ADVERTISEMENT
ADVERTISEMENT

The industry keeping Venezuela afloat is under pressure from both inside and outside the country

Internal decay and external pressure are adding to the turmoil in Venezuela.

  • Venezuela is increasingly reliant on its faltering oil industry for revenue.
  • But the deteriorating economy is undermining the oil sector.
  • And other countries in the region want to roll back Venezuela's oil diplomacy to further isolate its embattled government.

Venezuela's embattled government has relied on oil — which provides about 95% of the country's export revenue — to help keep it afloat as it fends off international pressure and deals with unrest over a rapidly unwinding economy and rampant shortages.

But turmoil in Venezuela and external efforts to isolate President Nicolas Maduro are increasingly straining the country's oil industry, managed by state oil company PDVSA.

On the ground, years of mismanagement and underinvestment have left much of PDVSA's infrastructure unable to function at full capacity — and, in some cases, unable to function at all.

ADVERTISEMENT

PDVSA's production has halved over the last 16 years. Daily output in January was 1.77 million barrels — down from a peak of 3.34 million barrels a day in 2001. Energy Intelligence reported this month that oil output may in fact be lower — about 1.4 million barrels a day.

PDVSA's refineries will operate at 43% of their capacity in March because of a lack of spare parts, feedstock, and light crude, according to Reuters, which cited company internal documents. The 701,000 barrels a day it plans to process this month are slightly more than in March 2017 but well below total capacity of 1.62 million barrels a day.

"With production going down and down, there is a spiral of less cash and less investment and less production," Francisco Monaldi, a Venezuelan oil expert at Rice University, told The New York Times in December. "I don’t think there has ever been such a collapse in cash flow of any national oil company."

Jobs at PDVSA — with generous pensions and ample meals in company cafeterias —were once highly sought. But spiraling inflation has made the pay increasingly worthless, and shortages have left the cafeterias bare.

ADVERTISEMENT

Underfed workers are less able to do their jobs. Some have passed out at their work stations. Others, too weak for demanding labor, are sent home. Workers who stay on the job have to do more, sending them deeper into calorie deficit. They are less able to quickly respond to the technical and mechanical problems.

Skilled workers like those from the oil sector have been sought by foreign headhunting firms, and an influx of Venezuelan oil workers has been credited with boosting Colombia's oil industry.

Hundreds of workers from Venezuela's Caribbean refineries left at the end of 2017 for $10-an-hour construction jobs on the Caribbean island of St. Martin, which is rebuilding after hurricanes late last year.

Maduro carried out what many saw as a purge of PDVSA last year, replacing rivals with political allies, mainly military officials. While their inexperience may only undercut the firm, Maduro doesn't appear to have suffered for it.

Venezuela's military is vital to Maduro's hold on power, Ramsey said, and "while it's clear that the oil sector has been key to ensuring the support of security forces ... Maduro has given them plenty of other perks to ensure their loyalty," including control of the borders and access to kickbacks from imports and food distribution.

ADVERTISEMENT

"That’s why oil sanctions are such a risky move: They wouldn’t necessarily force Maduro from power, but they would certainly provide him with plenty of ammunition to [blame] his country’s economic crisis on the United States," Ramsey said. "Ultimately, those who will be most affected by such sanctions would be everyday Venezuelans, already suffering from widespread shortages of food and medicine."

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.
ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng

Recommended articles

Here's everything to know about being a virgin on your wedding night

Here's everything to know about being a virgin on your wedding night

7 do's and don’ts of the Holy month of Ramadan

7 do's and don’ts of the Holy month of Ramadan

Top 5 sweetest celebrity mother-child relationships that stand out for us

Top 5 sweetest celebrity mother-child relationships that stand out for us

International Women's Day: 5 Nigerian female celebrities championing women’s rights

International Women's Day: 5 Nigerian female celebrities championing women’s rights

Top 5 female directors in Nollywood

Top 5 female directors in Nollywood

6 things that will break a Muslim's fast during Ramadan

6 things that will break a Muslim's fast during Ramadan

5 benefits of fasting during Ramadan

5 benefits of fasting during Ramadan

5 reasons Easter was more fun when we were children

5 reasons Easter was more fun when we were children

Dos and don’ts of supporting Muslims during Ramadan

Dos and don’ts of supporting Muslims during Ramadan

ADVERTISEMENT
ADVERTISEMENT