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Venezuela State Oil Company Recovers From Crisis

by Humberto Marquez


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Venezuela Strike Part Of Global Struggle Over Oil
(IPS) CARACAS -- A year ago, the Caracas headquarters of the state-run Petroleos de Venezuela (PDVSA) oil company was a gloomy building when its chief, Ali Rodriguez, gathered a handful of foreign correspondents and outlined the status of the industry under the strike/walkout that paralyzed the country at the time.

There was not even enough electricity available at the offices of the petroleum giant to fully illuminate the meeting site, and Rodriguez and the few executives present seemed diminished in that setting.

The situation was further complicated by the fact that the number of tanker ships dispatched to the United States, Venezuela's leading customer, could be counted on the fingers of one hand.

Along the Venezuelan coast, crews on strike stopped unloading fuel for the domestic market, leaving three million vehicles without gasoline, and everything was blocked, from oil refineries to the computers needed to generate the simplest invoice.

Beginning Dec. 2, 2002, the industry and union organizations as well as some 5,000 PDVSA managers and employees launched a general strike that was to last indefinitely. They demanded the immediate resignation of President Hugo Chavez or a recall referendum on whether he should serve out his six-year term begun in 2000.

The stoppage finally wound down in early February 2003.

In April 2002, just days after an opposition-supported coup d'etat put Chavez out of office for 48 hours, Rodriguez was called on to take the helm of PDVSA, for which he had to leave his post as secretary-general of the Organization of Petroleum Exporting Countries (OPEC), which he had held since late 2000.

Tuesday, a year after that meeting in the shadows of the PDVSA offices, an apparently contented Rodriguez met with the same group of foreign media reporters to outline some of the agency's financial results.

He described them as "extraordinary, if one takes into account that we experienced a war-like context until Feb. 2," when the nationwide strike finally ended without achieving its objectives.

Citing abandonment and sabotage, PDVSA laid off 18,000 of the 39,000 employees it had on the pre-strike payroll. The two-month stoppage, which affected a broad range of economic sectors, cost the country an estimated $10 billion, or around 10 percent of gross domestic product (GDP), which is expected this year to be 12 percent below the GDP of 2002.

During the most difficult days of December 2002, the usual daily output of 2.5 to 3.0 million barrels of crude dropped to just 25,000 barrels (159 litres each).

In contrast with that situation, which was in practice a halt to exports of oil and derivatives, the state-run firm is patting itself on the back for having dispatched 1,768 tanker ships of crude from January to November 2003 to points around the world, with an average volume of 2.1 million barrels a day.

According to PDVSA chief Rodriguez, "The country's economic recovery has already begun, and the most conservative estimates point to GDP growth of three percent for next year, though some say it could reach 7.5 percent."

"And petroleum and PDVSA will maintain their role as the engine" behind growth, he said.

Venezuela claims the capacity to produce 3.4 million barrels of crude a day, and an effective output of 2.8 million barrels, which is its quota under OPEC agreements aimed at shoring up international oil prices.

But the opposition-led group People of Petroleum, made up of former PDVSA managers, says Venezuela's true output is no more than 2.5 million barrels daily, and Platts, an oil industry watchdog, 888 reports that the South American nation puts out 2.6 million barrels a day.

Rodriguez said Tuesday that PDVSA had sales this year worth $17 billion, took in 16.6 billion dollars and will pass on $9.95 billion to state coffers in dividends and taxes.

The figure is comparable to last year's, when the oil company delivered $10.07 billion to the state, but the forecast for next year is just $7.5 billion, as the transfer of accumulated dividends will be less.

The Venezuelan state finances a large portion of its budget $25 billion to $26 billion annually -- with oil revenues.

PDVSA does business at a volume of $50 billion a year, thanks largely to its U.S. affiliate Citgo, which refines approximately a million barrels of crude a day and supplies gasoline to 15,000 service stations, mostly in the U.S. east and southeast.

In the mid-1990s, when the firm invoiced some $50 billion, it was number one in the developing world.

The former PDVSA executives who are active in the political opposition, such as Alberto Quiros and Gustavo Gabaldon, argue that the firm is losing production capacity and its competitive edge as a result of the Venezuelan political crisis, which has translated into fewer investments, less exploration and limited maintenance of existing installations.

Rodriguez, awaiting the results of the PDVSA annual meeting, went no further than to assure that the corporate results for 2004 "would simply be superior."



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Albion Monitor December 16, 2003 (http://www.albionmonitor.net)

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