State-run PDVSA drifts fur­ther

Kuwait Times - - BUSINESS -

CARA­CAS/HOUS­TON: To sur­vive months of street protests and an econ­omy in tail­spin, Venezue­lan Pres­i­dent Ni­co­las Maduro is try­ing to turn state oil com­pany PDVSA into a bas­tion of sup­port, fur­ther de­grad­ing an al­ready vul­ner­a­ble en­ter­prise. Po­lit­i­cal ap­pointees are gain­ing clout at the ex­pense of vet­eran oil ex­ec­u­tives, while em­ploy­ees are un­der mount­ing pres­sure to at­tend gov­ern­ment ral­lies and vote for the rul­ing So­cial­ists. The in­creas­ing fo­cus on pol­i­tics over per­for­mance is contributing to a rapid de­te­ri­o­ra­tion of Venezuela’s oil in­dus­try, home to the world’s largest crude re­serves, and to a brain drain at the once world-class com­pany.

In­ter­views with two dozen cur­rent and for­mer em­ploy­ees, for­eign oil ex­ec­u­tives, and con­trac­tors point to a PDVSA com­ing apart at the seams. “Ev­ery­thing is a dis­as­ter and yet we have to clap,” said a PDVSA em­ployee, who asked to re­main anony­mous be­cause she feared re­tal­i­a­tion. Af­ter four months of deadly protests against the un­pop­u­lar pres­i­dent, new com­pany lead­er­ship is in­creas­ingly pres­sur­ing em­ploy­ees to at­tend So­cial­ist Party ral­lies and at times ask­ing for let­ters ex­plain­ing ab­sences.

Man­agers told work­ers they would be fired un­less they voted in Maduro’s con­tro­ver­sial elec­tion on July 30 of a new leg­isla­tive su­per­body meant to re­write the Con­sti­tu­tion, which was widely de­nounced as a move to­ward dic­ta­tor­ship. Crit­ics have long con­tended that PDVSA - short for Petroleos de Venezuela SA - was be­ing turned into the cor­rup­tion-rid­dled heart of late Pres­i­dent Hugo Chavez’s “21st cen­tury so­cial­ism”, at the ex­pense of the OPEC na­tion’s on­ce­flour­ish­ing oil in­dus­try.

Now Venezuela’s oil pro­duc­tion is on track to end 2017 at a 25-year low, but the left­ist gov­ern­ment still re­lies heav­ily on PDVSA to be its fi­nan­cial mo­tor. That leaves man­age­ment in a pre­car­i­ous balancing act and sources say po­lit­i­cal fac­tions are in­creas­ingly locked in power strug­gles within the com­pany. A se­nior man­age­ment team named in January that draws heav­ily on po­lit­i­cal and military ap­pointees has left PDVSA’s pres­i­dent, the Stan­ford-ed­u­cated en­gi­neer Eu­lo­gio Del Pino, largely pow­er­less, ac­cord­ing to two high-level sources in PDVSA and the gov­ern­ment who spoke on the con­di­tion of anonymity for fear of reprisals. Mean­while, the in­fra­struc­ture of the com­pany is crum­bling, rig counts are at his­toric lows and re­finer­ies are work­ing at a frac­tion of ca­pac­ity. Staff at PDVSA’s once gleam­ing head­quar­ters com­plain that many el­e­va­tors are out of ser­vice, the bath­rooms lack toi­let pa­per, and their cars are bro­ken into in the park­ing lot. Scarce pa­per and ink are di­verted to make po­lit­i­cal posters. The gov­ern­ment has long de­nied al­le­ga­tions of mis­man­age­ment, say­ing there is a right-wing me­dia cam­paign out to smear Venezuela and high­light­ing PDVSA’s sup­port for so­cial wel­fare pro­grams. PDVSA and the oil and in­for­ma­tion min­istries did not re­spond to re­quests for com­ment.

Power Strug­gle

Del Pino, a low-pro­file tech­no­crat whom oil an­a­lysts see as a re­as­sur­ing fig­ure de­spite the pro­duc­tion drop on his watch, re­mains nom­i­nally at the helm of PDVSA de­spite los­ing many of his top ex­ec­u­tives in a January shakeup. How­ever, Oil Min­is­ter Nelson Martinez, the for­mer head of Venezuela’s U.S.-based re­finer Citgo and a close ally of Maduro, in­creas­ingly ne­go­ti­ates high-level pacts and flies to oil con­gresses rep­re­sent­ing Venezuela.

Prom­i­nent new ex­ec­u­tives in­clude trad­ing divi­sion boss Ys­mel Ser­rano, who used to work for cur­rent Vice Pres­i­dent Tareck El Ais­sami, and fi­nance vice pres­i­dent Simon Zerpa, a young ally of Maduro’s. The in­flux of in­ex­pe­ri­enced ex­ec­u­tives and mid­dle man­agers is keenly felt by for­eign oil ex­ec­u­tives, who say they some­times spend hours wait­ing for PDVSA rep­re­sen­ta­tives and com­plain that sim­ple de­ci­sions are in­ex­pli­ca­bly de­layed. “Most of the time ex­ec­u­tives don’t an­swer phone calls or emails. It’s sur­pris­ing how young and un­pre­pared some man­agers are,” said a rep­re­sen­ta­tive of a for­eign firm hold­ing a sup­ply con­tract with PDVSA.

He said that man­age­rial and op­er­a­tional chaos was wors­en­ing, with wait­ing time to load a tanker stretch­ing to 30-40 days com­pared to 2-3 days a few years ago. Should the United States fol­low through on its threat to im­pose sanc­tions on Venezuela’s oil sec­tor, a strug­gling PDVSA would likely find it harder to re­spond. “Both the in­creas­ing lack of man­age­rial ex­per­tise and the frag­men­ta­tion of the hi­er­ar­chy in­side PDVSA into fief­doms would make it re­ally dif­fi­cult,” said Fran­cisco Monaldi, an ex­pert on Venezuela’s oil in­dus­try at the Baker In­sti­tute in Hous­ton. — Reuters

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.