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An explosion at Venezuela’s largest oil refinery on the 25th August 2012, which killed at least 40 people and caused an estimated $1.7 billion in damages, was supposedly caused by foul play, it has just been announced.
After a recent 117 page report was released detailing the findings of an investigation into the cause of the explosion Rafael Ramirez, the president of Petroleos de Venezuela (PDVSA) and petroleum energy minister, said that he has “the conviction that it was an act of sabotage by factors external to our refinery, our industry.”
The state-sponsored investigation found that the blast occurred due to a gas leak, which in turn had been caused by some intentionally-loosened bolts.
Explosion at Amuay oil refinery. (NY Times)
Some associated to the industry claim that it is more likely that the explosion was a result of the overall deterioration at PDVSA. Many believe that PDVSA is mismanaging the development of Venezuela’s vital oil reserves, due to the fact that despite increased investment and a growing number of employees, the number of accidents still continues to increase, and the oil-rich nation is relying more and more on imported oil from the US.
Jorge Piñon, an energy analyst and Latin American specialist at the University of Texas, explained that “safety is ... part of running a business in this inherently high risk industry. PDVSA has lost sight of that.”
Related Article: US Refineries Respond to Latin American Shortfall
The Christian Science Monitor claims that, according to PDVSA company data, last year the state oil company registered 519 accidents, causing injury to 3,400 employees, and resulting in 24 deaths. In a comparison with other state-owned oil companies in South America (Mexico's Pemex, Colombia's Ecopetrol, and Brazil's Petrobras), made by the International Association of Oil and Gas Producers, PDVSA was found to the most dangerous.
Jose Bodas, the general secretary of Venezuela’s Federation of Oil Workers Union, said that “each accident has its own origin. The overall commonality we're seeing is the lack of maintenance and investment, and the incompletion of security regulations.”
Since 2005 PDVSA has been trying to increase its daily output to six million barrels of crude oil, and in 2007 it allocated $78 billion in order to facilitate the achievement of this target by 2012. Yet despite all that money, and increasing the workforce from 69,000 to 145,000, oil production has actually fallen from 3.1 million barrels a day in 1998 to 2.8 million barrels a day in 2012.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com