(Puerto Concha) Piping and fittings corroded by rust, spare parts lying on the ground, leaks… In the former oil field of Lake Maracaibo (west) stairs lead nowhere, a metaphor for the oil industry of Venezuela in the past flourishing and today in the doldrums.
Posted at 8:00 a.m.
Although production in the east of the country is doing better, the disuse of the facilities in the state of Zulia, where the Venezuelan oil industry was born more than a century ago, is symbolic of the decadence of this former oil giant.
In 2008, Venezuela produced 3.2 million barrels per day and the country was one of the economic heavyweights in Latin America. Thirteen years later, only between 500,000 and 1 million barrels come out of the country’s subsoil, which is going through an unprecedented crisis with a GDP per capita falling to the level of Haiti.
In its day, the Maracaibo deposit, called the “7 flagstones”, was a floating city that shone at night, with a halo visible for miles around. Today, it is a humid desert with a heavy air filled with the fumes of hydrocarbons from which slicks of crude escaped from the wells float in places.
The rigs were looted and stripped of anything of any value…including the taps and valves controlling the release of oil and gas.
No more people venture into the area “for fear of an explosion due to the gases”, says a fisherman on condition of anonymity.
On January 11, an explosion of an oil pipeline at the other end of the country in an oil zone in the northeast left three injured. Union organizations and opposition leaders frequently report accidents, but the government speaks instead of “sabotage” and “criminal actions” that are “part of the permanent war waged by groups belonging to the Venezuelan extreme right, supported by American imperialism”.
We are far from the prosperity of the 1970s when the country was nicknamed “Venezuela Saudi”. At that time, all the oil companies were nationalized.
political control
A gigantic state enterprise, PDVSA (Petroleos de Venezuela) had a monopoly that lasted until the “oil opening” in the 1990s, but this liberalization was then partially reversed with the coming to power of Hugo Chavez. President of socialist inspiration (1999-2013) he imposed on the companies present to associate with PDVSA which was to have the majority in these associations.
Corruption, questionable strategic choices, maintenance problems, financial penalties, aging industrial facilities… the sector is struggling to regain its former levels.
Asked by AFP, the company did not respond.
According to most analysts, one of the pivotal periods was the standoff in the early 2000s between Chavez (1999-2013) and the leaders of PDVSA. This opposition culminated in a historic strike from December 2002 to March 2003, followed by the total takeover of the company by the political power.
Denouncing the “sabotage” of production, the late president then dismissed many executives and thousands of employees to rehire people “loyal to the revolution”, but who did not necessarily have skills in the field.
PDVSA has thus “become the state’s cash cow” as well as the recruitment center for its “faithful servants”, without taking into account the company’s investment needs, reports an analyst.
Most of those interviewed by AFP preferred to testify on condition of anonymity on this extremely sensitive subject in Venezuela.
“Broken families”
Carlos (whose first name has been changed) was 18 when he joined PDVSA in the 2000s. so that “PDVSA turns into a political party” with a pitiful management of the company and nationalizations of subcontractors.
In 2009, some 70 companies that were in charge of maintenance and personnel transport thus became the property of PDVSA in the state of Zulia.
“The expropriations” resulted in “the lack of maintenance, the demotivation of the employees”, who saw their wages fall, explains Carlos.
He says he divorced when his income dwindled. “Many women left their husbands because they no longer worked at PDVSA. Families have broken up. I was not earning enough, ”he says.
At that time, half of the country’s 34,000 wells were paralyzed.
In 2013, the crisis worsened. Due to lack of payment, subcontractors began to stop working. Burning out light bulbs were no longer replaced and catering supplies to the platforms stopped. Some workers in charge of the extraction were therefore forced to spend their day “fishing for food”, says Maria, (first name also changed).
Teary-eyed
Maria also worked for PDVSA. In 2016, she noted the extent of the damage to the port of Maracaibo, the oil capital of the West, once teeming with activity: cemetery of dilapidated buses, stranded boats, and workers making an appearance and turning their inches.
” It hurts me. Tears came to my eyes,” she says.
At that time, everything was political, down to the screensavers that broadcast photos and maxims of Chavez or current President Nicolas Maduro.
“Appointing people based on politics has affected production a lot […]. We dismissed staff with experience and the meritocracy disappeared,” she says.
All of this has created a “bed of corruption” with embezzlement at the highest level – some leaders have been sentenced to prison terms – down to the operational level with the theft or looting of equipment.
