Print Edition - 2017-12-16 | MONEY
Venezuela’s oil purge cripples company
- paralysis at pdvsa
Dec 16, 2017-
Decisions at some joint ventures with foreign firms are delayed. A growing number of oil tankers sit idle because no one authorises payments. Employees struggle to get approval for routine expenses, from taxis to training.
An alleged crackdown on graft in Venezuela, seen by critics as an effort by President Nicolas Maduro to consolidate power, has sown panic across the country’s energy industry and all but paralysed state-run Petroleos de Venezuela SA, or PDVSA, according to people at the company and across the sector.
The ongoing purge, in which prosecutors have arrested at least 67 executives including two recently ousted oil ministers, now threatens to further harm operations for the OPEC country, which is already producing at near 30-year-lows and struggling to run PDVSA units including Citgo Petroleum, its US refiner. Further trouble for the all-important industry could cause yet more economic chaos in the once-prosperous Andean country, which is currently grappling with a profound recession, soaring crime and violence, crippled public services and the world’s steepest inflation rate.
Many of those detained have not yet been replaced, as the once world-leading company, already struggling with a brain drain, wants for qualified personnel. Executives that remain, meanwhile, are so rattled by the arrests that they are loathe to act, scared they will later be accused of wrongdoing.
“In PDVSA, nobody dares sign anything now, not even a Christmas card,” said one executive at a joint venture between PDVSA and a foreign firm in the Orinoco oil belt, asking to remain anonymous.
Interviews with around 20 current and former PDVSA employees, executives at foreign firms, traders and PDVSA clients say fear is compounding problems including the loss of talent, mounting debts, equipment shortages, rampant theft and chronic underinvestment.
Venezuela’s Oil Ministry and PDVSA did not respond to a request for comment.
Oil accounts for over 90 percent of Venezuela’s export revenue and provides the hard currency for Maduro’s socialist government. Yet the country, which sits on the world’s largest crude reserves, is now producing under 2 million barrels per day (bpd).
Published: 16-12-2017 09:01