Explosion at Oil Refinery Raises Concerns about PDVSA’s Infrastructure

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Early Saturday morning, a massive explosion occurred at Venezuela’s largest oil refinery, killing 48 and injuring 80, stopping production, and rocking the nearby town.

Residents reported smelling gas the night before, but many thought nothing of it, as the odor had occurred many times before. This time, however, was different. At 1 a.m. an explosion engulfed the refinery and also destroyed homes in the town of Amuay, injuring residents who were still sleeping. Two hundred homes were damaged by the blast and 33 families were displaced.

The fires burned for three days, causing several more oil tanks to explode, and were only extinguished yesterday. The refinery has not resumed production, and may not do so for several more days. Concerns remain that once production resumes, the fires may flare up again. Investors, meanwhile, worry that the halt in production from one of the world’s largest refineries could drive up prices.

President Hugo Chávez arrived on the scene Sunday, roughly a day and a half after the explosion first occurred, declaring three days of mourning for those killed in the accident. His initial response was to deny the residents’ reports of the gas leak, telling a reporter that it was “impossible” that there was any deficiency in maintenance at the plant. However, El Nuevo Herald reports that documents from a reinsurance agency that performed an inspection of the plant in March detailed a long list of maintenance problems and safety issues.

Chávez has promised a full investigation though, in light of his original remarks, some question how thorough it will be or whether it will be made public.

The accident calls attention to the decay of the PDVSA’s infrastructure, which has seen a steady decline in production since Chávez took power in 1998. Although Venezuela possesses the largest proven oil reserves of any nation, it lacks the infrastructure to extract and refine this oil safely and efficiently, a shortcoming which has caused serious problems for its economy.

The event couldn’t come for a worse time for Chávez, as new polls show opposition candidate Henrique Capriles with a lead in the polls. It also comes on the heels of an embarrassing moment last week when Chávez was blindsided by protestors in a national broadcast as well as another large prison riot, on which Chávez has refused to comment.

Upon arrival at Amuay, Chávez expressed solidarity for the victims and then stated, somewhat oddly, that “the show must go on.” Indeed, with just over a month before the presidential elections, Chávez probably wishes he could put this all behind him.

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