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Is Venezuela a De facto dictatorship?

Editorial | Petroleumworld.com

08.02.05 | We have received a letter from a concerned former oilman, in which he describes the total lack of information coming out of PDVSA, together with declarations by government representatives such as: “all decisions regarding the sale of CITGO will have to wait the orders from the President (Chavez)”. This is a situation that Venezuela had not experienced in many years. We would have to go back to the times in which Juan Vicente Gomez distributed oil concessions among his friends, to see such a high degree of political intervention in our main (and almost only) industry.

In parallel with this total subordination of the management of PDVSA to the whims of one man, we also witness the disappearance of basic information from PDVSA that should be given to the nation, the true owner of the company. The list of reports from PDVSA which are no longer available to the common citizens or, even, to the petroleum analysts, include the following:

• Operational and financial results of PDVSA for the years 2002, 2003 and 2004. The last information on these results was published in 2001.

• Presentation of the Annual Financial and operational report of PDVSA to the security Exchange commission of the United States. The last report is from year 2002 and was handed in very late.

• Up to date information on royalties, Income Tax payments and Dividend payments, if any.

• Investment Plan of PDVSA and of the private contractors for 2005

• Investment Budget execution of PDVSA for 2003 AND 2004

• Number of drilling rigs active in the country and volumes of production by month for 2003 and 2004.

• Audits on PDVSA’s assets abroad and sales of assets of PDVSA abroad.

• Audit on the Venezuela-Cuba oil supply agreement, including debt by Cuba.

• Audit on acquisition of oil products for the domestic market during December 2002, January and February, 2003.

• Costs and prices of gasoline in the domestic market.

• Audit on the significant smuggling of oil products to Colombia and Brazil.

• Status of the INTESA legal situation.

• Legal status of the situation of the over 18000 employees of PDVSA dismissed in 2003 and of their severance payment still retained by the government.

• The volumes of new foreign investment in the oil sector under the provisions of the new Law of Hydrocarbons.

• New licensing for exploration and/or production of natural gas in territorial waters or elsewhere in the country.

• Use of the money being diverted from PDVSA to the social programs of the government.

• Up to date indices of industrial accidents, oil spills and industrial safety.

• The contracts signed with private international companies to operate new oilfields, such as Tomoporo and Zumano.

• Information on the construction of new refineries in Venezuela.

• Up to date information on the acquisition of Venezuelan goods and services by PDVSA, 2003 and 2004.

• Bilateral Agreement with Trinidad-Tobago to develop gas reserves.

• Number of new employees of PDVSA since 2003 and information on these new employed personnel.

• Information on the new Petroleum Collective Contract.

• Information on the investigations derived from former Comptroller Fabian Chacon’s charges.

• Information on the creation, objectives and organizational characteristics of the projected PetroAmerica, PetroSur or PetroCaribe announced by the President.

• Information on the sale of CITGO

• Information on the agreements with Argentina and the acquisition of Shell’s assets in Argentina.

• Information on Orimulsion’s agreements with China.

In a democracy the people has the right to know how the state-owned companies are being managed. Some information could be sensitive enough to keep confidential while business is conducted but transparency dictates that the managers of state-owned companies behave in a transparent manner. If not, they should be fired and held accountable, according to our laws. The situation of PDVSA is so critical, the lack of accountability is so great that we have no doubt that a company being managed in this manner should be rescued by us, the owners. The question is: How? It seems clear that the current management of PDVSA is exercising rights that do not belong to them. Would the Supreme Tribunal of Justice pay any attention? Would the Attorney General pay any attention? Would the Ombudsman pay any attention? Would the General Comptroller pay any attention?

Who will pay attention before the disaster of PDVSA is completed?

Or are we in a De facto dictatorship?



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