Oil, Venezuela’s Lifeblood, Is Now Its Social Currency, Too
by Juan Forero New York Times/Reuters
In recent months a large part of the earnings from the Venezuelan oil company have been channeled to pay for a social revolution, including adult education classes, long promised by President Hugo Chávez.
CARACAS, Venezuela – Seventeen months after an antigovernment strike crippled production, Venezuela’s state oil company, Petróleos de Venezuela, has made what analysts call a Herculean return.
Though energy experts say production remains below prestrike levels, the oil-and-gas monolith is, once again, one of the world’s great producers of crude. Its giant refining arm is talking of adding two refineries to the three already operating in the United States. The company says it is embarking on a strategy, heavily dependent on foreign oil companies, to nearly double production by 2009.
All this is part of a grand design made possible largely by sky-high oil prices, which have nearly doubled the expected revenue of Pdvsa (pronounced peh-deh-VEH-sah), as the company is known.
But while Pdvsa’s talk of foreign investment and ramped-up production is welcome in the boardrooms of the world’s biggest oil companies, in recent months much of the new earnings have been siphoned from exploration and production projects that some energy analysts say Pdvsa needs to recover fully from the strike. Instead, the windfall is financing a social revolution long promised by President Hugo Chávez’s 5˝-year-old government to extricate the country from its malaise and ease life for the poor, an effort that had been hobbled by the strike and a 2002 coup that temporarily ousted the firebrand leader.
And with the Aug. 15 recall referendum that could end Mr. Chávez’s presidency drawing ever nearer, the spending spree – on everything from housing to railroads, health clinics and literacy programs – is an increasingly important, and successful, tool for solidifying support for Mr. Chávez. Recent polls show he could squeak to victory.
Pdvsa’s new role has raised eyebrows among oil executives and in Washington, which has long counted on Venezuela as one of the four big exporters of oil to the United States and which has been hoping Pdvsa will help curtail the reliance on Middle Eastern crude.
The company that has emerged from the ashes of the strike that ended in February 2003 is nothing like the button-down, corporate-style company that in the 1990’s was often the No. 1 provider of foreign oil to the United States.
Gone is the by-the-book giant, which had $42 billion in sales, according to filings with the Securities and Exchange Commission last October. Gone is the multinational whose managers once proudly compared Pdvsa to Exxon Mobil. Gone, too, are 18,000 experienced executives and managers who were fired for their role in the strike.
So is the autonomy the company once wielded, replaced by a highly centralized management controlled by the Ministry of Energy and Mines.
The new Pdvsa seems to be in no rush to pump more oil to ease the supply squeeze that helped contribute to a price of $42 a barrel in early June and caused so much consternation for American energy officials.
Nor is it moving fast toward deals with foreign oil companies, though Pdvsa officials insist they want private investment as long as the terms are beneficial to Venezuela.
“We do not need them at any price,” said Bernard Mommer, an executive at Pdvsa who has advised the company and the Ministry of Energy and Mines on how to realign the company. “Some of them believe they can carry on as they did in the past. No way.”
This change of tune is interesting, after all the months and years of demonizing Chavez: imagine, an oil company that doesn’t behave like a money shark. Here is the nationalizing of industries of which the West is so afraid. Profits funneled into the infrastructure?? If they keep doing things like this, what is the World Bank to do?? It sounds like they have realized that Chavez will win this referendum if the election isn’t fixed, and that they will have to make nice to make deals, since Venezuela is being picky about who gets in.
July 25th, 2004 at 10:00 am
Cynical mean and inhumane, are the experts.
Gone is the by-the-book giant, which had $42 billion in sales, according to filings with the Securities and Exchange Commission last October. Gone is the multinational whose managers once proudly compared Pdvsa to Exxon Mobil. Gone, too, are 18,000 experienced executives and managers who were fired for their role in the strike.
Indeed!
much of the new earnings have been siphoned from exploration and production projects that some energy analysts say Pdvsa needs to recover fully from the strike.
President of the Century, President Hugo Chávez President of Humanity.
stay on board Chavez saty relevant! the world is looking for the answer and your example will triumph in our search for peoples government and social guidance. We bank on your victory over Bush and his cabinet fanatics in Washington and Downing Street London.