Summary

Venezuelan President Nicolas Maduro is cracking down on officials in the PDVSA, the state-owned oil company, and placing military officers in charge. The government has arrested 65 oil industry officials on corruption and money laundering charges. Maduro claims that the purge and the new appointments will help clean up and discipline Venezuela’s struggling oil industry. However, it’s far more likely the moves are meant to eliminate potential rivals and reinforce Maduro’s control over one of the key pillars of the state apparatus.

Background

Home to the world’s largest oil reserves, Venezuela’s oil industry is the government’s main source of revenue. Venezuela’s economy is highly dependent on oil, which constitutes 96 percent of its exports. However, depressed global prices, a lack of capital expenditure, and PDVSA mismanagement have driven Venezuela into a profound economic crisis. In October, crude oil output dropped to its lowest level in 28 years at less than 2 million barrels per day. Production facilities, exports, and crude oil quality are all deteriorating, and some believe that oil production could fall by another 10 percent in 2018.