“I Haven’t Eaten Meat In 2 Months” – Venezuelan Oil Workers Are Collapsing From Hunger On The Job

This report was originally published by Tyler Durden at Zero Hedge

Those who are unfamiliar with Venezuela’s unprecedented economic collapse might be surprised to learn that the country’s oil production has only slowed, even as the price of a barrel of crude has risen in most international markets.

Unsurprisingly (it’s Venezuela), there’s a macabre explanation for this phenomenon: The workers at PDVSA – Venezuela’s state-owned oil company, which once showered Venezuelans with oil wealth – are literally collapsing due to hunger and exhaustion as workers defy their government handlers and flee their jobs in their desperation as the value of their pay has been completely erased.

Bloomberg spoke with several workers in Venezuela’s oil industry about the harsh conditions they face on a daily basis.

Of course, oil workers aren’t the only ones suffering: The situation in Venezuela is getting so dire that ordinary Venezuelans are losing tons of body weight because of the food shortages. Many can no longer afford to buy meat.

One worker told Bloomberg about how his weekly salary barely pays for the corn flour he mixes with water and drinks every morning.

At 6:40 a.m., Pablo Ruiz squats at the gate of a decaying refinery in Puerto La Cruz, Venezuela, steeling himself for eight Sisyphean hours of brushing anti-rust paint onto pipes under a burning sun. For breakfast, the 55-year-old drank corn-flour water.

Ruiz’s weekly salary of 110,000 bolivares — about 50 cents at the black-market exchange rate — buys him less than a kilo of corn meal or rice. His only protein comes from 170 grams of canned tuna included in a food box the government provides to low-income families. It shows up every 45 days or so.

“I haven’t eaten meat for two months,” he said. “The last time I did, I spent my whole week’s salary on a chicken meal.”

Hunger is hastening the ruin of Venezuelan’s oil industry as workers grow too weak and hungry for heavy labor. With children dying of malnutrition and adults sifting garbage for table scraps, food has become more important than employment, and thousands are walking off the job. Absenteeism and mass resignations mean few are left to produce the oil that keeps the tattered economy functioning.

Researchers at three Venezuelan Universities reported losing on average 11 kilograms (24 lbs) in body weight last year and almost 90% now live in poverty, according to a new university study on the impact of a devastating economic crisis and food shortages. That annual survey has become a key barometer of the country’s economic stress since the government stopped releasing reliable economic data, as Reuters reports.

Per Reuters, over 60% of Venezuelans surveyed said that during the previous three months they had woken up hungry because they did not have enough money to buy food. About a quarter of the population was eating two or less meals a day.

After winning the presidency in 1999, leftist President Hugo Chavez was proud of improving Venezuela’s social indicators as the country’s economy was bolstered by oil-fueled welfare policies.

But his successor President Nicolas Maduro, who has ruled since 2013, has allowed corruption to flourish. And his political allies have mismanaged the economy to such a degree that the collapse in the price of oil during 2014 had ruinous consequences.

Even as the price of crude has begun to creep materially higher, the situation in Venezuela is only getting worse.

In contemporary Venezuela, currency controls restrict food imports, hyperinflation eats into salaries, and people line up for hours to buy basics like flour.

As a result, 90% of Venezuelans live in poverty.

In what appears to be a last-ditch effort to rescue the country’s economy and his regime, President Nicolas Maduro yesterday began sales of the Petro, Venezuela’s oil-backed cryptocurerency. The launch was so successful, Maduro has assured the public, that he is considering launch a “Petro Oro” – a cryptocurrency backed by gold reserves.

But perhaps even more shocking than the dire circumstances under which PDVSA’s remaining employees go to work every day is the contrast with the country’s prosperous past, as Bloomberg describes it…

For decades, PDVSA was a dream job in a socialist petro-state. The company supplied workers not only with a good living and revolutionary-red coveralls, but cafeterias that served lunches with soup, a main course, dessert and freshly squeezed juice. Now, the cafeterias are mostly bare, the children are hungry and employees are leaving to work as taxi drivers, plumbers or farmers. Some emigrate. Some hold out as long as they can.

…Now, instead of enjoying the trappings of a comfortable, middle-class life (not to mention freshly squeezed fruit juice), desperate employees are risking the government’s wrath – and possibly sacrificing their chance at a government pension someday – to escape not only from their jobs, but from Venezuela.

