The Venezuelan government arrested two Chevron executives as the socialist country tries to crackdown on alleged graft in the oil industry, according to a report Wednesday from Reuters.
Venezuelan intelligence agents burst into a company’s joint venture’s office in Puerto La Cruz and arrested two Venezuelan employees for alleged wrongdoing, sources told Reuters. The move could scare oil companies from investing in OPEC countries that wrestle with hyperinflation.
Chevron confirmed the reports.
“Chevron Global Technology Services Company is aware that two of its Venezuelan-based employees have been arrested by local authorities,” Chevron said in a statement Tuesday, referring to the government’s move Monday to arrest chemical engineer Carlos Algarra and Rene Vasquez, a procurement adviser in the country.
“We have contacted the local authorities to understand the basis of the detention and to ensure the safety and wellbeing of these employees. Our legal team is evaluating the situation and working towards the timely release of these employees,” Chevron added.
They were arrested after arguing with state-run company PDVSA over procurement agreements. Oil industry analysts claim the arrests should be a warning sign to companies that relations with Venezuela’s government could go sour during extreme economic upheaval.
“Oil industry companies would do well to be cautious and stop assuming that good relations with PDVSA can last forever due to a common interest in pumping oil,” Raul Gallegos, associate director with the consultancy Control Risks, told Reuters shortly after the arrests were confirmed.
“The level of corruption in PDVSA, especially under a military administration, can and will trump production logic,” he added. The economic turmoil comes as hyperinflation continues racking the country’s currency.
Each of 20 bolivar bills, according to analysts, is worth about $0.0001 at the current exchange rate, requiring Venezuelans to have 100 of the bills to even have a penny. Galloping inflation has essentially robbed half the country, according to Francisco Toro, an executive editor of the Caracas Chronicles.
“Hyperinflation is disorienting. Five or six years ago, the 500 bolivars on the floor would’ve bought you a meal for two with wine at the best restaurant in Caracas,” Toro wrote in a January editorial for The Washington Post.
“As late as early last year, they would’ve bought you at least a cup of coffee. At the end of 2016, they still bought you a cup of café con leche, at least. Today, they buy you essentially nothing … well, except for 132 gallons of the world’s most extravagantly subsidized gasoline,” he added.