How AMLO’s Crown Jewel Became the World’s Deadliest Covid Company
(Bloomberg Businessweek) -- Tomás Morales Vega shivered and huddled close to his co-workers in a narrow corridor outside the doctor’s office. They knew they’d be waiting awhile—there was only one doctor on the Pol-A platform processing center, one of almost 240 platforms and other structures operated in the Gulf of Mexico by Petróleos Mexicanos, or Pemex, Mexico’s state-owned oil company. Outside, wind whipped the platform and waves smashed into its towering steel legs.
Morales, a 62-year-old mechanical integrity engineer, had been feeling ill for days, but when he finally saw the doctor he was told to return to his bunk; there were many other people who were sicker than he was. He kept working. He ate his meals in a poorly ventilated dining room with as many as 100 other people. He shared 160 square feet of living space with three men as he tried to ignore his worsening dizziness, fever, and headaches. By the time a helicopter came for him on April 16, the sky buzzed with air ambulances evacuating the sick from the platforms and a nearby Pemex flotel, a floating hotel that sleeps 700 workers. “There were a lot of infected people,” Morales says. “The doctors couldn’t get people off the platforms fast enough.”
Pemex has reported the deaths of 314 employees and seven contract workers from Covid-19. That’s not only scores more than at all the rest of the world’s major oil companies combined. It’s also the largest number of any company anywhere. Ground zero is the platforms: By Aug. 13, 36 of Pemex’s 7,500 platform workers had died from Covid-19, meaning those workers were more than twice as likely as other Pemex employees to die from the disease and 10 times as likely as the average Mexican citizen. And while its policies and procedures are now more rigorous, Pemex is still suffering from big outbreaks. In August a huge floating Pemex oil processing and storage facility off the coast of Campeche state halted operations for six days because of an outbreak.
Pemex is a key source of government revenue, and of national pride. A decline in production could have political consequences for Mexican President Andrés Manuel López Obrador, known as AMLO, who’s placed Pemex at the heart of his plans to reverse three decades of what he calls neoliberal economic policy. He blames the market-friendly agendas of his predecessors—not least the 2014 reforms that ended Pemex’s monopoly and opened the energy sector to foreign investment—for weakening Pemex and, he said on the campaign trail, ransacking Mexico’s oil riches. After assuming the presidency in December 2018, AMLO vowed to reverse declining production at Pemex and make the country self-sufficient in energy.
On April 13, Pemex said it had put into effect an emergency plan to combat Covid on offshore platforms. Workers on those platforms say the company was slow to sanitize the working and living spaces, reduce the number of personnel, evacuate sick employees, and provide diagnostic tests for Covid-19 before people boarded. Evacuations moved slowly because doctors had to seek permission from their bosses in Pemex-run hospitals and regional offices to send people home, resulting in contagious people continuing to work in proximity to others for days after reporting symptoms. Interviews with more than a dozen Pemex employees, as well as ex-employees, family members, and a lawyer representing employees, suggest that in some places conditions have improved and in others they haven’t.
Mirroring Mexico’s overall population, Pemex’s workforce counts high rates of people with diabetes, hypertension, and obesity, conditions that make them more vulnerable to Covid’s afflictions. These people are typically treated at one of Pemex’s network of 24 hospitals and clinics, which serve a population of about 750,000 people entitled to Pemex’s health benefits, including 126,274 employees, their family members, and retirees. Like much of Mexico’s public health-care system, care at Pemex’s hospitals is spotty, with some facilities ill-equipped to deal with the large influx of virus patients.
Pemex Chief Executive Officer Octavio Romero Oropeza has held homages to deceased employees on his visits to oil fields and facilities but hasn’t said anything publicly about the toll that sets Pemex apart. A Pemex representative who asked not to be identified, citing company policy, said the company has promptly reported the measures it’s implemented to combat the virus and had no further comment. Andrés Oliva, spokesman for the Union of Oil Workers of the Mexican Republic, which represents more than 75% of Pemex employees, said in response to emailed questions that sanitation methods on Pemex’s platforms “were adopted in accordance with the guidelines of Mexico’s General Health Council.” He said the union, known by its Spanish initials STPRM, had asked Pemex to “comply with its collective labor agreement and the guidelines established by the Secretary of Health and the General Health Council.”