Those who quit without notice risk losing their pensions, as bureaucrats refuse to process paperwork. Many managers live in terror of arrest since the Maduro regime purged the industry, imprisoning officials from low-level apparatchiks to former oil ministers. In one human resources office, a sign advertised a limit of five resignations a day.

“Management is holding them back to stop brain and technical drain,” said Jose Bodas, general secretary of United Federation of Venezuelan Oil Workers. He estimates 500 employees have resigned at the Puerto La Cruz refinery and nearby processing facilities in the past 12 months – even though superiors have labeled them “traitors to the homeland,” a phrase that often precedes arrest. In the streets, families sell their boots and the red coveralls.

“They’re giving up because of hunger,” Bodas said. “They’re leaving because they get paid better abroad. This is unheard of, a catastrophe.”

In a nightmarish reflection of what life must’ve been like in some of the most poverty stricken areas of the Soviet Union, widespread adsenteeism is forcing those who stay behind to work long hours at the state’s insistence – without any additional compensation.

Sitting in the living room of his house, on his day off, Endy Torres says he has lost 33 pounds over the past 18 months. He shows his PDVSA identification photo as proof: a chubby-cheeked man, weighing 176 pounds.

Ten years ago, he joined the company expecting an ample salary and comfortable pension. Today, his 700,000 bolivars per month, plus a food bonus of 1.6 million bolivars (about $9.50 altogether) can’t fill the fridge at his grandmother’s house, where he lives.

About 10 people from his department resigned in January. There are 263 plant operators remaining and 180 vacancies at the Puerto La Cruz refinery, he said.

Absenteeism forces those who show up to work extra hours and burn precious calories. The lack of investment in equipment and maintenance has increased technical failures, almost all in the early hours of the morning, he said. When they occur, workers are too fatigued to act quickly, and accidents occur.

And the worst part of it all is: Even if oil prices make a surprise comeback, years of favoritism, corruption and – now – international sanctions mean it’s unlikely Venezuela’s oil industry will suddenly blossom once again: For those who stay behind, the formerly wealthiest country in Latin America will probably remain mired in poverty, for as long as it’s ruled by a corrupt autocracy.

Venezuela Bans Magazines From Publishing Photos Of Women In Bikinis

While Venezuela’s embattled government struggles with the fallout from being declared officially in default by ISDA after delaying a principal payment on the Petroleos de Venezuela SA, or PDVSA, bond that matured Nov. 2, its Supreme Court has been busy robbing the country’s downtrodden public one of the few small pleasures still available in a country that has been deprived of seemingly every necessity, from food to medicine.

Local media reported that Venezuela’s Supreme Court on Friday ruled that magazines that circulate to the general public can no longer feature images of scantily clad women on their covers.

The decree specifically mentions “pornographic” content, yet includes many mainstream magazines: According to the court, “images of nude or partially nude women in compromising and suggestive poses that stimulate sexual arousal for commercial ends” are now banned from magazines, regardless of whether the photos are editorial content, or found in advertisements.

 

Foto contraportada diario Meridiano hoy 16 de agosto. Mil gracias a Edgar Àlfaro por la deferencia. Es para ustedes pic.twitter.com/rXBQOtct5o

— Merineth Vegas (@MerinethVegas) August 16, 2013

 

The decision was a response to a complaint filed by a citizen against weekly sports publication El Heraldo, a subsidiary of 6° Poder. The complaint requested that the government prohibit the “publication of any example, be it digital or printed, including private subscriptions, of images with sexual content … whether it be by way of a photograph, other image, advertisements or links that could be accessed by children and young people."

The court claimed that when such images go public, the publishers aren’t aware of their responsibilities as “media outlets in society to transmit appropriate content” seen by both adults and children.

This ruling directly affects the country’s primary publications Meridiano and Líder, both of which make use of images of women in bathing suits on their covers.

“These types of sexual images don’t come with a warning, which could bring about negative consequences with respect to people’s baser instincts, and thereby put at risk the constitutional rights of the most vulnerable, namely children and young people,” the court’s ruling continues.

Venezuela’s Supreme Court has regularly kowtowed to the whims of the Maduro government, most famously when it certified a Maduro-approved directive to disband the country’s Congress, a ruling that led to the successful (if rigged) referendum vote to create a new National Assembly to help Maduro change the country’s Constitution to cement his long-term grip on power - and marginalize political dissidents who have been rallying in the streets of the country’s cities for months.

