Cash-strapped and crisis-stricken Venezuela “can easily manage” an oil production increase of 1 million bpd this year to lift its production capacity to 2.472 million bpd, its oil minister Manuel Quevedo told S&P Global Platts in an interview published on Tuesday.

Cash shortages amid a severe economic crisis have led to Venezuela’s oil production steadily dropping over the past few months, to a nearly-three-decade low last month.

Last week, figures by OPEC showed that Venezuela’s oil production declined by another 82,000 bpd in December to 1.745 million bpd. The Venezuelan government’s self-reported figures showed that production plunged by a massive 216,000 bpd in December, to 1.621 million bpd. The country sitting on the world’s largest oil reserves saw its crude oil production drop by 649,000 bpd in 2017—a 29-percent annual plunge—and probably the worst loss of oil production in a single year in recent history.

Quevedo—a National Guard major general who was recently appointed by Nicolas Maduro as the new head of state oil firm PDVSA and the oil ministry—expressed optimism when speaking to S&P Global Platts. Quevedo said that Venezuela could achieve the presidential order to boost its oil production by 1 million bpd this year, by restructuring its debts to Russia and China, attracting international investment to redevelop its shut oil fields, and incentivizing its joint venture partners to boost production at existing projects.

The minister said there had been recent talks with oil supermajors Shell and Total, which have minority stakes in joint ventures in Venezuela.



While Quevedo told S&P Global Platts “We could easily start to recover very soon”, analysts are predicting even steeper declines for Venezuela’s oil production this year. Related: Crisis-Hit Venezuela Takes Over OPEC's Rotating Presidency

Venezuela is the story to watch in the first quarter of 2018, Helima Croft, head of global commodity strategy at RBC Capital Markets, told CNBC at the end of November.

“We really have a country that is poised to go out of business,” Croft said.

The International Energy Agency (IEA) said in its monthly Oil Market Report last week that “Declines are accelerating in Venezuela, which posted the world’s biggest unplanned output fall in 2017.”

“The general perception that the market has been tightening is clearly the overriding factor and, within this overall picture, there is mounting concern about Venezuela's production,” the Paris-based agency said.

By Tsvetana Paraskova for Oilprice.com

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