trigger the acceleration clause, they have the right to seize
Venezuelan oil that's in the United States or on tankers in the ocean as
That would cut
off the government's ability to bring in what little revenue it has. And that
would cause more suffering for ordinary Venezuelans struggling to live through severe shortages