Venezuela: new signs of corporate deterioration in PDVSA
Editorial Commentary by Petroleumworld
(15.12.03) - A report by Energy News Today filed in Tulsa, Oklahoma, describes the attempts of PDVSA to cancel the 250,000 barrels per day petroleum supply contract with CITGO, four years before its normal expiration date. This contract is for 25 years and has formed the basis for the vigorous expansion of this company in the US domestic market of products.
The supply of Venezuelan crude to CITGO does carry a discount, in order to strengthen the competitive position of the affiliate company, but PDVSA has obtained, in exchange, a secure market for its crude oil. The attempts at canceling the contract by PDVSA have nothing to do with long term marketing strategies but with the urgent need for cash PDVSA is experiencing due to the collapse of its production and marketing activities.
The Wall Street Journal has described in some detail how PDVSA has lost hundreds of millions of dollars in the past 16 months, due to the mediocrity and lack of transparency of its marketing staff. In fact, traders of doubtful quality have conducted most of the international marketing of PDVSA during this period.
Now PDVSA is looking to compensate for those errors with a greater error, that of abandoning its traditional marketing strategies based on long term contracts in favor of placing important volumes of crude oil in the spot market. In this manner they hope to get more money in the short term but they will risk losing a secure client, international credibility and, even, legal fights with third parties.
This attitude of PDVSA means that they are mirroring the central government in their strategy to sacrifice the future for the immediate present. Any hopes we had that PDVSA might have influenced the central government administration to behave more sensibly have evaporated.
Today PDVSA is clearly the biggest clown of the Chavez circus.
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