Venezuela Strike Pushes Nation Toward Crisis

This nation was at the brink of its most serious political crisis since an April coup Thursday as a nationwide strike caused a sharp decline in oil production and President Hugo Chavez sent army and national guard troops to protect all of Venezuela’s petroleum facilities.

As strike leaders announced that they would continue the strike for a fifth day to force Chavez to agree to a February vote on his rule, a growing number of employees with the state oil company, PDVSA, joined the protest.

Slowdowns were reported all along the production chain, from wellheads to oil tankers. The resulting cascade effect was expected to result in defaults on international oil contracts in “five or six days,” according to a high-ranking PDVSA member.

Venezuela is the fourth-largest supplier of oil to the United States, providing on average about 13%, or 1.2 million barrels, of U.S. daily petroleum needs.

“The situation is extremely grave,” said Jose Toro, an oil analyst in Caracas, the capital.

Venezuela reeled dangerously as Chavez and his opponents faced off in a high-stakes confrontation with no endgame in sight. Chavez’s opposition, a large but disorganized group that includes businesses, unions, dissident military officers and opposition politicians, accuses the president of leading the country into ruin. It cites the shrinking economy, rising joblessness and internal strife.

They are seeking to hold a referendum in February on Chavez’s rule, but he has said the constitution does not permit a vote until August.

The standoff and the growing pressure from the oil crisis led to fears of new violence and possibly a new coup attempt. More than 60 people died in street clashes during a short-lived coup in April.

The strike seemed to have morphed Thursday into a new alliance between the opposition and the oil workers, who have remained mostly above the fray since their participation in strikes in April led to the coup.

Their joint participation complicated a possible solution because the two groups have different complaints. While the opposition has demanded a referendum, oil workers have a series of internal concerns. They say Chavez has installed incompetent sycophants in key company positions.

An angry Chavez said the opposition was trying again to overthrow him. He was returned to power two days after the April 11 coup by loyal military officers and supporters.

“I am making a call so we are ready to confront any situation caused by these violent, subversive, destabilizing instigators,” the fiery leftist said. “This is the moment to distance ourselves from subversive, coup-plotting, fascist currents.”

Chavez said he would send navy commandos to take over one of the rebellious ships, the Pilin Leon, loaded with 280,000 barrels of gasoline. Late Thursday, the standoff was resolved when the captain, Daniel Alfaro, said he would voluntarily turn over the ship and crew to a replacement crew to deliver the cargo.

Chavez also guaranteed that oil production would continue. Oil revenues account for more than half the government’s budget.

“All Venezuelans must be alert to defend our democracy,” he said, holding up a small blue book containing the country’s constitution. “They are trying to affect the heart of the economy to generate a state of chaos.”

At least six ship captains in the state-owned oil fleet joined the strike, stranding their ships in Lake Maracaibo, the heart of the nation’s oil industry. Striking dockworkers slowed the loading of ships that continued working. Daily operations suffered, with 90% of white-collar employees out.

More oil workers at the Paraguana Refinery Center, the largest in the Western Hemisphere, announced that they would join the protest, bringing production to a halt and resulting in a potential loss of about 1 million barrels of oil a day, equal to about a third of the country’s average daily output, according to PDVSA officials.

Oil prices jumped sharply Thursday. International benchmark Brent crude oil prices rose 62 cents, or 2.5%, to close at a six-week high of $25.80 per barrel.

Ed Morse, an oil expert at Hess Energy Trading Co. in New York, said a short-term strike didn’t pose any serious long-term risk to U.S. energy security.

“We still don’t know how long the situation will last,” said Morse, a former U.S. State Department official. “But it looks like it’s deteriorating rapidly and that control over both oil production and refining and shipping has fallen out of the hands of the government.”

Opposition figures had planned to hold a march through Caracas but canceled it, claiming that Chavez allies had planted snipers on rooftops.

“What they are playing is a game of poker to see who will first break the rules of the constitution,” said Antonio Herrera, general director of the Venezuelan-American Chamber of Commerce.

Further complicating a negotiated solution were new demands from the opposition. Emboldened by the participation of the PDVSA, the opposition said it was now demanding that presidential elections, scheduled for 2006, be moved up.

Negotiations between the opposing sides, mediated by Cesar Gaviria, secretary-general of the Organization of American States, were suspended Thursday.

But new hope emerged late Thursday that the two sides would return to the negotiating table. Government negotiators, who previously had refused to talk while the strike continued, said they would heed a call from fellow nations and Pope John Paul II to return to the table.

They asked Gaviria to seek ways to immediately begin a dialogue with the opposition. A source close to the talks called it a “step forward.”

Government officials acknowledged that oil production was suffering but said they have contingency plans in place to satisfy local and international petroleum needs.

“Operations are flowing normally,” said Bernardo Alvarez, vice minister of energy and mines. “There have been some minor delays, but that’s all.”

That account was sharply disputed by three high-ranking PDVSA officials interviewed by The Times. They portrayed an industry that was barely functioning and on the verge of shutdown.

At Paraguana, another union announced that it would join striking workers, crippling the facility. The group announced that the refinery would work only to supply basic electrical services to local communities.

The refinery “is shut down,” said Juan Fernandez, PDVSA’s planning director and a key player in the strike. “They are joining the strike for the same reasons as the rest of the country’s citizens: to demand a call for elections.”

Production was also slowed at two large refineries, Puerto La Cruz and El Palito, which supplies much of the country’s internal gas needs, a high-ranking PDVSA source said.

The six tankers amount to about half of PDVSA’s state-owned fleet, which accounts for 30% of its transportation capacity. The other 70% of oil transportation is performed by private contractors. Those ships were moving freely in and out of Lake Maracaibo, despite a threat by tugboat pilots to block them, the source said.

The slowdowns had already left 30% of gas stations in the eastern section of the country dry, the source said. Gas supplies in central and western Venezuela were expected to begin being affected in two to three days.

International contracts will begin to be affected in the upcoming week, the source said. It takes four days for an oil-laden tanker to make the trip from Venezuela to the United States, the country’s largest customer.

“There are still no defaults, but we are close,” the source said. “If the strike continues, I’d estimate in five or six days.”

PDVSA executives portrayed a growing divide among the company’s employees, who have long prided themselves on holding themselves aloof from politics despite being a state-owned company.

That assessment, at least, was backed up by Chavez allies in the oil company.

“It’s very tense,” said Enny Pulgar, a pro-Chavez administrator participating in a pro-government protest outside the company’s mostly abandoned headquarters Thursday. “Sometimes, when we’re drinking coffee, they come up and do a cacerolazo”--in which Chavez foes bang together pots and pans in protest.

*

Times staff writer Warren Vieth in Washington and special correspondent Christopher Toothaker in Caracas contributed to this report.