IN 2003 Venezuela’s then president, Hugo Chávez, fired more than 18,000 employees, almost half the workforce, of the state-run oil corporation, Petróleos de Venezuela (PDVSA). Their offence was to have taken part in a strike (pictured) called in protest at the politicisation of the company. Their punishment was to be barred from jobs not only in PDVSA itself but also in any company doing business with the oil firm. The axe fell heavily on managers and technicians: around 80% of the staff at Intevep, PDVSA’s research arm, are thought to have joined the strike. At the stroke of a pen, Venezuela lost its oil intelligentsia.
It was a blow from which PDVSA has never recovered. The firm’s oil production has since stagnated (see chart), despite a big run-up in prices. The financial crisis bears some of the blame for that, as does the economic mismanagement of Chávez and, since last year, Nicolás Maduro. But the loss of skilled personnel was a huge handicap, hurting exploration and management. The Centre for Energy Orientation, a Venezuelan NGO, says the number of incapacitating injuries due to accidents at PDVSA rose from 1.8 per million man-hours in 2002 to 6.2 in 2012. At Pemex, Mexico’s state oil firm, the rate was 0.6 in 2012.
Venezuela’s loss was others’ gain. Not all of the former PDVSA employees stayed in the oil business; a minority chose to remain in Venezuela. But thousands went abroad—to the United States, Mexico and the Persian Gulf, and to farther-flung places like Malaysia and Kazakhstan.
Many headed to Alberta, in Canada, where the tar sands yield a residue that is similar to the heavy oil from the Orinoco belt, which Venezuela is struggling to develop. There were 465 Venezuelans in Alberta in 2001; by 2011 there were 3,860.
Pedro Pereira, who once headed PDVSA’s research into the processing of extra-heavy crude oil, came to Canada in order to set up a similar research team at the University of Calgary in Alberta. His work focuses on inventing and patenting new technologies to process Alberta’s crude. Three dozen Venezuelans have passed through the Calgary centre since its inception, around two-thirds of them as a direct result of the purge of 2003. All have gone on to work in the Canadian oil industry.
No country has benefited more from the Venezuelan exodus, however, than one next door. Colombia’s oil output was declining at the time of the purge, falling from 687,000 barrels a day (b/d) in 2000 to 526,000 five years later. Today, average daily production stands at around 1m b/d. Much of this renaissance is thanks to the Venezuelans.
Former PDVSA executives had been heading to Colombia even before the purge. (Luis Giusti, a former chairman who quit as soon as Chávez came to power in 1999, helped the Colombian government redesign its energy policies.) But it was the post-2003 influx that revolutionised the industry. All of a sudden, says Alejandro Martínez of the Colombian Petroleum Association, “Colombia was filled with real oilmen.” The Venezuelans had years of experience, lots of it spent abroad. They had an excellent technical heritage: PDVSA was created in the mid-1970s when the local subsidiaries of sophisticated firms like Exxon and Royal Dutch Shell were nationalised. They were also used to thinking big. “They did not shy away from projects that needed $2 billion in investments when for Ecopetrol [Colombia’s state oil firm] $50m was a big deal,” says Mr Martínez.
In 2007 Ronald Pantín, a former chairman of PDVSA Services, bought Colombia’s Meta Petroleum along with several partners. Meta operated the Campo Rubiales field in central Colombia, from which operators were then barely squeezing 14,000 b/d. Now it is the country’s largest producing oilfield, and Pacific Rubiales Energy, Meta’s owner, is the largest independent oil producer in Colombia. Humberto Calderón, a former Venezuelan oil minister, founded Vetra in 2003. Today the two firms account for more than a quarter of the country’s production.
Without the input of the Venezuelans “there is no way Colombia could have doubled its production in such a short time,” says Carlos Alberto López, an energy analyst. It was an “extraordinary coincidence” that Colombia carried out its reforms just as PDVSA’s managers were thrown out, oil prices soared and areas once under guerrilla control were made safer. “The timing couldn’t have been better,” says Mr López.
The prospects for enticing the diaspora back to Venezuela are poor. The expatriates have put down deep roots abroad, and the situation at home remains chaotic. PDVSA’s goal is for the Orinoco belt to be producing 4.6m b/d by 2019. But the oil is difficult to refine, and the huge investment required is hampered by the government’s insistence on overvaluing the bolívar. So far PDVSA has missed all its intermediate targets for Orinoco: by the end of 2013 it had reached 1.2m b/d, compared with a planned figure of 1.5m.
Welders, electricians and machine workers reportedly make three times as much helping with the expansion of Ecopetrol’s refinery in Cartagena as they can in Venezuela, according to El Nacional, a Venezuelan daily. A ranking published by Hays Oil and Gas, a recruitment agency, put the average annual salary for oil-industry professionals in Colombia at $100,300. In Venezuela it is $50,000. From Calgary Mr Pereira says he is seeing a “second wave” of emigration that began a couple of years ago, of young professionals with five or six years’ experience. “As soon as they get some significant knowledge, they’re leaving,” he says. “The company, and the country, is heading for a disaster.”
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