By Charles Kennedy – Mar 22, 2021, 10:00 AM CDT
A section of a natural gas pipeline in Venezuela exploded on Saturday, which the country’s energy minister blamed on an attack, Reuters reports, citing a document produced by state energy company PDVSA.
According to the same document, PDVSA had to suspend operations at the reinjection plant that the pipeline supplied with gas to stop the resulting fire and evaluate the damage.
Energy minister Tareck El Aissami blamed the explosion on a terrorist attack without elaborating. Last year, an explosion at a refinery in northern Venezuela was also blamed on a terrorist attack with “a large and powerful weapon,” as per President Nicolas Maduro.
Blackouts and other problems with the country’s energy infrastructure have also been blamed on terrorist attacks and sabotage, while critics of the government have blamed neglect and underinvestment.
Venezuela’s crude oil and refined product exports plummeted in 2020 to their lowest level in 77 years as the U.S. continued to step up sanctions against Maduro’s regime and anyone found dealing with it. Last year, Venezuela’s oil exports plunged by 37.5 percent, reaching just 626,534 barrels per day (bpd), the lowest level since the early 1940s, according to data from Refinitiv Eikon and internal documents from PDVSA, cited by Reuters.
Yet Caracas seems to be planning to reverse this: recent reports say that Maduro is preparing to end the monopoly that PDVSA has on the local energy market and encourage foreign oil companies to return to Venezuela. The plan signals hope that the Biden administration will lift crippling sanctions that have sent Venezuela’s economy into a free fall.
Currently, foreign companies can operate in Venezuela’s oil industry, but their investments can only total 49 percent of any project to maintain majority ownership for the state. If this changes—and if Washington removes the sanctions—Venezuela could rise from the ashes. For now, however, the chances of sanction removal are slim: Reuters recently reported that the Biden administration was in no rush to lift them until Maduro made some “serious steps” in negotiating with the Venezuelan opposition.
By Charles Kennedy for Oilprice.com
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