The Devil's Excrement

One could only watch the sorry spectacle in awe. The Supreme head of injustice in Venezuela, denouncing the loss of his Mickey Mouse rights, outraged at the insult to the majesty of the institution he claims to represent. Decrying the fact that the dignity of his institution had been attempted against. Asking for explanations for what is essentially irrelevant for the affairs of state. Talking about morals and ethics and calling himself an honorable person.

But where was selfless and immoral Mora when the rights of thousands of Venezuelans were being violated by the same unethical and amoral Government, which he supports with adoration, was destroying the lives of truly honorable citizens and their families, eliminating the only livelihood or destroying the civil service careers of normal citizens whose only crime was to exercise their constitutional right to request the recall of the President? Or why didn’t he hold a press conference to denounce how the rights of dozens of poor citizens of the state of Guarico had been violated, as they were violemtly exterminated and eliminated, under orders of the Governor of that state, who is still backed and supported by his adored leader? These were truly members of the “pueblo” he and his leader claim to love and work for and it is a political party, rather than the Justice system who is deciding the fate of the case. More Venezuelans than Posada Carriles ever killed in his lifetime have been killed in the state of Guarico by its own Government, but has Mr. Mora signed any order against the Governor of that state, or anyone for that matter?

Is a simple email grave enough to upset him, but the daily death of a Venezuelan in prison goes by unnoticed by him? This, while various Government offices and the same judicial system he presides over forgets the thousands of men and women without sentencing, without lawyers, sometimes even without formal charges, who live in infrahuman conditions in Venezuelan prisons, without anyone taking responsibility for it? And what of the immoral removal of judges at all levels anytime a decision is made by one of them, which goes against the whims, moods and wishes of the supreme leader?

Mr. Mora wants the US Embassy to treat him with courtesy. I want Mr. Mora as the impersonator of the Chief of Justice in Venezuela to have that same courtesy and respect he demands for our beleaguered and battered Constitution. I want him to go out and hold a press conference with the same outrage, intensity and passion, every time the basic and fundamental principles that are supposed to be guaranteed by our Constitution are trampled over and violated by this fake revolutionary Government.

Morals, ethics and majesty are big words. They should be handled with care. Particularly by those who have the power, who have the ability to affect the course of events. When the highest Court of the land is simply placed at the service of a man and his ideas and not of the Constitution, there is no morality or ethics to defend. As for Majesty with a capital M, a Court that has had no respect for the Majesty of the Law, has no majesty that can be respected. There has not been lese majesty in the case of Justice Mora and the Court he represents; only when dignity is restored to that body, could such a crime be committed.

Teodoro Petkoff is so mad about what is being said about PDVSA that he broke his tradition of not writing the Friday Editorial, to write this:

Buffoonish Nationalism by Teodoro Petkoff in Tal Cual

Minister Ramirez attacked this week the oil opening projects. He affirmed that the operating agreements approved by the National Congress in 1995 said one thing and that the multinationals have done something else.

It just so happens, however, that of the ten years that the oil opening has been in place, ALMOST SEVEN have been under the administration of the “revolution”. Thus, if these companies have cheated, as Ramirez affirms, it has been under the noses of these shoddy nationalists that today govern us. If we suppose that the foreign companies have not paid what they owed, the blame is on those that were obligated to collect from them.

Nevertheless our “anti imperialists” have played leading roles in remarkable contradictions. Chavez assured us on March 200^th. 2002 that “Total” and “Statoil”, precisely the two companies that Ramirez pointed to as cheaters, “should be given a trophy” and on March 9^th. of this same year, only two months ago, Chavez was filled with pride with the alliance with Total: “With Venezuela’s technology and allied with companies like Total, we are extracting heavy and super heavy from the Orinoco Oil belt…Then? Surely, we are like in the case of the “revision” of the relations with the US (The Foreign Office is explaining to everyone that Chavez did not mean to say what he said), our President will tell “his friend Jacques Chirac” that the thing with “Total” (a French company for those that don’t know it) was a “misunderstanding”.

