Venezuela Crude Production At 2.02 Mln B/d - PDVSA President
Posted by click at 12:40 AM
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sg.biz.yahoo.com
Monday February 24, 8:30 PM
(This article was originally published Sunday)
CARACAS (Dow Jones)--Crude production at Venezuela's state-owned oil monopoly Petroleos de Venezuela SA (E.PVZ) currently stands at 2.02 million barrels per day, the company president said Sunday.
"We are now at the production level of 2.02 million barrels and by the end of next week it will be 2.5 million barrels per day," Ali Rodriguez said. However, fired staff of PdVSA claim production is much lower and stands at around 1.4 million b/d while exports stand at 1 million b/d. Rodriguez didn't give any new export numbers.
Some 35,000 oil workers at PdVSA joined a nationwide strike Dec. 2 last year that was aimed at the resignation of President Hugo Chavez. The strike severely crippled exports and production which stood at a level of around 3 million b/d by the end of November.
Chavez, discussing production levels at his televised Sunday show "Hello President" said he expects the Organization of Petroleum Exporting Countries, or OPEC, not to have any problems that Venezuela would "progressively put crude stocks on the market that haven't been used," he said, without elaborating further.
He added that OPEC's Secretary-general Alvaro Silva is already working on the case. Silva is Venezuela's former Oil Minister and was appointed Secretary-general after Rodriguez became PdVSA President. Last year, Venezuela exceeded its official output target of 2.5 million b/d by around 400,000 b/d when it drew from crude inventories that are located in the Caribbean. Venezuela's OPEC quota - at least on paper - is 2.819 million b/d.
Venezuela's request comes as the company struggles to go beyond the 2 million b/d production level. After focusing on easy oil fields that don't require much added pressure to get the oil flowing, PdVSA faces difficulties as mature oil fields are more labor and capital intensive and take more time to pump oil. Experts have said they doubt PdVSA would reach 2.5 million b/d any time soon due to a lack of financial and human resources.
However, Sunday, a local newspaper reported PdVSA plans to lift the force majeure on its operations in the coming days as the situation at the company is almost back to normal.
"I believe we are in the condition to lift the force majeure...we will lift it in a matter of days or hours," Luis Marin was quoted as saying. Marin is in charge of company operations in eastern Venezuela. He could not be reached for additional comment.
A declaration of force majeure three days after the nationwide strike started Dec. 2 temporarily released the company and its clients from contractual obligations.
Meanwhile, the company has been split in half, with two operating entities in the eastern and western part of the country. Company headquarters will remain in Caracas, albeit slimmed down in a dramatic fashion.
El Universal reported Sunday that the number of dismissals at PdVSA was increased by 1,785 to a total of 14,548, or over 30% of its work force. The new firings were in the western part where Lake Maracaibo is located.
Also, El Universal reported that Chavez will head the so-called National Oil Council, or CNP, that will define the short, medium and long term strategy of the oil behemoth. The Planning, Finance, Trade and Oil Ministry will make up the rest of the Oil Council.
-By Fred Pals, Dow Jones Newswires; 58414-2887461; fred.pals@dowjones.com
The petrostate that was and the petrostate that is, part III
Posted by click at 2:06 AM
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caracaschronicles.blogspot.com
By Francisco Toro
Sunday, February 16
Here's part three of what will probably be a four part series. Part I (below) describes the original petrostate design, and how it degenerated through the late 70s and 80s. Part II (also below) goes into the failed attempt at reform in the early 90s, and how the petrostate limped along until Chávez came to power. This part deals with the chavista petrostate. The final part will try to describe some hints I see in society right now that suggest that we might finally be ready to move beyond the petrostate mould if we manage to get rid of Chávez without destroying the country altogether.
The petrostate that was and the petrostate that is, part III
It happened in the middle of one of his infamous televised harangues. The president had barely hit his stride when something caught his eye. His tone changed, he looked towards the scaffolding to the left of the stage, the one used to put up the lights for the speech. "Hey, come down from there," he said in a soft, almost fatherly tone, "no, don't climb to the front, it's hot there because of the lights...that's right, climb down towards the back. Don't worry, you'll get to talk to me. I want to hear your problem. I saw you crying earlier, just, just come down from the scaffolding and come up here."
Soon this 15 years old kid has climbed down and is walking towards the stage. He's crying. Chávez calls him up to the podium. With the camera's running, millions of people watching, Chávez takes him, hugs him hard and holds him for, oh, 45 seconds or a minute, while he the kid tells him, in between sobs, how his father died and his mother is sick and he can't afford the medicines to make her better...Chávez listens at length, pets his hair, assures that he's going to help him. The crowd is ecstatic, chanting "that, that, that's the way to govern!"
