PDVSA Board Seeks Solution to Current Crisis

Oil exports from Venezuela have been delayed and in some cases halted at ports across the nation Thursday as the board of directors of PDVSA sought a negotiated solution with protesting employees fighting a management shake-up. "The industry has not been stopped, but there have been delays in ships dispatched," Jorge Kamkoff, a PDVSA vice president and member of the board of directors, said in a statement on Thursday.

Six weeks of protests by PDVSA employees against the new board and a two-day national strike this week which was extended indefinitely, have cut deeply into vital operations such as crude production, refining, and exports, according to PDVSA and industry sources.

Oil production in the world's No. 4 crude exporter has been cut by as much as 20 percent due to the protests, according to dissident PDVSA executives. Venezuela produced about 2.6 million barrels per day (bpd) in March. Shippers and traders in Venezuela and the United States confirmed exports had been cut sharply, with some ports closed entirely.

The 960,000 bpd Amuay-Cardon refinery, Venezuela's largest plant, was running at under 50 percent capacity as tankers were receiving cargoes at a third to half normal rates. Industry sources said the refinery was facing the threat of a shutdown as supplies of natural gas dwindled. The government has insisted PDVSA operations have not been affected by the worker protests or the national strike.

The dissenting PDVSA employees contend President Hugo Chavez named the new board of directors based on political loyalty rather than on merit, and want new board members nominated. The board is scheduled to meet later Wednesday. Kamkoff has said he will resign to resolve the deadlock, with PDVSA sources saying he may suggest the rest of the board follow suit.

Chavez has firmly stood behind the new board, however, although the Ministry of Energy and Mines is still looking to find a negotiated solution to the turmoil within PDVSA, a spokesman said. Business and union leaders on Wednesday called an indefinite strike against Chavez, who they accuse of governing like a left-wing dictator.

With PDVSA tanker schedulers striking in Caracas, loadings of ships with oil and products for both international and domestic consumption have been severely curtailed. PDVSA may extend a force majeure issued in early January to comply with OPEC quotas to cover obligations it cannot meet due to the strike actions, company sources said. The loading trouble has forced refineries, already operating with reduced staff due to the strike, to cut back on runs as available storage fills.

PDVSA's 335,000 bpd plant in Curacao declared force majeure on liftings after power outages caused a plant shutdown last week. The refinery is returning to normal but the force majeure remains in place. Exports from the Guaraguao terminal at Puerto la Cruz were as low as 600,000 bpd, industry sources said, from about 1.3 million bpd normally. The Jose terminal in Puerto la Cruz was shut entirely on Wednesday due to a lack on nominations from PDVSA, according to shippers. At the El Palito refinery, a plant which produces for domestic consumption that was shut last week due to staff protests, ships loadings were also halted, according to trading sources. Some cargoes have been loading from storage facilities outside Venezuela such as in the Caribbean but it was not clear how long those supplies would last, traders said.