Venezuela’s economy has been locked in a vicious downward spiral after falling oil prices and years of mismanagement by Maduro and his predecessor, President Hugo Chavez have spurred inflation rates above 2,000%.

Given these endemic economic troubles, it would appear women in bikinis are the least of the societal ills plaguing Latin America’s favorite Socialist Paradise.
 

Venezuela Officially Declared In Default

Today at 11am, the ISDA Determinations Committee sits down to decide whether an event of default has occurred due to the delayed principal payment on the Petroleos de Venezuela SA, or PDVSA, bond that matured Nov. 2, in the process triggering PDVSA (and perhaps Venezuela) CDS, and officially declaring Venezuela in default.

We won"t have to wait that long: moments ago, Wilmington Trust, the Trustee of the 8.5% bonds due 2018, issued by Corpoelec, Venezuela"s electricity company, declared that the missed interest payment originally due October 10, and whose 30 day grace period expired on November 9, and for which no pament was sent or received, officially constitutes an event of default.

From Bloomberg:

From the statement:

Wilmington Trust, National Association is communicating the following to you in its capacity as successor trustee (the “Trustee”) to The Bank of New York, as trustee, under the Indenture dated as of April 10, 2008 (the “Indenture”) for the $650,000,000 8.50% Senior Notes due 2018 (the “Notes”) of C.A. La Electricidad de Caracas (the “Issuer”). In a letter to the Trustee and various other parties dated November 30, 2012, National Electricity Corporation, S.A. (CORPOELEC) advised that it is the successor by merger to the Issuer. Capitalized terms used herein but not defined herein shall have the respective meanings set forth in the Indenture.

 

Please be advised that the Paying Agent with respect to the Notes has advised the Trustee that the payment of interest on the Notes that was due on October 10, 2017 was not received by the Paying Agent. The Issuer’s failure to pay interest on the Notes when due on October 10, 2017 constitutes a Default under the Indenture. The Paying Agent has further notified the Trustee that the interest payment was not received by November 9, 2017.

 

The Issuer’s failure to pay the overdue interest on the Notes on or before November 9, 2017 constitutes an Event of Default under Section 5.1(ii) of the Indenture. Pursuant to Section 5.1(b) of the Indenture, if an Event of Default shall occur and be continuing and has not been waived, the Holders of at least 25% in principal amount of Outstanding Notes may declare the principal of, and premium, if any, accrued interest and Additional Amounts, if any, on all the Notes to be due and payable by notice in writing to the Issuer and the Trustee specifying the Event of Default and that such notice is a “notice of acceleration”, and the same shall become immediately due and payable.

It is unclear if this formal default declaration makes today"s ISDA determinations committee decision moot, however it now looks quite certain that Monday"s meeting between creditors and the country"s vice president and chief debt negotiatior, who also happens to be a US-sanctioned drug kingpin, will no longer be necessary.

Today"s news will not come as a surprise to CDS holders, who had already priced in a 99.99% probability of default in 5 years.

The full statement is below:

The Time Has Come: Venezuela May Be In Default In Under 48 Hours

This past weekend, Venezuela failed to make $237 million in bond coupon payment, blaming "technical glitches" when in reality it simply did not have the money (or wish to part with it). Adding the $349 million in unpaid bond interest accumulated over the past month as of last Friday, that brings Caracas" unpaid bills to $586 million this month, just days before the nation must make a critical principal payment. And, as BofA sovereign debt analyst Jane Brauer writes, while the bank"s base case assumption is that Venezuela will make its debt service payments this year, "the probability of a short term default has increased substantially with coupon delays" and it could come as soon as this Friday, when an $842 million PDVSA principal plus interest payment is due, and which unlike typical bond payments does not have a 30 day grace period but instead is followed by a second $1.1 billion PDVSA coupon on Nov 2, also without a 30 day grace period.

As Brauer writes, Venezuela has been in as similar situation of payment uncertainty in the recent past, with bond prices plummeting right before a big payment. For example, just before a big principal payment was due in April 2017 Venezuela received a $1bn loan from Russia just one week before the due date. At that time Ven 27s dropped 16% in a month (from $52 to $45) and recovered completely within a month.  Ven 27 has fallen to $35, as Venezuela has demonstrated that it will be a challenge to make all payments on time.  The difference between now and April is that coupon payment delays then came after, not before the payment.

