As Reuters ably showed yesterday, Venezuela’s wave of demonstrations and crackdowns are unlikely to affect the oil industry “in the short term.” The article left out the long term, but it’s pretty clear that it these rallies and counter-rallies can’t help the industry get out of its long-term slump. Every day that goes by like workers marching instead of, you know, working, and every time the oil minister has to spend hours either speaking about politics or attending cabinet meetings is another day of delay for PDVSA’s big capital projects: building new cities, ports, water systems and pipelines in the Orinoco belt, arranging financing with private partners, that sort of thing.
For those of us worried about global climate change, these delays are a good thing — they keep some of the world’s dirtiest crude in the ground, raising fuel prices and encouraging a transition to clean energy.
For those of us worried about the well-being of the Venezuelan people, the news isn’t so happy. Remember this chart, showing in schematic form how the government’s oil output goals have grown more ambitious over the years. When I wrote that, four months ago, Venezuela was aiming for roughly a 3 million barrel-a-day increase over the following five years. Of course output changes in big increments, but that works out to about 2,000 barrels a day of new production in order to overcome decline and also boost output. Every single day that workers are out enjoying the sunshine means those 2,000 barrels need to be spread out among the remaining days.
And what is PDVSA brass thinking about these days? I know there’s always a gap between public relations and reality, but here are the latest press releases via e-mail (a bit wider selection than what you can get from the company’s increasingly dysfunctional web site):
Since Feb. 16, the company has sent 53 press releases, of which one was specifically about oil operations (PDVSA to construct blending plant in Orinoco Belt), and one more about PDVSA bonds. In other words, the real cause of these protests — that Venezuela is falling into an economic shithole — has no near-term exit.
So to cheer you up, here are a few more of the photos PDVSA has sent out:
UPDATE: I just want to point out that this post is an example of the kind of lazy reporting I like to complain about. What happens on the internet (or in this case e-mail) doesn’t actually matter. What matters happens in the hands and heads of the Venezuelan people. And I’m not there, so I can’t report much on that, so I write what I know, which isn’t much. For better info, find people on the ground, especially people whose politics you disagree with, follow their tweeters, read what they are seeing and saying.
Completely agreed. Our Q&A was focused on the short term, but unrest over the long term could add problems to an industry already struggling to keep production stable. Regards and thank you for the charts!
It’s amusing reading some comments (on ‘leftist’ media in the UK) that think these PDVSA marches are spontaneous support of loving workers…
If you have examples they are welcome
Only one to hand but not a particularly good example:
In the comments but read the article and you’ll be incredulous that someone could write with such ignorance. I have read more: need to track them down at the Guardian etc.
I will be a wee bit cynical here but I don’ think that a 4000-man strong rally of PDVSA workers makes such a big difference when it comes to actual man/hours lost at PDVSA. According to an article I read recently, there are about 140,000 PDVSA workers now, of which more than 100,000 are working on oil extraction and the related industries. In 1999 there were 36000 of such people doing exactly the same work and for more barrels of oil.
By taking 40000 of those “workers” to a get-together Caracas tour, PDVSA might be spending some more money on buses but it might be saving on electricity, water, Internet and phone costs.
Workers are threatened with loss of job if they don’t participate (real time). Support maduro and Ramirez or everyone will lose their job if pdvsa changes management (future). Workers critical to the daily operations are transported to the local and central marches leaving the facilities bare of personnel in all areas for days at a time. This not only stalls increased production plans, but leaves the facilities in an extremely vulnerable and dangerous state, coasting in neutral.
90% (no exaggeration) of these workers that are bussed to the marches do not want to participate, but feel that they have no choice. Moral is at an all time low with inflation and devaluations, with little or no adjustment to pdvsa salaries. Pdvsa is doing nothing to build for the future or retain the limited experienced personnel that it has. There is no incentive, and the very people that are needed to improve production are leaving for better opportunities. That is the sad truth, and the forced marches only help make the decision to leave easier.
Er, ah, a bit off topic but,…..
Would love to see YOU do a posting on this:
A fascinating decision….