The accelerating collapse in oil production will contribute to PdVSA’s financial crisis, even as that crisis contributes to declining production.
As noted by Venezuela petroleum industry expert Russ Dallen, the regime has made almost no payments on sovereign bonds since last
November, is beginning to default on PdVSA bonds (which are more vulnerable in international courts), and is failing to pay past legal
judgements. The regime is also quickly running out of liquid assets to import basic goods, necessary both to satisfy the military and other
core supporters and to keep the economy running. Dallen calls attention to the fact that Venezuela’s gold reserves have fallen from
$21.2 billion in 2011 to approximately $6.1 billion last month. Last week, Venezuelan power producer Electricidad de Caracas became the
first state entity to be officially declared in default in the United States. Massive legal judgements, such as the $2 billion award against the
Venezuelan government to the Canadian mining firm Crystallex, can no longer be avoided through maneuvering by Venezuelan government

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