At best, Pemex’s response to the virus has been uneven. On March 18 the company announced safety and sanitation measures across most of its facilities on land, including refineries and petrochemical plants. Workers were required to use antibacterial gel and face masks and had their temperature checked each day; social distancing was enforced, and offices and plants were sanitized regularly. But on platforms, where social distancing is all but impossible, Pemex didn’t sanitize thoroughly or reduce the number of personnel until May, according to five Pemex platform workers. Also that month the company began doing rapid diagnostic testing on people scheduled to board platforms, the workers say. Those leaving platforms and scattering to all parts of Mexico, however, still don’t get tested.
Oscar Ortiz, a natural gas analytical tester on the Abkatún-Delta platform, says that before boarding on March 30, he completed a questionnaire about symptoms and had his temperature checked. That was the extent of Pemex’s safety protocols, he says. Over the next few months there were a number of outbreaks on the platform, and at least four people died from the virus, Ortiz says. “The security measures weren’t implemented in time, and they weren’t the correct ones,” he says. “It makes you feel impotent because these lives could have been saved.”
Eduardo Fernando Marín Castillo often purchased two seats to accommodate his bulk on the packed STPRM bus that took him a grueling 20 hours from his home in Tampico to Ciudad del Carmen. The city is a major oil hub and departure point for offshore workers, who take helicopters as far as 65 miles to offshore platforms in the Gulf.
As the coronavirus was spreading in April, Castillo started to think he should stay off the platforms—where he worked 14 consecutive days each month—and the buses because of his obesity, hypertension, and diabetes. But he, his partner, and their teenage son relied on his salary as a maintenance mechanic, which paid about 315,000 pesos, or $14,420, a year.
Although Mexico announced its first Covid-19 cases on Feb. 28, Pemex still wasn’t testing workers for the virus before they boarded as of April, according to workers on five separate platforms. By April 30, when Castillo returned to the Balam-Alfa platform, Pemex had reported the virus-related deaths of seven employees and one contractor.
The tight, interconnected quarters of an offshore platform offer the virus an infection matrix potentially as risky as a cruise ship or crowded bar. A Pemex platform typically hosts 200 to 300 employees and contractors who eat and sleep together in onboard dormitories. There’s a hierarchy to the living arrangements: Supervisors and coordinators sleep one or two per room, and engineers and technicians sleep in bedrooms of four. Lower-level workers often sleep six per room and use a communal bathroom. In addition to the people housed on the platform, managers fly in to make the rounds of various facilities on the water, as do contract maintenance workers.
When Castillo boarded the Balam-Alfa platform at the end of April, he saw no systematic implementation of measures to combat the virus, says his partner, Isabel Robledo Segura. His work team improvised their own preventive steps while continuing to interact with teams that weren’t wearing masks or regularly sanitizing. After another long bus ride home in mid-May, he decided to apply for paid leave under Clause 43 of the STPRM union’s contract with Pemex.
The clause stipulates that employees unable to get to work because of a natural catastrophe or other extreme situation can qualify for pay until they can safely return. As Covid cases multiplied, many Pemex employees started making Clause 43 applications. Castillo had worked for Pemex for 23 years as a “temporary” worker, one who effectively occupies a permanent position but doesn’t have a long-term contract. He was told he would have to wait in line behind full-fledged employees and perhaps should use vacation days, Segura says.
It’s unclear when and where Castillo was exposed to the coronavirus. On May 25 he took another bus back to Ciudad del Carmen to complete in-person paperwork he mistakenly thought he needed. He was home in June when he started developing Covid symptoms. Around that time, Pemex granted him the paid leave. He died on June 27, at age 50. “Sometimes I just collapse, and I cry and cry,” Segura says, her voice dissolving into sobs. “He told me he was scared.” As of Aug. 13, Rodolfo Lehmann Mendoza, Pemex’s deputy director of health services, said the company had granted Clause 43 leaves to almost 8,500 employees, about 7% of the workforce.
Sergio Castellanos, a 56-year-old Pemex platform engineer with hypertension, was on vacation in May when he requested a short extension to cover the end of his scheduled stint on the Abkatún-Alfa platform. He was fearful of the virus after seeing that Pemex wasn’t implementing sanitation or safety protocols during his time on the platform in March and April, he says.
“For just a few days of work, why not let me go and give me a chance to avoid getting infected?” he asks. Managers “are in the office, and because they are a little more isolated, they don’t realize how bad it is on the platforms.” His request was denied, and he worked on May 19 and 20, the remaining days of his designated work period for the month. On May 21 he left the platform and returned to his home in Minatitlán, Veracruz. A few days later he began to develop a sore throat, body aches, a headache, fatigue, and loss of appetite. On June 1 he was admitted to a Pemex hospital. His oxygen saturation level had fallen to a dangerously low 78%. “My teeth were trembling so bad, I couldn’t shut my mouth,” he says. He refused to let doctors intubate him because he thought he would die. Supplied with oxygen, he recovered and was released on June 12. By July 2 he was back on the platforms.
