U.S. oil major Chevron has evacuated executives from Venezuela after two of its workers were imprisoned over a contract dispute with state-owned oil company PDVSA, according to four sources familiar with the matter.
Chevron asked other employees to avoid the facilities of its joint venture with the OPEC nation's oil firm, the sources said.
The arrests, in a raid by national intelligence officers, were the first at a foreign oil firm since Venezuela's government launched a purge last fall that has resulted in detentions of more than 80 executives at PDVSA and business partners.
The Chevron workers may face charges of treason for refusing to sign a supply contract for furnace parts drawn up by PDVSA executives, Reuters reported earlier this week. The workers balked at the high costs of the parts and a lack of competitive bids.
Chevron's move to evacuate its expatriate workforce underscores how arduous it has become for foreign oil firms and their workers to sustain operations through Venezuela's accelerating political and economic meltdown.
The affected staff numbers about 30 people in the coastal city of Puerto la Cruz, although it is unclear how many people Chevron has already removed from the country.
Asked about the departures, Chevron on Tuesday declined to comment on what it called "personnel matters." Last week, the company said it was working for the release of the detained workers, Carlos Algarra and Rene Vasquez, who are represented by Chevron lawyers.
Neither PDVSA nor the government's Information Ministry responded to requests for comment. The public prosecutor's office, which has not publicly announced any charges against the Chevron employees, did not immediately respond to a request for comment.
Chevron has no plans to exit the country, according to a company employee familiar with the thinking of its board of directors. The oil company has not pulled out of other tough environments in the past, the person said — citing the jailing of employees in Indonesia in 2013 — and the firm believes Venezuela will eventually stabilize.
Chevron, the world's seventh-largest publicly traded oil producer with 2017 revenue of $135 billion, operates in Venezuela mostly through minority stakes in five projects across the OPEC-member nation.
The firm has about 150 employees in its Puerto la Cruz headquarters and has two more offices in the country. Its earnings from Venezuela dropped 18 percent last year, to $329 million, according to regulatory filings.
The arrests mark an escalation of tensions between PDVSA and foreign companies over control of supply contracts and the joint ventures' governance, sources familiar with the dispute told Reuters.
Outside firms say they are increasingly faced with impossible dilemmas. If their executives sign contracts without following their companies' due process rules, they run the risk of violating compliance standards meant to control costs and guard against corruption. If they don't sign, they stoke tension with their partners at PDVSA, which has a controlling interest in all joint ventures.
Companies evaluating an exit from Venezuela have limited options because few if any international firms would pay anything close to full value for assets in the country amid the ongoing turmoil, according to interviews with three executives of oil firms that have operated in Venezuela. But continuing operations often means stomaching steep losses, taking massive write-downs - and, now, the threat of having staff arrested by the embattled socialist government of President Nicolas Maduro.
PDVSA's deteriorating infrastructure and cash flow have caused oil production to plunge 33 percent in a year, to 1.51 million barrels per day (bpd) in March, according to official data reported to OPEC. Venezuela's oil output so far this year is at a 33-year low.
The falling production and arrests of PDVSA executives on allegations of corruption picked up speed late last year after Maduro named a military chief with no oil industry experience, Major General Manuel Quevedo, as the nation's oil minister and president of PDVSA.
Several of Chevron's foreign staff and some local executives and their families left Venezuela starting last week after the arrests, the four sources familiar with their departures told Reuters. They described the situation as temporary, and said executives may return if proposed talks between Chevron and PDVSA to resolve the dispute are successful.
Chevron executives have had high-level meetings with Venezuelan government officials this week, said two of the people familiar with the matter.
Chevron and other firms aim to avoid a repeat of what happened to Exxon Mobil and ConocoPhillips in Venezuela in 2007, when the government of then-President Hugo Chavez expropriated their assets after they could not reach an agreement to convert their projects into PDVSA-controlled joint ventures.
"No company can leave because it would lose the assets," said a former negotiator of Exxon's 2007 exit from Venezuela. "At this point, there are just a few options."