In 2017, the government launched a vast operation against corruption within PDSVA targeting former leaders of the state oil group, including its ex-president Rafael Ramirez, accused by Attorney General Tarek William Saab of being one of the main responsible for “the bankruptcy due to corruption” of the oil group. Exiled in Italy, he assures us that these accusations are political.
Several witnesses also mentioned the use of company vehicles for personal purposes, private purchases with company funds, the theft of televisions and computers. Mismanagement has slowly eroded everything.
“In the Hands of God”
Carlos Mendoza Pottella, professor of oil economics at the Central University of Venezuela (UCV), qualifies the observation, pointing out that this type of behavior was already occurring in the 1980s, yet a golden era.
Faced with the ongoing decadence, many PDVSA agents have left the sinking ship to find other work and become taxi drivers or supermarket workers.
Maria continues to come to work twice a week for a salary of 60 bolivares per month (less than 15 dollars). Before, there was, in addition to good salaries, medical insurance, school aids. “Now we are in God’s hands,” she said.
“Today, no oil worker lives on their PDVSA salary,” she continues. The only ones who are properly paid are because they are “employed in ‘mixed enterprises'”, joint ventures with China or Russia, countries that are politically friendly to Venezuela.
The haemorrhage has reached all levels: from unskilled labor to engineers or geologists, who have left to earn a living abroad. “Some had been trained by PDVSA, but the government let them go,” Maria points out.
Another problem, the frequent power cuts for 15 years in the state of Zulia, of which Maracaibo is the capital. Became so habitual at a certain period that the work was interrupted at noon.
Venezuela thus finds itself in a paradox from which it is struggling to emerge: despite overabundant world reserves, there is a shortage of petrol and Caracas has even had to import Iranian fuel at certain times.
Penalties
And this shortage itself affects production because it complicates the entire supply chain.
Even if the chronology of events does not correspond to the version of the authorities, the Venezuelan power accuses the American sanctions, the first of which date from 2014 and which were increased by Donald Trump in 2017, of being responsible for the disastrous state of the petroleum apparatus.
Traditionally hostile to socialist leaders, Washington, which had strained relations with Chavez, is seeking to oust Nicolas Maduro from power as the opposition boycotted his re-election in 2018 and the 2020 legislative elections, deeming the polls “fraudulent”. About 50 countries do not recognize Maduro as the legitimate president of the country.
It is true that the United States, which was the main buyer of Venezuelan crude, particularly targeted the oil sector, notably preventing the purchase of spare parts.
Sanctions make it harder for employees trying to get the industry back on track.
At the “7 Dalles”, Roy, a 30-year-old fisherman, recalls his beginnings with his father and how he was impressed by “La Casona” (the big house), a logistics platform for the site’s 13 wells. “There were always four or five boats” around, he said.
Leaks
Today, jets of crude sometimes escape from the platforms. “One day I saw a 70m jet. I thought it was water, but it was oil,” he says.
Uncontrolled discharges from wells pollute Lake Maracaibo (13,000 km2) For years. Certain parts deprived of oxygen due to oil slicks are called “dead zones”.
Residents suffer. “The slicks of crude prevent you from working,” says Roy, whose nets sometimes get stuck in the viscous liquid. He says he lost more than 100 kg of oil-soiled crabs.
In October 2021, NASA released uplifting satellite images of the lake showing spirals of seaweed and numerous slicks of crude.
“At the bottom of the lake there is [un enchevêtrement] pipes and pipelines, like a plate of spaghetti, releasing oil that kills biodiversity,” laments expert Mendoza Pottella.
But this is not the only site concerned. The existence of leaks, rarely reported by PDVSA, are reported everywhere oil is exploited in Venezuela.
“Small Recovery”
Near Maturin, the capital of the state of Monagas (northeast), leaks are frequent in the huge drains that cross farms and houses. In the small village of Los Pozos de Guannipa, the pipelines are cracked. “There is a continuous flow,” complains Eleazar, a modest farmer who grows bananas and papayas. “It contaminates everything”.
However, President Maduro welcomed the rebound in production to 1 million barrels/day in early January and set a target of reaching 2 million barrels/day in 2022.
In 2021, there was “a small recovery” in oil activities “and PDVSA” is paying its subcontractors, says a businessman with decades of experience in the oil world.
Until a few months ago “virtually everything” was stopped, he adds.
At a time when fossil fuels are decried, President Maduro, who inherited an industry already in freefall, assures that the country will emerge from dependence on oil.
“We are not going to mortgage the life of a country for a product, the time of the ‘oil rent’ is over”, swears the president who is now betting on “economic diversification”.