Home News Local news IMPLICATIONS OF VENEZUELAN UPHEAVAL UNCLEAR

IMPLICATIONS OF VENEZUELAN UPHEAVAL UNCLEAR

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April 15, 2002 – Whether the turmoil in Venezuela over the last four days which saw President Hugo Chávez first replaced and then returned to power has any impact on operations at the giant Hovensa refinery on St. Croix apparently remains to be seen.
Hovensa is a joint venture of Amerada Hess, parent company of Hess Oil of the Virgin Islands Corp., and Petroleos de Venezuela, that nation's huge state-owned oil enterprise.
What led up to Chávez being replaced early Friday was a nationwide slowdown over several weeks and then a strike last week by workers and executives of Petroleos de Venezuela, commonly known by its acronym PDVSA, after Chávez replaced the company president and five board members with his own supporters.
"The strike in Venezuela did not affect the refinery," Alex A. Moorhead, Hovensa vice president for government affairs and community relations, said Sunday morning.
As hundreds of thousands of protesters marched on the presidential palace in Caracas on Thursday, armed personnel said to be acting on Chavez's orders fired into the crowd, killing 16 persons. Pedro Carmona Estanga, president of a national business association, was installed as interim president on Friday, hours after the military high command arrested Chávez.
Wire services reported on Sunday that Chávez was freed by his military captors early Sunday morning and reclaimed the presidency as throngs of cheering supporters gathered outside the presidential palace. The reports said Carmona resigned as interim president under pressure from military authorities on Saturday, after some 3,000 members of the palace guard loyal to Chavez had regained control of the official residence.
Carmona was replaced by Chavez's vice president, who turned the government back over to Chávez upon his return. On Sunday, Chávez said he had never resigned, as Carmona and military leaders had claimed.
On Saturday, Moorhead noted that news reports early last week indicated "that increases in the price of crude oil, which has an ultimate impact on the price of gasoline, had resulted from two developments: concerns about Iraq's announced plan to suspend the sale of crude oil and reports of reduced production of crude in Venezuela" as the result of the PDVSA strike.
On Sunday, Moorhead said that whether the Iraqi embargo announced last Monday by Saddam Hussein will have any impact on V.I. consumers "is a question beyond Hovensa's knowledge. This is a matter that is subject to world market conditions over which Hovensa has no control."
Hovensa's president and chief executive, Rene L. Sagebien, speaking at the annual meeting of the St. Thomas-St. John Chamber of Commerce on Friday, commented only that Chávez' removal was "relatively peaceful" and that "with the help of God" the transition would go smoothly. He noted that he had worked with some of the PDVSA officials who had been ousted by Chávez and were being reinstated by the interim government.
Venezuela is variously described as the world's third-largest or fourth-largest oil producer. With the recent labor unrest, its crude oil production had dropped from a normal 2.6 million barrels a day to about 1.4 million.
In January, the Organization of Petroleum Exporting Countries cut its output by 20 percent to hold prices up despite a drop in market demand. In recent weeks, gasoline pump prices have risen dramatically on the mainland. The New York Times reported that oil prices fell by 6 percent Friday with the news of Chávez' removal, the sharpest decline in five months.
The Organization of American States announced it would send a delegation to Venezuela to assess the situation.
The Bush administration, which had not condemned Chávez's ouster, greeted his return on Sunday with a critical admonition. "The people of Venezuela have sent a clear message to President Chávez that they want both democracy and reform," a White House statement said. It said the United States welcomed the OAS "fact-finding mission."

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