Meanwhile, Venezuela has managed to redefine the concept of payment "on time" which now means "by the end of the grace period"

As we keep track of missed payments, the 5 missed payments, so far totaling $350mn all have a 30 day grace period, as did the $237mn payments over the weekend.

The concern is that the principal payments coming up have:

• No grace period in the bond indenture for an event of default


• Three business day grace period before triggering CDS

The concerning principal due dates are coming up, the first of which is this coming Friday, which means in less than 48 hours Venezuela could be in default unless it can find $842 million:

• Friday, Oct 27 PDVSA 2020 $842mn


• Thursday Nov 2 PDVSA 17N $1,121mn

The collateral against the first bond is PDVSA"s Houston-based refining and retail subsidiary, and in just a few hours, the bondholders may be the (un)happy new ownders of said subsidiary.

"This weekend, there"s either going to be a lot of bond holders and traders drinking champagne, or there"s going to be a lot of stressed fund managers," said Russ Dallen, managing partner at Caracas Capital Markets

And to help everyone involved, here are some key tables, courtesy of BofA:

1. Table 1. Ordered by due dates, missed payments and payments due today for Venezuela sovereign and wholly-owned quasi sovereign issuers.


2. Table 2. Sorted by grace period end dates for missed payments and those due today


3. Table 3. Debt service due dates for the next 9 months


4. Table 4. Bond Attributes and face needed to block CACs

Table 1

Table 2

Table 3

Table 4

Maduro To Generals: Prepare For War With "Criminal Empire" US

After barely managing to scrape together the nearly $200 million needed to make a bond payment earlier this month (the country made the payment a week late), Embattled Venezeulan President Nicolas Maduro is refocusing his attention on the US, warning military leaders Tuesday to begin preparing for war with the US. Maduro"s call to arms comes after the US has repeatedly tightened sanctions against Maduro"s regime and the country"s state-run oil company; earlier this week, the Trump administration blocked Venezeulan officials from entering the US as part of the White House"s new “targeted” travel ban. Trump has also repeatedly threatened a military intervention if Maduro doesn"t leave voluntarily.

Maduro is probably still brooding over Trump’s call for the world community to help restore “democracy and political freedoms” to Venezeula by ousting Maduro (to which Maduro reportedly responded in typical leftist fashion by comparing Trump to Hitler).  Trump made those remarks last week during his first address to the UN General Assembly. Earlier this year, Trump said he wouldn"t rule out a military option for dealing with Venezuela, adding that the US has an obligation to take of the country because it"s "our neighbor."

Maduro said Trump’s threats were the reason for him ordering the military to be on alert.

"We have been shamelessly threatened by the most criminal empire that ever existed and we have the obligation to prepare ourselves to guarantee peace," said Maduro, who wore a green uniform and a military hat as he spoke with his army top brass during a military exercise involving tanks and missiles. "We need to have rifles, missiles and well-oiled tanks at the ready....to defend every inch of the territory if needs be," he added.

Over the summer, the US announced sanctions to prevent PDVSA, Venezuela’s state-owed oil company, from issuing new debt (sanctions that conveniently avoided existing bonds held by Goldman Sachs), while also preventing Citgo, the US subsidiary of PDVSA, from repatriating dividends. The US has also passed sanctions against many top Venezuelan officials. Tensions between Maduro and Trump started escalating shortly after Trump’s inauguration, when the US blacklisted Venezuelan Vice President Tareck El Aissami for drug trafficking.

Maduro referenced the sanctions during his speech at the military base. As he spoke, Russian military planes flew in the sky as part of the training exercise, according to Newsweek.

"The future of humanity cannot be the world of illegal sanctions, of economic persecution," Maduro said.

Of course, Maduro doesn"t have the manpower to stand up to the US’s much-larger military. The embattled leader has managed to cling to power in Venezuela despite mounting political and economic crises that have inspired months of deadly anti-government demonstrations in the streets of the capital, Caracas and many other cities around the country.

As Newsweek reports, Defense Minister Vladimir Padrino has backed Maduro through the unrest, but Reuters reported back in August that there may be growing support for a military-backed coup against Maduro, whose approval rating remains at all-time lows, even as he has succeeded in consolidating power and marginalizing his opposition.

The country has managed to avoid financial calamity with the help of Russia and China. However, Newsweek reports that China is beginning to limit its exposure to Venezuela amid the mounting political unrest.
 

