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Petroleum

Venezuela's Oil Workers' Strike Wreaks Havoc on Economy and Industry

Strategic Insights

— 1 min read

A protracted general strike in Venezuela, aimed at ousting President Hugo Chavez, has resulted in a significant decline in the country's economy and oil industry. The strike has led to a substantial reduction in crude oil exports, with deliveries slowed to a trickle, and the government has sought fuel supplies from Brazil, Trinidad, and Russia to meet internal demand. The strike has cost state oil company Petroleos de Venezuela (PDV) over $2 billion in lost exports and damage to installations. The impact on the US oil industry is equally significant, with US refiners who rely on Venezuelan crude oil for their feedstock forced to slash production and resort to substitutes.

Key Takeaways:

  • The oil workers' strike in Venezuela has resulted in a significant decline in crude oil exports, with deliveries slowed to a trickle.
  • The strike has cost state oil company Petroleos de Venezuela (PDV) over $2 billion in lost exports and damage to installations.
  • US refiners who rely on Venezuelan crude oil for their feedstock have been forced to slash production and resort to substitutes.
  • The government claims that crude oil production in Venezuela has dropped to 600,000 b/d to 700,000 b/d, while dissident managers estimate output at under 200,000 b/d, or as low as 150,000 b/d.
  • PDV President Ali Rodriguez considers the damage to Venezuela's reputation as a reliable supplier to be the worst effect of the strike.
  • The strike has aided Chavez's strategy to re-shape PDV, weeding out dissidents and those who hanker for the old meritocracy.
  • Rodriguez has named 90 managers and professionals on administrative leave, who may face dismissal or prosecution on sabotage charges, potentially denting PDV's capabilities.

Statistics:

  • 2.5 million b/d: Contribution of Venezuela's crude oil exports to the global oil market.
  • $2 billion: Estimated cost of lost exports and damage to installations for PDV.
  • 110,000 b/d: Reduction in throughput at the 270,000 b/d Texas refinery jointly owned by Lyondell Chemical and PDV subsidiary Citgo.
  • 3 million b/d: Normal crude oil production in Venezuela.
  • 150,000 b/d: Estimated output of crude oil production in Venezuela, according to dissident managers.

Sources:

  • "Nation Within a Nation" by Oilweek, December 19, 2002
  • Interview with PDV President Ali Rodriguez, December 24, 2002

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