Welcome to the new era of chavista postclientelism. This sort of stunt is typical of Chávez's governing style. The president never turns down a personal plea for help. His weekly TV call in show amounts to a parade of supplicants - each week, the lucky few who manage to get their calls through see their wishes for a job or a pair of crutches or an operation fulfilled. The president works hard to make the entire audience feel how much he wants to help them all, personally, one by one.
Obviously, this brand of clientelism is quite a different animal from the adeco version. Just as obviously, it's still clientelism. Chávez's peculiar contribution to the concept has been to cut out the middlemen altogether. In the old system, each client's relationship was with the patron immediately above him. But the chavista patronage system only has two levels: the president and everyone else. The old system held together on the basis of the personal bonds between people in adjacent levels of the pyramid. These days, the relationships that hold up the system are imagined rather than personal - the charismatic leader's bond with each of his followers.
Of course, working one-by-one Chávez can help only a tiny handful of his supporters in a material sense, which in part explains why his popularity has frayed so much: only 20% of Venezuelans or so back him enthusiastically at this point. But the real mystery is not why so few people support him, but why so many do. Afterall, Chávez has presided over the fastest period of mass impoverishment this country has seen in 160 years. His handouts can't have helped more than a tiny fraction of the total who support him. So most chavistas are, in a sense, imagined clients. Yet they remain steadfast in their support.
The explanation, I think, is two-fold. In the first place, Chávez benefits from a kind of politicized lottery mentality. It's hard for people to think clearly about very large numbers and very small probabilities: that's why lotteries exist. If everyone had a realistic understanding of their actual chances of winning, no one would play the lotery. The same thing happens with chavistas' notions of their chances to get at a piece of presidential patronage. Aló, presidente is nothing but the latest nationwide lotery show, and people here love that kind of thing.
But the more important part of the explanation has to do with raw sentiment, with primary identifications. Your typical chavista feels deeply, personally, almost mystically wedded to the president - the intensity of their emotions towards him are very hard to overstate. I've heard journalists describe meeting chavistas who carry nothing in their wallets but an ID card, an icon of the virgin mary, and a picture of El Comandante.
That's another departure. In the old system, the relationship between patrons and clients was basically a business arrangement, a matter of mutual interest. Insofar as feelings played into it at all, they didn't go beyond a certain deference born of respect and fear of the boss. With Chávez, though, the bond comes from the heart. Chávez's rhetoric is so powerful he makes people want to see him as a messiah: they want to cry on his shoulders, they want to redeam themselves through him.
Said differently, Chávez's bright idea for moving beyond the outdated system of vertical interpersonal relations is to replace it with a cult of personality.
It's bad news.
At least in the old system, the state had two whole fully independent institutions: AD and Copei. It's true, it's terrible that there were only two real institutions around, that the courts and the elections authorities and the nationalized companies and every other part of the state was subjugated to one party or the other. But christ, at least there were two of them! If nothing else, AD and Copei served to balance each other off. No truly transcendent decision could be made without at least a tacit agreement between them.
Moreover, internally, each of the two big parties was a complex institution in its own right. Their National Executive Committees were made up of all kinds of factions that had to deliberate with one another to set the party's position on any given issue. Each faction would press the interests of a given constituency - the pro-business faction would haggle with the labor bureau to agree on the party's minimum wage policy and the peasant representatives would hash out the party's position on agricultural imports in talks with the technocrat wing. Each party had its own internal deliberative process. It was hardly a model of tocquevilian pluralism, granted, but at least some interest-mediation took place.
In the chavista state, there is only one institution: Hugo Chávez. Not even the presidency of the republic, just Hugo Chávez the man. When an important policy decision has to be made, the only deliberations that matter take place between the little voices inside his head. All loyalties must be directed at him personally. With the president locked in a tiny circle of relentlessly sycophantic collaborators, all dissent is equated with sedition. The one man who makes every relevant decision personally is never confronted with a view of the world that differs one iota from his own. The president can't countenance even the suggestion of reaching minimal agreements with non-chavista sectors of society. Venezuela's state today is an exercise in turbocharged personalism at its most debased.
As a social and political model, it's clearly quite different from what came before, but what has chavismo done to that most enduring feature of the petrostate, its culure? Chávez is an undoubtedly gifted and charismatic speaker, and he's slammed the old regime so much and so often he must have managed to effect some change in the way people see the state's role in society right?
Think again.
Chávez clearly sees himself as the pre-eminent critic of the post-1958 clientelist state. But his critique is based on ideas that have always been at the heart of the petrostate's cultural model. Chávez certainly thinks he's rebuilding Venezuela's political and social structures from the ground up. But like so many self-described revolutionaries before him, he's blind to how much his vision has in common with the old regime.
