Home' Trinidad and Tobago Guardian : July 24th 2014 Contents BG14 REGIONAL
BUSINESS GUARDIAN www.guardian.co.tt JULY 2014 • WEEK FOUR
In 2003 President Hugo Chavez of
Venezuela fired more than 18,000
employees, almost half the work force,
of the state-run oil corporation,
Petroleos de Venezuela (PDVSA).
Their offense was to have taken part in a
strike called in protest at the politicisation of
the company. Their punishment was to be
barred from jobs not only with PDVSA itself
but also with any company doing business with
the oil firm.
The ax fell heavily on managers and tech-
nicians. Around 80 percent of the staff at
Intevep, PDVSA s research arm, are thought to
have joined the strike. At the stroke of a pen,
Venezuela lost its oil intelligentsia.
It was a blow from which PDVSA never has
recovered. The firm s oil production has since
stagnated, despite a big run-up in prices. The
financial crisis bears some of the blame for
that, as does the economic mismanagement
of Chavez and, since last year, of his successor,
President Nicolas Maduro. The loss of skilled
personnel was a huge handicap, however, hurting
exploration and management.
The Centre for Energy Orientation, a
Venezuelan NGO, says that the number of inca-
pacitating injuries due to accidents at PDVSA
rose from 1.8 per million man-hours in 2002
to 6.2 in 2012. At Pemex, Mexico s state oil
firm, the rate was 0.6 in 2012.
Venezuela s loss was others gain. Not all of
the former PDVSA employees stayed in the oil
business. A minority chose to remain in
Venezuela, but thousands went abroad -- to
the United States, Mexico and the Persian Gulf,
and to farther-flung places such as Kazakhstan
Many headed to Alberta, Canada, where the
tar sands yield a residue that is similar to the
heavy oil from the Orinoco belt, which Venezuela
is struggling to develop. There were 465
Venezuelans in Alberta in 2001, but by 2011
there were 3,860.
Pedro Pereira, who once headed PDVSA s
research into the processing of extra-heavy
crude oil, came to Canada to set up a similar
research team at the University of Calgary in
Alberta. His work focuses on inventing and
patenting new technologies to process Alberta s
crude. Three dozen Venezuelans have passed
through the Calgary centre since its inception,
around two-thirds of them as a direct result
of the 2003 purge. All have gone on to work
in the Canadian oil industry.
No country has benefited more from the
Venezuelan exodus, however, than the one next
door. Colombia s oil output was declining at
the time of the purge, falling from 687,000
barrels a day in 2000 to 526,000 five years
later. Today average daily production stands at
around one million barrels a day. Much of this
renaissance is thanks to the Venezuelans.
Former PDVSA executives had been heading
to Colombia even before the purge. Luis Giusti,
a former chairman who quit as soon as Chavez
came to power in 1999, helped the Colombian
government redesign its energy policies. How-
ever, it was the post-2003 influx that revolu-
tionised the nation s industry and the state-
owned oil firm, Ecopetrol.
All of a sudden, Alejandro Martinez of the
Colombian Petroleum Association says,
"Colombia was filled with real oilmen."
The Venezuelans had years of experience,
lots of it spent abroad. They had an excellent
technical heritage: PDVSA was created in the
mid-1970s when the local subsidiaries of sophis-
ticated firms such as Exxon and Royal Dutch
Shell were nationalised.
They also were used to thinking big.
"They did not shy away from projects that
needed US$2 billion in investments when, for
Ecopetrol US$50 million was a big deal," Mar-
In 2007 Ronald Pantin, a former chairman
of PDVSA Services, joined with several partners
to buy Colombia s Meta Petroleum. Meta oper-
ated the Campo Rubiales field in central Colom-
bia, from which operators were then barely
squeezing 14,000 barrels a day. Now it is the
country s largest producing oil field, and Pacific
Rubiales Energy, Meta s owner, is the largest
independent oil producer in Colombia.
Humberto Calderon, a former Venezuelan
oil minister, founded Vetra in 2003. Today it
and Meta account for more than a quarter of
the country s production.
Without the input of the Venezuelans "there
is no way Colombia could have doubled its
production in such a short time," says Carlos
Alberto Lopez, an energy analyst.
It was an "extraordinary coincidence," he
adds, that Colombia carried out its reforms
even as PDVSA s managers were being thrown
out, oil prices were soaring and areas once
under guerrilla control were being made safer.
"The timing couldn t have been better," Lopez
The prospects for enticing the diaspora back
to Venezuela are poor. The expatriates have put
down deep roots abroad, and the situation at
home remains chaotic.
PDVSA s goal is for the Orinoco belt to be
producing 4.6 million barrels a day by 2019.
The oil is difficult to refine, however, and the
huge investment required is hampered by the
government s insistence on overvaluing the
bolivar. So far PDVSA has missed all its inter-
mediate targets for Orinoco. By the end of 2013,
it had reached only 1.2 million barrels a day,
compared with a planned figure of 1.5 million.
Welders, electricians and machine workers
reportedly make three times as much helping
with the expansion of Ecopetrol s refinery in
Cartagena as they can in Venezuela, according
to El Nacional, a Venezuelan daily. A ranking
published by Hays Oil and Gas, a recruitment
agency, put the average annual salary for oil-
industry professionals in Colombia at
US$100,300. In Venezuela it is US$50,000.
From Calgary Pereira says that he is seeing
a "second wave" of emigration that began a
couple of years ago, a wave of young profes-
sionals with five or six years experience.
"As soon as they get some significant knowl-
edge, they re leaving," he says. "The company,
and the country, is heading for a disaster."
@2014 The Economist Newspaper Ltd.
Distributed by the New York Times Syndi-
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