Venezuelan Oil Output Close to Normal After Strike

Six weeks after a crippling nationwide strike ended, Venezuela is reaching near-normal levels of oil production as the U.S. enters a war that could slash worldwide petroleum output, government officials said.

Venezuela, which was one of the United States’ biggest sources of oil until the strike began in December, is producing about 3 million barrels a day, compared with its average output of 3.1 million barrels just before the strike, according to the state-owned oil company, Petroleos de Venezuela, or PDVSA.

Long considered one of the United States’ most trustworthy sources of oil, the company backed up its claim by telling foreign customers this month that it could now fulfill all contracts, a commitment suspended during the strike.

“All the tankers are operating and functioning, all areas have been reactivated, all refineries are active,” President Hugo Chavez told his nation this month as he swore in a new PDVSA board of directors. “It was truly a great battle, a great battle.”

Striking oil workers and independent oil analysts, although claiming output is only about 2 million barrels a day, acknowledge that PDVSA is steadily increasing production despite the firing of about 16,000 workers, nearly half the company’s workforce.

Nowhere is the battle over Venezuela’s oil production more clear than here, on this starkly beautiful peninsula of cactus and desert that juts into the Caribbean Sea. Squatting on the western edge of the peninsula is the massive Paraguana refinery, one of the largest in the world, with a capacity of nearly 1 million barrels of oil a day.

Chavez has made the refinery the center of his battle to win control of PDVSA, which was nearly shut down as thousands of workers walked off their jobs to support the two-month nationwide strike that cost the country an estimated $6 billion. He held a rally here this month to celebrate the beginning of gasoline production.

When the strike began in a bid to force Chavez from power, most of the 3,400 workers here walked off their jobs, turning the place into a ghost town. Tankers sat stranded near the docks. The smokestacks stopped spewing. The omnipresent hum of machinery that normally fills the air quieted.

Now the plant has slowly begun production again, working with only 55% of its pre-strike employees. Last week, plant operators announced that they were producing enough leaded gasoline to meet the country’s internal needs, slowing gas imports that have cost Venezuela $534 million.

The nerve center of the complex is a low, tan, windowless building plunked in the middle of a black asphalt parking lot, a bunker supposedly designed to withstand an atomic blast. It sits surrounded by a nightmarish city, a mass of twisting pipes and burning smokestacks and sulfurous air. The noise of whirring machinery is constant, exacerbated by a steady 10-mph wind that never ceases blowing across the barren peninsula.

But the workers who defied the picket lines and labored seven days a week acknowledge that the reactivation is only half-complete. Though the plant has restarted, the real fight is to sustain production -- a concern echoed by the opposition.

“One thing is to get the plant working, another is to maintain it,” said Jose Vega, a process engineer who came out of retirement to restart the complex after spending five days in line to get gasoline during the strike. “We can’t hide this. We need more professionals. To deny this would be a lie.”

To fill the breach, the government has imported contract workers from the United States, Europe and Mexico. The most serious shortfalls are in areas that affect future revenues: exploration, sales and product development.

At Paraguana, 86 engineers once ran the refinery’s day-to-day operations. Now there are five. The shipping section once had 70 employees. Now there are two.

Former PDVSA employees say the lack of staffing is creating serious safety and environmental problems.

Edgar Rasquin is the former director of the refinery. Over dinner at an outdoor restaurant one recent night, he pointed behind him to one of the refinery’s main smokestacks. A massive, three-story-high flame was shooting upward, lighting the night like an artificial sun.

“This is not a normal situation. It’s an indication of a problem,” he said.

Current workers acknowledge that some areas of the complex are not functioning normally. A plant spokesman said there were problems with regulating the escape of gases, creating the massive smokestack flame.

But plant operators insist that the reactivation process has taken so long precisely because safety has been a top concern. There have been accidents, but none serious.

They also say the reduction in staff has allowed them to streamline a bloated company. Although they agree that more workers are needed, they say that staffing in administrative areas here was perhaps double what was needed.

“There was a lot of fat,” said the plant’s new director, Ivan Hernandez. A gruff man with a habit of speaking bluntly, he came out of retirement to take over the plant, responding to a personal plea from Chavez.

Hernandez, who rose through the ranks over a 42-year career to become the refinery’s first director, insists that he came back for patriotic reasons, not because of his devotion to Chavez.

His reward has been 16-hour workdays for three months, the scorn of striking workers who were once close friends and 38 earsplitting cacerolazos outside his home -- protests in which demonstrators bang together pots and pans for hours on end.

Working with less than half the normal staff, Hernandez has slowly overseen the plant’s reactivation. The computer systems were sabotaged, he said, resulting in his having to hand out fistfuls of cash to pay workers. The prolonged shutdown damaged the plant’s machinery, resulting in numerous minor mishaps.

He makes clear his scorn for the “Caracas types” who tried to disrupt the march of the “Bolivarian revolution” -- the mix of populism and leftist ideology that Chavez promotes as the solution to the country’s endemic poverty.

“I care a lot about the country, not about Chavez,” Hernandez said as he lifted up a small copy of the country’s constitution, waving it in the air as Chavez does during his speeches. “Chavez is an excellent leader, but my first commitment is to the constitution.”

It is this sort of embrace of Chavez’s program -- the president’s closest allies personally oversaw the writing of the constitution -- that worries former PDVSA workers. Until the strike, PDVSA prided itself on operating more like a private firm than an inefficient state enterprise.

Now opponents of the president believe that his need for money to fund social programs will put tremendous pressure on PDVSA workers to produce. Oil revenue accounted for half the government’s budget last year.

Those who work at the plant may not support Chavez or his plan. But they think a retooled PDVSA, one more devoted to relieving the country’s many problems, is a good idea.

Jose Nunez kept working during the strike, enduring heckling from his neighbors in the small company housing complex where he lives. His children were threatened, protests took place in front of his home and he has become isolated from former friends.

But he thinks that the company must change in order for Venezuela to change.

“We are a different PDVSA, definitely,” he said, taking a break in the bunker. “This is a PDVSA that is more human, a PDVSA that is less ‘don’t care about your suffering.’

“We can no longer be isolated,” he said. “We have to be aware of the reality of the country.”