MORON, Venezuela — Only the filthy water from broken sewer pipes keeps the dust down in front of Ramon Boet’s shop, which sells statues of saints and other religious objects.
In the distance, massive tankers pull up to a half-century-old refinery that processes much of the oil that earns Venezuela more than $100 billion a year.
“It doesn’t help us at all,” Boet, 58, said as a blackout snuffed the lights in his shop in this Caribbean coastal town. He closes before dusk. Too many robbers.
The oil flowing from the El Palito refinery sells for more than five times what it cost when President Hugo Chavez took office in 1999. Yet when Chavez died in March he left Venezuela’s cash cow, its state-run oil company, in such dire straits that analysts say $100-a-barrel oil may no longer be enough to keep the country afloat, barring a complete overhaul of a deteriorating petroleum industry.
The situation is more urgent than ever, analysts say. The price of crude has slumped in recent weeks, and Chavez’s heir, Nicolas Maduro, appears to have done little to address declining production, billions in debt and infrastructure deficiencies that have caused major accidents, including a blaze that killed at least 42 people at Venezuela’s largest refinery last year.
Maduro has retained Chavez’s oil minister and the head of state oil company Petroleos de Venezuela S.A., Rafael Ramirez. And he appears intent on continuing to send cut-rate oil to members of the 18-nation Petrocaribe alliance.
PDVSA, which accounts for 96 percent of the country’s export earnings, no longer “generates enough income to cover all its costs and finance its commitments,” said Pedro Sosa, an energy expert at the Institute for Advanced Studies in Administration in Caracas.
He said that “you can see PDVSA is in trouble” at the $100-a-barrel level because of the many millions lost to gasoline subsidies, spending on domestic social issues and PDVSA’s use as a “geopolitical tool” to maintain regional alliances.
Venezuela has the world’s largest oil reserves but PDVSA’s production, earnings and income all appear to be on a downward slide, and its debts to suppliers rose 35 percent. Its debt to the Central Bank of Venezuela reached $26.19 billion last year, a nearly eight-fold increase in two years.
The government makes no apologies. It said it is employing the country’s most important natural resource for the good of the people, and promises increased production and revenues in the immediate future.
Ramirez said PDVSA’s efforts remained focused on developing the remote Orinoco belt, site of the world’s biggest oil reserves, with the aid of oil firms from China, Russia, the U.S., Italy, Vietnam, Malaysia, Japan and Spain. Venezuela hopes to lift overall production to 3.32 million barrels a day, 200,000 more than last year.
“We’re in a process of trying to attract investment in dollars other than ours,” Ramirez said, adding that PDVSA would work with private investors to not take on more debt to make new investment.