Workers Flee and Thieves Loot Venezuela’s Reeling Oil Giant
Posted June 14, 2018 11:20 p.m. EDT
EL TIGRE, Venezuela — Thousands of workers are fleeing Venezuela’s state-owned oil company, abandoning once-coveted jobs made worthless by the worst inflation in the world. And now the hemorrhaging is threatening the nation’s chances of overcoming its long economic collapse, union leaders, oil executives and workers say.
Desperate oil workers and criminals are also stripping the oil company of vital equipment, vehicles, pumps and copper wiring, carrying off whatever they can to make money. The double drain — of people and hardware — is further crippling a company that has been teetering for years yet remains the country’s most important source of income.
The timing could not be worse for Venezuela’s increasingly authoritarian president, Nicolás Maduro, who was re-elected last month in a vote that has been widely condemned by leaders across the hemisphere. Prominent opposition politicians were either barred from competing in the election, imprisoned or in exile.
But while Maduro has firm control over the country, Venezuela is on its knees economically, buckled by hyperinflation and a history of mismanagement. Widespread hunger, political strife, devastating shortages of medicine and an exodus of well over 1 million people in recent years have turned this country, once the economic envy of many of its neighbors, into a crisis that is spilling over international borders.
If Maduro is going to find a way out of the mess, the key will be oil: virtually the only source of hard currency for a nation with the world’s largest estimated petroleum reserves.
But each month Venezuela produces less of it.
Offices at the state oil company are emptying out, crews in the field are at half strength, pickup trucks are stolen and vital materials vanish. All of this is adding to the severe problems at the company that were already acute because of corruption, poor maintenance, crippling debts, the loss of professionals and even a lack of spare parts.
Now workers at all levels are walking away in large numbers, sometimes literally taking pieces of the company with them.
A job with Petróleos de Venezuela, known as PDVSA, used to be a ticket to the Venezuelan Dream.
No more. Carlos Navas, 37, worked on a drilling crew outside of this oil city, El Tigre. He had a house here, with air-conditioning, and a car. He never imagined he might not make enough money to buy food for his wife and three children.
But he quit his job late last year, he said, because he couldn’t live on what had become starvation wages.
On a recent evening, with the sun slanting low over the plains, Navas prepared to leave. He was boarding a bus to the malaria-infested gold mines to the east, where he hoped to scrape out enough money to buy food for his family and, eventually, finance an even longer journey: to Ecuador or Peru, where he would follow a stampede of his fellow Venezuelans fleeing the country’s economic cataclysm.
“Before, you worked and you were rich,” Navas said of his oil company job. “Your salary bought anything you needed. Now you can’t buy anything, not even food.”
Inflation in Venezuela is projected to reach an astounding 13,000 percent this year, according to the International Monetary Fund. When The New York Times interviewed Navas in May, the monthly salary for a worker like him was barely enough to buy a whole chicken or 2 pounds of beef. But with prices going up so quickly, it buys even less now.
The state oil company is not faring much better. Output is at its lowest level in 30 years, and there is no sign that the sustained descent is over.
The company and the Venezuelan government are in default on more than $50 billion in bonds after failing to make interest payments since late last year. China has refused to continue lending Venezuela money in return for future payments in oil.
Venezuela’s oil exports are being interrupted by legal action as well. In recent weeks, courts have ruled that ConocoPhillips, a U.S. oil company, could seize Venezuelan shipments at refineries and export terminals in several Dutch Caribbean islands. The action stemmed from Venezuela’s decision to nationalize foreign oil assets a decade ago.
And at home, Venezuela has had so many troubles with refineries and other oil installations that it has had to import gasoline for the domestic market, spending dollars it can hardly afford.
Maduro has ordered the arrest of dozens of the state oil company’s managers, including the company’s former president, in what he describes as a corruption crackdown.
But the effort has the hallmarks of a battle for control and access to oil revenue. In November, Maduro installed a National Guard general, Manuel Quevedo, with no oil experience to lead the company.
All of that adds up to a company in a free fall.
In a speech last month after his re-election, Maduro said that oil production this year must increase by 1 million barrels a day, a seemingly impossible task, suggesting that he might seek more investment from friendly governments like Russia’s and China’s.
