Bloomberg
Toxic spills in Venezuela paint a bleak picture of the end of the oil
(Bloomberg) – Tropical rains have washed away most of the outward traces of the oil spill that ravaged Rio Seco this fall. But the fishing village in the shadow of Venezuela’s main refining center bears the scars of deeper pollution. Oil-spotted boats now have to go further into the Caribbean to make a catch. Crude oil has soaked the roots of nearby mangroves, rendering the shrimp grounds infertile. Seeing no future, dozens of fishermen and their families have fled their homes; those who linger in the village, waiting for Petroleos de Venezuela, the state oil company known as PDVSA, to compensate for lost boats, equipment and sales. The government of President Nicolas Maduro is subject to international sanctions and is squeezing what it can out of Venezuela’s collapsing oil industry, which is unleashing an environmental catastrophe in one of the most ecologically diverse countries on Earth. As the country’s vast resources become a toxic burden, Venezuela offers a bleak picture of the end of oil in a founding OPEC member. Rio Seco is just the latest to endure the fallout after the rupture of an offshore pipeline created a massive toxic geyser in the middle of local fishing grounds in September. The incident only came to light after Nelio Medina, the leader of a fishing council in the village, posted a video of the catastrophe on social media, causing quite a stir. It is far from an isolated case. In the past, it took protests to force the state oil company into action, Medina said in an interview. Fishing boats have even blocked shipping routes to the refineries – a drastic step in a country known for prosecuting dissidents. Yet despair is real: Medina sees no end to the problems caused by dilapidated pipelines. “They should have replaced them a long time ago,” he said. Venezuela has the largest known oil reserves in the world, but it is struggling to produce gasoline at all as sanctions limit the export of crude oil that is the foundation of the economy and prevent the import of parts essential for maintenance. The result is a downward spiral of spills, scarcity and further economic suffering that disproportionately affects the very poorest – those who cannot afford to join the estimated 5 million Venezuelans who have fled to neighboring countries. The Paraguana Peninsula, home to PDVSA’s Cardon and Amuay refineries, has shown just how far Venezuela has fallen. Due to endemic shortages, preparations for a round trip from the capital, Caracas of just over 1,000 kilometers (about 620 miles), include purchasing enough fuel for the route and a vehicle capable of carrying the necessary jerry cans. days and today’s decay are everywhere. The Paraguana complex was once the largest in the world, and by the turn of the century refineries were so dominant exporters to the US that even minor production disruptions boosted gasoline futures. Today only two of the six still produce something. The complex has a processing capacity of nearly 1 million barrels per day. But now even gas cooking is so scarce that many residents have to rely on firewood. “We don’t understand how with two such large refineries next door we run out of gas or gas,” said Reina Falcon, 69, as she prepared fish for her four grandchildren and five great-grandchildren. Falcon has seen PDVSA’s declining fortune from close by. the shores of the refinery town of Amuay. Living so close to the complex, she is concerned about the health and safety of her family: a massive explosion in 2012 left at least 42 dead, and fires and explosions have since become almost routine. Able to evade sanctions and export a few tanker cargoes – as happened when an Iranian ship loaded crude oil this fall – it frees up storage space to pump oil through leaking pipelines. Iran’s largest fleet of tankers to date is now at sea heading for Venezuela Best practices went out the window twenty years ago after a failed coup and nationwide strike against the late Hugo Chavez, Venezuela’s populist president who renationalized the industry and even during the era of $ 100 per barrel of oil. Prices have cratered under Maduro, culminating the cumulative impact of neglect, corruption and mismanagement. PDVSA was one of the most technically advanced national oil companies only in the late 1990s; now it is hollowed-out chaff presiding over the downfall of the industry. Crude oil production in Venezuela hit a low of 337,000 barrels per day in June, just 10% of the country’s peak production in 2001. PDVSA did not respond to requests for comment by email and text message. With global demand plummeting during the pandemic, the reality for Venezuela, as elsewhere, is that the world is moving on with fossil fuels. Oil-dependent economies everywhere will require billions of dollars to safely retire decades of infrastructure building, but in the case of Venezuela, the money is not there and there is little prospect of foreign aid, while the industry’s legacy goes back a century . neglect has been brutal, ”said Raul Gallegos, a Bogota-based director at Control Risks, an international consulting firm. In addition, the impact will only get worse as the Maduro administration “isn’t going anywhere,” he said. Maduro, who tightened his grip on power in the National Assembly elections this month and appears to have rejected the Trump administration, has expressed hopes for improved US relations