Pemex is in worse financial shape than almost any other oil company in the world, with a debt load of $107 billion. It’s struggled to cope with a heavy tax burden, a bloated workforce, heavy pension obligations, and a money-losing refining business. (Despite all the oil it pumps, Pemex imports 65% of the gasoline it sells.) Over the decades it’s failed to make significant investments in the discovery of new oil fields to replace depleted mature ones. After declining for 15 consecutive years, its oil output is half its 2004 peak. Moody’s Investors Service and Fitch Ratings downgraded Pemex in April, driving its bonds further into junk territory. S&P Global Ratings lowered its credit assessment to BBB, two notches above junk, in March.
For decades, Pemex has been operated as a cash cow for the Mexican government. Where its international peers continually plow money into finding more crude, Pemex funnels much of its profits into the treasury. Taxes, royalties, and other revenue from oil account for almost 10% of the federal budget. AMLO’s vow to boost the company’s daily crude production to 2.4 million barrels by the end of his term in 2024 might be ambitious, given that July output was 1.6 million barrels a day, the lowest volume of crude pumped since October 1979. It’s also unclear if or when global demand will recover.
Oil platform workers are crucial to AMLO’s hopes. On May 1, Pemex announced it had evacuated almost 3,100 offshore workers, halving the density on platforms. The company made a point of saying everyone actually producing oil would be staying. “It should be noted that the withdrawal of personnel is focused on non-essential functions that do not affect the operation of offshore oil facilities,” Pemex said in a statement. When questioned on June 3 about Covid‑19 outbreaks on installations and platforms off the coast of Campeche, AMLO said “nothing has been off schedule.” More recently, though, he said outbreaks on platforms were beginning to affect output. “We have also had difficulty due to Covid because we’ve had patients on oil platforms, on ships,” he said at his daily morning press conference on Sept. 7. “We’ve treated them, and production stopped.”
With workers falling ill, there’s even more pressure on those who are healthy to keep pumping. “Platform activities can’t be stopped from one day to the next because we have production commitments,” says Morales, the engineer on the Pol-A platform. “That’s what the people in the office tell us. And, of course, the president, the energy ministry, they want production at the national level.”
After Morales was evacuated from Pol-A in mid-April, doctors at a Pemex hospital in Ciudad del Carmen discharged him with a diagnosis of laryngitis and told him to self-isolate in a nearby hotel that he, not Pemex, would pay for. Instead he caught the next bus to Paraíso, where his family has a house. He waited in the packed bus station for three hours, then rode another three hours to Paraíso “glued” to other passengers on a crowded bus, he says. His wife, daughter, son, and pet Chihuahua, Mollete Federico I—named after the staple Mexican breakfast dish—journeyed from Mexico City to meet him.
A week later, Morales’s headaches, fever, appetite loss, and dizziness had gotten so bad that his son took him to a Pemex hospital nearby. The hospital couldn’t accommodate Covid patients, so an ambulance ferried him to another Pemex facility, in Villahermosa. That hospital had enough drinking water only for doctors and nurses, not patients, and the bathroom in Morales’s room had no soap or tissues. His family had to buy him water and toiletries. The air conditioning wasn’t working, so Morales sweated through a 102F fever in the tropical heat of southern Mexico. “I felt like an abandoned puppy,” he says.
He was first tested for the virus on April 24, the day he was hospitalized. The result came back positive three days later. He was released on May 1, and on May 19 he tested negative. He was back at work on the Pol-A platform on June 5 when he emailed Pemex’s human resources department seeking the Clause 43 work exemption. He cited his age and his hypertension. He never received a response, he says.
Clause 43 has become an issue for many Pemex workers, and for some a source of discontent with their union. Workers fear having their union benefits denied if they circumvent the STPRM by appealing to the company directly, says platform worker Oscar Ortiz. Jaqueline Roxana Izaguirre Godinez, an employee at the Salina Cruz refinery in Oaxaca state, complains that the union “negotiates” with workers over Clause 43 applications instead of pressing their cases with the company. She also says the union gives some workers preferential treatment with regard to Clause 43 applications.
Ernesto Cavazos Soto, a platform worker, formed a movement to combat what he sees as injustice at the union. He blames the union for failing to ensure that Pemex is keeping vulnerable workers off the platforms and sanitizing installations. Ortiz and Izaguirre are members of Soto’s movement, known as Fusión Socios Activos de la Comunidad Petrolera, or Merger of Oil Community Members.
