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Two years of crimes against Petroleos de Venezuela (April 2002 - April 2004)

By Gustavo Coronel, May 3, 2004

Not even the greatest pessimist in Venezuela could have imagined that the two years elapsed from April 2002 to April 2004 would have seen the conversion of Petroleos de Venezuela, from a major international energy corporation into a third world, mediocre, politicized organization. A brief list of the crimes committed by the regime of Hugo Chāvez against PDVSA during this period are listed below:

* Hugo Chāvez named Gastón Parra, a man ignorant of the oil industry and possessing a pathological hatred of PDVSA management, as president of the company. He did this in order to "promote a crisis in the company" and, as a result, to take over its political and financial control.

* Hugo Chāvez dismissed, in open violation of the Labor Law of Venezuela, over 18,000 managers and technical staff of PDVSA who, even today, have not received their severance payments.

* The current president of PDVSA, Alí Rodriguez, has disbanded INTEVEP, the most important petroleum research center of South America.

* CIED, the most important petroleum managerial and technical center of South America has also been disbanded by the current president of PDVSA, Ali Rodriguez.

* BITOR, the company that marketed ORIMULSION all over the world, has been dissolved by orders of the Minister Rafael Ramirez and the production of this emulsion, which gave some significant additional income to PDVSA, has been stopped.

* PDVSA has been unable to present timely to their shareholders and to the US Securities and Exchange Commission (SEC) their Financial Statements of the last two years. The SEC has spotted many errors and inconsistencies in the received documents and this has generated a significant distrust by the international financial community in the current management of PDVSA.

* The oil spills, industrial accidents and the highly toxic refinery emissions in PDVSA's plants and oilfields, have been at unprecedented levels during this period, the result of poor maintenance and mediocre technical staff.

* Persons without any knowledge of the oil industry have been named as members of PDVSA's Board, which has become a refuge for Chāvez's friends. The last such person is the former Minister of Defense, retired Army General Prieto, a very colorless and mediocre person who has never seen an oil well except in photographs.

* The oil production of PDVSA is now lower by almost one million barrels per day, in spite of the fraudulent claims made to the contrary by Minister Ramirez and PDVSA's president Rodriguez. Today, over 30% of Venezuelan oil production comes from foreign companies working as contractors for PDVSA. This is paradoxical as the government claims that today PDVSA is "really in Venezuelan hands."

* Natural gas production is so severely curtailed that the industrial domestic market is being left largely unsupplied.

* Refinery runs are between 65% and 70% of normal capacities and many plants in the refinery centers of Cardon, Amuay and El Palito are not or have not been in operation during the period (alkylation's, naphtha reformers, atmospheric and vacuum distillation units, hydrotreaters, catalytic cracker of Cardon).

* Gasoline production in the El Palito refinery has collapsed and national rationing of this product is being seriously considered while partial rationing is already in place.

* The petrochemical industry is in total disarray, now under the "leadership" of a brother of the President of the National Assembly. Imports of fertilizers and other products are being made to supply the domestic market.

* CITGO, the US Company owned by PDVSA is being moved from Tulsa, Oklahoma, where it has been for more than 20 years, to Houston, Texas. This move has no valid economic, operational or technical reasons. In fact, it will cost CITGO more than $85 million to accomplish. Hundreds of employees will be displaced from their jobs. New offices will have to be rented. A portion of the company will be left behind in Tulsa. Houston is offering no tax incentives of any kind. When the reasons for a big and expensive move are not evident, corruption is often present.

* International marketing staff was disbanded and these activities were put in the hands of foreign brokers with doubtful credentials. Millions of dollars have been lost to the nation as a result of this mismanagement.

* Bartering of crude oils and products have been attempted with Argentina, in exchange for food products and one with Cuba, in partial exchange for "technical" advice on sugar production, sports and medical services. This has never been done in the Venezuelan oil industry since it distorts the price of oil. In the case of Cuba the exchange will cost Venezuela several billion dollars during the 15 years of the "agreement." This constitutes a major act of treason against the nation. In fact, Cuba already owes Venezuela about $900 million in unpaid bills but keeps receiving the oil.

* The internal organization of PDVSA has undergone three major changes during the period. Discipline is at an all time low since managers now resort to political maneuvering to get what they want. The President and the Board constitute only one of three major groups struggling for power within the company. In this climate of chronic infighting no one is planning for the future.

This is only a partial list of the crimes that have been committed against PDVSA in only two years. They explain the collapse of oil production and the loss of credibility the company have experienced. Chāvez, Rodriguez, Ramirez, Parra, Marin, Mommer, Ciavaldini, Rivero and a few dozens of invertebrate extras have committed the crimes. History will point to this period as the worst disaster the Venezuelan oil industry has ever suffered. Unfortunately no one knows when the disasters will end and what kind of company will be left after Chāvez is gone.

The revolution of Chāvez is a criminal revolution.

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