led by President-elect Joe Biden. But the prospects for a slowdown in sanctions seem dim. Biden criticized Trump’s push for regime change, but he also called Maduro a dictator. Venezuela exported its first barrel of oil in 1539, when records indicate that a shipment was sent to the Spanish court to treat Emperor Charles V’s gout. Lake Maracaibo, a Caribbean inlet the size of Connecticut, is where the industry got its real start.In 1922, Royal Dutch Shell made a discovery in Cabimas: Residents of Maracaibo, some 20 miles away, could see the oil fountain on the other side of the lake of their roofs. The gigantic oil field then known as El Barroso II, later the Costal Bolivar Complex, made Venezuela the world’s largest exporter by the end of the decade, a crown it retained until 1970. airports and highways in the 1950s, made it a destination for immigrants from Europe and neighboring countries, helping pave the way for a gilded era of excess. Hilton established hotels in the capital and near the Caribbean coast; Concorde flew a direct Caracas-Paris service. A century after the first painter, the streets of Cabimas have again been polluted with crude oil. On Sept. 18, just a few blocks from the 1922 well site, during torrential rains, oil bubbled from a residential sidewalk and flooded several streets, according to videos and photos posted to Twitter. from her home, she said she had to send students home when the school was flooded with oil that soaked desks and chairs, forcing her to throw them away. “We don’t see a response from the government,” she said over the phone. Oil spills are a chronic by-product of Venezuela’s daily production, but sanctions limit the scope for outside help even if Maduro sought help. According to Ismael Hernandez, a remediation expert at the Central University of Venezuela, the spills are larger and more often out of sight in the plains of the Orinoco River, where cattle ranches and crops are located. Maduro prioritizes the region’s top fields in a last stand to maintain an output at all. biologist at Simon Bolivar University in Caracas. A glaring example came in July, when oil from a PDVSA refinery spilled onto the white sands and coral reefs of the world-famous Morrocoy National Park, home to more than 1,000 marine animals, many of which are endangered. As a signatory to regional treaties for the protection of the Caribbean ecosystem, Venezuela has a duty to protect the area, said Villamizar, an expert on the region’s mangroves. Instead, it left the initial response to environmental groups and the local population. Authorities downplayed the Morrocoy incident and accused environmental groups of exaggerating the damage. Environment Minister Oswaldo Barbera said in October that the park’s 25 km coast had been “100%” cleared with “no oil to be found”. Yet the environmental damage continues to come. The El Palito refinery west of Caracas is prone to accidents and fires due to a lack of personnel and spare parts. According to the people who work there, the refinery’s waste collection pits overflow and end up in the Caribbean when it rains. The nearby beach smells of diesel. Satellite images compiled by Eduardo Klein, coordinator of the Center for Marine Biodiversity at Simon Bolivar University, show dark outflows from the El Palito and Cardon refineries as if they were crying oil in the Caribbean. nothing to curb Venezuela’s emissions. That’s because the industry isn’t able to capture and use as much gas as it was even a decade ago, so it burns. Only the US, Russia, Iraq and Iran, all with much higher production, have flared more gas last year, a World Bank study found. Time may now be asked about Venezuelan industry. Global oil production was cut in response to Covid-19, and Venezuela’s OPEC + partners are limiting how quickly they recover production to bottom prices. Russia, which has been a Maduro ally for many years, produces a similar kind of heavy crude and has invaded some of Venezuela’s traditional markets. Canada’s tar oil has conquered others. The European oil companies that helped Venezuela develop its tar fields in the late 20th century are unlikely to return, even if Biden hastens an exit from Maduro. Shell and Total are under shareholder pressure to curb emissions, and that means we need to stay away from the most carbonaceous crude oils, such as the Orinoco. Maduro remains challenging. “We have prepared, we have trained, and Venezuela will not be held back by oil at 10, nor less than 10 [dollars a barrel], ”He said in April. In Rio Seco, heavy off-season rains in November washed much of the chronic petroleum residues off the beaches, providing temporary relief to locals. PDVSA has yet to estimate the damage after the spill, and officials have told the community they are waiting for funding to provide compensation.Giovanny Medina, 40, from across the gulf at Cardon, a fishing village that has managed to co-exist with the refinery that Shell built in 1949 is not concerned about competition from Rio Seco’s displaced fishermen. His main concern is the relentless pollution that means taking his wooden boat, known as a peñero, into deeper waters with more gasoline. “We don’t want to paint the hulls of our boats white anymore to cover up the gross spots,” he said. “We’re tired of doing this.” For more articles like this, visit bloomberg.com Subscribe now to stay ahead of the curve with the most trusted business news source. © 2020 Bloomberg LP