Caracas turns to Brazil for fuel shipment

news.ft.com By Andy Webb-Vidal in Caracas Published: December 28 2002 4:00 | Last Updated: December 28 2002 4:00 Venezuela is this weekend expected to take delivery of a shipment of petrol from Brazil, marking what industry analysts say will be the first time the nation has needed to import fuel in modern times.

A skeleton staff of dockers at Puerto La Cruz, in the east, were last night preparing to berth and unload the Amazon Explorer, a tanker laden with 520,000 barrels of petrol from Petrobrás, Brazil's state oil company.

That Venezuela, until a month ago the world's fifth largest exporter, has begun importing fuel demonstrates the size of the crisis gripping the country's oil industry and economy as a result of a strike by managers and workers at state-owned Petróleos de Venezuela (PDVSA).

The stoppage by an estimated 30,000 oil workers, who are demanding that President Hugo Chávez resign and call early elections, is now into its 27th day, with no sign of an end.

Ramón Espinasa, an oil industry consultant at the Inter-American Development Bank and a former chief economist at PDVSA, said the importing of petrol showed the severity of the strike at the oil company. "Its refineries are practically shut."

Before the strike began at the beginning of the month, PDVSA was producing 2.85m barrels of oil per day and exporting 2.4m b/d, with more than half going to the US.

But with only the refinery at Puerto La Cruz operational, refined product output has dropped to 68,000 b/d, cutting off exports and starving the domestic market of fuel and cooking gas. Motorists wait for up to 70 hours for rationed quantities of fuel in the capital.

The shipment from Brazil was requested by Mr Chávez and received the approval of both Fernando Henrique Cardoso, Brazil's president, and Luiz Inácio Lula da Silva, president-elect, who is due to take office next week.

Political opponents of Mr Chávez reacted angrily to news that fuel imports were on their way and accused the Brazilian government of interfering in Venezuela's domestic affairs.

Due to food shortages arising from the strike, Venezuela this week also began importing basic foodstuffs, including meat and milk from neighbouring Colombia and rice from the Dominican Republic.