Let honor be given where honor is due

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Tuesday, April 01, 2003 By: Oliver L. Campbell

VHeadline.com commentarist Oliver L. Campbell writes: I recall that old joke: What is the world’s best business? ...a well-managed oil company.

What is the world’s second-best business? ...a badly managed oil company!

Though it is undeniable that PDVSA needs good management and capable staff, the immediate success of the company largely depends on a factor within its control ... how soon it can get production back to 3 million barrels per day ... and one outside its control, how long the price of oil will maintain its present high level.

Given a high production level and a high price of oil, PDVSA should be back on the road to prosperity reasonably soon.

I would like to comment on a point made that many PDVSA employees left because of former PDVSA president Luis Giusti’s policies.

Before continuing, however, let me declare an interest: I used to play tennis with Luis (Eduardo) Giusti’s father, Luis German Giusti, a good friend, when we both worked for Shell de Venezuela in Maracaibo ... Luis senior was a keen tennis player, and some readers may remember when, back in 1956, he organized the tournament, we enjoyed so much that he brought Pancho Gonzalez , Jack Kramer, Dinny Pails and Pancho Segura to Maracaibo.

I was not in Venezuela when Luis Giusti was president of PDVSA ... so I am not qualified to comment on any negative aspects of his tenure ... though the 'malas lenguas' (bad tongues) among my friends did suggest he appointed too many of his colleagues from Maraven to key posts at the expense of people from Lagoven and Corpoven, and that this had caused friction.

What I can comment on (as an observer) is that Luis Giusti achieved what I believe are two remarkable successes. Firstly, he changed the industry from a vertical to a horizontal type organization. Out went the vertically-integrated companies Lagoven, Maraven and Corpoven to be replaced by functional companies for Exploration & Production and Manufacturing & Marketing. This had been talked about for many years, but no Chief Executive had wanted to grasp the nettle ... particularly as the three integrated companies opposed it.

Making a drastic change in an organization requires courage, needs detailed planning, produces opposition and ... unfortunately ... creates winners and losers. You no longer needed three heads of exploration, production, engineering, manufacturing, marketing, etc. and this is reflected further down the organization.

Obviously, this meant some staff became redundant, but those close to retirement who decided to leave were, I believe, fairly compensated.

Yes, some good people left prematurely, but that was the price of making a more efficient organization. All the major oil companies have had their reorganizations in the last few years, which have led to a reduction of staff ... particularly in administrative areas such as head offices.

The second considerable achievement was in the 'aperture' or opening-up of the oil industry to foreign companies. Luis Giusti played a leading role in negotiations with oil companies that wanted to invest in Venezuela ... and his was a major contribution in extracting so much cash from them. That the negotiations were so successful has been borne out by the fact that several oil companies now recognize they paid too much under the various agreements and have written down the assets in their books.

Of course, everyone has the same right to express criticism of Luis Giusti’s tenure as Chief Executive of PDVSA as they do of those who held the post before or after him ... but, to my mind, in those two important instances mentioned above he was eminently successful.

Let honor be given where honor is due.

Oliver L Campbell, MBA, DipM, FCCA, ACMA, MCIM  was born in El Callao in 1931 where his father worked in the gold mining industry.  He spent the WWII years in England, returning to Venezuela in 1953 to work with Shell de Venezuela (CSV), later as Finance Coordinator at Petroleos de Venezuela (PDVSA).  In 1982 he returned to the UK with his family and retired early in 2002.  Campbell returns frequently to Venezuela and maintains an active interest in political affairs: "I am most passionate about changing the education system so that those who are not academically inclined can have the chance to learn a useful skill ... the main goal, of course, is to allow many of the poor to get well paid jobs as artisans and technicians."  You may contact Oliver L Campbell at email: oliver@lbcampbell.com