Home > News > World
Wednesday February 26, 2014 MYT 7:20:03 AM
Wednesday February 26, 2014 MYT 7:21:25 AM
HOUSTON (Reuters) - Two weeks of violent protests in Venezuela have killed at least 13 people and raised doubts about what the unrest could mean for the oil industry, which accounts for 96 percent of the OPEC member nation's hard currency income.
Rampant crime, a deteriorating economy with rocketing inflation and shortages of staple consumer goods are putting pressure on President Nicolas Maduro, who narrowly won an election last April.
Maduro has promised to extend the socialist "revolution" of his late mentor, Hugo Chavez, who put state oil company PDVSA in charge of the entire industry in the country with the world's largest crude reserves. He also nationalized the assets of foreign firms and landed Venezuela in multiple international arbitration cases.
COULD PROTESTS AFFECT OIL OUTPUT OR REFINING?
Not in the short term. Protests are concentrated in the country's main cities, away from production centres such as the Orinoco belt, Lake Maracaibo and Monagas state in the east of the country.
Venezuela's refineries, which have a joint capacity of 1.3 million barrels per day (bpd), were built for exporting products and are located on the Caribbean coast. That allows PDVSA easily load tankers in order to ship crude and products abroad.
Venezuela exports about 2.2 million bpd of oil. Its top export market is the United States. So far, PDVSA has been sending crude and products normally to its clients and actively selling fuels on the open market, according to traders.
HAVE PROTESTS AFFECTED OIL PRODUCTION BEFORE?
Yes. The industry was shaken by a two-month strike in 2002-03 that was organized by the political opposition in a bid to push Chavez from power. That affected production, which fell to just 25,000 bpd from an average of 3 million bpd.
Refineries were halted by workers, hitting both exports and the domestic distribution of fuels such as gasoline, diesel and gas for cooking. The docks did not operate, forcing PDVSA to declare force majeure and making it hard for the government to import refined products.
In the weeks following the strike, a new PDVSA board of directors appointed by Chavez fired staff accused of taking part in the strike - about half of the company's entire workforce.
ARE THE GOVERNMENT AND PDVSA PREPARED IF PROTESTERS TRY TO
REACH PETROLEUM FACILITIES?
Yes. Petroleum Minister Rafael Ramirez said PDVSA has a "contingency plan" to reinforce security at all its facilities. In the past, these plans have included a military presence at refineries and in production zones. So far, protest leaders have not called for any marches at oil facilities.
ARE OIL WORKERS AFFILIATED WITH A POLITICAL PARTY?
Yes. During Chavez's rule, the different oil unions merged into a single organisation that is currently led by socialist, pro-government workers. Employees from refineries and other facilities have expressed support for Maduro's government.
HOW IMPORTANT IS VENEZUELAN OIL TO THE GLOBAL MARKET?
Venezuela is the largest South American oil exporter and while the U.S. market is its biggest client, it has diversified its customer base and sends more than 1 million bpd to Asia.
PDVSA has a branch in the United States, Citgo, with a refining network of 750,000 bpd. It receives mostly Venezuelan crude, but refineries from firms such as Valero Energy and Chevron also regularly run Venezuelan crudes.
In Asia, PDVSA uses oil to service more than $36 billion in loans from China to the Venezuelan government. A chunk of PDVSA's exports is earmarked to pay the credits and if it were to encounter delays, it would fall past due on the debt.
Venezuela is also the main provider of oil to Cuba and more than a dozen Caribbean islands which receive some 200,000 bpd through agreements that include financing and barter.
IS THE UNREST AFFECTING CRUDE OIL PRICES?
Somewhat. Venezuela's turmoil put upward pressure on crude prices last week, but the market is not expecting the petroleum facilities to be halted by protests.
COULD PROTESTS AFFECT VENEZUELA'S DOMESTIC FUEL SUPPLY?
Yes. PDVSA uses tankers and pipelines to move some 700,000 bpd of fuels from its refineries to domestic outlets, but a portion of the distribution to gas stations is done using trucks which load in Venezuela's central region.
Last week, delays of fuel deliveries to stations were reported by distributors, and Ramirez warned PDVSA could halt fuel deliveries to zones "under fascist siege" - before later appearing to walk back his comments.
COULD PROTESTS AFFECT OIL IMPORTS?
No. Venezuela buys some 100,000 bpd of refining feedstock and finished fuels through shipments that are received at docks located along the coast near refineries.
COULD GAS DELIVERIES FROM COLOMBIA BE HURT?
Potentially. Venezuela imports some 150 million cubic feet per day of natural gas from Colombia and a big portion of that is used to generate electricity. Interruptions have affected the gasoline before, but imports have not yet been affected by protests.
(Reporting by Marianna Parraga; editing by Terry Wade and G Crosse)
PDVSA says Venezuela oil industry normal after Chavez death
Venezuela oil minister warns of local fuel cuts in protests
Venezuela violated rights of protesters - rights group
Venezuela sees protests down to hard core, over by July
Venezuela's Maduro gives ultimatum to Caracas protesters
Ebola discoverer Piot sees long, bumpy road to ending epidemic
Putin says Russia is not a threat to anyone
Far-left politician a new threat to Merkel?
Sarkozy hopes to crush party rivals in French come-back test
India-Pakistan friction threatens South Asia trade at Himalayan summit
Insight - Secular France moves to confront jihadism after slow start
Jing Yi optimistic Malaysia will deliver the goods
Algeria says killed militant involved in French tourist beheading
Underwater robot helps create 3-D map of Antarctica's ice
Copyright © 1995-2014 Star Publications (M) Bhd (Co No 10894-D)