Venezuela's quick recovery surprises experts
The New Herald Posted on Thu, May. 29, 2003 BY RICHARD BRAND rbrand@herald.com
BACK ONLINE: The El Palito oil refinery in Venezuela is running again, loading tankers with gasoline, jet fuel and kerosene destined for foreign and Venezuelan pumps. The refinery is run by Asdrubal Chavez, a cousing of president Hugo Chavez. KIMBERLY WHITE/BLOOMBERG NEWS
EL PALITO, Venezuela - When President Hugo Chávez put his first-cousin Asdrúbal in charge of the El Palito oil refinery here in December during the height of a national strike, opponents cried nepotism and promised the move would backfire as reports of accidents mounted while a skeleton crew tried to resurrect Venezuela's third-largest refinery.
Four months later, El Palito is back online, loading tankers with gasoline, jet fuel and kerosene destined for foreign and Venezuelan pumps. The quick turnaround, accomplished with only 950 workers at a facility that once employed 2,200, has stunned many oil industry analysts who believed the process would take far longer.
The recovery at El Palito under Chávez has been mirrored across Venezuela's petroleum industry, at refineries, shipping centers and oil wells that are the lifeline of this oil-rich but politically divided nation.
Yet the extent of the recovery is in dispute. Officials at Petróleos de Venezuela, the state-run oil monopoly, say crude output has returned to prestrike levels of 3.2 million barrels per day. Analysts put that figure at closer to 2.6 million, a discrepancy worth billions of dollars a year.
''What is clear is that they have been able to materially increase their production,'' said Bruce Schwartz, an oil industry analyst at Standard & Poor's in New York. ``We were surprised at how fast PDVSA was able to restore production.''
Sitting in his new office overlooking a massive seaside complex of metal pipes, spires and choking clouds of sulfur smoke, Asdrúbal Chávez is triumphant.
``They said we would take six months, a year to recover. We did it in two and a half months.''
El Palito's two piers can accommodate four tankers between them. On a recent Saturday, workers loaded 300,000 barrels of jet fuel onto the Maltese-flagged Trogin, carrying a Russian crew. The load was worth an estimated $7.2 million and the refinery's most valuable shipment since the strike, said El Palito spokesman David Palm. The contents were bound for Canada's eastern coast.
Venezuelan national guard troops provide security over operations at El Palito.
''They said I wasn't qualified to run the refinery,'' Chávez said. ``But that was all a campaign of lies.''
For a president pitted against striking workers seeking a referendum on his rule and a divided military that had attempted to oust him months earlier, placing a trusted cousin at the helm of the El Palito, which provides gasoline to 10 critical states, seemed a smart strategic choice. After all, Asdrúbal, whose uncle is the president's father, had worked as a chemical engineer at El Palito for 21 years.
The two are apparently close. Asdrúbal boasted of playing pick-up baseball games with the president when they were young. Asdrúbal also said the president, who enjoys painting nature scenes on paper -- not canvas -- recently gave him several paintings as a present, and he displays them at home.
''We're chums,'' Asdrúbal said.
Asdrúbal is not the first of the president's relatives to rise to prominence. Older brother Adan Chávez is director of the National Land Institute. Ex-wife Marisabel, before the split, was a delegate to the constituent assembly that rewrote the nation's constitution in 1999. And father Hugo Chávez de los Reyes is the governor of Barinas, the family's home state.
After the national strike that brought Venezuela's oil economy to a grinding halt ended in February after two months, most anti-Chávez oil workers were fired, leaving PDVSA with 22,924 employees compared with 40,133 in prestrike days.
Among those who left were at least 10,949 analysts, 2,024 metal workers, 3,434 technicians, 649 executives and 154 tanker crewmen, said Edith Gómez, the new director of hydrocarbons at the energy ministry.
''There was an excess of personnel at PDVSA,'' Gómez said. ``We are adjusting without them.''
Gómez's plush, wood-paneled office in the penthouse of PDVSA headquarters belonged only months ago to a PDVSA executive who left in the strike, she said. The building's lower floors hold rows of empty offices, desks cleaned out. The ministry and PDVSA headquarters now share the same downtown Caracas address.
The departure of skilled workers and managers may pose safety risks for remaining employees, analysts say. Already, reports of fires, injuries and oil spills -- many denied by PDVSA officials -- have cast a cloud over recovery efforts.
''There have been clearly difficulties restarting PDVSA's refineries in that there have been fires and outages that have occurred,'' Schwartz said. ``It may be in part due to a less skilled workforce as a number of skilled managers were dismissed.''
Many of Venezuela's two million unemployed see opportunity in PDVSA's reduced workforce. El Palito refinery alone has received 25,000 résumés from people seeking employment, though Chávez acknowledges that ''only a few hundred have the skills we are looking for: engineers, human resources, lab technicians.'' Some of those will be hired.
The rest are from men like Alexander Vargas, 30, a welder who says he has been unemployed for 17 months. Since April, Vargas has joined dozens of people who make a daily pilgrimage to the chain-link entrance of El Palito, hoping the gates will swing open and somebody inside will offer him work.
''They need people inside,'' Vargas said, ``so I will continue waiting.''