The man who ran Venezuela’s state oil company PDVSA for a decade after 2004 says that the country’s oil firm is on the cusp of total collapse and expects oil production to drop by 600,000 bpd each year amid lack of investment.
Rafael Ramirez, who has long been a rival of Venezuela’s incumbent leader Nicolas Maduro within Hugo Chavez’s inner circle, told Bloomberg in a phone interview that “PDVSA may fall into an accelerated spiral downward.”
According to OPEC’s secondary sources, Venezuela’s oil production averaged 2.154 million bpd in 2016 and 1.916 million bpd in 2017. In March 2018, its production plunged to 1.488 million bpd.
Ramirez became oil minister in 2002 and then head of PDVSA in 2004. During his ten-year tenure at the company, Venezuela’s production dropped by 10 percent. Since Ramirez left PDVSA, oil production has lost another 30 percent, with the steepest drops occurring over the past two years amid total economic collapse and lack of investment.
At the end of last year, Venezuela said that it would launch a criminal investigation into Ramirez over alleged corruption in a wider graft probe that ended with dozens of oil executives arrested.
Ramirez is currently in a self-imposed exile in a European city.
Some analysts saw the corruption purge at the end of 2017 as politically motivated with Maduro getting rid of opponents and tightening his grip over the oil industry - Venezuela’s only foreign exchange income source. Maduro also named a National Guard major general - Manuel Quevedo - as the new head of PDVSA and the country’s oil ministry. Quevedo’s lack of any oil industry experience further worried analysts that mismanagement would continue and even increase.
The lack of knowledge and experience among the top oil men in Venezuela, together with infighting within the oil circles, has led to PDVSA’s plunging production, Ramirez told Bloomberg.
He also thinks that Venezuela may need to increasingly give control of PDVSA to international companies operating there.
“Under the argument that we destroyed the company, PDVSA will be de facto privatized,” Ramirez told Bloomberg. “It’s being taken out of the control of the Venezuelan state.”