Posted on 04/10/2002 4:12:30 AM PDT by rw4site
Oil experts in Houston and elsewhere are worried about the possible impact of an oil disruption from the Middle East. But there is an emerging crisis in the Venezuelan oil industry that could have a far more dire and lasting impact on the U.S. petroleum supply than any Mideast oil embargo.
The United States imports 1 million barrels of crude oil plus an additional million barrels of refined products each day. The impact on my country of Venezuela is likely to be far worse. As of Tuesday, the entire country was shut down.
Last week, the public affairs director of Petróleos de Venezuela, or PDVSA, and another executive were fired "for cause." Monday, five more senior executives were fired and 12 others were forced into early retirement. Some refineries have been shut down completely and crude oil production will most certainly be affected. At issue is the blatant and very simplistic politicization of the company, a venerable institution in Venezuela and the source of much of the country's income and economic activity.
PDVSA has long been a beacon of hope for the country, a progressive enclave of professional people where meritocracy ruled. The best and the brightest of my country found their professional fulfillment by working for the company. It was not just the wealth, which was and is considerable, that the company generates. It was also a work ethos, a culture whose emulation was intended to spring the entire nation from the traditional paternalistic and empty populist nationalism, so prevalent throughout South America, and into the modern world. Tremendous progress was made -- or at least we thought so.
Then came the present government, headed by President Hugo Chavez, who likes to think of himself as the modern reincarnation of Simon Bolivar, the legendary South American revolutionary. Chavez believes that somehow wealth is there for the splitting among the "masses." How wealth is to be generated never enters the argument. Have we heard this before in the last 100 years? Have there been any successes to show, anywhere?
"Revolutionary" ideological purity is a linchpin of the Chavez government's appointments. PDVSA, with its imposing presence in Venezuela,was accused by then candidate Chavez of being a "state within a state."
Immediately following his election, Chavez's first act was to replace the old upper management with a new one. This was understandable for a national oil company and did not raise too many alarms. Indeed, his appointee was a very legitimate man, Roberto Mandini, who had been the president of the PDVSA U.S. subsidiary, Citgo, and whose credentials included the fact that he was not tainted in Chavez's eyes by an intimate association with the previous PDVSA president, Luis Giusti, a man who was anathema to the Chavez people.
Mandini did not last long. Seven months later, he was unceremoniously canned and replaced by a highly unqualified ideologue, Hector Ciavaldini, who started a process of "purification." Ciavaldini, a relatively low-level ex-PDVSA employee, had no discernible status among PDVSA professionals or managers. His only qualification was his allegiance to the government (and his animosity toward the old management). New appointments, not just to key positions, but also to run-of-the-mill, routine jobs were, firstly, ideologically based. Merit was only as an afterthought Government loyalist vigilantes were installed in the board of directors.
Both Ciavaldini's management, but especially his moves, brought about a quick reaction among PDVSA professionals and a large public outcry. What was happening was a stark departure from decades of practices. Continued unrest brought another swift change. Ciavaldini was replaced by an army general who had no previous connection with PDVSA. Gen. Guaicaipuro Lameda took over as PDVSA president in October 2000 with some obvious apprehension by the staff. Yet, his tenure was probably not what the government had expected. From the beginning, one of his stated tasks was to depoliticize the company. He ran the company as a progressive entity that responds to internationally recognized business practices and not as a government fiefdom, one intended to respond to ideologically tainted objectives.
Then, about a month ago, the government replaced its own hand-picked president with Gaston Parra, an academic with no knowledge of the workings of a petroleum company. Parra's only real claim to fame has been essays lambasting essentially everything that Venezuela has done for the past 40 years.
Immediately, 44 senior executives (practically the entire upper management of the company) signed a public statement of "no confidence" in the new appointment.
I am certain that the unfolding drama will lead to a crisis whose dimensions and repercussions are hard to fathom. Americans should pay close attention to what is happening in the Venezuelan oil industry. Potentially, this is no less a national security problem than the Middle East.
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