Reuters reported today that following Venezuelan President Hugo Chavez's re-election on Sunday, the investment bank J.P. Morgan predicted the country's oil supply will fall to 2.58 million barrels per day (bpd) next year, down from this year's prediction of 2.62 bpd.
"By 2014, production is likely to fall to 2.52 million bpd, the bank said," as quoted by Reuters.
The reason: Chavez's re-election means the Venezuelan state oil company PDVSA will continue to give discount deals to its socialist allies, as reported by Reuters. This, and according to its critics, the government is hobbling the industry with its demands.
The Associated Press reported today that one of those allies, Cuba, "breathed a sigh of relief," at the election results. Adding, "According to government statistics, Cuba and Venezuela did some $6 billion in trade last year...most of that comprised of Cuban imports of oil and derivatives."
PDVSA produces almost 3 million bpd and is thought to have one of the biggest crude reserves in the world, but had had trouble meeting its own production targets.
The company is banking on large foreign investments to meet its own quotas in the coming year and has already made deals with companies in a number of countries for joint ventures in the Orinoco extra-heavy crude belt, Reuters reports.
Chavez, 58, won his third six-year term with more than 54 percent of the vote against opposition rival Henrique Capriles. He has recently undergone treatment for cancer.
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