The efficiency of the oil sector in Venezuela could be of more relative importance to the common citizen than is the efficiency of the government itself. Considering the brouhaha that the search for constitutional or electoral reform would cause, it is surprising how easily the reorganization of PDVSA went down.
When faced with all the country’s problems, most of its citizens, at least those that cannot even contemplate emigration, have placed all their hopes on the imminent development of a buoyant oil sector once production has been increased to six million barrels per day. In order to avoid the onset of profound depression, it is probable that most Venezuelans don’t question or even contemplate the possibility that all is not as it should be in the oil patch.
I am one of those that await only good things from our oil industry. However, since “the eye of the owner fattens the cattle”, all Venezuelans have the clear responsibility of keeping watch, issuing opinions and generally do all that is within reach to avoid that due to lack of effective control the industry dives into a tailspin. Without this control, and should the internal meritocracy (however meritorious it may be) be allowed to simply act as it pleases, it seems evident that an organization as rich as PDVSA, dedicated to an activity generous enough to permit the sale of a product with a production cost of about US$ 5 at US$ 20, will eventually degenerate.
In this sense, it behooves us to express our reservations about the amply publicized restructuring of the oil industry. As far as we understand, the plan is based on the substitution of the current organization, represented by Lagoven, Maraven and Corpoven, all of which functioned integrally as operators, with specialized companies designed to cover specific functions, among them exploration and production, manufacture and commercialization and services.
It could be that I have been overly innocent, but I was always under the impression that by splitting the Venezuelan oil industry into three operating companies, we had the keys to some control over it. This division allowed for certain competition, guaranteed a basis for comparison and finally, created different specialized professional teams which in one way or another kept an eye on each other.
I was, however, never so innocent as to figure that this control was perfect. Evidently this three-way split created much duplication of costs. The solution, however, seemed to be satisfactory when compared to alternatives such as the politicization of the industry or the awarding of total independence (upon which we would have had to light candles to our favorite Saint).
The new Plan has been justified with the following arguments: a) estimated savings that have quickly grown from US$ 1 billion to US$ 2 billion annually; b) the need to elevate the country’s participation in the international market; and c) as a simple response to organizational tendencies and pressures relative to the industry itself.
These arguments don’t completely convince me. Evidently, some savings are always possible. However, if savings such as those mentioned above are possible without adversely affecting the company’s operations, it would imply the recognition of such an incredible inefficiency that the first administrative act we should request is the immediate removal of the entire Board of Directors of PDVSA.
The second argument, i.e. the need to elevate the country’s participation in the global market, has more to do with abandoning the agreements established by OPEC than with a plan for reorganization. Finally, we should not be comparing the organization of a state owned company like PDVSA with private oil companies that operate in a world of shareholders, stock markets and other elements that exercise control over management.
Until I hear arguments to my satisfaction that address the issue of the control that our society has a right to, the Plan simply smacks of a proposal to centralize, both functions as well as power. In this sense, I believe the Plan could simply accelerate the degeneration which I feel the industry is doomed to. Additionally, why are we so set on decentralizing the country’s government, infrastructure, etc. if centralization by function is so beneficial?
In Daily Journal, Caracas, November 13, 1997
When faced with all the country’s problems, most of its citizens, at least those that cannot even contemplate emigration, have placed all their hopes on the imminent development of a buoyant oil sector once production has been increased to six million barrels per day. In order to avoid the onset of profound depression, it is probable that most Venezuelans don’t question or even contemplate the possibility that all is not as it should be in the oil patch.
I am one of those that await only good things from our oil industry. However, since “the eye of the owner fattens the cattle”, all Venezuelans have the clear responsibility of keeping watch, issuing opinions and generally do all that is within reach to avoid that due to lack of effective control the industry dives into a tailspin. Without this control, and should the internal meritocracy (however meritorious it may be) be allowed to simply act as it pleases, it seems evident that an organization as rich as PDVSA, dedicated to an activity generous enough to permit the sale of a product with a production cost of about US$ 5 at US$ 20, will eventually degenerate.
In this sense, it behooves us to express our reservations about the amply publicized restructuring of the oil industry. As far as we understand, the plan is based on the substitution of the current organization, represented by Lagoven, Maraven and Corpoven, all of which functioned integrally as operators, with specialized companies designed to cover specific functions, among them exploration and production, manufacture and commercialization and services.
It could be that I have been overly innocent, but I was always under the impression that by splitting the Venezuelan oil industry into three operating companies, we had the keys to some control over it. This division allowed for certain competition, guaranteed a basis for comparison and finally, created different specialized professional teams which in one way or another kept an eye on each other.
I was, however, never so innocent as to figure that this control was perfect. Evidently this three-way split created much duplication of costs. The solution, however, seemed to be satisfactory when compared to alternatives such as the politicization of the industry or the awarding of total independence (upon which we would have had to light candles to our favorite Saint).
The new Plan has been justified with the following arguments: a) estimated savings that have quickly grown from US$ 1 billion to US$ 2 billion annually; b) the need to elevate the country’s participation in the international market; and c) as a simple response to organizational tendencies and pressures relative to the industry itself.
These arguments don’t completely convince me. Evidently, some savings are always possible. However, if savings such as those mentioned above are possible without adversely affecting the company’s operations, it would imply the recognition of such an incredible inefficiency that the first administrative act we should request is the immediate removal of the entire Board of Directors of PDVSA.
The second argument, i.e. the need to elevate the country’s participation in the global market, has more to do with abandoning the agreements established by OPEC than with a plan for reorganization. Finally, we should not be comparing the organization of a state owned company like PDVSA with private oil companies that operate in a world of shareholders, stock markets and other elements that exercise control over management.
Until I hear arguments to my satisfaction that address the issue of the control that our society has a right to, the Plan simply smacks of a proposal to centralize, both functions as well as power. In this sense, I believe the Plan could simply accelerate the degeneration which I feel the industry is doomed to. Additionally, why are we so set on decentralizing the country’s government, infrastructure, etc. if centralization by function is so beneficial?
In Daily Journal, Caracas, November 13, 1997
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