ANALYSIS-Growing labor unrest to hurt Venezuela's PDVSA


July 15, 2010 Updated Mar 20, 2009 at 5:02 PM CDT

* Protests to hurt but not halt PDVSA

* Chavez faces growing protests in public sector

* Cash-strapped Chavez struggles to meet worker demands

By Deisy Buitrago

CARACAS (Reuters) - A wave of pay-related
protests by workers at Venezuela's state oil company could hit
productivity at PDVSA, the engine of President Hugo Chavez's
drive to bring socialism to the OPEC nation.

Thousands of oil workers are demanding new collective
contracts even as tumbling oil prices are depleting state

Meanwhile, thousands of public workers in other key sectors
like electricity, industry and healthcare also want higher
wages to help deal with Latin America's highest inflation.

This is the largest wave of worker discontent Chavez has
faced since 2003 when an oil strike supported by the opposition
halted the industry and jeopardized the country's economy.

An operator of oilfields, health clinics and even
supermarkets, PDVSA is the main source of the income Chavez
needs to keep spending on the poor, whose support helped him
win a recent vote to lift a ban on presidential reelections.

Demonstrations have already hit service and maintenance
operations, halted some drilling work and slashed the number of
workers in oilfields.

"We are not thinking of halting operations because the
state and Venezuelans will end up losing," Will Rangel, head of
Venezuela's biggest oil union that represents PDVSA workers and
private contractors, told Reuters.

"But we will not stop our demands and raise our voice of
protests and discontent."

The company built a multibillion-dollar bill with oil
services providers since last year, but has started to pay.

If protests intensify it could seriously hurt the company's
production and refining capacity.

After the strike at the oil company in 2003 failed to oust
Chavez, he fired more than 20,000 PDVSA workers. Analysts say
the move greatly hurt the company.

Chavez again warned of tough actions against public workers
that take to the streets.

"Anyone who halts operations of a state company is directly
messing with the head of state," Chavez said recently.

A PDVSA spokesman declined to comment on the matter.

Cash-strapped Venezuela could for now weather the protests
by delaying new contract negotiations in hopes oil prices
rebound as the global crisis hits bottom, experts say.

"PDVSA has raised its operation costs more than the
industry average and they could keep that up this year," said
Maikel Bello, an economist with Caracas-based Ecoanalitica.

"We are not going to see a crisis or a collapse, but less
efficiency and higher costs," he added.

After a decade in power, the charismatic Chavez has
increased the number of public workers with a wave of
nationalizations in key parts of the economy from oil to
telecommunications and farming.

Last year PDVSA raised its workforce by a quarter to 75,600
and also hired more contractors, according to company data.

Venezuela, one of top oil exporters to the United States,
says it produces about 3 million barrels of oil per day,
although trade sources and analysts calculate a much lower
output at 2.4 million bpd. The country's aging crude refineries
also suffer repeated technical problems and stoppages due to
low investment.

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