Not long ago, when his anti imperialistic measles broke out, Chavez said that “it can’t be that an oil company comes and pays 1% of royalties (…) I have given orders to PDVSA and the Tax Office to collect retroactively and with interest what they owe us (…) If they don’t pay they have to leave”. All the stupid jerks, Ramonet-style, must have had an orgasm confronting such courage. However, Ramirez in his speech could not avoid saying the truth, Chavez, apparently, was not informed that the stuff about increasing the royalties was in the law and the contracts with the companies. The Minister explained that according to the Law of Hydrocarbons of 1943, one could reduce royalties “to economically support projects under development”, but, according to the same law, once those economic conditions were overcome, the Minister of Energy could adjust the royalties to the normal levels.

“That’s what we did” said Ramirez candidly. Nothing then about the exploits, Lazaro Cardenas style, when he nationalized Mexican oil or Mossadegh style, when he did the same thing with Iranian oil.

No, it was a simple matter of “revising the numbers” according to the law. What Ramirez should explain is why they took so long in discovering that after three consecutive years of stratospheric crude prices “it was illogical that the companies pay a royalty of 1% “and because of this “we adjusted the royalty to 16%” and “we did not go to 30% for legal protection”. Nothing about the “clear clarions” of the revolution. Just accounting adjustments. The rest is pure show. Read our central pages of today’s edition, where, through the words of Chavez along these years, one can follow the trajectory of this fake and erratic policy.

This is the mail that incensed the President of the Venezuelan Supreme Court and he gave a copy to the press. What is most interesting is that it is signed by the “Fraud Prevention Unit”. Why?

Note that it says the person should go to the Embassy to learn about a matter “of his interest”. Ominous! Again: Why?

What hides between that entire supposedly nationalistic hullabaloo of Minister Rafael Ramirez? What are they trying to cover up with that rhetoric? It draws your attention that at the same time that they are accusing the so called “old PDVSA” (which obviously includes the PDVSA of Mandini, Ciavaldini and Lameda) of “treason to the nation”, in the “new” PDVSA plans prosper that without any doubt could provoke the collapse of the national oil industry.

It can’t be a coincidence that simultaneously they are working on the sale of Citgo, on the elimination of the production of Orimulsion and the ferocious questioning of the oil opening. These are three business areas of PDVSA that, if they are successful in the strategy that points towards their destruction, it will gravely affect our productive capacity and our presence in world markets. It can not be a coincidence that they want to get rid of a company like Citgo that seeing under the time horizon which is characteristic of the oil industry, which is decades, insures a significant participation in the most important of world oil markets, which is that of the US. It can not be a coincidence that they want to liquidate the production of Orimulsion, a product with growing demand and of high profitability. It can not be a coincidence the questioning of the oil opening, whose companies produce today more than a million barrels a day, almost half the crude the country exports.

Who would benefit from the collapse or significant reduction of our oil production? Without any doubt, all of the members of the reduced club of oil producing countries. All market spaces that Venezuela abandons or loses will be rapidly occupied by other producers. The Arab countries, with whom we share OPEC, would not vacillate, however, to fill any holes that Venezuela opens.

Neither would Russia or Mexico. PEMEX would not be unhappy to take some of the yanqui market that today belongs to Venezuela. Neither would, for example, Saudi Arabia. It is simply a matter of competing for markets.

In the high commands of the “new” Pdvsa there are some people who have theorized about these matters. Juan Carlos Boue, a Mexican, previously a high chief at PEMEX and today with high responsibilities at PDVSA, and Bernard Mommer, today Vice-Minister of Energy and Oil, after a number of years of apprenticeship at the Oxford Petroleum Institute, financed by a number of Arab producers of crude, have written about these topics, providing theoretical arguments to get rid of the “bad business” that Citgo would be and to close the plants of Orimulsion.

Nevertheless, at the same time that we advance in the destruction of the businesses of PDVSA with false nationalistic arguments, the Government issued the Gas Bill, that hands over 100% of the exploitation of gaseous hydrocarbons to multinationals, on the basis of which, they have established themselves in the delta platform. While the decibels of the pseudo patriotic speech go up, we go back to the policy of concessions in the Gulf of Venezuela. Some thirty multinationals are fighting for the space.

Are these contradictory conducts and the shady negotiations that are behind them what Minister Ramirez wants to mystify with the hollow loudness of his speech yesterday?

