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Sunday, 7 April, 2002, 14:33 GMT 15:33 UK
Venezuela's escalating oil dispute
An employee of Petroleos de Venezuela (PDVSA) holds a sign reading PDVSA Never Will Be Beaten
The oil workers are backing their former bosses
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By Adam Easton
BBC correspondent in Caracas

The partial stoppage of Venezuela's oil sector - the first in the country's history - has caught the government off guard.

Oil workers from the state-owned company PDVSA - Latin America's largest corporation - are carrying out partial strike action which has already disrupted fuel and gas supplies.

It's better to shut down PDVSA for five days than to have a crippled company in the years to come

Karl Mazeika, former PDVSA vice president
The economy is also likely to be damaged - Venezuela is the world's fourth-largest oil exporter.

On Saturday, the labour conflict worsened when the country's biggest union federation, the CTV, announced it had called a 24-hour general strike for next Tuesday.

The announcement increased business at Caracas supermarkets as residents stocked up on food supplies.

Managers 'deceived'

It came just a day after a meeting between mediators and the new management board reached several "pre-agreements" in the conflict.

But it was not enough. After more than a month of negotiations which left some company managers saying they felt "deceived", the strike began last Thursday.

Filling up with petrol
Venezuela is the world's fourth largest oil exporter
Managers at the company are protesting against the new board.

They say Venezuelan President Hugo Chavez has filled it with his supporters.

Five of the 10-member board were promoted from relatively junior ranks.

Karl Mazeika, a former company vice president, attended a noisy management demonstration outside a company building on Saturday.

He told the BBC: "If the government decides to change the board, the problem immediately ends and everybody goes back to work. It's better to shut down PDVSA for five days than to have a crippled company in the years to come."

But the government has refused to do so. In response, workers stopped filling oil tanker trucks with gasoline, and gas plants stopped production of propane for cooking gas.

Oil tankers have started queuing at the country's terminals as workers stopped loading operations.

Panic buying

The strike could be a devastating blow to the country's economy as Venezuela, relies on oil for 80% of its export earnings and more than half of its tax revenues.

Venezuelan National Guards
National Guard troops have been sent to safeguard the oil plant
Within hours, motorists in many of Venezuela's major cities began queuing to fill up their tanks as panic buying broke out.

One who waited for hours said: "Everyone is talking about the problem at PDVSA which is causing serious supply problems. Since I need the car to make a living, I am here along with the others to voice our concern."

One opinion poll suggested 72% of Caracas residents supported the managers' actions.


Both the government and new PDVSA president Gaston Parra assured the nation that the company would guarantee both its internal and export commitments.

Vice president Diosdado Cabello took over the country's television channels on the hour every hour to deliver a recorded message calling on Venezuelans not to panic.

He said the naming of the board was the sole responsibility of the president.

President Hugo Chavez
Chavez has come to blows with unions before
But the board's decision to suspend four senior executives has escalated the conflict, completely shutting down operations at the 130,000 barrels a day capacity El Palito refinery.

National Guard troops have been sent in to safeguard the plant. Clashes between supporters and opponents of the government culminated in the deaths of two oil workers at a drilling rig last week.

The conflict is the biggest test Mr Chavez has faced since coming to power three years ago.

Opinion polls say his popularity has plummeted from highs of 80% to around 30%.

"I don't understand what the government is doing. PDVSA has to be run by people with experience not politicians," taxi driver Eduardo Martins said.

"The best thing for Venezuela is for Chavez to step down."

See also:

06 Apr 02 | Business
Venezuelan oil dispute spreads
05 Apr 02 | Business
Iran wields oil embargo threat
05 Apr 02 | Business
Venezuelans hit by oil crisis
05 Apr 02 | Business
Venezuela oil dispute escalates
21 Mar 02 | Americas
Clashes erupt on Venezuela streets
27 Feb 02 | Americas
Venezuela divided over Chavez
29 Mar 01 | Business
Venezuela outlaws oil strike
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