Unruly oil

This is part of a series of re-published articles I wrote in 2005 for the Daily Journal in Caracas.

Russian wants to supervise PDVSA
By Jens Gould
Daily Journal
May 16, 2005

The general comptroller of Venezuela, Clodosvaldo Russian, wants state oil company Petroleos de Venezuela (PDVSA) under his supervision. Until this happens, the company may remain a punching bag for many officials fed up with supposed corruption.
"The prevailing culture at PDVSA for many years-without saying that this has been erased, because the culture still remains-in PDVSA it was assumed that public control over the company was not a given," said Russian on Monday, according to El Universal's website.
Russian met with Vice President Jose Vicente Rangel on Monday to discuss the Organic Law of the Comptroller’s Office and the National System of Fiscal Control, said a press release from the Vice President's office. Within four weeks, the comptroller will put new measures into place to ensure more consistent auditing of public entities such as PDVSA, he said.
Russian said that because PDVSA was owned by the Venezuelan State and it belonged to "all Venezuelans," it was subject to fiscal oversight by the General Comptroller's office. He added that the company was "perfectly controllable" by his office.
National Assembly (AN) Deputy Julio Montoya - of the opposition's Movimiento al Socialismo (MAS) party - called on Monday for an investigation of supposed irregularities at the Western division of PDVSA in front of the Attorney General's office in Zulia state, reported El Universal.
Montoya, the vice president of the AN's Energy and Mines Commission, presented documents that he says indicate corruption at PDVSA, reported Union Radio.
According to Montoya, PDVSA-West's production is 500,000 barrels below levels indicated by the government.
Deputy Rafael Simon Jimenez accused President Hugo Chavez' ruling Fifth Republic Movement (MVR) party on Monday of skirting the issue of decreased production at PDVSA by calling for an evaluation of operating agreements with transnational companies, reported El Universal.
"Concentrate on saying how it is that you have plundered PDVSA, how you have humiliated the industry, how it is that you are responsible for the drop in production," said JimÈnez who belongs to the opposition's Accion Democratica.
A Bloomberg report stated that a drop in Venezuela production could jeopardize global oil supply as demand rises this coming winter.
Oil expert Alberto Quiros Corradi said on Monday that unruliness at PDVSA was a recent phenomenon.
He said that management before the national strikes of 2002-03 maintained a comptroller's office within the company and that the Energy and Mines Ministry also released an annual statistical report, the "Pode," reported Union Radio. But the last "Pode" the Ministry released was for the 2002 fiscal year.
Since then, information has been sketchy at best. "Here there hasn't been a palpable demonstration of what the production is, there hasn't been a demonstration of questioning about how many profits are handed over to the Venezuelan Central Bank," said Quiros Corradi.
Chavez said Sunday that members of the opposition as well as United States' "imperialism" were trying to "create chaos" at PDVSA, as well as in the Armed Forces.
Quiros Corradi called such explanations "ridiculous" and "childish," demanding that PDVSA reveal audits from the past two years, detail its royalty payments, and prove that it has not sold oil at a discount or through middle men.
Carlos Carreno and Luis Martins, former PDVSA mechanics, said earlier this month that problems with management, labor and corruption had plagued the company, Bloomberg reported.
"We're all backers of the president, we're all Chavistas," Martins told Bloomberg last week. "But Ramirez and the board aren't letting the president know what's really happening here."
"There's a lot of corruption inside the company," said Martins to a crowd of workers at La Salina oil terminal on Lake Maracaibo.
40 managers and more than 8,000 contract workers have been let go by the company so far this year, reported Bloomberg.
Chavez has also accused transnational companies operating in Venezuela of tax evasion.
Montoya pointed out that despite such accusations, Chavez has continued signing agreements with them. "If these companies were robbing us, the ethic should be to stop doing business with them," he said.
Jose Toro Hardy told The Daily Journal in a telephone interview last week that the International Energy Agency reported Venezuela's daily oil production at 2.6 barrels per day (bpd) while the government announced levels of 3.3 bpd.
PDVSA hopes to raise its production to over 5 million bpd by 2009. But unconfirmed reports circulating within the industry claim that PDVSA has closed hundreds of wells due to technical difficulties arising after the national strikes.