Venezuela, As soon as an Oil Big, Reaches the Finish of an Period

CABIMAS, Venezuela – For the first time in a century, Venezuela has no drilling rigs prospecting for oil.

Wells that once tapped the world’s largest crude oil reserves are being abandoned or poisonous gases ignited that glow orange over depressed oil cities.

Refineries that once processed oil for export are rusting hulks and leaking crude oil that blackens the coasts and coats the water with an oily sheen.

Lack of fuel has brought the country to a standstill. Lines run for kilometers at gas stations.

Venezuela’s colossal oil sector, which shaped the country and the international energy market for a century, has almost stalled. Years of gross mismanagement and American sanctions reduced production to a minimum. The collapse leaves a devastated economy and a devastated environment and, according to many analysts, ends Venezuela’s era as a power plant.

“Venezuela’s times as a petrostat are over,” said Risa Grais-Targow, an analyst at Eurasia Group, a political risk consultancy.

The country, which was the largest producer in Latin America a decade ago and made around $ 90 billion annually from oil exports, is expected to bring in around $ 2.3 billion by the end of the year – less than the total amount Venezuelan migrants before the Having fled the country’s economic devastation, they are being sent home to support their families, according to Pilar Navarro, a Caracas-based economist.

Production is the lowest in nearly a century Now that sanctions have forced most oil companies to stop drilling for or buying Venezuelan oil – and even that trickle could soon dry up, analysts warn.

“Without drilling, without service companies and without money, it is very difficult to maintain current levels of production,” said David Voght, director of IPD Latin America, an oil consultancy. “If the political situation in the country doesn’t change, you could go to zero.”

The decline has narrowed beyond recognition of a country that competed with the United States for regional influence a decade ago. It also unravels a national culture defined by oil, a source of money that once seemed endless; It funded monumental public works and ubiquitous transplants, generous scholarships, and eye-catching Miami shopping trips.

The crippling fuel shortage has led to dozens of daily protests in most Venezuelan states over the past few weeks.

In the capital, Caracas, regular fuel deliveries from Iran, which are paid for with the country’s remaining gold reserves, ensure a semblance of normalcy for a few weeks. But in the countryside, residents have resisted the pandemic lockdown to block roads and clash with police amid their desperate demands for the minimum amount of fuel they need to survive.

In Venezuela’s oil cities, the sticky black crude oil that once provided jobs and social mobility is poisoning residents’ livelihoods.

In Cabimas, a town on the shores of Lake Maracaibo that was once a production center for the region’s productive oil fields, crude oil seeping from abandoned underwater wells and pipelines coats the crabs that former oil workers pull out of the lake with blackened hands.

When it rains, oil that got into the sewer system leaks through manholes and drains, flows through the streets with rainwater, lubricates houses and fills the city with its gaseous stench.

Cabimas’ desolation marks a sudden downfall for a city that was one of the wealthiest in Venezuela a decade ago.

During the boom years, PDVSA, the state oil company, showered residents of oil towns like Cabimas with perks like free food, summer camps, and Christmas toys. Hospitals and schools were built.

Now the tens of thousands of workers at the bankrupt company have been reduced to dismantling oil factories for scrap metal and selling their signature overalls with the company logo in order to make ends meet.

“We used to be kings because we lived on the banks of the PDVSA,” said Alexander Rodríguez, a Cabimas fisherman whose two boat engines were displaced by an oil spill. “Now we’re cursed.”

The PDVSA social club, where the locals used to gather to drink whiskey, play tennis and watch movies, is in ruins and, like so much in the city, is smeared with oily, black debris.

“There are no jobs, no gasoline, but the oil spills all over the place,” said Francisco Barrios, a baker.

The end of oil’s central role in Venezuela’s economy is a traumatic reversal for a nation that in many ways has defined a petrostat.

After large reserves were developed near Lake Maracaibo in 1914, oil workers poured into the country from the United States. They helped build many Venezuelan cities and instilled a love of baseball, whiskey, and large gas-guzzling cars in the country that forever set it apart from its South American neighbors.

As a driving force behind the founding of the Organization of the Petroleum Exporting Countries in 1960, Venezuela helped the Arab nations take control of their oil wealth and shaped the global energy market and geopolitical order for decades to come.

