Industry Trend Analysis - Quick View: Venezuela Unable To Regain US Market Share - MAR 2018

The Latest: Venezuelan crude exports to the US fell to the lowest rate in 26 years in 2017, averaging 593,000b/d. This compares to an average of 741,000b/d in 2016 and 776,000b/d in 2015. Total crude cargoes to the US reached 419 in 2017 compared to 530 shipments in 2016.

Implications: The fall in exports to the US underscores the weakened state of Venezuela's upstream, narrowing the country's largest single source of income. A prolonged decline in crude production has eroded state-owned PdVSA's ability to reach previous levels, particularly as loan payments to China and Russia are transacted via crude cargoes.

What's Next: The continued inability of PdVSA to reverse production declines will reduce its share of the US market to a greater extent over 2018. Years of underinvestment into the sector has deteriorated its infrastructure and made it extremely challenging to operate at intended capacity. Moreover, the removal of skilled leaders at PdVSA has stymied effective decision-making while cementing the company's focus on more cost-intensive heavy crude development.

PdVSA Losing Its Place
US - Crude Imports From Venezuela
Source: EIA, BMI

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