Fiber optic connectors are a substantial fragment of the global telecommunication industry. Optical fibers are joined using fiber optic connectors, which allow the light conduction between two consecutive optical fibers. An additional im…
BMI View: We maintain our downbeat outlook for Venezuela's oil and gas sector despite vast belowground
potential and ambitious production plans by state-owned PdVSA. We expect Venezuela
to underperform, given the large scope of above-ground challenges, including excessive political
interference, chronic underinvestment, an unattractive operating environment and the precarious financial
situation of PdVSA. Moreover, sustained weakness in global oil prices will deteriorate production growth
prospects as PdVSA and international investors face declining revenues and a reduction in available capex
Latest Updates and Key Forecasts
? We maintain our downbeat crude production forecast for 2016 this quarter to a contraction of 5.4% y-oy
amid sustained weakness in crude oil markets. This will negatively impact available investment in
Venezuela's upstream sector as the government contends with its sizeable public sector spending plans.
? Crude production declines accelerated over H116, with OPEC data showing production falling to 2.37mn
b/d in May, a 14.4% decline over the past year. Secondary sources report that output fell to 2.19mn b/d,
the first time production fell below 2.2mn b/d in over 20 years.
? President Nicolas Maduro announced an increase in the country's subsidised fuel prices for the first time
in two decades on February 17, with prices taking effect on the 19th. Heavily discounted fuel has long
been a key tenant of the ruling Partido Socialista Unido de Venezuela (PSUV) party, many of whose
members believe near free fuel to be an innate right of the Venezuelan people. This historic reform
underscores the extent to which government debt has become unsustainable under the existing fiscal
regime as oil prices remain at historic lows.