Will Colombia overcome Venezuela’s oil production?

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While the indexes of the Colombian industry grow subtly but constantly, the Venezuelan oil industry has plummeted in recent years

Historically, Venezuela has been one of the largest oil producers worldwide, characterized by extracting barrels of heavy hydrocarbons, which require a more complex handling for their use in daily life.

Leer en español: ¿Puede Colombia superar la producción petrolera de Venezuela?

According to the Organization of the Petroleum Exporting Countries (OPEC), by the end of 2014, Venezuela was producing 3 million barrels per day, while at the end of 2018 it could only reach 1.15 million barrels per day. These figures, although bulky, represent a setback for the Venezuelan economy, since they are far from the standards that only a few years before were the usual ones.

For Colombia, however, these are very good news. Although this country is not characterized by having a strong oil industry and barely has an incipient industrial development in comparison to the big competitors, its figures have been increasing consistently throughout the last years, especially along 2018.

According to the Ministry of Mines and Energy, during the month of December last year, the Colombian industry reached the figure of 889,352 barrels per day, a very positive balance for this 2019, where some media have raised two controversial questions: Can Colombia increase your daily production of barrels in such a way that it surpasses Venezuelan production? Venezuela has stopped being an oil country?

These questions, which without a doubt are incendiary, ignore, at least partially, a large number of factors regarding the oil industry that must be taken into account. To begin with, Ecopetrol president Felipe Bayón spoke at Inside LR of La República in September 2018 about production projections both to end the year and for years to come. In this interview, Bayón was very clear: the intention of Ecopetrol is not an extensive production without any support.

At the time, the president of the Colombian oil company spoke of 715,000 and 725,000 barrels per day as a goal, which, compared to the end of the year production, represents a solid increase. However, it is not an increase that thinks about climbing abysmally, because production in Colombia is more concerned in having a stable and profitable production, before anything else.

Uncertainty in the face of future development

On the other hand, during his message to the National Constituent Assembly, the president of Venezuela, Nicolás Maduro, assured that he expects to reach the production of 5 million barrels of oil per day through the establishment of joint ventures.

This figure, although at first sight sounds far fetched, shows that Venezuela does not intend to abandon oil as the main means of its economy, nor does it intend to stop competing internationally, which would call into question the "advantage" that Colombia can take in this industry.

Also read: What will be the oil prices for 2019?

But beyond the estimates of both countries for the immediate future and the future in a medium term, other factors must be taken into account. For example, OPEC, in the first days of December 2018, reached the determination to reduce its oil production to 1.2 million barrels per day, which would be a boost for the price of this product internationally.

At the same time, President Trump pushes from the other shore, from the consumers' side, so that the price of oil goes down to a more competitive level for them and for big consumers like the European Union. In this way, it is possible to observe that the production estimates not only respond to the number of barrels that are taken each day, but also to their stability and profitability in an increasingly volatile market.

LatinAmerican Post | Jorge Ovalle

Translated from "¿Puede Colombia superar la producción petrolera de Venezuela?"