The Petroleos de Venezuela (PDVSA) of which I feel proud

www.vheadline.com Posted: Friday, January 31, 2003 - 12:06:34 PM By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: The first thing that made me feel proud about PDVSA was the manner in which it became a First World corporation surrounded, on all sides, by Third World government agencies.

What could be called an island of excellence.

It was living proof that Venezuelans could be as organized, as disciplined, as efficient as the Norwegians or the British or the Americans. It was living proof of the proposition that education, training and proper work ethics are not the monopoly of northern, protestant cultures and that progress and success are not only found in developed societies.

During the 1980s, PDVSA rapidly became one of the three or four most important energy corporations in the world ... and its management was 100% Venezuelan ... men and women of all colors, mostly 'mestizos' like the majority of our population. Some were pretty dark, like the marketing expert and board member Mario Rodriguez. Some started as minimum wage laborers ... like Alberto Quiros ... who became the first Venezuelan president of Shell, and still is our foremost petroleum expert.

Many were immigrants or sons of immigrants. But the whole management team was tightly united around four basic principles:

PDVSA was to be managed professionally, as a commercial enterprise.

PDVSA was to be apolitical.

PDVSA should finance itself, and

PDVSA should always plan well and execute well.

...and this is the way it was until 2000.

PDVSA grew from having 18 billion barrels of reserves to having 340 billion barrels of reserves (including the Orinoco heavy oil belt) in 1999. It went from a production capacity of 2.7 million barrels a day to 3.8 million barrels a day ... from one million barrels a day of refining capacity to over three million barrels per day with refineries in Venezuela, the Caribbean, North America and Europe.

In 1976 gross income was $9 billion and in 2000 $54 billion. Net earnings increased from $7 billion to $20 billion while the government share per barrel increased from $8 to $12 per barrel. Of these net earnings of $20 billion the government take is, I am told by the petroleum finance managers, $15 billion, this is, 79%. A major portion of the costs of PDVSA, some $19 billion, have to do with the buying in the open market of the oil they could be producing internally, if it was not for the OPEC quota limitation.

But the objective of the Chavez government was not to make the rest of the bureaucracy as disciplined and efficient as PDVSA's, but to make PDVSA as inefficient and as chaotic as the rest of the government sector. This was necessary, in order to have a society in which we would all be at the same level, not by upgrading the poor and the ignorant, but by downgrading the prosperous and the educated.

One of Chavez' claims was that petroleum managers earned too high a salary ... I have already documented the fact that PDVSA productivity per employee was the highest in the group of its large international competitors. No society can ever prosper by penalizing productivity.

• Of course, the 1.3 million government employees ... including Chavez ... earn mediocre salaries, and the net result is a very high degree of corruption, low productivity and an indifferent bureaucracy.

Today PDVSA is being destroyed systematically ... over 5,000 managers and technicians have been fired ... men and women who are impossible to replace except by foreign-hired guns. Operations are disastrous and oil spills are 10 times the normal incidence. There is no management in place.

To go by the PDVSA Caracas HQ is an insult to the eye and to our sense of smell. The walls of the building are covered with grafitti, painted by the two most violent 'Chavista' groups -- the Tupamaros and the Paracaimas -- both armed and harboring an intense social hatred for the middle class.

• In this environment, I am afraid there is very little hope for a civilized way out for Venezuela.

As the 'Powers' other than the Executive remain co-opted by Chavez, all doors to a peaceful solution are being closed. This is leading to increasing frustration among large sectors of the population that up to now have remained within legal bounds.

As this frustration mounts, it will get to the point where words are no longer the manner of exchange.

For someone who has a "revolutionary" dream, violence is the preferred path because it seems easier to destroy completely and to build anew, than to reform a house while inhabited by dissenting tenants.

This is our tragedy and it is unfolding right now, before the eyes of the international community.

Santayana said that those who forget history are obliged to relive it.

I have not forgotten what I experienced under Perez Jimenez, what I lived under Sukarno and what I saw happening in Cuba ... I do not intend to relive those years of horror.

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email ppcvicep@telcel.net.ve