Venezuela Prepares For A War With The United States

The socialist nation of Venezuela has called on its military and asked them to prepare to go to war with the United States. Venezuela’s President Nicolas Maduro is bracing for war just days after the Trump administration banned Venezuelan officials from entering the nation.

“We have been shamelessly threatened by the most criminal empire that ever existed and we have the obligation to prepare ourselves to guarantee peace,” said Maduro, who wore a green uniform and a military hat as he spoke with his army top brass during a military exercise involving tanks and missiles. “We need to have rifles, missiles, and well-oiled tanks at the ready….to defend every inch of the territory if needs be. The future of humanity cannot be the world of illegal sanctions, of economic persecution,” Maduro said.

According to Newsweek, Maduro’s threats come down to the Trump administration’s hard stance against Maduro’s regime by banning money lending to Venezuela’s government or its state oil company PDVSA and passing sanctions against Maduro and his top officials. But it isn’t likely that the socialist regime has the ability to stand up to the United States in any meaningful way.

It’s unlikely Maduro has the manpower to stand up to the U.S., which has a much larger military. Maduro has maintained power in Venezuela despite mounting political and economic crises that has seen months of violent, anti-government demonstrations across the South American nation. Defense Minister Vladimir Padrino has backed Maduro during the upheaval, but some critics have begun a whisper campaign suggesting that the military could break away and support a coup against the president, Herbert Garcia, a former senior army general and minister,told Reuters in August. There have been three attempted military coups in Venezuela since 1992. –Newsweek

Russia has come out on the side of Venezuela. “We are strongly against unilateral sanctions against sovereign states,” Russian Foreign Ministry spokesperson Maria Zakharova said in August. “We will carefully analyze the implications of the sanctions imposed by the United States, and their possible effect on the interests of Russia and Russian businesses. We can already say that they will not affect our willingness to expand and strengthen cooperation with the friendly nation of Venezuela and its people.”

Russia has defended Venezuela frequently lately saying Trump is simply ramping up for a war and an invasion of Caracas.

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Author: Mac Slavo
Views: Read by 515 people
Date: September 27th, 2017
Website: www.SHTFplan.com

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Venezuela's Oil Production On The Brink Of Collapse

Authored by Nick Cunningham via OilPrice.com,

Desperation is spreading in Venezuela as violent protests continue to paralyze the country, further damaging the country’s shattered economy. Venezuela’s already-decrepit oil industry is deteriorating by the day, and an outright implosion is no longer out of the question.

The inflation rate, according to the IMF, will balloon to 720 percent this year. Food shortages have been common for quite some time, but are deepening and wearing down the population. Three out of four people surveyed by the WSJ reported involuntary weight loss last year. Hospitals have completely broken down.

Venezuela has been crippled by protests since late March, with more than three dozen people having been killed over the past two months, and there is no sign of improvement. This meltdown is taking a toll on Venezuela’s oil production, the last thing keeping the country from becoming a failed state. Venezuela’s oil production has been declining for more than a decade, mainly because oil revenues are used to finance the government, leaving little for state-owned PDVSA to reinvest in its operations.

But things are getting worse. The cash shortage is accelerating the decline. As of April, oil production stood at 1.956 million barrels per day (mb/d), down 10 percent from last year, and down more than 17 percent from 2015 levels - and output continues to trend downward. James Williams, energy economist at WTRG Economics, told Marketwatch in March that he expects Venezuela to lose another 200,000 to 300,000 bpd this year, another 10 to 15 percent decline from 1Q2017 levels.

The problem is downstream as well, as the shortage of refined products worsens. Three out of Venezuela’s four oil refineries are operating significantly below capacity because of the inability to find spare parts for maintenance, according to Reuters. The Paraguana Refining Center, for example, is only producing 409,000 bpd compared to its nameplate capacity of 955,000 bpd. PDVSA’s third largest refinery, which has a capacity of 187,000 bpd, is operating “at minimum levels due to problems at two of its three distillation units,” Reuters says.

With cash drying up, PDVSA is also struggling to import lighter fuels that are necessary to blend with the country’s heavy oil. Some ships are sitting off the Venezuelan coast because of unpaid bills. Meanwhile, because of obligations to creditors, PDVSA is sending crude abroad, leaving little for domestic refining.

But PDVSA’s financial and operational problems have a compounding effect. Falling production at refineries mean more gasoline needs to be imported from abroad, putting a tighter squeeze on state finances, which in turn leaves even less for everything else the country needs, from food to healthcare.

