Our story begins in the
new world in Venezuela,
where mounting oil riches
are bringing modern benefits
to its capital, Caracas.
And as slum dwellings make
way for towering new housing
projects, Caracas presents
a study in civic progress
and the western way of life.
Venezuela's oil
industry was once
seen as the region's
crown jewel.
But years of neglect
and mismanagement
have decimated a sector
that used to supply
10 per cent of the world's oil.
Now it musters less than
half a percentage point.
Yet even by its own
recent standards,
Venezuela's latest oil
industry output is shocking.
Data released by Opec
showed that the country,
once the largest exporter
of oil in the world,
produced around 370,000
barrels per day in June.
This is an
unbelievable collapse.
I mean, we're going
back to the production
that Venezuela had in the
1930s and, in per capita terms
to early '20s.
So it is really
astonishing for a country
that has some of the largest
oil endowments in the world.
So how did it come to this?
There are essentially
two reasons:
mismanagement and US sanctions.
In 1960, Venezuela was
one of the five founding
members of Opec and the only
one outside the Middle East.
When president Carlos Andres
Perez nationalised the industry
and founded state
owned oil giant PDVSA,
Venezuela was pumping
3m barrels per day.
And the money rolled in.
Oil revenues helped build
one of Latin America's most
modern capitals and created
a thriving middle class.
In 1999, a military
officer, Hugo Chavez,
became Venezuela's president
and launched the Bolivarian
Socialist Revolution.
He benefited from a commodities
boom that lasted until 2014.
The president spent much
of it on social projects
to help the poor, but
a lot was squandered.
Before Hugo Chavez
there was an oil opening
that brought in all the big
oil companies to the country.
They invested a lot of money
and added about 1.1m barrels
of capacity.
And so the combination
of this new oil
coming from these private
companies with the oil price
boom hit to the country
that the national oil
company was being destroyed.
After an oil strike
that ended in 2003,
Mr Chavez sacked 18,000 workers,
many of them highly skilled.
From then on appointments at
PDVSA were often political.
After Mr Chavez's death in 2013,
Nicolas Maduro took office.
Soon after, the
oil price crashed.
The economy went into a tailspin
and has never recovered.
More than 5m
Venezuelans have left.
Those who've stayed
face shortages
of food, fuel, and medicine.
Mr Maduro has been
forced to import petrol
from Iran as he struggles
to keep the nation afloat.
Against this backdrop US
President Donald Trump
has imposed crippling sanctions.
In January 2019,
Washington targeted
PDVSA to deprive Mr Maduro of
cash and force him from power.
At the time the US
was the biggest buyer
of Venezuelan oil.
Now it doesn't buy any and
is pressuring other countries
to follow suit.
Today Treasury took action
against Venezuela's state
owned oil company,
PDVSA to help prevent
their further diversion
of Venezuela's assets
by former President Maduro.
The United States is
holding accountable
those responsible for
Venezuela's tragic decline.
The Maduro regime has struggled
to get round the sanctions,
hence the drop in output.
Caracas blames the US for
the industry's collapse.
But the truth is that it was
well underway beforehand.
Production had already fallen by
50 per cent in the two decades
before 2019.
Sanctions have
exacerbated the decline,
but they didn't cause it.
In April, Mr Maduro
appointed a new oil minister
and a new head of PDVSA.
And they have a plan
to turn things around.
But with oil prices now hit
by coronavirus and the slump
in the world economy there
seems to be no way back
for Venezuela.
A return to the heady
days of the 20th century
looks impossible.
