Pdvsa, an empty shell?
01.12.04 | Recently appointed Pdvsa president Rafael Ramírez has revived the idea of selling the assets that the oil company has abroad. In a television interview, Ramírez, who is also the Minister of Energy and Mines, announced that they are taking a look at the company’s businesses in Europe and in the United States with a view to reorganizing the industry to adapt it to the new functions it has been assigned in order to meet Venezuela’s new strategic objectives. He didn’t clarify what those objectives were nor did he specifically mention which assets would be sold. He hinted that they might be evaluating the sale of part of Citgo and other properties the company has in Germany, Belgium, Great Britain and Sweden.
Ramírez’ position comes as no surprise, as President Chávez’ has been toying with this idea since the time he was a presidential candidate and has spoken of it in public on several occasions. So far, however, little has been sold. Although the government announced the sale of 50% of Ruhr Oel to the Alfa Group a year ago, it is not known whether the sale went through, much less what the price was. Then, a few months ago, 34 gasoline pumps were sold in Puerto Rico. Venezuela’s strategic vision should be to expand, consolidate and guarantee the market for Venezuelan crudes and to exercise more influence within international agencies such as OPEC.
However, the temptation to give in to voracious spending has led the powers that be to view the sale of assets is a tasty morsel, more so when current crude production doesn’t even reach the OPEC quota. Taking a short-term view when analyzing oil issues is a mistake.
In the long term, Citgo with its network of nine refineries, more than 15,000 gas stations, and an entire support infrastructure guarantees that Venezuela will be able to sell its oil in a secure market when there is a world surplus. The same can be said of the other assets abroad.
On the domestic front, it is worrying that the strategy is focused on increasing the social budget for 2005 by 41% to $2.4 billion, to be divided up among three trust funds (agriculture, infrastructure and missions). Pdvsa has now become the government’s arm for carrying out social projects.
Pdvsa should be concentrating on recovering its operating and production capacities, which are way below 1998 levels, and at the same time focusing its efforts on its business. Unless it does, it will soon be no more than an empty shell.
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