Oil Is Focus Of Venezuela's Crisis

by Humberto Marquez

A navy commando unit boarded the Yavire tanker carrying liquified natural gas, whose crew had joined the strike by anchoring off the eastern Venezuelan port of La Cruz, while the coast guard provided back-up for inspectors checking several of the 30 other vessels that have adhered to the stoppage.

Chavez ordered the armed forces to back the efforts to ensure fuel supplies to individual consumers, heavy industry and export firms.

But according to executives of the state-oil monopoly Petroleos de Venezuela (PDVSA) who have joined the walkout, nearly 90 percent of the oil industry -- the engine of the economy of this South American country of 24 million -- is at a standstill.

Most manufacturing is also paralysed, along with air transportation and the country's leading businesses, banks, offices in the services sector, schools and hospitals, which are only attending cases on an emergency basis.

There are shortages of goods in pharmacies, supermarkets and bakeries, which are only open a few hours a day.

The strike, along with daily protests and nightly pot-banging demonstrations in Caracas and other cities, are backing the demand set forth by opposition parties, business associations and trade unions that Chavez, whose term ends in 2006, step down or agree to an early 2003 referendum on whether or not he should stay in office.

"We are breaking through the blockade imposed abroad as well as in the internal market by the oil industry executives who are committing sabotage," said Energy Minister Rafael Ram’rez in a press conference Wednesday, in which he reported that several pumping stations had resumed operations, to guarantee domestic fuel deliveries.

Other members of the Organization of Petroleum Exporting Countries (OPEC), of which Venezuela is the only Latin American partner, "have offered to help" meet deliveries to Venezuela's clients abroad, "but we have not yet had to take advantage of that offer," he said.

"The market has the capability to make up for Venezuela's shortcomings," Juan Fern‡ndez, the leader of the union of PDVSA managers who have joined the strike, Gente de Petr—leo, told IPS. "It accommodates itself, and once we emerge from the crisis we will begin providing supplies once again."

Fernandez, PDVSA's planning manager, said the company "has oil in its storage tanks in the Bahamas and the Netherlands Antilles." He also pointed out that the company's clients "have been notified that we have invoked force majeure," which means Venezuela may be unable to meet its contracted deliveries.

Until the strike, Venezuela was producing around 2.8 million barrels of crude a day, 2.4 million of which were exported. Of that total, 1.5 million went to the country's main client, the United States, 600,000 to other countries in Latin America, and smaller amounts to western Europe and Canada.

Clients in the region have their own reserves. The president of the Dominican Republic oil refinery, Amaury Duarte, said his country's reserves would last through January, and that the company is negotiating with Mexico as a possible substitute supplier.

Through the San Jose Pact, Mexico and Venezuela each provide half of the 160,000 barrels a day that go to 10 small neighbors in Central America and the Caribbean, on preferential terms.

In addition, Venezuela supplies that region with another 100,000 barrels a day on preferential terms, including 53,000 barrels to Cuba.

According to the American Petroleum Institute, Venezuela's oil output has plunged to a million barrels a day because of the strike, although Gente de Petr—leo says production has fallen even lower.

Ram’rez, meanwhile, expressed confidence that production would soon be back to normal.

"The United States should worry about what is happening in Venezuela, because it will need steady supplies if it goes to war against Iraq," another OPEC member and major oil producer, said Maruja Tarre, an expert in international affairs and director of the Energy Institute at the Sim—n Bol’var University in Caracas, in a conversation with IPS.

President George W. Bush has called on all sides in Venezuela to act in a responsible and peaceful manner, to continue the dialogue, and to reject violence, White House spokesman Ari Fleischer said Tuesday, although Washington is cool to the Chavez presidency and friendly with his conservative foes.

Washington backs the efforts of Organization of American States (OAS) Secretary General Cesar Gaviria, who is heading negotiations between the government and the opposition in Caracas aimed at coming up with a peaceful, democratic, constitutional and electoral solution to the crisis, he added.

OPEC Secretary General Alvaro Silva, a Venezuelan, said in Vienna that the conflict between Chavez and his adversaries "is hurting the market in general," as reflected by a rise in prices in the past few days.

The international benchmark North Sea Brent, for example, closed Wednesday at 26.89 dollars a barrel on the London market, 86 cents up from Tuesday's price.

Against the backdrop of the crises involving Baghdad and Caracas, OPEC is meeting Thursday to decide on a Saudi Arabian proposal to increase the cartel's output from the current 21.7 million barrels a day.