“I don’t have any problems firing everyone I need to fire,” Venezuelan President Hugo Chavez thundered in 2002 as he began purging state oil company executives who had mounted protests against him.
Months later, nearly 20,000 oil workers, from petroleum engineers to geologists and managers, had been fired. But with the company under the president’s tight control, production has swiftly fallen and Venezuela has slipped from the world’s fifth-largest oil exporter to the 11th.
The oilmen who were banished have taken their experience drilling for Venezuela’s tarlike oil to countries as varied as Iraq, Nigeria and Canada. But the presence of Venezuelan petro-scientists has been most vital in Colombia, where they have helped oil companies sharply increase the production of crude, much of which is exported to the United States.
“Chavez has been a huge help for the petroleum industry in Colombia,” said Humberto Calderon, a former Venezuelan mining minister who now runs Vetra Energy in southern Colombia.
Colombia is now on the verge of achieving what just a few years ago was unthinkable — pumping 1 million barrels of oil a day, up from 540,000 barrels daily in 2005.
“This is practically doubling production during the last four or five years,” said Javier Gutierrez, president of Colombia’s state oil company, Ecopetrol. “It’s a spectacular development.”
The new El Dorado is here in Colombia’s stark eastern plains, a wild land known for its horsemen and harp-based folkloric ballads.
Across 700 square miles, Pacific Rubiales Energy, which is listed on the Toronto stock exchange, jacked up production from 14,000 barrels a day as recently as 2007 to 224,000 last week. Although 12,000 Colombians work here, the company’s top directors and those overseeing exploration and production cut their teeth at the Venezuelan state oil company, Petroleos de Venezuela, known worldwide as Pdvsa.
“The top management of Pdvsa is now the top management of Pacific Rubiales,” said Ronald Pantin, the chief executive and founder of the company and a former high executive at Pdvsa (pronounced peh-deh-veh-sah). “All the people we brought from Venezuela have more than 25 years of experience, so people with a huge knowledge of all this geology.”
That experienced oilmen are now considering Colombia as a destination is a testament to a new reality on the ground in this once-chaotic country and what oil analysts call Venezuela’s mismanagement of its oil sector.
Once terrorized by leftist rebel groups that often bombed oil pipelines, much of rural Colombia has been pacified after a long army offensive supported by U.S. aid. Colombia’s previous government, led by President Alvaro Uribe, also introduced financial incentives that lured scores of oil companies, said Ramon Espinasa, senior oil and gas specialist at the Inter-American Development Bank.
Ecopetrol’s Gutierrez said 65 percent of the basins that may hold oil have now been awarded to oil companies; eight years ago 13 percent of the potential oil fields were being developed.
In Venezuela, meanwhile, Chavez has entrusted Pdvsa with not only producing oil but also overseeing the importation of food and the construction of housing. The workforce ballooned from 40,000 before the mass firings in 2003 to an estimated 100,000, and those workers have been publicly pressured by Pdvsa’s president, Rafael Ramirez, to embrace Chavez’s socialist ideology or lose their jobs.
Production declined from 3.4 million barrels daily in 1998, the year Chavez was elected, to less than 2.4 million a day in 2010, according to the U.S. Energy Information Administration and independent oil analysts. Exports have fallen from 2.2 million in 1998 to less than 1.3 million in 2009, most of which is shipped to the United States. Countries including Mexico, Canada, Kuwait, Iraq and Kazakhstan have overtaken Venezuela and become more important exporters.
In cables written out of the U.S. Embassy in Caracas and released by WikiLeaks, diplomats reported how Venezuelan oil officials manipulated the price of their country’s petroleum products, failed to invest in oil production and owed billions of dollars to foreign oil service companies. Among the sources for cables in 2009 and 2010 was an unnamed Pdvsa executive with access to detailed financial information.
“It is hard to envision a scenario where Venezuela maintains or increases crude oil production in 2010,” said a memo written early that year.
Among those who had sharply criticized Chavez and are now in Colombia is Calderon, who had led Pdvsa and been president of the Organization of the Petroleum Exporting Countries.
In 2002, when oil workers rose up to try to oust Chavez, Calderon gave a speech in Caracas in which he said that “this can only end with the president resigning.”
“This is about him or us,” Calderon said at the time.
In a recent interview in his Bogota office, Calderon recalled how after Chavez put down the protests, a small group of former Pdvsa workers met regularly at a Caracas hotel and came up with the idea of starting a company, Vetra Energy.
“We thought, ‘Where could we go?’ There had to be oil, had to be a country that needed our services, a country where Chavez couldn’t affect us,” Calderon said.
With their links to the oil industry and investors, Calderon and his associates were able to raise enough capital to begin operations in Colombia.
“Colombia has thousands of square kilometers of basins that have not been explored,” he said. “So we said, ‘There’s great potential. We have to go there.’ ”
The most successful player, though, has been Pacific Rubiales. The company took a region that had failed to live up to its potential after an Exxon affiliate discovered oil in 1981.
Pantin said he and his associates knew the underground formations were similar to those in Venezuela.
“When we came from Venezuela, we were looking for the continuation of the Orinoco oil belt,” said Pantin, referring to the rich oil swath in the center of Venezuela.
The Venezuelans introduced technology used in their country but uncommon here in Colombia’s Meta state, such as the use of horizontal wells, which scoop up more oil. Pacific Rubiales is hoping to introduce a system to heat the heavy oil that is underground, improving recovery from 15 percent of the reserves to 50 percent.
“It will be 2.1 billion barrels in only one field,” said Pantin, who like other executives at the company received Colombian citizenship from the Uribe administration, which frequently clashed with Chavez. “That is more than the rest of the reserves in Colombia, so it is huge.”
In a visit to Rubiales, a vast field the company operates here with Ecopetrol, roughnecks manned 12 drilling platforms and oversaw 340 production wells. Construction crews were busy building storage tanks that could each hold as much as 100,000 barrels. Facilities included an airport, housing for workers and a church.
German Hernandez, a Colombian who oversees operations, is among those who have been working here for a decade.
“We were fewer than 20 people, practically living in tents with mosquito netting,” he said, recalling operations a few years ago. “Today we are the number one project in the petroleum industry in Colombia.”