PDVSA, Venezuela’s state oil company, sent a statement at 2:24 pm showing that workers in the western division “continue activities in support of President Nicolas Maduro.” They “reject the violent acts registered in various states of the country that have accounted for the deaths of eight Venezuelans and numerous material damages.”
Then at 4:27 pm, the same company sent a statement saying a small fire in a pump at the Cardón refinery had been controlled.
Reminds me a bit of how the huge pipeline spill in Maturín last year happened on a day when the workers were in Caracas for a political rally, celebrating the 20th anniversary of Hugo Chávez’s failed coup attempt of February 4, 1992.
It was further determined that one of the workers accidentally brought his crescent wrench to the rally. For the next rally scheduled on Friday he promises to leave the wrench behind for the others. Er, wait, no. I guess they’re going too. Sorry.
Not sure why you harp on PDVSA accidents so much. The oil industry is a dirty and dangerous business the world over. How many barrels of oil did BP have go into the Gulf? How many people just died in the explosion of a petro chemical plant in Texas.
Is there some sort of firm evidence that PDVSA has a worse safety than other oil companies or than it had before?
Hi OW, nice to hear from you again. Fair question. First of all, I specialize in writing about corruption in the South American oil industry. So I barely touch on situations outside South America and the Caribbean, and in situations like the recent refinery fire in Argentina, where I don’t know much about the local corruption situation, I don’t write much about it. Second, I write about PDVSA problems when they appear to be symptoms of a larger issue — often the corrupt procurement practices, excessive politicization, or endless self-inflicted conflicts with rent-seekers, thanks to having given in to so many rent-seekers in the past. Third, I write about these issues because they are barely covered in English, and I think it’s important for consumers in the US to at least have access to the information in English, even if they don’t care much about it. It creates a (virtual, temporary, generally unused) record.
The BP spill and the Texas explosion also reflect serious problems at those companies. BP paid some consequences, though arguably not enough given the scale of the disaster. People were fired, at least. The guy who housed military personnel inside the Amuay refinery is still in charge of Venezuela’s refining system. We’ll see what happens in Texas; hopefully the neighbors will be compensated for their losses and the company will be held to account for not calling for an evacuation before the explosion.
To get into specifics, the BP spill was the worst in the history of the world, and I believe I made clear at the time that it was worse than anything happening at PDVSA. However, during that spill, you recall, PDVSA also lost a drilling rig. But it wasn’t lost to negligence, miscommunication or corporate greed, as in the case of BP. It was lost largely because PDVSA’s procurement methods now prioritize kickbacks over quality. Just as the BP spill reflected a deep problem in that company — and perhaps in private sector oil companies generally — the PDVSA Oban Pearl sinking reflected a deep problem at PDVSA. It appears that about half the money spent on the Oban Pearl was spent on kickbacks. If PDVSA had spent that same amount and hired a reputable rig, it probably would now be producing gas at Mariscal Sucre.
Other accidents I have highlighted include fires at tank farms, caused by lightning. You can search the news yourself — such tank fires happen often enough at a global level, but mostly at pissant installations, not at global oil companies. And when they do happen, they almost never affect more than one tank. As I have written previously, Ecopetrol and Pacific Rubiales operate in the lighting-prone llanos, so they have state of the art fire protection. At PDVSA, again, procurement is deranged, and the refineries don’t always have up to date fire protection.
One of the spills in eastern Venezuela last year was big enough that it was worth highlighting for environmental reasons, just as the Exxon spill a couple weeks ago in the US was worth highlighting. The Venezuela spill may have been bigger, and flowed right into a tropical river that is both full of biodiversity and is the water source of a city. That is worth mentioning. The smaller spill, in Bare, was mostly interesting because it showed how even routine little issues in Venezuela turn into arguments over sabotage and politicized hiring. The lack of trust between poor neighbors and the big oil company was striking, especially for a company that is supposed to be firme con el pueblo.
And this one, again, demonstrates a wider point. They say it’s a minor fire, but what is interesting is it happened while workers were off marching. I don’t know if there is a correlation or causation, but it’s a coincidence worth watching.
Hi, thanks for the explanation.
You are making a number of strong accusations. I’m wondering, do you have actual evidence for example that there were kickbacks with respect to that drilling rig and has any legal action been taken with respect to it either in Venezuela or in the country of origin of the rig?
I can certainly believe that there is corruption and even bribery that goes on within PDVSA. There is in all large organizations. But you make it sound pervasive and even a normal business practice for PDVSA which is difficult to believe given that the company is audited each year. On what basis do you think it is endemic and how can it get by the audits undetected.
Further, PDVSA contracts with lots of American oil service companies. These companies all fall under the Foreign Corrupt Practices Act and would be taking a large risk of prosecution if they took bribes from PDVSA or anyone in Venezuela. Have any of them been so prosecuted. And if they have been regularly accepting bribes from PDVSA, as what you say implies, how have they managed to avoid prosecution?
Also, I’m still not sure that PDVSA’s track record is any worse now than it was before the change of management when Chavez took power. Certainly there were bad incidents involving large number of deaths under previous management:
(if you can’t read the link let me know). I think we’d have to see actual fatality of oil spill statistics, though I don’t know if such statistics exist.
