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COLLAPSE OF VENEZUELAN OIL

By A.M. Mora y Leon | Publius Pundit

26.05.05 | Counting oil sands, Venezuela has more petroleum reserves than any country on earth. Even Russia. Even Canada. Even Iran. Even... Saudi Arabia. It’s unbelievable what the Texas-and-Oklahoma-sized country only 1350 miles away from us really has. Venezuela could probably supply the entire world with oil if it wanted. That road you are driving on, if it’s nice, is probably made of Venezuelan-oil-derived asphalt, the world’s finest.

Which is why Venezuela’s declining oil production is such a scandal. Only Iran and Indonesia have comparable production declines in their state-dominated oil industries, but not nearly as intense. Globally, it forces the Saudis to pick up the slack. But it doesn’t go unnoticed.

Today in the Venezuelan blogosphere, writer after writer, some of whom do not even know each other, reach the same conclusion: Venezuela’ s state oil company, under the regime of Hugo Chavez, is being systematically looted by Chavez’s cronies so badly it’s affected production. And hundreds of billions of dollars have been lost. These sums are like Argentina’s default numbers, triple digit billions. It’s coming to a head as a powerful indictment of the Chavez regime, and try as he might to use diversions, like Posada Carriles, Bush, the Norwegians, the IRS, the foreign oil companies, it all comes down to the elephant in the room - the state oil company is bleeding money and Chavez is responsible. And Venezuelans are very angry, angry to the point that Chavez is trying to distract them.

The results are there for all to see.

Charito Rojas writes:

the President of the Republic, his Energy Minister and simultaneous President of PDVSA (greater responsibility in this disaster is impossible), and a whole string of inept people who have ruined the country’s principal industry, still dare to deny a truth that stands before the eyes of Venezuelans who have witnessed the depletion of oil wells for lack of investment, the shutdown of oil rigs, the inoperativeness of the barges, the spills and damage to drill sites, the near-shutdown of the refineries, the continuous industrial accidents with injuries and even deaths, the bloodletting by traders and middlemen who sell Venezuelan oil to third parties. The math does not lie and no matter how pissed off Chávez may be, all figures point in the same direction: Venezuela is producing 2.6 million BPD, of which 1.1 million are produced by PDVSA and 1.5 million by foreign companies.

Daniel Duquenal writes:

One thing is certain: we are not any closer to know what really is going inside PDVSA. And closer to the point where only an independent and foreign audit could solve the problem. Obviously the current management does not know how to do arithmetic, nor wants anyone to do it for them. Gee, I wonder why……

Miguel Octavio writes:

All of this is to me simply a smokescreen. They are trying to create and build scandals and make noise to distract people from the real and very serious problems at PDVSA. It is not whether the foreign companies pay or not taxes (That is the tax office’s job, not PDVSA’s), or whether Sincor produces more or not (The Ministry announced it!), or whether the agreements are legal or not (This Government signed similar or worse ones!). The whole point is that PDVSA is producing less and less and they know they are responsible for the deterioration. They have to hide it until they can figure out how to produce more and save their reputations and in the end…that of the Chavez Government. If not, they will be known as the people that managed to destroy PDVSA. What a revolutionary legacy!

Gustavo Coronel writes:

The fact remains that considerable amounts of money, billions of dollars, remain essentially unaccounted for. Nobody knows where the money is. For a regime that based its electoral campaign in its promise to combat corruption, the financial chaos in Petróleos de Venezuela represents a major violation of this promise. The material corruption and ethical collapse of the Venezuelan petroleum industry is proof that the pretenses of honesty and the concerns for the poor shown by the Chávez regime are a fake.

Tomas Sancio writes:

“Saving the oil” for future generations will only make sense if the future generations have a smarter approach to this income that we receive from underground. Since oil was nationalized in the 1970’s, the country’s GNP per capita has diminished steadily as oil expenditure increased and oil production replaced all of the other economic activities.

Aleksander Boyd writes:

…one can expect PDVSA’s president Rafael Ramirez to have offered yet another ‘promise’ that will not be kept, the intention being to deviate attention from the state of sheer chaos and anarchy in which PDVSA founds itself in at this moment. Ramirez also announced that in six months time PDVSA will be producing 3.5 MBD, from the present output guestimated at 1.4 MPD. Since London bookies aren’t taking any bets on the SEC fillings by PDVSA in June I challenge any chavista apologist to get in touch in order to arrange for a private bet; what’s more I put this site as my offer, should PDVSA deliver I will cede it to the winner.

These are just essays that appear in the English-language blogosphere. What’s written in the Spanish-language press is undoubtedly greater in quantity. But all of these voices, demanding accountability from the government of Hugo Chavez signal a white-hot issue for Hugo Chavez, something a democratic opposition is rallying around. Not only that, the holding of Chavez accountable is one of the few democratic things left they can do. They can’t organize peaceful demonstrations in their newly lawless country, because Chavez’s goons will shoot them, and they can’t settle their differences with Chavez through the ballot box, because Chavez will rob them, but they can hold Hugo Chavez accountable about oil, the very oil revenues he depends on to finance his state-soup-kitchen programs. Chavez may topple on this theft of oil billions and his mammoth destruction of the country’s natural wealth.



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