The giveaway here is his heavy rhetorical emphasis on corruption and theft as the root causes of poverty. To my mind, perhaps the most reliable rule of thumb in Venezuelan politics is that those who think they can fix the problem by rooting out corruption are hopelessly stuck in the petrostate cultural framework. And sure enough, just about every speech Chávez has given in the last 4 years has featured these long, vitriolic, totally over the top tirades against the soulless oligarchs who stripped and looted the state, used the National Treasury as a personal plaything, and doomed the majority to abject poverty.
Chávez doesn't know it, but that kind of rhetoric places him squarely in the intellectual tradition pioneered by Rómulo Betancourt, AD's founding father, 50 years ago. Because the clear implication of his line of reasoning is that by stealing so much, the old party bosses vitiated the state's fundamental mission, which was to distribute the petrodollars to the people. Ultimately, Chávez is just a particularly crass purveyor of a very old petrostate line - the old longing to fix the petrostate, to reform the unreformable.
What's sad is that, ultimately, that longing, the way he has given voice to that longing, is the key to his political success. In beating the old petrostate drum, Chávez tapped into a rich vein in Venezuela's collective consciousness. Breaking the petrostate's dominance/submission social system is child's play compared to the monumental task of breaking the petrostate as an idea, as a collective understanding of the function of the state. And Chávez never challenged the dominant understanding on that score, he merely leveraged it to his own advantage.
In 1998, the voters wanted to hear someone tell them that the country is rich, that prosperity is their birthright, and that the only reason they are poor is that their share of the oil money was stolen. They wanted to hear that because that was what they intimately believed. And Chávez articulated it brilliantly. With amazing vigor and charisma, he captured the volcanic anger they felt at the breakdown of the old model. Chávez became their voice. So they voted for him. What could be more natural?
There's just one minor inconvenience: the Chávez era has made the petrostate model even more unworkable than it was 4 years ago, much more unworkable. Oil production is in freefall. Chávez's catastrophic mismanagement of the oil industry has left the state in such an amazing fiscal mess that soon there may not be any petrodollars at all left to distribute.
Even before the oil strike got under way in December 2002, Chávez had done huge damage to the state's revenue stream. From the moment he took office, not only did he alienate, spy on, harrass and fire hundreds of the oil industry's best managers, he also made such unreasonable demands for cash from PDVSA that the company just didn't have enough money left in hand to even maintain its old capacity levels.
That's worth a brief explanation. Those of us who don't work in the oil industry tend to think of oil wells more or less as water faucets: you want oil, you just turn the thing on. It doesn't quite work that way. As oil wells age, their pressure decreases, and increasingly sophisticated methods are necessary to keep the black stuff flowing. To keep them working, you need to either re-inject the natural gas you get out of them, or inject steam into them. All of that costs money, so, as oil wells get older, you need to invest more and more money just to stay even in terms of production capacity. Venezuela's rate of depletion runs at about 20% a year, meaning that, in the absence of new investment, that's how much our production capacity would fall each year.
Hugo Chávez either doesn't understand that or doesn't care. Since 1999 his government has pressured PDVSA so hard to hand over more and more cash that the oil men haven't had enough money on hand to even maintain capacity. Insufficient investment has sent PDVSA's capacity tumbling - from 3.8 million barrels per day in 1998, capacity had fallen to about 3.3 million b/d at the end of last year.
And now, with the oil strike, capacity is falling even faster, much faster. Nothing is worse for an oil well than to stay idle for weeks on end. They silt up, harden, lose pressure, get screwed up in all sorts of ways. The government's pigheaded refusal to sit around the table with the strikers and reach some sort of deal has led to a further, calamitous collapse in production capacity - it's down at least 400,000 b/d from pre-strike levels. The oil people I've talked to think capacity might settle at no more than 2.6 million b/d when all is said and done.
Instead of taking emergency steps to stop this disaster, Chávez has declared a "revolutionary offensive" against the strikers, firing over 12,400 of them - about a third of PDVSA's total payroll. He appears to have decided he'd rather have a much smaller, less lucrative company he can control at will than a larger, more lucrative company that ever places "buts" in the way of his megalomanic whims.
When the dust settle, the country will be able to produce 1.2 million b/d less than it could 4 years ago. To give you a notion of scale, that's about the size of Nigeria's entire industry, and Nigeria is considered a fairly important player in the world market.
So one of the many, many contradictions and ironies of the chavista era is that the president hangs on to the petrostate's founding myth even as he chips away at the oil industry's ability to finance it. If the state couldn't really afford to bankroll society on 3.8 million b/d, if its overbloated payroll was non-viable on 3.8 million b/d, then it's really, really, really unworkable on 2.6 million b/d. The retrenchment in public spending will necessarily be massive, and the likely social cost of those cuts will make Argentina's crisis last year pale in comparison.