Finally, speaking of oil spills, Ecopetrol in Colombia just dumped a bunch of oil into the Carribean via a shipping collision.
Thanks for the work on the blog and writing about these issues. They are indeed under reported.
You’ve been out of the Venezuela loop for a while, haven’t you? Here is a bit of reading to get you back up to speed. http://lasarmasdecoronel.blogspot.com/2012/07/revisiting-aban-pearl-now-with-more.html http://www.soberania.org/Articulos/articulo_6691.htm
You’re really going to compare Colombia’s environmental regime to Venezuela’s? Great, I look forward to hearing about the People’s Power Environment Ministry sanctioning PDVSA for the Maturin oilspill. You know, like this: http://www.businessweek.com/news/2013-02-06/colombia-suspends-drummond-ship-loading-license-agency-says
Finally, please take your worries about ‘strong accusations’ and put them on your own blog. I have no patience for that. If the executives of Ovarb Industrial and Derwick Associates want to sue someone for defamation, they should go ahead and do so. These guys fly around in Gulfstreams, they certainly don’t need some pissant blog commenter to defend them. Oh look, Derwick did sue — only to withdraw their suit last Friday. Funny, if they really gave a fuck about the defamation you’d think they would have pursued their case. But no, once some blogs were eliminated, they were happy to go back to their caves, or at least their wine cellars. I’m glad I didn’t buckle to their pressure.
Colombia does have a serious pollution issue, common to most Latin American countries with their population of small-time miners, with mining pollution. Although, I’m not sure how anyone would use the Colombian collision example when they could have used Chevron (with Ecuador being key) for first world oil company bad practices. The worst oil spills are in Nigeria, from Shell operated waters, I believe.
Now…I had some of the same concerns as OW when Robert Farley over at Lawyers, Guns, and Money blog did a review of Dragon in the Tropics with this aspect of the book’s topics. If I remember what I wrote correctly, it was that most national oil companies are relatively unprofessional, with Petrobras being the only one I can recall as actually being particularly skilled. Next, in the current geo-oil regime, there is just very little interest in expanding capacity and investment outside of E. Africa and shale plays (which, given the lack of financial success outside the US, I strongly suspect is liberally layered in subsidies, explicit and implicity). I, personally, can’t believe that PdVSA is more incompetent and corrupt than PEMEX, and my personal impression of Russian energy players aren’t that different. Most of the “better” operators in the third world tend to be state-within-a-state organization (i.e., what PdVSA used to be) with little accountability to the public at large–think about just how reluctant Sinopec et al is to address fuel mix for lower pollution on the Pacific seaboard, and how well they are able to defend that lack of interest in spite of horrific pollution that’s broadly very bad for business, long term. They stuff their own pockets and play politics according to their own internal logic as far as Parkinson’s law would permit. The main difference is simply who the corrupt beneficiaries are, and on an operational level, I simply don’t hear about stupidity wrt PdVSA as I do about Pemex. Of couse, Pemex is much more transparent, Mexico news get here without shrill ideology, etc, etc.
Thanks Darius. Chevron in Ecuador was decades ago, and the current tolerance for such stuff across Latin America has declined. I agree that Colombia has a pollution issue, and it’s possible that their oilfield pollution is bad, too. But I have never seen anything in Colombia to compare to the nastiness I’ve seen in Venezuela. In fact, I’ve never seen anything anywhere to compare with current practices in Venezuela. I have heard that Nigeria is worse, and I have no doubt that Chinese state enterprises within China are probably worse. But what can I say? I’m here. This is what I see, and this is what I report on. I focus on Venezuela because Venezuela seems uniquely uninterested in getting better. It is actively getting worse, as it prioritizes politics and corruption rather than safety and environment.
Illegal mining all around the fringe of the Amazon, from the Guyanas to at least Peru (and maybe Bolivia too) is a major issue. But it’s not a big state enterprise doing the mining, so fixing it is more an issue of increasing overall state capacity rather than changing political rhetoric and policy.
I do NOT buy the idea that there is something inherent about state enterprises that is problematic. Such a belief might be fun from some think tank in the USA, but here a few blocks from Codelco headquarters, I know it makes no sense. Every institution is governed to produce certain outcomes. PDVSA is very efficient at certain tasks: producing kickbacks, ensuring political support for the Bolivarian project, and offering decent jobs to a bunch of people who might otherwise struggle. But it’s not efficient at health and safety, it’s at best so-so at producing oil, it’s horrible at construction. It fails at tasks that one would normally consider “core competencies” of an oil company. This is why I frequently mention it.
What’s one good example of missing core competencies? Refinery building and repair, like the joint-project gone bad with Petrobras in NE Brazil or, hey, how they doing on fixing that gutted refinery? I’m also wondering whether it’s simply dangerous to show initiative at certain tasks (due to polarized politics). Now, I need to go find a good account of the 2003 strike.
How many fatalities are there in the USA and in Venezuela due to oil company problems? How many people are involved in both places?