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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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An Environmental Disaster Is Unfolding In Venezuela

  • Two decades of malfeasance, mismanagement, and corruption have led to ill-maintained energy infrastructure and a large number of oil spills in Venezuela.
  • Caracas’ reluctance to identify, contain, and clean up oil spills has significantly worsened the environmental impact.
  • The environmental disaster unfolding in Venezuela could take years, perhaps even decades to clean up.
Oil Spills

An often overlooked and ignored aspect of Venezuela’s crisis is the considerable environmental degradation occurring at the hands of the OPEC member’s decrepit oil industry. Two decades of malfeasance, mismanagement, and corruption coupled with chronic under-investment in maintaining, repairing, and refurbishing industry infrastructure means oil spills are nearly an everyday occurrence. Frequent spillages of crude oil and emission of toxic gases, through flaring, as well as liquids from severely corroded infrastructure, including pipelines, storage facilities, and refineries, are creating an environmental crisis of catastrophic proportions in one of the world’s most biodiverse countries. A focal point of the environmental disaster engulfing Venezuela is Lake Maracaibo. Satellite images from 2021 show the body of water, which is the largest lake in South America and one of the world’s second-oldest, marred by oil slicks and algae blooms. The lake and nearby Maracaibo Basin have long been at the core of Venezuela’s petroleum industry with the first productive well drilled in 1917. Local fishermen regularly complain of contaminated catches with fish and the lake’s shore covered in black slime. Oil spills along Venezuela’s Caribbean coast as well as leakages of petroleum liquids and related noxious gases from nearby infrastructure are regular, almost daily, events.  The scale of the disaster engulfing Venezuela’s environment due to oil industry operations is practically impossible to quantify because PDVSA ceased reporting spills during 2016. That coincided with the national oil company ceasing to make operational data publicly available after ending the publication of operational data certified by an independent auditor in 2012. Despite the lack of reporting, independent experts believe that oil spills, waste discharges, fumes, flaring, and other environmental emissions have soared over the last decade. During 2016, the year that PDSA ceased reporting environmental incidents, there were 8,259 spills, or quadruple the volume reported for 1999. That is a startling number of oil spills for a country that, according to OPEC secondary sources, pumped an average of 2.1 million barrels per day during 2016 compared to 2.8 million barrels for 1999, which was Chavez’s first year in power.

A February 2022 report from Venezuela’s Academy of Sciences, quoted by news agency Reuters, detailed nine serious oil spills during 2020 and 2021 that caused major environmental damage. This included the 26,730 barrels July 2021 spill in Falcon state which polluted the ecologically sensitive Morrocoy national park causing significant destruction. According to the academy: “Along the coast, hydrocarbon spills and the discharge of waste by the oil industry happen with greater frequency every day,"

The Venezuelan Observatory For Political Ecology identified 53 oil spills (Spanish) for the period 1 January 2021 to 16 September 2021. That number is of considerable concern when it is considered that Venezuela only produced an average of 528,800 barrels per day during 2021.

Venezuela Oil Spills 1 January 2021 – 16 September 2021 

Source: Venezuelan Observatory For Political Ecology.

More than half of those spills, 33 in total, occurred in Falcon State which contains a significant proportion of Venezuela’s petroleum refineries and related infrastructures such as pipeline, storage, and loading facilities. Among the serious incidents reported by the observatory is the rupture of a tank at the 310,000 barrels per day Cardon Refinery, part of the Falcon State Paraguana Refinery Complex, which saw 3.6 million liters of gasoline drain into the Gulf of Venezuela. According to the newspaper La Prensa Del Tachira (Spanish), the crack that occurred in the tank was because of a lack of maintenance, which despite being required every two years had not been conducted by PDVSA since 2016.

Related: Russia Speaks Out Against High Oil Prices As Brent Nears $100

The condition of PDVSA’s installations has significantly deteriorated over the last decade because corruption, a lack of skilled labor, and a dearth of capital are preventing the national oil company from performing crucial maintenance activities. As the condition of Venezuela’s petroleum infrastructure deteriorates further, due to a decade of neglect, lack of maintenance and chronic underinvestment oil spills, emissions, and other environmentally damaging incidents will occur with greater frequency. PDVSA and the Maduro regime’s primary goal appears to be to pump and refine as much crude oil as current resources on hand allow, regardless of the crumbling state of crucial infrastructure and the environmental damage being caused. That was worsened by Caracas’ reluctance to identify, contain, and clean up oil spills and other environmentally damaging petroleum industry discharges. There is a belief among industry analysts that PDVSA and the Maduro regime are distorting the production data provided to OPEC. For that reason, it is almost impossible to gauge the volume of environmental damage caused by oil leaks and spills, flaring, and other industrial pollution. 

The environmental disaster unfolding in Venezuela caused by a near-bankrupt and desperate Maduro regime is on such a scale that it will take years, perhaps even decades, and considerable amounts of capital to clean up. As Caracas places ever greater pressure on PDVSA to lift production, with Maduro announcing in January 2022 (Spanish) that the national company’s oil output will reach 2 million barrels per day before the end of the year. That overly ambitious target is nearly four times greater than the 528,800 barrels per day, according to OPEC secondary sources, pumped on average for 2021. It is also around three times higher than the 718,000 barrels produced per day shown by OPEC’s secondary sources and double the one million barrels a day that Maduro claims PDVSA pumped for December 2021. As PDVSA labors to achieve Maduro’s production target using dilapidated and decaying facilities further oil spills, gasoline leaks and noxious emissions are inevitable, causing an ever-greater degree of environmental damage and degradation. Venezuela’s vast petroleum reserves, the world’s largest at 304 billion barrels, are ultimately proving to be a curse for the crisis-torn Latin American nation. For these reasons, the enduring legacy of Hugo Chavez’s socialist Bolivarian revolution will not be one of greater equality and prosperity but an environmental catastrophe that will scar Venezuela for years and even decades to come.


By Matthew Smith for Oilprice.com

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