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Re Venezuela: A Letter to Tim Padgett, a TIME Journalist

By Gustavo Coronel, July 21, 2004

Dear Mr. Padgett:

I hope you had a good time in El Furrial, the oilfield near Maturin, Eastern Venezuela, where PDVSA production still holds, due to its relatively early stage of development. I am an old oilman, a geologist and, for the last fifty years I have been very much involved in the Venezuelan oil industry, both as an actor and a witness. It is as an oilman that I feel compelled to tell you that your piece on the current President of Petroleos de Venezuela, published by TIME, and titled "The Latin Oil Czar," presents a highly distorted version of the situation of our oil industry and a very sugary version of a person like Ali Rodríguez who, more than a Latin Oil Czar, should be defined as the man who has destroyed Petroleos de Venezuela. I am not assuming that you wrote what you wrote in bad faith. I am only surprised and disappointed that you chose to write a very unbalanced piece, with only a brief critical intercalation by one of the most competent former PDVSA managers, expelled in a grotesque and unethical fashion by the government Rodríguez represents in PDVSA.

As you say in your piece, Ali Rodríguez was a Marxist terrorist in the 1960's but you fail to add that he participated in several terrorist acts against oil installations, as well as in kidnappings and other violent acts, against democratic Venezuelan governments. Contrary to what you suggest, Rodríguez has never been a person particularly knowledgeable about the oil industry. Maybe he organized oil "seminars" in the mountains but I doubt that he knew what he was talking about. His companions were probably impressed by Rodríguez, simply because in the land of the blind the one eyed is king. The Venezuelan Left has always been notoriously ignorant about the oil industry since they never had hands on experience but were mostly reduced to the study in universities of Marxist economic theory. Few of them ever had their shirts full of oil drilling mud.

You describe Rodríguez as perched in an office above Caracas. I would like to add that this office used to be organized, clean and disciplined, during pre-Chávez days. Rodríguez has allowed the rabble to install vending shacks around the place and, at the height of the crisis of 2002, the "revolutionary" mobs ate, got drunk, relieved themselves and slept in the perimeter of the headquarters of what once was the third most important oil corporation in the world. Even today the place looks like part of a bazaar, rather than as headquarters of a corporation.

You claim that the "curtain is rising this summer on Rodriguez's most interesting act yet. A five year, $37 billion plan. . . ." I want to inform you that this "Rodríguez" five year plan is very much the same five year plan that PDVSA has been rolling over for the last years. There is very little new about this plan. What is new and immoral is the deviation of huge amounts of money directly from PDVSA to the Chávez government to feed the political campaigning of Chávez. What you call "anti-poverty initiatives" are little more than political propaganda and special effects designed to carry Chávez over the hump of the referendum that could oust him at the mid-term of the presidency, due to his dismal performance. To call PDVSA, as you do, a "development agency" plays into the hands of the government gang and is, unfortunately, an example of substandard journalism since no reference is made by you to the improvised and populist nature of the "social" expenditure made with our national money, without transparency or accountability.

You mention the oil strike by PDVSA employees but only use the government version. The other version that is very well documented is that Chávez himself provoked this strike in order to take political control of the company. In fact, if you had done your homework, you would have found that Chávez actually confessed to doing this, in a speech before the National Assembly and in front of all the Diplomatic Corps. Check it up, Tim!

You suggest that Venezuelan oil production has more power to move OPEC's prices than it really does. Venezuela is a second rate producer as compared to the Middle East and to other non-OPEC producers such as Russia. Do not overestimate the power of Venezuela to influence world oil prices.

You rightly assert that PDVSA, before Chávez, had become a model oil firm but go on to say that Venezuelans viewed the company "as a den of arrogant, pampered technocrats and a cookie jar for Venezuela's elite, whose corruption. . . ." Whereas no big and powerful corporation is ever trusted by the common folk, PDVSA was accepted and appreciated by a vast majority of Venezuelans. Only the Marxist and Radical Left, which had been rightly excluded from getting their paws onto the company, felt hostility against the company. The company did generate much money and passed it on to the State to be utilized. They did not utilize the money themselves, except for reinvestment purpose. Today the company has been sacked and is in the hands of the inept. Look at the statistics on exploration, production, refining, marketing and transport. You cannot hope to write objectively about PDVSA or about Rodríguez without talking to the professional managers and not only to the politicians siding with the government.

You are right in saying that Rodríguez has politicized the company. In fact, he has prostituted the managerial principles on which this company was based: Professionalism, freedom from political contamination, meritocratic promotions, self-financing and normal operations. All of these principles have been violated by Rodríguez and his gang. The deterioration of PDVSA is the inevitable product of this perverted process.

A company that is run by the inept, which gives the money to the government for political purposes, which has no accountability, which cannot present timely and accurate financial statements cannot hope to convince the nation that it can be run by "a lefty as effectively as any capitalist CEO." This is a lot of bull and you know it.

You mention that the Law of Hydrocarbons of 2001 (the baby of Rodríguez and Silva Calderon) is resented (and rightly so) by "some" investors (all investors, I should say) but that "the government is helping investors to find ways around the Law." Don't you think that this highly inefficient and hypocritical? You issue a law and then you help to break it under the table!

Rodríguez comes across as impudent when he says that PDVSA will be "visible" in the barrios. It is not the task of PDVSA to be visible in the barrios. Its task is to manage efficiently the oil resources of Venezuela and to obtain optimum income for the nation and not for a group of adventurers that have installed a highly corrupt government in our country. It is regrettable that you failed to mention this other side of the coin in your piece, non- recommended for diabetics.

Tim, next time you visit us and want to write about oil, take some time to talk to petroleum managers who converted PDVSA, during the last 25 years, into one of the top three oil companies in the world. They are mostly very competent, honest and have paid a high personal price to defend PDVSA from the invasion of the incompetent. They have been temporarily overpowered but we hope that, someday, PDVSA will be rescued from the paws of people like the "Latin Oil Czar."

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