In Venezuela, more oil, questions
www.miami.com
Posted on Tue, Mar. 18, 2003
BY MARIKA LYNCH
mlynch@herald.com
CARACAS - As war in Iraq appears closer, Venezuela says its production of crude oil has nearly recovered from a crippling two-month strike.
By June, this important U.S. supplier expects to be able to surpass its former output to pump 3.4 million barrels of crude a day, officials said.
But Venezuela, according to analysts, fired oil workers and opposition members, is still behind and unlikely to recover fully before year's end.
' `I don't think so.' That's the general reaction,'' said George Beraneck, manager of market analysis for Washington-based consulting firm PFC Energy.
After surveying U.S. importers and other sources, Beraneck believes that Venezuela is producing about two million barrels a day, not the three million its government says. Though not the target, he said, that number is far beyond what he would have predicted a month ago.
''They're doing a nice job, considering what they're working with,'' Beraneck said.
Venezuela accounts for about one out of every seven barrels of oil imported to the United States daily. The strike is one of several reasons that U.S. and world oil reserves have been low over the last year, causing prices to rise.
The future of world oil prices is uncertain, analysts said, above all because of a possible war in the Middle East.
Venezuela's oil industry collapsed in December, when employees at state-owned Petróleos de Venezuela, angry about changes in the company under the administration of President Hugo Chávez, walked off the job.
By the height of the strike, 16,000 employees had walked out and production had shrunk to 200,000 barrels a day, costing Venezuela $6 billion. The country had to import fuel to keep vehicles moving, and drivers waited for days at gas stations.
The strike, which failed to oust Chávez or to get early elections called, was strongest in the oil sector, though businesses around the country shut down. Because oil is Venezuela's primary source for foreign exchange, the country had to impose currency controls and ration dollars, which it hasn't sold in over a month.
The government, meanwhile, fired the striking workers and is moving to replace them with outside employees. In addition, seven oil executives, charged with sabotage, have gone into hiding. On Monday, an appeals court, citing procedural violations, struck down those charges, the executives' lawyer told reporters.
In January, President Chávez pledged a rebound by the oil industry and said crude production would be back to three million barrels a day by mid-February. On Saturday, state oil company chief Alí Rodríguez said that Venezuela had all but stopped importing gasoline, that crude production had nearly reached prestrike levels and that the company must now concentrate on stabilizing production.
Rafael Ramírez, minister of energy and mines, echoed his statements.
''We've maintained, intact, our production capacity,'' Ramírez said at a weekend oil conference.
In June, OPEC members are to gather to review the world oil situation. If the group agrees, Venezuela will surpass its limit to pump 3.4 million barrels of crude a day, Ramírez said.
But industry sources and former workers consider that level physically impossible. They note that many employees, including most top executives, have left, taking years of experience with them. And pumping crude, they say, isn't as simple as turning on a faucet; once off, it takes time for a well to be pumped again.