For All Nails #266: No Oil for Blood

By Noel Maurer

From the Statist
26 March 1976

No Blood For Oil?

The British government has always insisted that the war in America was not about oil. Now that the best part of New Granada's oil facilities are under British control, London seems surprised to find that it was telling the truth.

During last year's campaign, United Empire forces were particularly careful to minimize the collateral damage to New Granada's oil wells, pipelines, ports and refineries. By and large, they succeeded. Even so, industry experts say that the British would be lucky to restore even half of the oil-producing giant's former mainland production. The new administration is hindered by a lack of experienced employees and managers. Moreover, although the retreating Neogranadians refrained from deliberately destroying the oil facilities -- "We'll be back," said General Manuel Huitrón before boarding the last gyropter out of Mérida -- the wells were shut down, and many were damaged in the process.

Petroleos Granadinos, or Petrograsa, produced 4.5m barrels a day in the occupied territories (a region known to Neogranadians as "Venezuela") before the invasion, which made it the world's third-largest oil producer after the Arabian gulf (including Persia) and Mexico. Foreign oil companies, mainly Mexican, produced an additional 400,000 barrels in the area currently under Bornholm Pact occupation. As of this week, the new managers have only succeeded in bringing 1.4m barrels per day back on line, and experts agree that they will be hard-pressed to produce much more than that. Meanwhile, the Mexican government has ordered Mexican operations in the country to cease production.

The world-wide oil industry has almost no spare capacity at the moment. Germany's recent investments in the Arabian gulf have boosted daily production there to 22m barrels, but little new investment is currently planned. Mexican oil production has been stagnant for years, with new drilling barely compensating for tapped-out older wells. No other countries seem able to make up the shortfall in the near future. New Granada possesses other oil-producing regions, but they are (obviously) not exporting at the moment. The result has been a soaring oil price. The benchmark price of crude in Michigan City has almost doubled over the past year, to N. A. £1.86 a barrel. Further increases seem likely.

Moreover, experts say that New Granada has permanently lost more than 20% of its total output. Low-pressure wells, common in the central part of the nation, have filled with sand, rendering them useless. The more mature fields around Lake Maracaibo will be the toughest to restore. New Granada's heavy petroleum, meanwhile, tends to congeal when shut down and may take many months to begin flowing again.

British engineers are skilled at the production of synthetic crude from heavy-oil, and Imperial Petroleum announced this week that it plans to resume production using the facilities from its former joint venture with Petrograsa. That depends, however, on whether Imperial can get enough natural gas to break down the heavy petroleum and make it usuable in refineries back in Britain.

These problems are compounded by a natural production decline across the Neogranadian industry of 20% per year per well, which is particularly steep. Replacement workers brought in from Britain and Taiwan lack knowledge of the wells, especially those that require technical expertise to force oil to the surface. Nearly 12,000 of Petrograsa's former 40,000 employees based in the occupied territory have disappeared, presumably to the still-unoccupied Andean part of the country. Of those that remain, fewer than 10% have shown up to work.

Regardless of the effect on the world oil market, eastern New Granada's economic prospects are grim. The estimates are that the economy has shrunk by almost 30% against pre-war levels; some economists suggest that this year could see a further decline of half as much. But until the oil industry returns to work, figures are just guesswork. What is not is the liquidity crunch that is slowly crushing what remains of the private sector in the occupied territories. More strikes seem inevitable. Prime Minister Geoffrey Gold may have won the Battle of Venezuela. What is less clear is whether he can win the battle for production.

From the New York Herald, page C1
1 April 1976

New Granada Crude Output: Sharp Decline In Eastern Part

CARACAS -- New Granada's crude oil output fell to 1.04 million barrels per day Wednesday, compared with around 1.22 million barrels on Tuesday, dissident staff at Petroleos Granadinos said yesterday.

The biggest decline was noted in the far eastern part of the occupied territory of Venezuela, where 692,000 barrels are being produced, compared to 852,000 the day before. The decline is due to wildcat strikes at fields that had been pumping at capacity in Monagas province. "This is what it is going to be like in the coming weeks -- production will vary," said an anonymous source in the British occupation authority. Production in the west stood at 260,000 barrels per day, unaffected by the strikes. In the southern occupied region, production maintained its level of 92,000 b/d.

From the Statist
8 April 1977

Striking Oil ... Workers

At the back of the Caracas airpark, thousands of Filipino and Chinese laborers queue up with almost military precision for their daily work assignments. British officers hand out jobs as construction workers, lorry drivers, garbagemen, and cooks. Meanwhile, within sight of the British sentries, another group queues up with far less precision: striking "Venezuelans" awaiting their daily food ration courtesy of the North American taxpayer.

The "provisional government of Venezuela" has been preturnaturally quiet since its creation 17 months ago. Foreign troops and civilian contractors travel freely in all the major urban areas, the oilfields, and the country's beach resorts. Unfortunately, Venezuela's quiescence is the result of a year-long general strike that shows no sign of ending.

More than 50,000 laborers from the Philippines and the poorer member states of the Chinese Community have been contracted to carry out the necessary jobs that the Venezuelans refuse to do. Thousands more skilled engineers from Taiwan, Britain, and Germany -- the latter undaunted by their country's withdrawal from the Bornholm Alliance -- toil in the nation's petroleum industry. Salaries for skilled workers are high, even by German standards. Unfortunately, those high salaries have added to the Venezuelan oil industry's already-high costs. While production is up to two-thirds of its prewar level, profits are nil.

The only exceptions to the general strike in the major cities, besides scattered shopkeepers and various service workers, are the police and schoolteachers. As the last Neogranadian troops left Venezuela, the leaders of the unions governing both professions emplored their members in the occupied territory to stay at their jobs for "patriotic reasons." When the head of the provisional government, Esteban Nuñez, angrily refused to allow public employees to continue working unless they pledged allegiance to his administration, he was summarily overruled by Colonel James Waltham of the British Expeditionary Force.

Unfortunately, the scarcity of local revenues has forced the Bornholm Alliance to pick up the tab for public salaries. Fortunately for the United Empire's strapped taxpayers, the Japanese government has agreed to pony up the necessary resources. Meanwhile, much of the Venezuelan urban population survives on food aid donated by the Confederation of North America.

Ironically, while both the food and the ships that bring it are paid for by the CNA, the stevedores who unload it and truck drivers who transport it are employees of -- you guessed it -- the Venezuelan provisional government, which is financed by Japan. Tokyo, therefore, has managed to simultaneously relieve its Bornholm partners of the burden of paying for the occupation, subsidize the North American relief effort, and support the Venezuelan strikers. It is hard to tell whether it is the most brilliant diplomatic effort of the war, or simply the most inept.

Forward to #267 (American War, New Granada): Easter Rising - Prelude.

Forward to 5 April 1976: Buddha on Ice.

Return to For All Nails.

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