Oilfield services company Schlumberger has let go of workers and pulled out of projects as it cuts operations in crisis-stricken Venezuela, sparking worker protests and heightening worry over the OPEC country’s slumping oil output.

Schlumberger in April said it would reduce activity in the South American OPEC nation, which accounted for less than 5 percent of the company’s consolidated revenue last year, due to insufficient payments and no improvements on the horizon.

As a result, employees working on projects ranging from the oil-rich Maracaibo Lake to the Orinoco Belt are being laid off, workers and a union leader said, an ominous sign for Venezuela’s slumping crude production and crumbling economy.

“They’re getting rid of almost all the workers because they’re reducing operations and the contracts won’t be renovated because of debt owed by PDVSA,” said a Schlumberger employee in Venezuela’s eastern city of Maturin, asking to remain anonymous because he was not authorized to speak with media.

Houston-based Schlumberger declined to comment. Caracas-based PDVSA did not respond to a request for comment.

Ivan Freites, a union leader and fierce PDVSA critic, said some 600 workers are being fired in Zulia state, whose capital is Maracaibo, and 2,000 workers are being let go nationally.

While the exact number of laid-off workers was not immediately clear, the dismissals could further stoke social unrest as Venezuelans struggle to eat three meals a day amid worsening food shortages and triple-digit inflation.

Some Schlumberger workers protested the layoffs in Maracaibo on Wednesday.

A worker in Venezuela’s oil-rich Orinoco Belt said Schlumberger had scaled back its projects and was now only working on Petropiar, a joint venture between PDVSA and U.S. oil company Chevron, and Petromonagas, a joint venture between PDVSA and Russian oil giant Rosneft.

PDVSA, exclusive operator of Venezuela’s vast oilfields, has run up billions of dollars in unpaid bills to service providers as a result of cash-flow problems amid a deep recession.

U.S. oil services company Halliburton Co in April also said it would begin curtailing activity in Venezuela. It also declined to comment on its scale-back.

PDVSA’s president Eulogio Del Pino told Reuters in June that it was close to reaching a deal with Schlumberger to boost services again, but there have been no details on the potential agreement.

Schlumberger’s declining presence comes as Venezuelan oil fields suffer from lack of spare parts, a brain drain, crime, and maintenance issues.

The country’s crude output fell to some 2.364 million barrels per day in June, from 2.675 million in the same month last year, according to data OPEC says was provided by Venezuela. The drop could help erode a supply glut that has weighed on prices.

Of course, Schlumberger and Halliburton’s dwindling operations in Venezuela could also provide opportunities for their rivals.

One Schlumberger source said a PDVSA unit and Bohai Drilling Service, a unit of China National Petroleum Corp (CNPC), were pocketing some of the contracts. An official at Bohai declined to comment and CNPC, China’s top energy group, did not respond to a request for comment.

Source: www.reuters.com