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Pirates and Hold-ups: Crime Strikes Venezuela's Oil Industry

FILE - An oil pump is seen in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 2015.

When night falls over western Venezuela, armed gangs known as "pirates" sometimes ride boats into muggy Lake Maracaibo to steal equipment from oil wells.

In the country's Paraguana peninsula, opposite the Caribbean island of Aruba, slum dwellers at times break through a perimeter wall into Venezuela's biggest refinery and rob machinery, construction tools, and cables to sell as scrap.

On the other side of the OPEC country in Monagas state, around 26,000 potential barrels were lost in March during a shutdown after state oil company employees and contractors stole copper cables and caused a tank to overflow.

Venezuela's national crime pandemic - the United Nations says the country has the world's second-highest murder rate after Honduras - is a growing headache for the oil industry, which accounts for nearly all of the country's export revenues.

Hold-ups and thefts in the sector are on the rise, taking a toll on output, according to interviews with around 40 people, including oil workers, union leaders, foreign executives, opposition politicians, scrap dealers, and people who live near oil installations.

Shortages of spare parts or the prospect of further theft stymie replacements of the stolen items, forcing some wells to function at partial capacity or at times even shut down, the people said.

"The scrap seekers are uncontrollable," said National Guard Lieutenant Lenin Osuna, who helps oversee security at the northern Paraguana's 645,000 barrel-per-day Amuay refinery where, he added, 20-30 people sometimes sneak in at once.

"Any day now they could commit irreparable harm to the refinery," added Osuna, speaking in a barracks next to Amuay as he leafed through a thick folder documenting criminal incidents.

Evidence of the rising crime threat to the oil industry is chiefly anecdotal due to a dearth of data and publicly disclosed cases, which the sources chiefly attributed to fears of retribution from perpetrators and a climate of impunity.

Men work at an oil pump in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 20, 2015.
Men work at an oil pump in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 20, 2015.

The Oil Ministry's 2014 annual report acknowledged the problem but did not provide details.

"A high frequency of events linked to insecurity in oil fields has affected operational continuity in generation and maintenance due to theft and loss of components of equipment, materials and consumer goods," it read.

The ministry and state oil company PDVSA did not respond to detailed requests for further information.

Gangs, including those that have for years prowled the waters of Lake Maracaibo, are lured by the oil sector's valuable infrastructure as Venezuela's economic crisis turns tools, computers and machinery into rare and coveted goods.

Some workers, foreign executives and opposition politicians allege this trend has been exacerbated by lax oversight that has allowed crime groups to form within PDVSA's workforce of around 152,000.

"Workers recruited to be drillers end up as bandits who kill, rob, and hold up their colleagues or steal equipment," said Americo De Grazia, an opposition legislator on the National Assembly's commission on energy and petrol who is in touch with oil workers and union bosses.

"They're turning the oil industry into a no man's land where no one can instill order," said De Grazia, adding his attempts to debate the issue have been rebuffed in parliament.

Political 'Sabotage'?

PDVSA says it is up against "sabotage" from political enemies who see damaging the oil industry as a means to weaken President Nicolas Maduro's socialist government.

The company points to measures, including the arrest of employees for the Monagas theft and the deployment of the army to protect installations in that state, as proof Venezuela is taking oil crime seriously.

"We are trying to increase security," PDVSA president Eulogio Del Pino told Reuters in April during a media trip to the Orinoco Belt in the country's southeast. He added that the problem was far more serious in neighboring Colombia, for instance, where guerrillas frequently blow up pipelines.

Fellow oil-rich nations like Nigeria and Mexico have also struggled with oil crime for years.

Currency controls that hurt imports and cash flow, as well as a brain drain of Venezuelans leaving the country, are more salient challenges for Venezuelan output, which PDVSA recently put at roughly 2.85 million barrels per day.

Oil output in Venezuela, which has the world's largest proven reserves, has been falling or stagnating for about a decade, according to U.S. Energy Information Administration figures. Venezuela's output figures often conflict with international agencies. PDVSA says it has shored up production in recent months, thanks to the heavy-crude-rich Orinoco region.

Venezuela's western border - known locally as the "hot frontier"- is particularly restive due to a mix of Colombian paramilitaries, Marxist FARC rebels, drug gangs, and smuggling rings.

In January, for instance, PDVSA reported one of its employees was killed during a night-time hold-up by seven criminals at a well near Lake Maracaibo.

The "pirates" of Lake Maracaibo, a massive bay where the country's oil boom took off a century ago, target cables and devices that control gas injection, according to several PDVSA employees who work on the water and spoke on condition of anonymity.

Small groups of armed men on boats typically zip up to an oil platform at night and hold up workers, stealing everything from microwaves to wallets to machinery, according to oil workers.

That crimps operations at wells, and at times forces them to shut down entirely. A shortage of boats - due to stolen motors and a scarcity of parts- further curbs surveillance on the lake, they added.

"We've returned to the stone age due to theft," one PDVSA engineer said, resting at a relative's home after his shift in the sweltering Caribbean area. "Whatever you replace, they'll steal."

Convoys, Fences, Surveillance

Robbers also target the vast Orinoco Belt, where Venezuela is pinning its hopes of sustaining a production increase to fight declines in mature fields like those around Maracaibo.

Foreign oil companies who operate joint ventures with PDVSA there are pushing for increased security and some have already ntroduced convoy systems, built fences, and boosted surveillance, sources close to the JVs said.

Russia's top oil producer Rosneft, for instance, is seeking more safety guarantees for its Orinoco operations, a source close to the issue said.

Del Pino, a Stanford-educated engineer tapped in September to lead PDVSA, said the company is working with the government to declare the Orinoco a national security area.

"[That means] if someone tries something there they will have a lot of problems," said Del Pino, widely seen as a pragmatist trying to depoliticize and clean up the oil giant critics say has become bloated.

Amuay's security was doubled in January. Soldiers disguised as workers patrol the refinery at all times and several workers are under investigation, Lieutenant Osuna said.

Critics counter that is a drop in the ocean.

Criminals still break into Amuay daily, local union leaders say, at times on motorbikes. Night shift workers fear being held up on their way to the bathroom and fret for their cars after a rash of robberies at the Amuay parking lot this year.

"They can rob you here in the actual refinery, it's happened," one worker said. "It happened in the past too but never in such a nasty way."

Security is also tight for foreign executives visiting the capital Caracas, with measures at times including use of armored vehicles or a ban on travel after dark, according to security consultants and sources in the oil industry.

Meanwhile, the "pirates" attack oil platforms between five and six times a month, estimated Francisco Luna, a machinist in Lake Maracaibo and a leader of Venezuela's oil workers' federation.

"The platforms are in isolated areas. It's easier than stealing in the city," he said.

While Venezuela's sprawling and remote oilfields have suffered crime for decades, industry veterans say the situation has taken a turn for the worse.

"I wouldn't work in Lake Maracaibo now," said one retired PDVSA worker who gave his last name as Sanchez as he rode a bike near the water, wearing old PDVSA work overalls. "It's too dangerous."