Venezuela's oil industry is bleeding - and its collapse could mark the end of President Nicolas Maduro

REUTERS/Carlos Garcia Rawlins

Deputies of the Venezuelan coalition of opposition parties (MUD), clash with Venezuelan National Guards during a protest outside the Supreme Court of Justice (TSJ) in Caracas, Venezuela, March 30, 2017.

• President Nicolas Maduro is widely seen as winning reelection this month - the Venezuelan government has been accused of rigging elections in the past.
• But some experts don't see Maduro holding power past 2018, even if he is reelected.
• A collapsing oil industry could lead to Maduro being overthrown.

Given the far reaching grasp of the Venezuelan government, there's a good chance President Nicolas Maduro will hold power through 2018 - but after the presidential election could be a different story.

A crumbling economy has plunged Venezuela deep into a humanitarian crisis, with hundreds of citizens fleeing to neighboring countries each day. And under a leader who has already inspired regular and heated protests by its citizens, some experts think it could be the tipping point for overthrowing the regime.

"We do not believe that any government can survive a collapse of this magnitude if it continues indefinitely," analysts at BMI said. "In order to remain in office, the current regime must take steps to create a new set of policies that can revive Venezuela's economic activity."

Any chance of meaningful recovery would almost surely start with fixing the oil industry, which makes up 95% of export earnings in the country and accounts for about a quarter of GDP. Production dropped by more than 50% from January 2016 to January 2018, according to the US Energy Information Administration.

In fact, most experts are betting things will only get worse for state-run oil company PDVSA. Analysts at Bank of America Merill Lynch expect the country's crude oil output to continue to slide, ending the year at 1.1 million barrels per day.

For starters, Venezuela is bleeding money. After defaulting on more than a dozen bonds last November, it's been forced to focus on paying sovereign debt. That leaves less funding for the country's oil giant, where operations are already falling apart.

A lack of crucial maintenance and repairs at PDVSA refineries have left them operating at a record-low utilization rate of 30%, according to analysis by BMI. And the production decline is so sharp that even booming prices don't seem to be helping.

On top of that, PDVSA is facing a worker crisis that could further decrease output. About 25,000 workers - more than 17% of PDVSA staff - left the company between the start of January 2017 and the end of January 2018, Reuters reports.

With no clear end to the economic crisis in sight, analysts say things don't look so good for Maduro past 2018. Even if he shifts his policies immediately, it would likely be at least several years before the country could return to growth.

"We believe that he has remained in office - in spite of a deep economic depression, widespread street protests and growing humanitarian crisis - because the elites have yet to turn against him in sufficient numbers to overthrow the regime," BMI analysts said.

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