Even during these exciting days, Venezuela’s prominent oil minister, Juan Pablo Pérez Alfonzo, warned that sudden oil wealth had pitfalls: it could lead to excessive debt and the destruction of traditional industries.

“It is the devil’s droppings,” declared Mr Perez Alfonzo famously. “We’re drowning in the devil’s excrement.”

In the years that followed, Venezuela faced a roller coaster ride with recurring debt and financial crises, despite plentiful oil revenues. The wealth also did nothing to reduce corruption or inequality, and when a former paratrooper, Hugo Chavez, appeared on the national stage in the 1990s and promised a revolution that would use Venezuela’s oil for the poor majority, he captured it Nation.

Shortly after being elected president in 1998, Mr. Chavez commanded the country’s prestigious state-owned oil company for its radical development program. He laid off nearly 20,000 oil professionals, nationalized foreign-owned oil assets, and allowed allies to pillage the oil revenues.

The troubled industry fell into a free fall last year when the United States accused Chavez’s successor and protégé, President Nicolás Maduro, of election fraud and imposed severe economic sanctions to remove him from power.

Soon Venezuela’s oil partners, bankers and customers broke ties, and production plummeted at a pace that has surpassed the downturn in Iraq during the Gulf Wars and Iran after its Islamic revolution.

The sanctions forced the last American oil companies in the country to stop drilling. You can leave the country entirely in December if the Trump administration ends its sanctions exemptions.

Mr Maduro’s Russian and Chinese partners have not closed the gap, reduced production and cut oil trading, according to company employees.

Venezuela’s opposition, which last year challenged Mr Maduro for leadership of the country with Western support, claims it can rebuild the oil industry by ending American sanctions and offering investors attractive terms.

However, analysts say the Venezuelan oil industry is unlikely to attract the investment needed for a full recovery. At a time of stagnant global demand, weak prices, and growing environmental concerns, the country’s extra heavy oil is particularly environmentally damaging and expensive to process.

To make up for the loss of revenue, Maduro has turned to illegal gold mining and drug trafficking to stay in power, according to the US government.

Mr. Maduro’s withdrawal from the oil left the shrinking Venezuelan economy comparable to that of the Democratic Republic of the Congo, a country that has been plagued by civil wars since its independence. But the transition has allowed Mr Maduro to maintain the loyalty of the military and weather punishing American sanctions, said Ms. Grais-Targow, the analyst.

The cost of this economic contraction was borne by the Venezuelan people, she said.

More than five million Venezuelans, or one in six residents, have fled the country since 2015 and, according to the United Nations, caused one of the largest refugee crises in the world. According to a recent study by Venezuela’s three leading universities, the country now has the highest poverty rate in Latin America, overtaking Haiti this year.

Near the huge refineries on the Venezuelan coast, residents hunt for firewood and haul their fishing nets on foot to find food. Their fishing boats are on the beach without gas and their kitchens have long been out of cooking gas.

“If we haven’t hit rock bottom yet, we’re inches away from it,” said José Giron, who used to transport tourists to the beach town of Tucacas near the three largest refineries in Venezuela.

PDVSA has kept production to a minimum by sacrificing basic equipment maintenance while environmental costs rise. The country’s Caribbean coast, a source of national pride with its turquoise waters and white sandy beaches, has been damaged by at least four major oil spills this year – an unprecedented number, according to Venezuelan biologists.

Fuel shortages and the pandemic have already emptied Tucacas’ tourist beaches. Now the fish that many here rely on to survive are being decimated by the oil.

“This pollution is the ultimate insult to the people,” said Luis Vargas, who used to sell seafood cocktails to tourists.

The large, creeping oil stains also devastate Cabimas in the west of the country, where residents fish the polluted lake with inflated hoses and search rotting oil plants for some gasoline. Three people died last month when an argument over a leaking gasoline line resulted in an explosion.

For generations, Cabimas residents have said they are proud advocates of Venezuela’s oil. They too now call it “the devil’s excrement”.

Tibisay Romero reported from Tucacas, Venezuela, and María Ramírez from Puerto Ordaz, Venezuela.

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