Ex-Venezuela Oil Boss: PDVSA Is Collapsing

Authored by Tsvetana Paraskova via OilPrice.com,

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.”

Comments

silverer Mon, 05/07/2018 - 08:45 Permalink

Typical of nationalized companies. Governments always driven by pure greed and lust for power. Unicorn thinking elected officials don't know shit about how a basic toaster works. They'll ruin any business. The only thing they know about business is how to steal from them.

fx Vilfredo Pareto Mon, 05/07/2018 - 09:32 Permalink

For sure PDVSA is in deep trouble and output keeps falling. However, it seems that at the same time the military starts succeeding in their crack down on theft and illegal sales from PDVSA's oil by corrupt PDVSA managers. And it seems, Ramirez was one of the major ones in this regard:

While some charges by the maduro govt against him may be purely politcally motivated, there seems to be fire there, not just smoke, when it comes to corruption and bribes:

 

https://www.apnews.com/6cbba8789ed849d2ac210f8571addc59

http://www.chicagotribune.com/business/sns-bc-lt--venezuela-oil-corrupt…

https://www.caracaschronicles.com/2018/02/16/rafael-ramirez-took-bribes…

In reply to by Vilfredo Pareto

Cloud9.5 fx Mon, 05/07/2018 - 09:42 Permalink

You guys are simply overlooking the nature of Venezuelan oil.  It has to be mixed with thinners before it can be utilized as fuel.  Venezuelan oil is one step higher than Canadian tar sands.  Compared to shale oil which is pretty much bunker fuel when it is pumped out of the ground demand for Venezuelan oil is an outlier. That is what is killing the economy.

In reply to by fx

Offthebeach Cloud9.5 Mon, 05/07/2018 - 09:59 Permalink

Totally wrong.

Vez oil doesn't have to anything, the market desires and pays, if you can supply.  Why is American and Canadian heavy oils booming?  Because demand will pay.  Vez oil is wanted and viable, and was the low cost producer.  Was.  They're so leftist fukd( but I repeat myself ) that they can't bucket it out of the pools.

 

In reply to by Cloud9.5

MoreFreedom HenryKissinger… Mon, 05/07/2018 - 10:16 Permalink

In socialist run businesses, the goal of the employees is to steal what they can.   As the old joke goes, they pretend to pay the employees, and the employees pretend to work.  

And Bernie Sanders is trying to peddle government jobs for all here in the USA, which is even more short sighted than his wife's vision for the now defunct (because of her vision and investments in their growth) Burlington College.   It's sad it appeals to so many.  They should go live in Venezuela for a couple of months to gain an education of appreciation for free markets by learning what it's like without free markets. 

In reply to by HenryKissinger…

Vilfredo Pareto CarthaginemDel… Mon, 05/07/2018 - 09:10 Permalink

Lol.  When gooberment has reached the point where  it even  tells bakers what percentage of various breads to make, caps prices, and outlaws queuing in front of bakeries (because bread lines weren't real but were anti Maduro propaganda lol), then the result is fairly predictable. 

 

I am surprised even dropping to last in America in per capita income and a reported 20 lb weight loss on average in the adult population hasn't set off revolution yet.

 

I would like to think in the USA we would have started sniping off as many government officials as dared show their face long before that.

http://bapresley.com/genealogy/hawkins/foster/themilitiawarnewspaper.ht…

 

In reply to by CarthaginemDel…

Vageling Mon, 05/07/2018 - 08:53 Permalink

I'll give you a bitcoin backed up by oil. But you need extract the oil yourself or get in line and wait till we have your barrel ready. This fucking busdriver is funny. Surprised they haven't hanged him yet.

Nuclear Winter Mon, 05/07/2018 - 09:19 Permalink

The fools in Europe, Russia, China, and in some quarters of America are celebrating 200 years of Karl Marx. Venezuela should be a wake up call to what comes next in those societies, where sloth replaces talent, bottom feeders replace skilled labor, and ambition, invention, and innovation are crushed.

Name the last breakthrough that anyone in China invented in the last 25 years of tech?

The clock is ticking...

hanekhw Mon, 05/07/2018 - 10:49 Permalink

'Its being taken out of control by the Venezuelan state'

Really? Only if they physically move the facilities. The people with the guns and clubs are not rational, don't care about lives let alone property and they'll arrest them all and use their convict labor while holding their families hostage.

Ink Pusher Mon, 05/07/2018 - 11:41 Permalink

So Conoco kicks the Chinese in the shins and everyone pays more at the pumps.

Thanks Conoco !

I love paying MORE for no reasons other than increasing your margin and propping up another dying petro-currency.<SARC