Venezuelan oil union arrests unsettle industry critics

  • Market: Crude oil, Oil products
  • 11/27/20

The arrests are a shot across the bows for mid-level officials seeking to balance out the Maduro administration's narrative

The recent arrests of two prominent Venezuelan oil union officials are having a chilling effect on local industry sources who have long filled an information void at state-owned PdV.

National oil federation FUTPV's director, Eudis Girot, and retired refinery operator Guillermo Zarraga have been charged by the attorney general's office with treason, terrorism and organised criminal association. Girot has also been charged with leaking internal information to international news media, and Zarraga has been charged with causing a 27 October explosion that destroyed a 120,000 b/d crude distillation unit at PdV's 635,000 b/d Amuay refinery.

Girot has denied the charges, while Zarraga's family says the charges are false. Both are jailed in Caracas at facilities run by Venezuela's DGCIM and Sebin intelligence agencies. Another senior oil union official who was forced into hiding tells Argus the arrests seek to muzzle PdV and oil ministry officials who regularly leak information after the government suspended the publication of all official data four years ago.

The ministry sends monthly crude production numbers to Opec, but PdV and the ministry have not issued any official operational and financial data since the end of 2016, just as the industry's decline was accelerating. Official Opec data itself is routinely at odds with estimates from secondary sources, including Argus.

Venezuelan mid-level officials who leak internal data such as refinery runs and field-level output often are motivated by a desire to counter the rosier official narrative with more realistic, technical interpretations of chronic industry woes.

Oil minister Tareck El Aissami ordered the arrests after Girot and other critics disclosed that the Nabarima floating storage vessel holding 1.3mn bl of crude was at risk of sinking in the Gulf of Paria, a senior PdV official tells Argus. PdV is currently draining the vessel in a heavily guarded, piecemeal operation that is widely considered an environmental risk, rebuffing US-cleared offers by its Italian minority partner, Eni, to carry out a more efficient ship-to-ship transfer.

Frequent detailed leaks of PdV's failed attempts to restart gasoline production since March at the 305,000 b/d Cardon and 140,000 b/d El Palito refineries also angered El Aissami and PdV chief executive Asdrubal Chavez. "El Aissami and Chavez are going to make examples of Girot, Zarraga and others to send a message to critics and unauthorised information suppliers at the oil ministry and PdV," the PdV official says.

Giving up on Guaido

Some senior Venezuelan oil union officials openly backed the country's US-supported opposition leader, Juan Guaido, after he declared an interim administration in place of President Nicolas Maduro in January 2019. Since then, many of Guaido's associates have been detained or fled abroad, including most recently Leopoldo Lopez, who is now in Spain. Maduro remains firmly in power despite crippling US sanctions.

Several of the union officials and PdV workers now say they feel betrayed by Guaido and the four main opposition political parties that support him. "Some opposition leaders are trying to make money any way they can to take their families out of Venezuela permanently, and the ones who cannot leave for whatever reason are looking for ways to mend their differences with Maduro," one of the union officials says. "Venezuelans who believed in Guaido have become enormously disenchanted and feel betrayed by the opposition. It is now clear to everyone that the opposition leadership is pursuing its own interests and is not capable of fixing Venezuela's problems."


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