US Embassy’s Stephen McFarland: “The US Government has not received any request for the extradition of Luis Posada Carriles…we have only received a request for his provisional arrest’

Cool! Threaten to break relations, blame the US for damaging relations, promote rallies to ask that Posada be extradited and you have not even submitted your request! Once again, the opposition was wrong; the Government did not act efficiently in this case either!

Chief Justice of the Venezuelan Supreme Court Omar Mora: “I demand an explanation for my visa to the US being cancelled…I don’t want to say it was because it was the Court he presides that requested the extradition of Posada Carriles”

How can he think that, there has been no extradition request! He also complained the US made it public by sending it to the airlines. He should sue himself for appearing on TV and telling all of us. Hold it! Can the Chief Justice sue himself? Why does he want to go to the evil Empire anyway? Disneyland? Las Vegas? Check his bank accounts?

Hugo Chavez: “We are going to reactivate the nuclear project of my General Marcos Perez Jimenez”

Interesting that he would call “my General” the last Dictator we had, who was a bloody, fascist, right wing Dictator.

Rafael Ramirez: “We could not find any of the documents…in the official archives…the Ministry and PDVSA. Only one possible outrageous conclusion was possible: Someone made a point of gathering them and disappearing them”

Oh! It is the old “hairy hand argument” so common in our history. Whoever did this had a long reach, it even disappeared the documents at the Assembly controlled by the….Chavistas!

Prosecutor’s Office: “We are opening an investigation against webpage http://noticias.reconocelos.com, among other things for defaming people”

Wow! It took a year to do anything about Tascon’s list, but in a day the Prosecutor opens an investigation on a page that may be defaming people who are pro-Chavez for calling them Chavistas. I think they are right, this is worse than Tascon’s list; they are calling you a Chavista in public and revealing who you are! Nothing like a very private Chavista! This is defamation; they are encouraging people to hate them! The guy who asked for the investigation is being accused at the webpage of “being Chavista and organizing without success groups to take over Fedecamaras” or something like that. Really nasty stuff indeed!

Central Bank Director Maza Zavala: “I am no detective to know what PDVSA did with the foreign currency…it is a simple arithmetic operation”.

You have to give credit to the “father of Venezuelan Marxist economics”. He is certainly a man of principles and a relentless critic of the way the Chavez administration is running the economy. Notice he says “it is a simple arithmetic operation” to know some funds are missing.

Today, at last, the President of PDVSA and Minister of Energy and Mines went to the National Assembly to discuss PDVSA. The whole thing was a travesty. First of all, the Chavez majority in the Assembly limited the discussion to the operating agreements and the oil partnerships, rather than talk about the problems of the whole company. Then, the Assembly was surrounded by Ramirez’ “supporters” who were bused in to chant slogans around the Assembly building (I am sure that was funded with Government money) and finally, the whole Board of PDVSA and Vice-Presidents were there, leading some to ask who was minding the store.

But I digress.

Ramirez began with the usual political speech about the previous Governments, selling out the company, underpayment of taxes, a serious investigation has to be carried out to find those responsible and all that. And then, he began making specific accusations and I just sat there in disbelief at what he was saying and which cases he brought up.

He first noted that the worst offender was a company named Sincor. Sincor is a heavy oil partnership in which French company Total has 47%, Norway’s’ Statoil has 15% and PDVSA has 38%. Sincor processes heavy crudes and makes lighter synthetic crudes.  Ramirez charge against Sincor? That the company was producing twice as much oil as it had approval for. Ramirez called for an investigation of all these cases and determine who was responsible. Well, in the case of Sincor you have to look no further than…Ramirez himself!

You see, while Ramirez made it sound like the “old PDVSA” versus the “new PDVSA” or the old Governments versus the new one, in the case of Sincor he is more responsible than any Minister of Energy (or Oil as it is called today) or President of PDVSA than any before him can be blamed.

Sincor was a project that was indeed approved by PDVSA during the Caldera Government in 1997. But when Chavez took power in early 1999, Sincor had yet to produce a single barrel of synthetic crude. In fact, the first barrel was actually produced in 2001, but it was not until 2003 that Sincor went up to its original full capacity of over 100,000 barrels of oil a day. At that time Ali Rodriguez was President of PDVSA and Ramirez was already Minister of Energy and Mines. Then, on October 9^th. 2003, the Deputy Minister of Energy and Mines Luis Vierma, a Chavista brought over form PDVSA, announced that Sincor was going to increase production by 100,000 barrels a day. Then, seven months later, on May 19^th. 2004 (last year!), a spokesman for French company Total said that the company would invest US$ 200 million to expand capacity to 214,000 barrels a day. Then eight months ago, on Sept. 30^th. 2004, Sincor announced that it was shutting down its plant for 48 days to expand capacity. Then last Dec. 8^th. 2004, the company announced that it was restarting the plant to produce 214,000 barrels of oil a day.

