One year after Venezuela’s Amuay Refinery explosion the government
points to foul play, while critics say state-run oil company is
By Andrew Rosati
CARACAS, VENEZUELA — Authorities say foul play was involved in the
deadly gas explosion that tore through Venezuela’s largest oil
refinery last year. The blast claimed at least 40 lives, displaced
hundreds of families and caused an estimated $1.7 billion in damages.
“I have the conviction that it was an act of sabotage by factors
external to our refinery, our industry,” said Petróleos de Venezuela,
S.A. (PDVSA) president and petroleum energy minister, Rafael RamÌrez,
upon releasing a 117-page report of a state-sponsored investigation
last week. The report indicates that intentionally-loosened bolts in a
gas pump caused a leak that led to the ensuing blast.
Prior to the probe’s release, opposition lawmakers decried the tragedy
at the Amuay Refinery as “completely avoidable,” citing a recent
report by Profesionales del Petróleo, an oil industry group.
While the disaster is being dragged further into Venezuela’s bitter
political strife, industry observers say the Aug. 25, 2012 explosion
is more likely a symptom of the overall deterioration at PDVSA.
Despite increased investment and a burgeoning staff, the frequency of
accidents and reliance on refined oil products is stoking fear of
mismanagement in this oil rich South American nation.
“Safety is … part of running a business in this inherently high risk
industry “ says Jorge Piñon, energy analyst and Latin American
specialist at the University of Texas at Austin. “PDVSA has lost sight
According to company data, the state owned oil company PDVSA
registered 519 accidents, causing 3,400 employee injuries and 24
deaths last year. In a recent report comparing PDVSA to its regional
state-owned counterparts — Mexico’s Pemex, Colombia’s Ecopetrol, and
Brazil’s Petrobras — The International Association of Oil and Gas
Producers, a global forum, found PDVSA the most dangerous.
Pointing to the continued occurrence of fires, spills, and equipment
failures, José Bodas, general secretary of Venezuela’s Federation of
Oil Workers Union, says “each accident has its own origin. The overall
commonality we’re seeing is the lack of maintenance [and] investment,
and the incompletion of security regulations.”
Despite calls for increased safety and new funding initiatives,
“things remain the same,” says Mr. Bodas. “We still haven’t seen the
political will,” to change, he says.
Given the rash of accidents at PDVSA facilities, critics remain
skeptical of claims of subversion. “We’ve heard sabotage before,” says
Eddie Ramírez national coordinator of Gente de Petróleo, a civic
association. “One has to ask is sabotage also the cause of falling
Lifeblood of the economy
Oil remains the lifeblood of the Venezuelan economy, accounting for 95
percent of its exports and about 20 percent of its gross domestic
product. PDVSA has been striving to boost its output to 6 million
barrels a day since 2005, and as of 2007 it had allocated $78 billion
to reached the target by 2012.
Staff levels have also swelled. Mr. Ramírez of Gente de Petróleo
highlights company data showing staff growth from about 69,000 workers
in 2001, to nearly double the staff today, with over 145,000
But even with the injection of billions of dollars and the addition of
thousands of employees, the state energy monopoly’s production has
continued to sputter in recent years. According to official OPEC data,
the flow of Venezuelan crude has slowed to 2.8 million barrels a day
in 2012 from a high of from 3.1 million barrels a day in 1998.
“The only thing they’ve managed to achieve is verifying that we do
indeed have the world’s largest proven oil reserves,” says Ronald
Balza, an economics professor at both the Central University of
Venezuela and Andrés Bello Catholic University. As of last year,
company data indicates that PDVSA has spent more than $74 billion
toward its state goal, and has only certified that the country
possesses oil reserves of 297 billion barrels.
“We still lack the technology to get it out of the ground,” says Mr. Balza.
The company has since announced an additional $266 billion to reach
previous set production goals by 2019.
“One wonders where the money is going,” says Balza.
Besides its energy endeavors, PDVSA also sponsors various government
social programs and participates in food production and cultural
initiatives. Ramírez stresses the need for social responsibility in
the oil industry, but he fears such programs, “distort the primary
objective of the company, which is the production of energy.”
Critics are quick to highlight that Venezuela is now importing from
the U.S., with whom it maintains strained relations. According to the
U.S. Energy Information Administration, Venezuela imported some 3.3
million barrels of oil products from the U.S., including gasoline in
“The clock is ticking for PDVSA,” says Piñon.