Today, at last, the President of PDVSA and Minister of Energy and Mines went to the National Assembly to discuss PDVSA. The whole thing was a travesty. First of all, the Chavez majority in the Assembly limited the discussion to the operating agreements and the oil partnerships, rather than talk about the problems of the whole company. Then, the Assembly was surrounded by Ramirez’ “supporters” who were bused in to chant slogans around the Assembly building (I am sure that was funded with Government money) and finally, the whole Board of PDVSA and Vice-Presidents were there, leading some to ask who was minding the store.
But I digress.
Ramirez began with the usual political speech about the previous Governments, selling out the company, underpayment of taxes, a serious investigation has to be carried out to find those responsible and all that. And then, he began making specific accusations and I just sat there in disbelief at what he was saying and which cases he brought up.
He first noted that the worst offender was a company named Sincor. Sincor is a heavy oil partnership in which French company Total has 47%, Norway’s’ Statoil has 15% and PDVSA has 38%. Sincor processes heavy crudes and makes lighter synthetic crudes. Ramirez charge against Sincor? That the company was producing twice as much oil as it had approval for. Ramirez called for an investigation of all these cases and determine who was responsible. Well, in the case of Sincor you have to look no further than…Ramirez himself!
You see, while Ramirez made it sound like the “old PDVSA” versus the “new PDVSA” or the old Governments versus the new one, in the case of Sincor he is more responsible than any Minister of Energy (or Oil as it is called today) or President of PDVSA than any before him can be blamed.
Sincor was a project that was indeed approved by PDVSA during the Caldera Government in 1997. But when Chavez took power in early 1999, Sincor had yet to produce a single barrel of synthetic crude. In fact, the first barrel was actually produced in 2001, but it was not until 2003 that Sincor went up to its original full capacity of over 100,000 barrels of oil a day. At that time Ali Rodriguez was President of PDVSA and Ramirez was already Minister of Energy and Mines. Then, on October 9th. 2003, the Deputy Minister of Energy and Mines Luis Vierma, a Chavista brought over form PDVSA, announced that Sincor was going to increase production by 100,000 barrels a day. Then, seven months later, on May 19th. 2004 (last year!), a spokesman for French company Total said that the company would invest US$ 200 million to expand capacity to 214,000 barrels a day. Then eight months ago, on Sept. 30th. 2004, Sincor announced that it was shutting down its plant for 48 days to expand capacity. Then last Dec. 8th. 2004, the company announced that it was restarting the plant to produce 214,000 barrels of oil a day.
Thus, you have to ask:
1) The expansion was public, announced by the Vice-Minister of Energy, when Ramirez was Minister, repeatedly announced by the company, but neither the President of PDVSA nor the Minister of Energy knew anything about it?
2) PDVSA owns 38% of Sincor. Doesn’t it have members on the Board of Sincor? Did they know about the expansion? Who are they? Have they been fired? Are they the same ones as when Chavez got to power in 1999? Are we to believe that in seven years, the Chavez administration did not change these people on the Board? Are these people independent, i.e. Do they report to no one at PDVSA?
3) When Chavez became President he named oil industry veteran Mandini, who was pro-Chavez, as President of PDVSA. A year later, he named Hector Ciavaldini, an ardent Chavez supporter who had been fired from PDVSA for not working and whose level was way below Executive level, to the Presidency of PDVSA. Ciavaldini was the company’s President when Sincor produced its first barrel of processed oil. Then came Guicaipuro Lameda, Gaston Parra, Ali Rodríguez and now Ramírez. Are we to believe that during all this time, nobody mentioned, discussed, talked about Sincor or know what it was, how much it produced or how much it had authorization for? The Board never discussed the company or ask what it was? If true, who is at fault? The pre-1998 administration or the current one? Sounds to me that if they did not know about it, they are terrible managers or are so improvised that they had no clue about what they were doing and is taking them this long to figure it out.
So, if you carry out an investigation, who is responsible? Those that approved a certain project many years ago or those that allowed it to exceed parameters or were ignorant about them or did not even read the newspapers or listen to their Vice-Minister’s talk about it?
But let’s move on to the second of the three cases discussed. Ramirez also charged that Citgo may have overpaid US taxes and PDVSA is carrying out a study. Now, notice the “may”. Is that a serious and responsible charge? He did not say why it may have overpaid, he just stated it may have. So I ask again, Chavez has named six Presidents of PDVSA in seven years and it is only now that they realize this? Who is responsible? Will they prosecute the Chavista President’s too? Including Ali Rodriguez?
Finally, Ramirez said the operating agreements were illegal and information was withheld from Congress on these agreements and “today” the truth would be known. Well, I did not hear any “new” truth, but I have to ask: The former President of PDVSA Ali Rodriguez, who was President of the company since April 2002, made a career out of attacking those operating projects. In fact, he owes his career to them. Other than being in the guerrilla’s he was not known for anything else. He was the one that led the suit to the Supreme Court in 1997 asking that the agreements be declared illegal. So we are supposed to believe that Rodriguez was President of PDVSA for almost three years and never inquired about them, nor managed to prove that they were illegal and it is only today that they found out how? (But we are not told why?)
But even more interesting, why did the Chavez Government rush to sign agreements under the same conditions as the those he now calls “unpatriotic”, right before the new hydrocarnos law was approve?This inluded a new twist in the fact that any arbitration would be resolved by international courts and not Venezuelan ones, as proposed then by the opposition?
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!
(Meanwhile Saudi Arabia’s Aramco is making a recruitment trip to Venezuela to hire Venezuelan oil workers, who are even banned from working for companies that do any work for PDVSA)