Appointment of Army general to Venezuela oil
company could mean more politics, less oil
CARACAS, Venezuela -- Venezuelan President Hugo Chavez's "peaceful
revolution" has again swept into state oil company Petroleos de Venezuela,
worsening fears that business is taking a back seat to politics in the world's No.
3 petroleum exporter.
Chavez named Army Gen. Guaicaipuro Lameda president of the oil monopoly on
Sunday as part of a "profound restructuring" at the world's second largest state
oil firm. The appointment followed a four-day strike by petroleum workers last
week.
It was Chavez's second promotion in a week of a military officer to a senior post
in the company. He also had named Army Gen. Oswaldo Contreras, a PDVSA
board member, head of Citgo, Venezuela's U.S. refining and marketing arm.
The former paratrooper-turned-president on Sunday repeated past pledges to go
over PDVSA with a "magnifying glass" -- to eliminate alleged corruption and
bring the company under closer government control. They were the same
promises Chavez made when taking office two years ago, after which he
ordered PDVSA's board of directors to meet in the presidential palace. One other
Chavez-appointed military man, Army Maj. Gen. Arnoldo Rodriguez Ochoa, still
sits on PDVSA's board.
Some industry analysts welcomed the departure of outgoing PDVSA President
Hector Ciavaldini, a personal friend of Chavez's, whom Chavez appointed just
over one year ago. The former mid-level PDVSA executive was widely
considered to be unqualified for the top post.
However, industry analysts expressed fears that the new appointments meant
PDVSA's autonomy and culture of meritocracy would be further eroded under
Chavez.
"If the president thinks he knows best about business theory, strategic planning
and how to run the oil industry ... I am extremely worried," Venezuelan oil expert
Alberto Quiros told local Union Radio.
New oil boss lacks industry experience
Lameda, who has a postgraduate degree in economic planning, has won praise as
a shrewd administrator in his previous post as head of the Central Budgetary
Office. However, the general has no previous experience in the oil sector.
According to El Universal, a Caracas daily, another soldier was named to
PDVSA's board to replace the seat left vacant by Contreras after his promotion
to Citgo. He is the former-head of Chavez's presidential guard, Gen. Cipriano
Martinez.
"Where are the civilian business leaders, or do we have no managers in
Venezuela? One starts to wonder if this is a meritocracy which evaluates just one
sector," said Quiros.
OPEC policy will remain unchanged
Since taking office in February 1999, former coup leader Chavez has shaped
Venezuelan oil policy to his leftist, nationalist vision.
He has become wildly popular among Venezuela's poor, with his promises to
give all of them a share in Venezuela's oil wealth. He also has fashioned himself
as a Third World spokesman, expressing resentment at U.S. hegemony, and
asserting that Venezuela's oil policy would reflect this world view.
Chavez and Energy and Mines Minister Ali Rodriguez, a lawyer and former leftist
guerrilla, also have converted the South American country from OPEC's black
sheep into one of the most outspoken advocates of the cartel's production
quotas. Chavez has argued that record oil prices this year are fair.
"You cannot deny the positive results which our change in oil policy has had in
the international market," Deputy Energy and Mines Minister Alvaro Silva told the
Globovision television channel.
Chavez has curtailed the ambitious expansionist plans to double oil production of
PDVSA President Luis Giusti, who led the company during the previous
government of Rafael Caldera. In doing so, he has prompted the exodus of
hundreds of PDVSA's best qualified executives, during an upheaval which has
seen three Chavez-appointed presidents of the state company during 20 months.
He had frequently called PDVSA a privileged "state within a state," whose
executives enjoyed cushy expense accounts.
Referring to the structural changes at PDVSA, Silva said, "We are making
adjustments in the way the company is run and it functions ... you cannot
separate (PDVSA) from national politics or our international policies."
Chavez, a fervent nationalist, has said he wants oil companies, including PDVSA,
to buy more Venezuelan goods. He's also called on local companies to take a
more active role in the development of Venezuela's oil sector.
Earlier this year, PDVSA abruptly froze an earlier deal to sell its Jose oil export
facility to a U.S.-Canadian consortium, claiming the plant had strategic
importance.
Citgo changes raise concerns
According to oil analyst Philip Verleger, plans by Venezuela's government to milk
PDVSA's $20 billion Citgo subsidiary, via increased dividends and possible asset
sales, could have disastrous effects on the company.
The change of management at Citgo could start a stampede of qualified
executives from the company at a time when it needs to upgrade its plants,
which comprise 4.3 percent of U.S. refining capacity, Verleger wrote in a report
Monday.
With U.S. fuel markets already tight, "the market implications of management
changes at Citgo are potentially enormous," Verleger said.
Chavez's intervention in Citgo's business could boost U.S. gasoline prices by 10
to 15 cents per gallon," Verleger added.
Rodriguez, Venezuela's oil minister, has said Citgo will renegotiate some
long-term crude contracts with PDVSA. Those deals gave Citgo cheap crude for
up to 20 years and guaranteed PDVSA a market for its heavy oils, allowing it to
obtain favorable financing terms.
Lameda is accompanying Chavez on a trip Sunday to Houston, Texas, where the
Venezuelan leader is expected to officially appoint Contreras to Citgo's top post. |
