Caracas (AFP) - After decades of being Venezuela's cash cow, the state oil company PDVSA is a ragged shadow of its former self: overburdened, underfed, and in hock to Russian and Chinese creditors.
The woes of the group, whose full name is Petroleos de Venezuela S.A., look set to worsen because of US sanctions imposed last month restricting its access to credit.
Oil production keeps declining and much of what is exported goes to repay billions of dollars in loans.
That puts the government of President Nicolas Maduro in a very tight spot.
It relies on PDVSA's export income for 96 percent of foreign earnings, and to pay for many social programs.
Reduced oil revenues means "there is a real chance of default," said Tamas Varga, an analyst at London-based PVM Oil Associates.
- Sanctions and storm -
Venezuela faces additional problems in the form of US sanctions.
In July, Washington imposed direct sanctions on PDVSA's financial chief, Simon Zerpa, making it illegal for US individuals or companies to do business with him.
In August, President Donald Trump ratcheted up the pressure with broader sanctions against any new PDVSA bonds and the ability of its US subsidiary Citgo to repatriate cash.
The aim is to "deny the Maduro dictatorship a critical source of financing to maintain its illegitimate rule," the White House said.
What the measures do is effectively cut off PDVSA's option of restructuring its debts through a new bond issue.
Maduro railed that they amounted to a financial and economic blockade, as ratings agency Fitch downgraded Venezuela and warned default was now likelier.
The country has to make $3.8 billion in debt payments in October and November, while its foreign currency reserves have sunk under $10 billion.
Another complication, whose effects are yet to be fully felt, came with Hurricane Harvey hitting Texas. The storm late last month ripped through a part of the United States that is home to a third of American refining capacity -- some of it geared to handling Venezuelan crude.
PDVSA's president, Nelson Martinez, said last week that one of the company's refineries, in hard-hit Corpus Christi, was not damaged but had to shut down.
The aftermath of the storm, which saw oil tankers unable to offload crude, could prove to be a tough blow to Venezuela's fragile oil export system.
"The storm could impose financial pain on Venezuela without the United States actually sanctioning it, since US demand for the country's crude will fall, at least for as long as the refineries are down, thus forcing Caracas to find other outlets, and likely agree to significant discounts, for its oil," Antoine Halff, a director for global oil markets at Columbia University's Center on Global Energy Policy, told the Financial Times newspaper.
"That would add to the Maduro regime's struggle to meet debt payments," he said.
- World's biggest reserves -
Venezuela sits atop the world's biggest proven oil reserves.
Currently it accounts for eight percent of US imported crude, making it the third-biggest supplier, after Canada and Saudi Arabia. A third of PDVSA's output of 1.9 million barrels per day goes to America.
But the quality of its black stuff -- with sludge high in sulfur -- is inferior to the lighter crude pumped by Saudi Arabia, and far more expensive to extract or refine.
"Much of it needs to be diluted with lighter oil just to be able to transport it. If you want to visualize it, think of tar on a roof on a hot summer day," said James Williams, an oil analyst at WTRG in the US.
For Venezuela to balance its accounts through oil sales, it needs a price "well over $125 per barrel," Williams said.
That poses a challenge, given global oil prices slumped dramatically three years ago and never recovered. They are now half of what they were in mid-2014.
According to PDVSA's latest annual report, the average 2016 price of a barrel of Venezuelan crude was $35.15.
The oil company earned $48 billion last year from 2.27 million barrels a day (mbpd) produced -- sharply down from $72 billion in 2015, when it pumped 2.65 mbpd.
- Unsustainable demands -
Nearly two decades of spendthrift Socialist governance by Maduro and, before him, the late Hugo Chavez, spread PDVSA's revenues thin, as did their scheme of selling oil to Cuba and other Caribbean states at preferential prices to ensure political support.
What has been exposed are unsustainable demands on output and a severe lack of investment in PDVSA's pipelines and oil fields.
Rigid price controls and nationalizations have scared off foreign investment. Rampant political patronage at PDVSA has forced many qualified Venezuelan oil engineers and managers to emigrate.
Recent efforts by OPEC, of which Venezuela is a member, to bolster prices through a production quota accord will not help Caracas, according to analysts who say only a change of government would work.