God Rest Ye, Merry Gentlemen - Jars of Clay - listen now

Friday, November 25, 2005

WHAT "THUGGO" CHAVEZ HATH WROUGHT

Well that pudgy tyrant "Thuggo Chavez" is succeeding in "reforming" the oil industry in Venezuela. That is if you consider running it into the ground and sending most of its employees into exile "reforming."
CARACAS, Venezuela -— Three years after President Hugo Chavez purged 20,000 employees from state-owned Petroleos de Venezuela, the oil giant's production still hasn't recovered, but many who became part of a global diaspora of Venezuelan talent slowly are putting their lives and careers back together.

An estimated 1,000 former PDVSA workers, many of them with graduate degrees from U.S. and European universities, have left Venezuela for Mexico, the United States, Russia, Kuwait, Saudi Arabia -— wherever oil is being sought, produced or refined.


PDVSA's recovery from the devastating loss of personnel seems to have stalled. The mass firings -— which included 75% of the company's engineers, 70% of research scientists and 50% of its refinery employees -— are an important factor in its failure to regain production levels of late 2002. That's when a series of strikes began in response to Chavez's efforts to bend the previously independent company to his political will, culminating in the mass layoffs in early 2003 and the decline of daily output to as low as 700,000 barrels.
A few facts on the Thug's reforms:
  • Production has dropped 25% from 3.2 million barrels a day to 2.5 million barrels.
  • Over half Venezuela's oil is heavy crude, difficult to pump, transport, and refine. The loss of industry talent leaves the state oil company (PDVSA) short of the manpower and technical skill necessary to accomplish this.
  • Accidents are increasing.
  • Chavez is using his control of PDVSA to rape it of its profits so he can use them in his populist communist culture war.
  • Chavez is trying to break contracts made by PDVSA before he came to power. This is causing foreign oil companies to reconsider doing business with Venezuela.
  • Chavez threatened to send troops out to take over production projects. This is also causing foreign oil companies to become quite nervous about their current investments and to reconsider any future investment.
Unfortunately, as Chavez sucks the capital out of PDVSA nothing is left to keep its infrastructure running. Not that the Thug cares.
But as Chavez spends money all over the world, some say the PDVSA infrastructure is deteriorating and endangering the sustainability of his largesse. Many of the wells and extraction equipment have fallen into disrepair through lack of investment, and natural gas needed to force up crude oil is in increasingly short supply in some fields, observers say.

All those fired employees are sorely missed, said Carrillo, who before ascending to top management was manager of PDVSA's second-largest refinery in Cardon for 17 years. "A refinery is like a car. If you don't maintain it, it will break down. And that's what's happening."

Energy Ministry officials denied an interview request this month to discuss the current state of PDVSA infrastructure.
Soon, Thuggo, your economic stupidity will catch up with you. So for now, we'll gladly take your cut rate fuel oil and just bide our time.

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