There was a time when PDVSA, Venezuela’s state-owned oil company, commanded respect in the industry. Over the past two decades it has become little more than a despot’s piggy bank. The firm’s oil exports to America are the principal source of new dollars for Nicolás Maduro’s beleaguered government.

PDVSA’s vital role in buying the support of the armed forces for Mr Maduro explains the decision by the US Treasury on January 28th to impose further sanctions on it. The risk is that such measures will increase the misery for Venezuelans in a country that has lost nearly half of its economic output since 2013. About a tenth of the population has fled hyperinflation and shortages of food and medicines.

PDVSA has been mismanaged for years. In 2003 Hugo Chávez, Mr Maduro’s predecessor, sacked almost half of the company’s staff. He went on to take controlling stakes in international firms’ projects in the country. ExxonMobil and ConocoPhillips left. Instead of reinvesting PDVSA’s profits to boost production, Chávez tapped it to fund welfare spending. Production declined during Chávez’s presidency, but it has plunged during that of Mr Maduro: output in 2018 was 30% below what it was a year earlier, according to OPEC.

Professional employees have mostly left. A purge in 2017 saw around 70 PDVSA staff arrested, including its president. It is now run by a general with no oil expertise. It has defaulted on most of its debt and its domestic facilities are regularly robbed by staff and roaming gangs.

As a result, the PDVSA piggy bank is almost empty. According to calculations made by Siobhan Morden of Nomura, a bank, before the latest round of sanctions, PDVSA was set to produce less than 1m barrels per day over the course of 2019. After deducting all the other claims on that output, including payments in kind to Russia and China, she reckons that the regime would have been left with only $234m to help pay for the loyalty of the armed forces.

Now even this amount is under threat. Despite its woes, PDVSA continues to eke out some barrels. In October Venezuela exported 570,000 barrels a day to America, more than all but Saudi Arabia, Canada and Mexico. The new sanctions block company assets under American jurisdiction. American companies can still buy Venezuelan crude, but payments will be placed in escrow accounts. PDVSA will obtain access to those accounts only after the company comes under the control of Juan Guaidó, who declared himself acting president on January 23rd, or of a democratically elected leader.

If Mr Maduro were to continue to make sales to America, in other words, he would be weakening himself and creating a pot of money that his rival could use to entice the armed forces to his side. So Mr Maduro must search for export markets elsewhere, most probably in Asia, which will mean a reduction in revenue, due to higher transport costs. Importantly, the Treasury seems also to be prohibiting American firms from selling diluents, products that PDVSA mixes with its viscous crude so that it can be transported through pipelines. Without American diluents, PDVSA will have to buy them from elsewhere, probably at a higher cost. That will squeeze PDVSA’s margins further, along with the amount of money available to the armed forces. The vice around Mr Maduro steadily tightens.