Thus, you have to ask:

1)      The expansion was public, announced by the Vice-Minister of Energy, when Ramirez was Minister,  repeatedly announced by the company, but neither the President of PDVSA nor the Minister of Energy knew anything about it?

2)      PDVSA owns 38% of Sincor. Doesn’t it have members on the Board of Sincor? Did they know about the expansion? Who are they? Have they been fired? Are they the same ones as when Chavez got to power in 1999? Are we to believe that in seven years, the Chavez administration did not change these people on the Board? Are these people independent, i.e. Do they report to no one at PDVSA?

3)      When Chavez became President he named oil industry veteran Mandini, who was pro-Chavez, as President of PDVSA. A year later, he named Hector Ciavaldini, an ardent Chavez supporter who had been fired from PDVSA for not working and whose level was way below Executive level, to the Presidency of PDVSA. Ciavaldini was the company’s President when Sincor produced its first barrel of processed oil. Then came Guicaipuro Lameda, Gaston Parra, Ali Rodríguez and now Ramírez. Are we to believe that during all this time, nobody mentioned, discussed, talked about Sincor or know what it was, how much it produced or how much it had authorization for? The Board never discussed the company or ask what it was? If true, who is at fault? The pre-1998 administration or the current one? Sounds to me that if they did not know about it, they are terrible managers or are so improvised that they had no clue about what they were doing and is taking them this long to figure it out.

So, if you carry out an investigation, who is responsible? Those that approved a certain project many years ago or those that allowed it to exceed parameters or were ignorant about them or did not even read the newspapers or listen to their Vice-Minister’s talk about it?

But let’s move on to the second of the three cases discussed. Ramirez also charged that Citgo may have overpaid US taxes and PDVSA is carrying out a study. Now, notice the “may”. Is that a serious and responsible charge? He did not say why it may have overpaid, he just stated it may have. So I ask again, Chavez has named six Presidents of PDVSA in seven years and it is only now that they realize this? Who is responsible? Will they prosecute the Chavista President’s too? Including Ali Rodriguez?

Finally, Ramirez said the operating agreements were illegal and information was withheld from Congress on these agreements and “today” the truth would be known. Well, I did not hear any “new” truth, but I have to ask: The former President of PDVSA Ali Rodriguez, who was President of the company since April 2002, made a career out of attacking those operating projects. In fact, he owes his career to them. Other than being in the guerrilla’s he was not known for anything else. He was the one that led the suit to the Supreme Court in 1997 asking that the agreements be declared illegal. So we are supposed to believe that Rodriguez was President of PDVSA for almost three years and never inquired about them, nor managed to prove that they were illegal and it is only today that they found out how? (But we are not told why?)

But even more interesting, why did the Chavez Government rush to sign agreements under the same conditions as the those he now calls “unpatriotic”, right before the new hydrocarnos law was approve?This inluded a new twist in the fact that any arbitration would be resolved by international courts and not Venezuelan ones, as proposed then by the opposition?

All of this is to me simply a smokescreen. They are trying to create and build scandals and make noise to distract people from the real and very serious problems at PDVSA. It is not whether the foreign companies pay or not taxes (That is the tax office’s job, not PDVSA’s), or whether Sincor produces more or not (The Ministry announced it!), or whether the agreements are legal or not (This Government signed similar or worse ones!). The whole point is that PDVSA is producing less and less and they know they are responsible for the deterioration. They have to hide it until they can figure out how to produce more and save their reputations and in the end…that of the Chavez Government. If not, they will be known as the people that managed to destroy PDVSA. What a revolutionary legacy!