The possibility of all hell breaking loose is not zero. The WSJ reports that Venezuelan security forces are at their breaking point. Young, underpaid members of the national police are often not given food or water while on duty, and are asked to constantly beat back rapidly escalating protests in scorching heat, around the clock. Also, police and soldiers are not immune to the food shortages and economic collapse that the rest of the country is suffering through. The loyalty of the security services to the President no longer appears rock solid.

PDVSA and the national government avoided a debt default a few weeks ago, but with obligations looming later this year and a dwindling pile of cash with which to draw upon, the problem is not going away.

As far as the oil sector goes, the best case scenario for Venezuela is steady, if rapid, decline in production – a loss of 200,000 to 300,000 bpd this year. But the darker scenario is a much more sudden disruption if the country implodes. There is no way of knowing if this will happen, but analysts are growing increasingly concerned about the possibility. “Oil production continues its downward drift due to service provider cuts, power shortages, inability to obtain imports and irregular salary payments,” Helima Croft, commodities strategist at RBC Capital Markets, wrote in a recent report. “The oil question is whether current conditions could set the stage for the type of industrial action that cut exports by nearly 80 percent in the early 2000s.”

Country With The World's Largest Oil Reserves Runs Out Of Gasoline

In a testament to the efficiency of socialism, leftist-run Venezuela has long prided itself on selling its citizens the world"s cheapest gasoline... that is when it has gasoline to sell. 

While fuel supplies in the country with the world"s largest proven oil reserves...

... have continued flowing despite monetary collapse and hyperinflation, a domestic oil industry in turmoil and a deepening economic collapse under President Nicolas Maduro that has left the South American country with scant supplies of many basic necessities, that changed last Wednesday when Venezuelans faced their first nationwide shortage of motor fuel since an explosion ripped through one of the world"s largest refineries five years ago. At the time, the government of then-President Hugo Chavez curbed exports to guarantee there was enough fuel at home.  This time, however, the problems were all man made and the shortage was mainly due to problems at refineries, as a mix of plant glitches and maintenance cut fuel production in half.

In the immediate aftermath of the shortage, Venezuela’s state oil company, Petroleos de Venezuela, rushed to replenish gasoline supplies in various neighborhoods of Caracas as drivers lined up at filling stations amid a worsening shortage of fuel. While Petroleos de Venezuela, or PDVSA, says the situation is normalizing and blamed the lines on transport delays, the opposition says the company has had to reduce costly fuel imports as it tries to preserve cash to pay its foreign debt. The opposition was likely right.

According to Bloomberg, tanker trucks were seen in several neighborhoods of the capital city resupplying filling stations after local newspaper El Nacional reported widespread shortages across the country.  As the company’s crumbling refineries fail to meet domestic demand, imports have become a major drain of cash as the country buys fuel abroad at market prices only to sell it for pennies per gallon at home, unless, of course, one buys abundant gasoline on the black market where its cost is orders of magnitude higher than what one would pay at the gas station.

“Yesterday, I went to three filling stations and I couldn’t fill my tank,” Freddy Bautista, a 26-year-old student, said in an interview while waiting outside of a gas station in the Las Mercedes area of eastern Caracas on Thursday. “I’ve been waiting 30 minutes here, and it seems like I’ll be able to fill up today.”

But the key reason PDVSA has been reducing the money-losing imports as it prepares for $2 billion in bond payments due next month, said Jose Brito, an opposition lawmaker on the National Assembly’s oil commission. “They’re not importing enough because they are saving up to pay the debt,” he said in a telephone interview. “It’s unbelievable that this is happening in an oil producing country.”

It gets better.

While PDVSA was "suddenly" unable to keep the domestic market stocked, it had no problems supplying gasoline to its main export partners such as Cuba and Nicaragua. As Reuters reported, Caracas has continued exporting fuel to political allies and even raised the volume of shipments last month despite warnings within the government-run company that doing so could trigger a domestic supply crunch. Shipments from refineries to the domestic market needed to be redirected to meet those export commitments, internal documents showed.

"Should this additional volume ... be exported, it would impact a cargo scheduled for the local market," read one email obtained by Reuters and sent from an official in the company"s domestic marketing department to its international trade unit. Venezuela last month exported 88,000 barrels per day (bpd) of fuels - equivalent to a fifth of its domestic consumption - to Cuba, Nicaragua and other countries, according to internal PDVSA documents seen by Reuters.

