Venezuela Is Leaking Oil Everywhere

(Bloomberg) -- From a distance, the scene is beautiful, a dark pool shimmering under the midday sun, reflecting billowing clouds. But when you close in on the dirt-packed trail leading toward a trio of storage tanks, a pungent odor makes it clear. It's not pretty; it's an oil spill.

In this one spot in the Orinoco Belt, a region in Venezuela named for the river that flows above the world's largest deposits of crude, so many barrels have escaped from underground pipes that a 2,150-square-foot pit around the tanks is filled to the brim. The country is pockmarked with these messes, as Petroleos de Venezuela's infrastructure rots after years of neglect, scant investment and corruption scandals under the regimes of the late Hugo Chavez and his successor as president, Nicolas Maduro.

Venezuela, an OPEC member dependent on oil sales for almost half the national budget, is pumping at the lowest levels since the 1940s.

The spills are conspicuous signs of what has gone so horribly wrong at once-mighty PDVSA. The state-owned company doesn't publish statistics, but environmentalists, analysts and workers keep seemingly endless lists of examples of wayward crude—unleashed by busted valves, ripped gaskets, cracked pipes and on and on—that they say has polluted waterways and farmland and probably has seeped into aquifers.

PDVSA's cleanup policy is, on paper, strict, because “if spills aren't quickly attended to, they become environmental liabilities,” said Carmen Infante, a Caracas-based industry consultant. But resources are spread so thin that responses are rarely swift or comprehensive; trunks of nance trees near the three tanks in Anzoategui state are buried in crude more than 10 months after the leak was discovered.

According to workers in the field, many of the services contractors that specialize in sponging up spills, with trucks equipped with giant vacuums, have gone out of business because they've had such trouble getting paid by PDVSA.

Rigs and pump jacks are part of the landscape in the rural Orinoco Belt. So are black puddles, in ditches, under bushes, along roadsides, around tanks. While not all are the remnants of spills—oil on the ground is a byproduct of the business—industry analysts and consultants who have studied the matter say there are far more than would be considered normal.

Urban areas have been hit, too. Early this year, the contents of a ruptured transport line blackened the Guarapiche River in Monagas state. A water-purification plant on the river was compromised, and the authorities shut it down for more than a month. Local schools canceled classes, and government offices reduced office hours because water was so scarce.

PDVSA stopped making spill data public in 2016. That year, the number of annual incidents had increased more than fourfold since 1999.

With little detailed information to work with, it's difficult for experts to calculate the cost of remediation. There are some hints: Infante says just the 12,367 unattended, potentially contaminated oil-waste pits that PDVSA acknowledged existed 10 years ago—the last time the company released information on these overflow graves—would require around $2.2 billion to bring up to internationally recognized standards.

“There is a lot of concern with the state of the infrastructure when the time comes to reactivate the industry,” said Juan Carlos Sanchez, an environmental consultant in Caracas who used to work for the company. “PDVSA has been collapsing since 2016.”

To get it back on its operating feet in this one area may well require more money than Venezuela earned selling crude on the foreign market last year: $22 billion.

To contact the editor responsible for this story: Patricia Laya at playa2@bloomberg.net, Anne Reifenberg

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