Published: Friday, 30 Oct 2009 | 3:59 PM ET

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Five months after Venezuela nationalized dozens of oil service contractors in Zulia state, the once-bustling industrial dock on Lake Maracaibo is nearly abandoned, and the 16 red flags raised to celebrate the takeovers are already tattered and faded.

A few small groups of workers remain, hoping to get the jobs they were promised after the expropriations.

"We demand our jobs. Because we haven't gotten an answer, we're still here," said Demostenes Velasquez, who for months has lived under the scorching sun in a tent improvised from remnants of oil union election pamphlets.

Like Velasquez, many workers on the eastern shores of the lake have protested or gone on hunger strikes to demand jobs promised them after President Hugo Chavez's government expropriated 76 oil services companies on the Maracaibo Lake.

The western region has a long history of oil production.

As part of his drive to install socialism in the OPEC nation, Chavez expropriated the companies contracted by state-run PDVSA, with promises of social prosperity and worker justice.

Over the months since then, protests have intensified so much the government sent troops to control the discontented workers. Many of the protesters sewed their lips together and chained their hands and feet to call the president's attention to their plight.

Broken Promises

Despite the protests, most of the workers don't blame Chavez or his revolution, but individual managers of the state oil company.

Howard Yanes / AP Hugo Chavez

"Five months ago, our President Hugo Chavez announced the glorious news (of the nationalization) that would benefit the town, but some (PDVSA) managers have contradicted it," said Velasquez, a self-proclaimed "Chavista" who dresses in the red clothing popular with champions of the president.

The raft of nationalizations in Venezuela since 2007 has brought pressures on the government to improve lives for workers. But petroleum revenues have dropped with crude oil prices in the recession, leaving Venezuela without funds to fulfill the promises made to gain worker support.

"If we took control of these businesses to continue exploiting workers, it would have made no sense to nationalize them," Rafael Ramirez, energy minister and president of PDVSA, said in July, predicting a bright future for the workers.

The situation has repeated itself in various nationalized industries, putting pressure on Chavez to demonstrate his oft-repeated assertion his government advocates for workers.

Analysts believe Chavez's popularity, which is still above 50 percent, could suffer from worker discontent as families with falling incomes struggle with double-digit inflation and cutbacks in state subsidies.

Collateral Damage

PDVSA says in the next months it will appraise the occupied assets and provide compensation, despite the fact that the state owes its suppliers a debt of around $4.5 billion.

"With all the companies concerned ready to negotiate the settlement terms and come to an agreement... Nobody has a gun to their head," said Eulogio del Pino, PDVSA's vice president of exploration and production, at an oil exhibition in Maracaibo, the capital of Zulia.

He announced that other companies will also be nationalized.

Experts said production in west Maracaibo has a capacity of up to 1 million barrels per day (bpd). But experts say its rate of decline has accelerated since nationalizations.

"The sad thing is that after the nationalizations, PDVSA will need some of these businesses, the largest ones, to provide it with services," said a trade union leader who asked not to be named.

PDVSA says it will extract an additional 220,000 bpd, adding to the 700,000 bpd currently produced from the region.

The oil industry slowdown has reverberated throughout the economy. According to the Association of Retailers and Industrialists of Lagunillas, commercial activity in the region has contracted between 30 and 70 percent.

Meanwhile, Velasquez and his family take refuge from the suffocating humidity in their battered shelter at the gates of the Papagayo docks.

A few meters away, an enormous fence plastered with Chavez's likeness reads: "Proud of the rescue of our docks."

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