Oliva, the STPRM spokesman, denied that the union had discouraged Pemex workers from applying for Clause 43 or provided preferential treatment to some union members. “It would be absurd to object to compliance with a clause that was negotiated in the Collective Bargaining Agreement for all workers,” he wrote.
Some workers who fail to get Clause 43 exemptions from the company have sought injunctions in federal and state courts. They argue that they’re entitled to exemptions under either the contractual clause or a March 31 order from the health ministry that said Mexicans who are at high risk of serious complications from Covid-19 at their jobs should stay home. The ministry’s order expired at the end of July, making it more difficult for Pemex workers to receive or maintain paid leave. A collective of attorneys known as Justicia Covid, or Covid Justice, has provided free legal services to more than 100 vulnerable Pemex employees. Emmanuel Quiroz, a lawyer with the group, says some clients have trouble qualifying as vulnerable because the company hasn’t kept their medical records current. “Pemex is obligated under its collective bargaining contract to provide medical checkups once a year, but at some facilities it’s been years since the workers have had checkups,” he says. When that’s the case, it can be unclear whether they have conditions that would put them at risk.
Morales hired his own attorney and sought an injunction after Pemex failed to act on his Clause 43 exemption plea. After finishing his 14-day June stint on the Pol-A platform, he was granted a court injunction allowing him to stay off the platform from June 26 to July 31.
As the pandemic ebbs and flows across Mexico and the world, it’s a constant presence at Pemex. It’s infiltrated the company’s facilities on land, including a refinery in Cadereyta. At least four employees from Cadereyta have died, including two from the refinery’s processing units, one in sales, and a nurse at the regional Pemex hospital, according to three Pemex employees at the refinery who requested anonymity. The contagion started with maintenance work at a unit that involved about 200 workers, a mix of Pemex staff and contractors working side by side, many without masks, the three workers say. They also say the company gave the outside contractors access to the facility without conducting health checks.
At Salina Cruz, Mexico’s biggest refinery, Izaguirre says Pemex didn’t enforce social distancing or provide masks to all workers in April and May. There was no soap in the bathrooms or antibacterial gel, she says. “The company is obligated to provide us with the equipment and materials to protect ourselves,” she says. “I bought my own face mask, latex gloves, and sanitizing gel because I was worried about being infected and infecting my children.”
The crown jewel of AMLO’s campaign to rejuvenate Pemex is a new $8 billion refinery in Tabasco state, where the Mexican president was born. When construction is completed, the refinery will have the capacity to process 340,000 barrels a day, making it the country’s largest. AMLO says the refinery will allow Mexico to stop importing gasoline. His critics say the project diverts attention from the core business of drilling and point out that Pemex’s six existing plants operate at about one-third of their capacity.
Nevertheless, a video posted by the Dutch company Van Oord, a subcontractor on the project, shows that companies are toiling ceaselessly to complete the refinery by AMLO’s 2023 deadline. Outside the site, hundreds of local residents huddle without masks or social distancing, hoping to land one of the 20,000 construction jobs promised by AMLO, according to the Mexican news site Animal Político. AMLO’s energy minister, Rocío Nahle, who frequently tweets photos and videos from the site, recently tested positive for Covid-19.
About 48,000 Pemex employees are working from home. This summer the company extended a work-from-home order through the end of the year while also creating tougher guidelines for employees hoping to qualify as “vulnerable” and eligible for paid leave. According to an internal Pemex document from July 27 seen by Bloomberg Businessweek, employees must be 65 or older to qualify as high risk due to age—five years older than the minimum age ordered by Mexico’s health ministry. In the case of people with diabetes or hypertension, in addition to health ministry requirements—such as having stage 2 hypertension—they must have had a major medical emergency such as a heart attack or stroke. The Pemex representative said doctors will evaluate each patient individually and use the criteria as a guide rather than a requirement.
On Aug. 1, Morales returned to work, arriving at the Dos Bocas port in Tabasco and joining 10 other men in orange jumpsuits waiting at a heliport beneath a cloudless sky. They joked darkly about being incarcerated in prisons at sea, on death row. After undergoing rapid diagnostic tests for the coronavirus, they flew 75 miles to the offshore platforms. Morales said he didn’t feel the panic that gripped him on his last trip to the platform, but he was sure that at home his wife and children and Mollete the Chihuahua were fretting over him. “My wife always thinks the worst. But I am optimistic,” he said. “We are in God’s hands.” —With Bryan Gruley
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