Page last updated at 07:16 GMT, Tuesday, 23 June 2009 08:16 UK

Oil workers urge Chavez to pay

By Will Grant
BBC News, Ciudad Ojeda, Venezuela

Maracaib 420 miles west of Caracas, Venezuela
Oil assets are now in government hands, though workers are not happy.

On the shores of Latin America's largest lake lies Ciudad Ojeda, a town dedicated to oil.

Almost everyone here works in the industry, either directly as contract workers or because their restaurants, bars and other small businesses rely on the free-spending oil workers to stay afloat.

Last month, a significant change happened in Ojeda. Dozens of those contractor businesses were expropriated, along with their assets.

Overnight, 300 boats and an estimated 8,000 workers passed into government hands.

No wages

There were scenes of jubilation as President Hugo Chavez came to the dockside by Lake Maracaibo to meet the newly nationalised oil workers.

Our companies are being run into the ground and it's hurting the workers the most
Juan Lacorte, the former head of the now-nationalised Gutesca oil services company

They waved red flags and celebrated their addition to the payroll of the state-run energy company, PDVSA.

A few weeks later, and those celebrations have turned to protests.

In the central square of Ciudad Ojeda, a noisy demonstration of about 100 workers is held in the stifling mid-morning heat.

Some say they lost their jobs during the nationalisation, others that their pay has been frozen.

"I haven't been paid for more than two months now," says young father-of-four Jose Cardoso.

"There's no food at home and we're getting desperate," he says, adding that he would be willing to go to prison over his outstanding wages.

Debts or savings?

At the time of the nationalisations, President Chavez said the move represented a $700m saving for the Venezuelan government.

Venezuela President Hugo Chavez
President Chavez accused his critics of profiting from poverty.

More importantly, he said, all the different parts of oil production in western Venezuela were now in the hands of the Venezuelan people.

But for some analysts, there is an inherent danger in taking the work of specialist contractor companies out of private hands and putting it under the wide-reaching umbrella of PDVSA.

"First off, [President Chavez] owes that money, so I don't know how he can count it as a saving," says former Shell executive Alberto Quiroz.

"Those are services rendered and he has to pay for them, sooner or later.

"Secondly, he claims that PDVSA can perform the same services cheaper than the specialist companies. Well, that's open to discussion. Personally, I think it will end up being more expensive."

Near standstill

Mr Quiroz believes the nationalisation process has created inefficiency in the oil industry, which is being most keenly felt in Ciudad Ojeda.

There are almost daily reports in the newspapers - many of which are firmly opposed to Mr Chavez - of the nationalised tug-boats lying idle in the dock and falling into disrepair.

Such claims are difficult to prove as the military are guarding the nationalised companies and access is difficult.

But one business owner, who has spent more than 25 years in the oil industry in Ojeda, is convinced things have slowed down to a near standstill since May.

"Normally you'd expect to see 30, 40 boats working out on the lake at any one time," says Juan Lacorte, the former head of the now-nationalised Gutesca oil services company.

"These days, you'd be lucky to see three or four. Our companies are being run into the ground and it's hurting the workers the most. I thought this was supposed to be a socialist government."

Important company

Mr Chavez says that complaints from men such as Mr Lacorte are baseless, and he accuses them of being the kind of capitalist businessmen who for too long have been getting rich, at the expense of the poor, from the country's natural resources.

Whether the oil price is high or the oil price is low, PDVSA is going to be attacked by the people who don't believe in what President Chavez is doing
Former government economist Jose Sojo

The government also denies any suggestion that PDVSA is in trouble.

The oil minister, Rafael Ramirez, recently produced figures for 2008, which at $9.5bn showed a 50% rise in the company's profits compared with 2007.

"PDVSA is the fourth most important oil company in the world," he told reporters.

Controlling resources

However, jPDVSA's level of debt is significant too, at $7.5bn, and the government's detractors are convinced that the oil giant is on the brink of either financial collapse or an operational shut-down.

"If PDVSA was a private company, I'm sure it would be in deep trouble by now," says Mr Quiroz.

"The difference is that by being state-owned, there are measures the government can take that a private company can't - these nationalisations in the state of Zulia being one of them."

For former government economist Jose Sojo, nothing could be further from the truth.

"Whether the oil price is high or the oil price is low, PDVSA is going to be attacked by the people who don't believe in what President Chavez is doing.

"But the fact is that for Venezuela, as for many other Latin American countries, the base for reaching real economic development is the adequate use and control of our natural resources."

Crucially, the question many observers are asking is whether the lower oil price will affect President Chavez's ability to pay for his popular social programmes in health, education and poverty reduction.

Not at all, says Mr Sojo.

"We have had a reduction in our annual income from the lower oil price, that's obvious. But President Chavez has identified areas that we can reduce without hurting these programmes.

"This government will do all it can to cut back on luxuries and other unnecessary expenditures before it cuts back any social spending."

Nevertheless, the sight of normally loyal President Chavez voters, some still wearing their PDVSA overalls and red baseball hats, protesting outside the gates of their nationalised companies will concern the government.

The oil ministry in Venezuela will no doubt hope the slow recovery of the oil price will alleviate any immediate cash-flow problems that PDVSA is experiencing.

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