That was up 22,000 bpd on the volumes Venezuela had been shipping to those two countries under accords struck by Chavez to expand his diplomatic clout by lowering their fuel costs through cheap supplies of crude and fuel. The order to increase exports came from PDVSA"s top executives, according to the internal emails seen by Reuters.

Then came the departures.

As Reuters adds, the strain on the country"s fuel system has been worsened by the quiet departure of staff in PDVSA"s trade and supply unit who are key to ensuring fuel gets to where it is needed and making payments for imports, three sources close to the company said. Clearly unconvinced that Venezuela is the socialist paradise shown on brochures, the unit has seen around a dozen key staffers depart since Maduro shook up PDVSA"s top management in January. Among those who left was the head of budget and payments.

"Every week someone leaves for one reason or another," said a PDVSA source familiar with the unit"s operations. Some have been fired, while others have left since the shake-up inserted political and military officials into top positions and bolstered Maduro"s grip on the company that powers the nation"s economy.

The imposition of leaders with little or no experience in the industry has further disillusioned some of the company"s experienced professionals and accelerated an exodus that had already taken hold as economic and social conditions in Venezuela worsened.  A recent internal PDVSA report seen by Reuters mentioned "a low capacity to retain key personnel," amid salaries of a few dozen dollars a month at the black market rate.

The vacancies have led to all-out chaos inside the state-run energy company: the departure of staff responsible for paying suppliers, as well as a cash crunch in the company and the country, have led to an accumulation of unpaid bills for fuel imports into Venezuela. Had those bills been paid, the supply crunch would have been less acute, company sources said.

About 10 tankers are waiting near PDVSA ports in Venezuela and the Caribbean to discharge fuel for domestic consumption and for oil blending.

Only one vessel bringing fuel imports has been discharged since the beginning of the week, shipping data showed.

PDVSA ordered some of the cargoes as it prepared alternative supplies while refineries undergo maintenance.

As a result of this clusterfuck, Venezuela finds itself in a particular bind: while there are millions of gallons of gasoline parked offshore (not to mention some 300 billion barrels of oil underground) they will remain there indefinitely until PDVSA pays for their cargoes. Should PDVSA pay - up to $20 million per cargo - shortages could blow over relatively soon. However, as noted above, it won"t, as it is saving every dollar for an upcoming bond payment: PDVSA is preparing for some $2.5 billion in bond payments due next month.

Meanwhile, the shortages persist despite calls for calm from PDVSA.

Ysmel Serrano, commercial and supply vice president at PDVSA, said on Twitter last Wednesday that the company has sufficient supply from its refineries and is working to increase shipments to stabilize distribution after transportation delays led to lines at gasoline stations in four states. “We call for calm and to resist false rumors from sectors trying to create chaos in the country!” Serrano said.

The comments came just hours after the company said it had controlled a “minor” fire at the Amuay refinery in Falcon state, the largest refining complex in the country where a 2012 explosion killed dozens of people.

To be sure, shortages are nothing new in Venezuela. The hunt for gasoline is just the latest headache for consumers after years of severe economic contraction and triple-digit inflation have produced shortages of everything from bread to antibiotics.

Unfortunately, even once the bond payment is made there is no assurance the flow of gasoline to the domestic market will resume. Venezuela has been forced to increase imports of finished gasoline and components over the past years as its refinery utilization rates declined because of deteriorating infrastructure and under-investment. The country imported about 75,000 barrels a day of refined products from the U.S. in 2016, according to the U.S. Energy Information Administration.

As Bloomberg writes, in Caracas’ eastern Sucre municipality, around 20 cars were lined up outside of a PDVSA gas station trying to fill up. National police in the Las Mercedes part of the city, meanwhile, were trying to prevent lines from forming outside of filling stations there. Outside of Caracas, El Carabobeno, a newspaper based in the central city of Valencia, reported widespread lines there.

* * *

On Wednesday, Maduro found a way to briefly deflect blame for the ongoing debacle: Venezuela’s public prosecutor ordered the arrest of Marco Antonio Malave, PDVSA’s manager of international trade, for supposed wrongdoing related to fuel purchases for the domestic market. Malave was detained at a Venezuelan military facility and his bank accounts have been blocked. This attempt to scapegoat failure on one person will resolve nothing.