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PDVSA: Not a shadow of its former self

From | VenEconomy

14.12.05 | It is well known that the “new” PDVSA is not the shadow of its former self. Its ills are patently obvious: a) shrinking production capacity; b) the lack of maintenance, deterioration in the work environment, and lack of technical expertise that have led to an increase in accidents at refineries and in oil pipelines and to losses of life among workers; and c) lack of juridical security and respect for existing agreements with domestic and foreign companies.

Independent organizations such a the OPEC and the International Energy Agency put production at between 600,000 and 700,000 barrels/day below the 3.3 million b/d that PDVSA blithely claims and nearly one million barrels below what was being produced in 1998.

This decline in production is due to two factors: the lack of investment and the lack of technically qualified people. And the responsibility for both situations falls squarely on the shoulders of the present government. It is the Chávez administration that suspended the Investment Plan of the old PDVSA, which aimed to reach 5 million b/d in 2005. The government now admits that production from the 32 contractors is in the order of 461,000 b/d, and not 510,000 b/d as budgeted for 2005. This drop is due to the investment cuts implemented by PDVSA a year ago. The fact is, without investment, maintaining production is impossible.

It was also the Chávez administration that fired more than 20,000 highly qualified and specialized professionals for purely political reasons in 2003 and replaced them with people whose only credentials were that they supported the regime. Ironically, it is now PDVSA that is admitting that the new graduates would need 20 years’ experience in order to be able to meet the challenge they are faced with.

The regrettable part is that the government’s arrogance has led it to continue pressuring and coercing contractors to accept changes in the game rules at the expense of disinvestment. Worse still, that same arrogance is also preventing it from extending a conciliatory hand to the thousands of professionals that it dismissed unfairly, at the cost of destroying the industry that was once the pride of Venezuelans.

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