On the same day that The VP of Exploration and Production Luis Vierma said at the National Assembly that PDVSA was currently in an “important operational emergency” and that the Board of Directors as a whole was to blame, it comes out that this same bunch of incompetent fools are getting ready to destroy the country’s main source of revenue.
Vierma’s sharp criticism is the first attack from an insider on how the company is being run, while outside analysts all question the company’s production numbers. Vierma, who is being investigated for some reported monkey business in the hiring of some Chinese drilling rigs, using phantom companies, simple said the whole thing is a mess. Vierma seemed to have little memory of why particular companies were picked, other than the bidding committee recommending them. he then proceeded to tell the Deputies that oil is a difficult business and that it took 15 years to form a good oil engineer, thus, he said, PDVSA was in the hands of multinationals, until all those engineers could be trained. Vierma selectively forgot how his team fired thousands of such technically trained people in the name of ideology and politics, guaranteeing that PDVSA would be mired in the mess it is in.
And as Chavista fanatics still want to believe the fake numbers given out by Ramirez and his cronies, the truth is that not only is PDVSA dysfunctional in its operations, but its finances are now being compromised beyond repair.
But these guys, who can not even manage PDVSA properly, have an incredible ability to believe their own BS and now have come up with an even bigger scheme: Let’s have PDVSA get involved in a whole bunch of different areas, reviving the same Venezuela Inc. concept that failed so miserably in the 70′s for the same reasons, trying to do too much without the required managerial capability.
Thus, these guys have now come up with the idea that PDVSA will create eight companies called: PDVA Industrial, PDVSA Servicios, PDVSA Construction and building, PDVSA Naval, PDVSA Gas, PDVSA Urban Development and PDVSA and PDVSA Agriculture. An eighth company has yet to be approved called PDVSA Home (Hogar), the most ambitious of them, which will manufacture everything from lightbulbs to shoes.
Now, I will not bore with the details of what each company will do, but suffice it to say that it will be a sort of Everything Inc. taking over gas bottling and distribution from the private sector, house construction, shipbuilding, tools, matresses, shipbuilding, oilr services, refining design and whatever they come up with.
So, they can barely run the country’s most important industry and they want to do them all, guaranteeing that PDVSA will not make the investments it needs, because the funds will be used elsewhere, and that none of these new companies will do their job efficiently, since there is little technocal or managerial capability to do them.
But it is the financial part that is getting truly scary. As PDVSA is not making the investments required, its cash flow is being diverted to social programs, airlines and the like and now it will be needed to fund all of these grandiose plans. But even worse, PDVSA has committed to help build 14 refineries abroad, has to compensate its former and current partners for their stakes in the heavy crude companies and may even have to buyback some US$4 billion in bonds from these projects.
Clearly, not even at US$ 100 per barrel of oil, there is sufficient money to do all of this. In the meantime, attention is diverted from the focus of PDVSA and the future gets even murkier then. Of course, all of this plans assume that PDVSA has fantastic management and oil prices will hold up at current levels. This from the same people who can not even manage to keep up oil production or even guarantee that the country will have sufficient functioning oil drilling rigs to sustain oil production, a business which they are supposed to know.
It is all a gigantic circus where the lack of transparency and accountability does not reveal the extent of the damage that is being done to the country’s main industry. And with it, the damage will be done to the whole country. PDVSA and its clowns will subsidize competition with the private sector, which will suffer. Perfectly running private operations are being nationalized. Factories will be built that will never even open or sell anything. Money will be wasted. Corruption will be rampant. All in the name of the revolution.
Until one day it will all run out of money, gas and more importantly, all that hot air!