We often say that Venezuela is a rich country because of massive oil reserves. Unfortunately, Venezuela also has a socialist government destroying the oil sector day by day.
Recently, it has become abundantly clear that the number of drills operating in Venezuela has dropped to levels of a country without oil reserves.
Our oil industry was once the envy of the region; now it’s the tragedy of the region. Chinese investment will not save us… thus far the Chinese have made only meager and insufficient investments that will not change the fundamental reality of our precipitous decline in production.
The number of drills in operation or “rig count” as analysts term it, is a thermometer of the vitality of an oil industry. It might sound like a truism, but if it is not drilled, there is no way to extract oil. Of course, in an oil state like Venezuela with 100 years of history, there are already tens of thousands of existing wells, and the reconditioning of them can help to boost production.
But without drilling new wells there is no way to reverse the natural decline in reservoir yields and in turn produce enough additional oil so as to increase the laughable 1.2 million barrels per day that the country is currently producing.
At present, the number of drills in operation is under 25, and knowing the conditions that prevail in the fields, plus the abandonment of their posts by qualified personnel, the drilling efficiency of these leaves much to be desired.
It’s really Socialism 101.
Castro did the same thing to Cuba’s sugar industry and others as well. I remember an old Cuban joke about communism and the island’s fishing industry. It was very successful prior to Castro. So the joke asked: what happened to all of that fish that used to live around the island? The fish swam to Miami.
In Venezuela, the oil revenues were used to maintain and reelect Hugo Chavez. The money was never invested in the business. It was invested in the bureaucracy, providing jobs and benefits to voters who “showed up” to vote.
Socialism does not work. Just look at Cuba and Venezuela. Don’t bring it to the U.S.!
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