February 9, 2009 / 6:06 PM / 9 years ago

FACTBOX-Venezuela's oil industry

Feb 9 (Reuters) - Venezuela’s oil industry is the engine of the economy and finances social programs that keep leftist President Hugo Chavez popular, but a sharp fall in crude prices means state oil company PDVSA is struggling to pay bills and has laid off contract workers.

Some 5,000 oil workers have lost their jobs and another 5,000 are going without pay as a result of large debts to service companies, union officials say.

The following are key facts about Venezuela’s oil industry.

* Chavez repeatedly fought with PDVSA’s management team, which was in favor of more foreign investment, after he took office in 1999. The clashes culminated in a grueling two-month 2002-2003 shutdown that nearly paralyzed operations. As a result Chavez sacked half the work force and took control of the company, just as oil prices were beginning to rise.

* A tumble in oil prices in the last few months from highs near $150 per barrel has left PDVSA behind on its bills. It owes close to $8 billion to service companies, many of which have stopped paying workers.

* Venezuela’s oil industry was nationalized in 1976 and PDVSA was created in the mold of multinational oil companies. In the 1990s it teamed up with private companies to develop the massive Orinoco belt reserves, thought to be among the largest in the world.

* PDVSA is now directly involved in financing social programs ranging from agricultural development to local health clinics. PDVSA’s president, Rafael Ramirez, who is also energy minister, runs a high-school completion program that Chavez created.

* The company has become heavily politicized with employees pressured to demonstrate their allegiance to Chavez. Shortly before the 2006 presidential election, Ramirez was filmed telling company employees they must be “red, really red” supporters of Chavez’s self-styled socialist revolution. Opposition leaders decried the comments, but Chavez congratulated him.

* Venezuela has produced crude since the early 20th century and energy from Venezuela helped the Allies win World War Two. It now provides some 11 percent of U.S. oil imports. (Reporting by Brian Ellsworth. Editing by Frank Jack Daniel and Kieran Murray)

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