The Devil's Excrement

In an announcement that left more lingering doubts and confusion than anything else, the Ministry of Energy and Mines announced the revival of the old Corporacion Venezolana del Petroleo (CVP). According to the announcement, approximately 1.5 million barrels in oil production from PDVSA have been transferred to CVP, a little over half of the country’s oil production. The announcement was made even more confusing by the creation of a trust with 480 billion Bolivars with CVP funds, which would be used to build housing for Venezuelans. Apparently, the idea is to have CVP play a more active role in solving the country’s social problems, a role played by PDVSA to a small degree in the past, for which it was always criticized sharply. So far, the Government has given no details as to how the financial restructuring of PDVSA will occur, and which of the two companies will assume the debt and/or the guarantees given in some of the bonds issued by PDVSA. Similarly, it is not clear how the production assets, investments and administrative structures will be divided between the two companies. What is most remarkable about the announcement is that the decision has been taken by a very reduced number of people, without discussion, justification and the release of the details, which was one of the biggest criticisms by Chávez of how PDVSA was run when he was campaigning for the Presidency. Moreover, it is remarkable, to say the least, that the current administration of PDVSA continues to divide up the company in pieces at a time when the worldwide trend in the oil business is exactly the opposite.

This entry was posted on August 18, 2003 at 11:22 pm and is filed under Venezuela.