Venezuela’s Oil Industry

The Los Angeles Times has an interesting article on the Venezuelan oil industry. Three years ago, Hugo Chavez fired 20,000 workers from the state-owned oil company. Now those employees are finding work in oil-producing countries all over the world.

An estimated 1,000 former PDVSA workers, many of them with graduate degrees from U.S. and European universities, have left Venezuela for Mexico, the United States, Russia, Kuwait, Saudi Arabia — wherever oil is being sought, produced or refined.
“Things are expanding here with a lot of projects on the drawing board,” said Ciro Izarra, a former PDVSA facilities planning specialist who is now working for an oil company in Dharhan on Saudi Arabia’s Persian Gulf coast. He chose not to name the company for fear of political reprisals back home. “It’s been professionally and economically interesting, an agreeable surprise.”
PDVSA’s recovery from the devastating loss of personnel seems to have stalled. The mass firings — which included 75% of the company’s engineers, 70% of research scientists and 50% of its refinery employees — are an important factor in its failure to regain production levels of late 2002. That’s when a series of strikes began in response to Chavez’s efforts to bend the previously independent company to his political will, culminating in the mass layoffs in early 2003 and the decline of daily output to as low as 700,000 barrels.
Although the Chavez government claims that production has largely recovered and is averaging 3.2 million barrels of crude a day, industry experts contend that the level is closer to 2.6 million barrels, a 25% drop from the 3.5 million that Venezuela was producing before chaos enveloped the state company.
Worse is that average daily production has remained flat over the last two years and may have declined by 120,000 barrels more this year. Chavez was forced to concede in early May that production has fallen by about that much in Zulia, the western state where oil was first discovered and exploited in the 1920s. Energy ministry officials since have said that production drop has been recovered, but experts are skeptical.
Meanwhile, OPEC members have raised their daily production by an average 15% since 2002 to about 30 million barrels.

Posted by on November 25th, 2005 at 11:42 am


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