“We have to increase by a million barrels!” he shouted. “Who’s going to do it? Maduro?” His answer: PDVSA workers.
In the area around El Tigre, many of the operations are run by the state oil company in joint ventures with foreign entities, including Western companies like Chevron and Repsol of Spain, as well as state companies like the China National Petroleum Corp. and Rosneft of Russia.
Oil executives cite the difficulty of working in Venezuela as social conditions decline.
“People are starving,” said Eldar Saetre, chief executive of Equinor, the Norwegian oil giant that works with PDVSA.
Interviews with more than a dozen current and former oil workers revealed deep anger. The workers, many of whom asked not to be named because they feared retaliation, said that while Venezuela’s oil company had been sliding for years, its deterioration had accelerated.
“This was a golden cup,” said one worker. “Not silver, gold. Now, it’s a plastic cup.”
Workers said that lifelong health insurance was now worth little, because the state oil company had largely stopped paying private clinics. Field workers complained that lunches sometimes failed to show up because the company did not pay the provider. Then there is the theft of essential equipment. A tour of oil installations around El Tigre showed a devastating toll.
At several pumping stations and tank facilities, thieves had torn apart electrical installations to strip out the copper cable. At one site, nine electrical transformers had been torn from posts, their copper parts gutted, disabling vital control systems.
Many pump jacks were idle. At one well, the motor had been stolen, shutting it down.
There were gaps in fences and gates left open, leaving facilities unprotected. An employee said that a National Guard unit assigned to patrol the area had been sidelined for months because its vehicle broke down and there were no spare parts to fix it.
The facilities showed deep neglect. Many had oil spills caused by damaged tanks, pipes or valves. At one site, two large tanks were surrounded by a large black lake of crude oil that had seeped out.
Workers said they did not know who was behind the thefts. They said criminal gangs might be to blame, but some acknowledged that dismantling live electrical systems required a knowledge that workers or former workers would possess.
Ali Moshiri, Chevron’s top executive for Latin America until last year, said that theft in Venezuela’s oil fields had been a fact of life for 20 years.
“But the stealing has accelerated,” he said, citing theft as a prime reason that oil production is plummeting. “They’ll steal your car, they’ll steal your wellhead if they can. They will melt it, take parts out of it and sell it.”
“People are so desperate,” Moshiri added. “They can sell the copper to feed their families.”
Workers and supervisors in El Tigre said that production from existing wells was down and that the drilling of new wells was largely paralyzed by the lack of equipment, chemicals, spare parts and basics, like food for workers.
One supervisor listed the many destinations to which his co-workers had fled: the United States, Argentina, Peru, Ecuador, Brazil, Colombia and Spain.
Many leave without giving notice. Often, they are not replaced. When they are, the new workers frequently have little or no experience.
Junior Martínez, 28, who has worked in the oil industry for eight years, is assembling papers, including his diploma as a chemical engineer. His wife and her daughter left three months ago to earn money in Brazil.
“I get 1,400,000 bolívars a week and it isn’t even enough to buy a carton of eggs or a tube of toothpaste,” Martínez said of his salary in bolívars, Venezuela’s currency.
Martínez’s father, Ovidio Martínez, 55, recalled growing up here when the oil boom began, with wells sprouting down the block. He cried as he spoke of his son’s determination to leave the country.
“You watch your children leave and you can’t stop them,” the elder Martínez said, fighting back tears. “In this country, they don’t have a future.” Here in El Tigre, hundreds of people stood in line one recent morning outside a supermarket, many waiting since the evening before to buy whatever food they could.
Carlos Antonio Ortega, 31, walked along the line in his red PDVSA coveralls, selling loose cigarettes. He said he had been a maintenance worker for the oil company but quit eight months ago.
“I couldn’t buy anything with what I was making,” he said. “You have to make the food stretch.”
One PDVSA worker with more than 30 years’ experience, who recently retired from her job arranging oil exports and shipments, said that when she started she made the equivalent of about $1,750 a month. The company even paid for her to study abroad and receive graduate degrees.
When she retired, she said, her monthly salary couldn’t buy two cartons of eggs.
“You want to go into a corner and cry,” she said. “It’s a time bomb. I would sit in meetings and think to myself: Ticktock, ticktock.”