placeholder
header

home | Archive | analysis | videos | data | weblog

placeholder
news in other languages:
placeholder
Editorials in English
fr
Editorials in Spanish
esp
Editorials in Italian
ita
Editorials in German
de

placeholder

Situation of Petroleos de Venezuela in January 2004

By Gustavo Coronel

January 26, 2004 - The Venezuelan State owned Petroleum Company has not been able to recover the financial and operational levels it had 3 years ago, when the government of Hugo Chávez decided to intervene its professional management, turning it into a politically controlled corporation.

Current production level remains at 2.6 million barrels per day (b/d), in contrast with the 3.2 million b/d level attained before. Although the government keeps claiming that 3.2 million b/d is the real production level, all credible reports from OPEC, the International Energy Agency and the Venezuelan Central Bank, an autonomous organization, coincide with the lower level. Furthermore, of this production only 1.6 million b/d are PDVSA's own since international companies operating under contract with PDVSA produce the other one million b/d.

Western Venezuela, traditionally the most important producing Venezuelan area, has been the hardest hit since production in that region has decreased to some 840,000 b/d. Overall PDVSA has lost about 730,000 b/d of production, meaning some USD $800 million of loss of income per year. This is a similar amount to the one being illegally requested by the government from the Venezuelan Central Bank.

Maintenance continues to be mediocre, resulting in both loss of production and unacceptable quality control. Because of this, several cargoes of crudes and products have been rejected by clients, due to their being out of specification. In the international petroleum industry this is one of the worst problems an exporting company can have: losing the trust of the clients.

Refinery runs have peaked out at 79% of normal capacity and acute environmental problems exist at the densely populated area of Paraguana, where toxic gas emissions remain unchecked.

In the domestic market the poor mechanical condition of many trucks transporting fuel have caused lack of supply in gasoline stations.

Exports are at 70% of normal levels. This has produced considerably lower income to the national treasury, as pointed out by the Venezuelan Central Bank. Lower petroleum income has resulted in an immoderate growth of the national debt. In the last five years the internal debt of the government has grown from USD $2 billion to $16 billion. This, in turn, has converted the domestic banking system into an appendix of the government, as a full 60% of their debt portfolio is now represented by government debt. Even a delay in the government's honoring of these debts could cause a major collapse of the banking system in the country.

The petrochemical complexes of Moron and El Tablazo are experiencing multiple operational problems and running at no more than 60% normal capacity.

The most visible problem being faced by the International Marketing Division of PDVSA is the huge debt accumulated by the Cuban government. Cuba already owes almost USD $900 million to Venezuela, related to the supply agreement of 53,000 b/d to that country by PDVSA. According to the laws and procedures of PDVSA this supply should have been stopped long ago but the managers have been overruled by political decisions. The loss of this money will be the responsibility of the Presidency of Venezuela, from where the orders flow.

The worst aspect of the current PDVSA relates to management and organizational stability. Changes within the organization continue at a rapid pace, determined by political and patronage considerations. Meritocracy is a thing of the past. A new "reorganization" is being announced, to convert PDVDSA into a paternalistic, welfare institution. This is the way PEMEX, PERTAMINA, YPF (Argentina) and YPFB (Bolivia) went into catastrophic collapses in the past. The current Venezuelan government has decided that ideology is all-important and that sound economic performance is secondary.

Reality is already telling them that a PDVSA managed by the inept cannot keep being the first rate international energy corporation that had been until three years ago.



send this article to a friend >>
placeholder
Loading


Keep Vcrisis Online






top | printer friendly version | contact the webmaster J.B. | disclaimer
placeholder
placeholder