(Meanwhile Saudi Arabia’s Aramco is making a recruitment trip to Venezuela to hire Venezuelan oil workers, who are even banned from working for companies that do any work for PDVSA)

Today I was at work and there was a TV on and I caught a phrase from the announcer who said “The MVR Deputy said that proof that things were normal in PDVSA was the announcement that PDVSA will hand over its reports to the SEC by the end of June”

Now, I could not believe my ears. I did not get the name of the Deputy who said this but I was completely flabbergasted that any thinking human being could have made such an idiotic statement. If anything, the announcement proves something does not work well in PDVSA. In fact, you have to wonder whether they want Posada Capriles so he can help them out with PDVSA’s financials. With his experience at the CIA or Venezuelan intelligence (sounds almost oxymoronic!) I am sure he could help them forge here and there.

But hey! Who am I to judge? Let’s look at PDVSA’s track record. The 2002 financials which were due in June 2003, were late. How late? Well, in a post on July 15^th. 2003, I described how we were promised the 2002 financials weekly. In fact, in August of that year a joyous Minister of Energy and Mines even announced that they had handed them in, but it was the wrong report. They had only handed in the report for an affiliate, not for the whole company as required by SEC regulations. The whole thing was such a charade, that the Minister actually said that Venezuela should be “happy” and “proud”. But the whole thing was actually shameful. It was just another attempt to fool the people.

After that, we were told that it would be in August, when PDVSA would comply with the SEC. We even heard “We have until September to comply”. But August came and went. And September came and went. And it was not until October, four months late, that audited financials for PDVSA for the year 2002 were finally handed over to the SEC.

And things were so “normal”, that apparently nobody thought of that the 2003 financials had to be handed over too.  June 2004 came by, the “normal” deadline to hand over the financials to the SEC and nothing happened. If PDVSA had been a public company it would have been suspended. Then came one of the most bizarre transactions of the Chavez administration when PDVSA announced in late June 2004, that it would buy all of its debt. It was really strange, announcing a buyback at a very high price that would essentially bring the company’s debt to almost nothing, which did not make sense. The proposed explanation: Company Directors were protecting themselves from prosecution under Sarbanes Oaxley.

But see, it is now May 2005, and the financials are 11 months late! Is that normal? Obviously not. In 2003 they had the excuse of the strike, but these are now the 2003 financials for God’s sake! The same ones we were told in February that would be handed out in March. But it is now May. Quite normal? Only in the revolution.

But we also hear today, that the President of PDVSA has hired former Superintendent of Bank Simancas to get those financials done by June 30^th. Good luck! I certainly hope they do, I want to see them and analyze them, but the whole thing is very far from normal. In fact, in my mind this simply confirms the fact that things are not well in PDVSA. Not well at all. Any company worth its salt has to be capable of being audited. PDVSA is simply joining the long list of dysfunctional Venezuelan Government institutions which are almost impossible to audit: Bandes, Banco Industrial Seguro Social, Centro Simon Bolivar, Fogade. I guess the Deputy is right, it is becoming normal, that is it is turning into what is  the ordinary, what is the norm in Venezuela.  God help us!

This picture was released yesterday before Chavez’ Sunday program in which he announced a factory will be built with the Iranians to build bicycles in Venezuela. Immediately afterwards, Chavez talked about using Iranian solar technology and “starting” a Venezuelan nuclear program.

What does one thing have to do with the other? Easy, this is the third time Chavez announces a joint venture to build bicycles in Venezuela; the other two were with the Chinese and the Cubans. The point being that it is easy to make bicycles, but you need human resources and know how to make nuclear technology, but we have not been able to get going a single one of the earlier two bicycle factories.

Speaking of nuclear technology, Venezuela even has a nuclear reactor, which Chavez appears not to know  about, but it is not in use it is GE technology from the 1950’s, the control room was tubes and there was never money available to upgrade it. Thus, it has been converted into an irradiation plant.

There have also been groups that made solar panels and even sold some for remote applications. I believe there is still some work going on at the University of the Andes. But apparently Chavez knows more about Iran than about Venezuela. In any case, unless you go into the materials aspects of it, this is really about engineering and not research.

But as a scientist, I think there are other areas where money would be better spent. Particularly because the toughest part is always human resources and there are lots of areas in which the country has strengths like tropical diseases and biotechnology, so why not invest in it, rather than having many mediocre groups with no budget, maybe we can have one or two which are good and have good funding. But I guess excellence is not this Government’s forte. Or starting or finishing projects.