By Humberto Márquez
CARACAS, Sep 18 2008 (IPS)

“I would have liked to be taken on by PDVSA, but I didn’t win that lottery,” Antonio Jiménez, a 52-year-old father of four and grandfather of three who is a pump attendant at a petrol station on the outskirts of the Venezuelan capital, told IPS.

The Venezuelan parliament passed a law in August at President Hugo Chávez’s behest to nationalise transport and wholesale distribution of fuels, absorbing them into another branch of the giant state oil company Petróleos de Venezuela (PDVSA), but the measure did not include the 1,800 service stations and their workers.

“Who wouldn’t want to be a PDVSA employee? They have good wages, health coverage and clinics, education for their kids, housing loans, and generous travel expenses. They have a cushy life,” said Jiménez, who earns the minimum wage, equivalent to 372 dollars a month, and makes as much again from tips.

PDVSA, created as a holding company for the operators that replaced the foreign oil corporations nationalised in 1976, has in the last five years become the main instrument for executing government policies, in parallel to the institutional structures of at least 12 of the 28 government ministries.

When PDVSA managers and employees held a two-month strike in December 2002 and January 2003 in an attempt to force Chávez to step down, the government responded by sacking 18,000 of the 37,000 workers on the payroll. The company managed to recover its former production levels with the workers who remained in service.

But now the company’s payroll has ballooned again. At the end of 2007, PDVSA officially had 61,900 salaried employees, and another 15,300 contract workers. The new functions that are being added to the corporation almost every month explain this growth in personnel.

Originally, PDVSA was meant to explore for, extract, refine and sell crude oil, natural gas, derivatives and petrochemicals in Venezuela and abroad, by itself or in partnerships. The Petroleum Intelligence Weekly (PIW), an industry publication, has placed PDVSA among the world’s five or six biggest oil companies over the past decade.

This ranking is based on statistics: revenue of 96.2 billion dollars in 2007, assets worth 107 billion dollars, reserves of 99 billion barrels of crude and 170 trillion cubic feet of natural gas, potential production of 3.5 million barrels per day (bpd) of crude, and an official figure for actual production of 3.2 million bpd.

PDVSA operates 400 oil fields and 4,800 kilometres of pipelines. It has a refining capacity of 3.1 million bpd of crude: 1.3 million in Venezuela and 1.8 million bpd in its refineries abroad – it owns Citgo in the United States, and is a partner or operator with Veba Oel and Nynäs, in Europe, and Isla, on the Caribbean island of Curaçao.

Around the world, several oil companies have expanded into other fields of energy or the chemical industry, but in the last few years PDVSA’s statutes and functions have changed to include areas such as the food industry, housing and high-level competitive sports, at times even taking verbal orders directly from Chávez on his weekly radio and television programme “Aló Presidente”.

“Day by day we will give more responsibilities to PDVSA, more weight, because it has the means to respond. It is multiplying in order to continue helping the economic and social development of the country,” Chávez said recently.

The government “has made PDVSA into a parallel state that is headed by an energy minister who is at the same time the head of the oil corporation, through which the government controls virtually all Venezuelan oil revenues to foment its socialist programme,” industry expert Elie Habalián, a former Venezuelan governor of the Organisation of Petroleum Exporting Countries (OPEC), told IPS.

Energy minister and president of PDVSA, Rafael Ramírez, said “We have taken on board important and necessary social activities to support the government’s efforts to achieve a more just society and guarantee social inclusion for all, with equality and social justice.”

Among opposition voices, Eddie Ramírez, a former top manager of PDVSA, said that “with such a dispersion of efforts and the conversion of PDVSA into an arm of the government, as well as loss of human talent, investment and innovation are being neglected, and in the long term the firm will go under.”

As well as embarking on electricity generation for the capital city and its surrounding area, PDVSA is involved in growing crops, running sugar mills and providing loans to finance food producers, while managing a network of low-cost markets that distributes 120,000 tonnes of subsidised food products a month, as well as dairy and fruit companies.

It is also involved in environmental clean-up of the Guaire river, which flows through Caracas, and environmental education programmes, as well as light industry, such as companies producing domestic appliances, candles and shoes.

In addition, PDVSA is active in the world of culture, managing a big arts centre in Caracas, refurbishing works of art, organising concerts and supporting the country’s orchestras, while in the field of information and communication technology it responds to the needs of radio stations and television channels, including the government’s flagship project, the regional Spanish-language news network Telesur, run in partnership with other governments in the region.

The Ribas Mission, an adult education plan at the secondary school level, is also directed by PDVSA, and the oil giant supports “Bolivarian” schools that offer children all-day attention and activities, including meals.

Another project involves the so-called Endogenous Development Nuclei (NDEs), which are clusters of economic and social activities within a community (for example, production or services cooperatives, health clinics, or food shops) that encourage participative, self-starting productive initiatives.

PDVSA also fosters community banking and the “April 13th” Mission, which consolidates those projects or works left only half-finished by other “missions,” the name given to the government’s multiple social programmes for the poor.

In healthcare, PDVSA finances the Barrio Adentro (primary health care) and Milagro (eyesight) Missions, as well as managing a hospital in Maracaibo, the country’s second largest city, and a programme to promote breastfeeding.

When IPS visited communities of Barí indigenous people earlier this year in the extreme west of Venezuela, on the border with Colombia, agents of PDVSA’s new Indigenous Affairs Department arrived to vaccinate the children and deliver medicines.

The state oil company has also moved into the territory of several government ministries: the Ministry of Housing, with a programme of so-called “petrohouses” made out of polyvinyl chloride (PVC); Infrastructure, by building and paving streets; and Basic Industries, by leading the negotiations for nationalising cement companies owned by Mexican, French and Swiss capital.

It handles matters related to foreign policy, such as energy agreements in the context of the Bolivarian Alternative for the Americas (ALBA), in which Venezuela is a partner with Bolivia, Cuba, Dominica, Honduras and Nicaragua; and Petrocaribe, an arrangement to sell crude on easy terms of payment to a dozen Caribbean countries.

Furthermore, PDVSA is financing the training centre for the national football team, creating an optimum health programme for high-level competitive athletes, and opening a special office to serve Venezuelan Olympic athletes.

“Social expenditure” by PDVSA has risen from 548 million dollars in 2003 to 12 billion in 2006 and nearly 14 billion in 2007. In the first quarter of this year, it amounted to 2.7 billion dollars, and this figure could increase in subsequent quarters, depending on the international price of crude and the company’s dividends.

The corporation’s consolidated net profit, after costs, investments and taxes, was 6.2 billion dollars in 2007.

Dozens of critics of the government and of PDVSA management, both inside and outside Venezuela, claim that its profits and other favourable figures are basically due to soaring oil prices, which have tripled in less than five years, and not to better management. They have started to compare PDVSA with the declining Mexican state oil company, PEMEX.

Former PDVSA chief economist Ramón Espinasa carried out a comparative study of the region’s oil companies, and concluded that “success stories like Petrobras (Brazil), Ecopetrol (Colombia) and Petroperú attract investment, and their governments refrain from assigning them functions outside of their area of expertise.”

In contrast, “negative examples, like PDVSA, PEMEX and Petroecuador are showing signs of disinvestment and are having difficulties in increasing production,” Espinasa said.

The most obvious aspect of this debate about PDVSA is its production level, officially reported as 3.2 million bpd, but which actually stands at between 2.4 and 2.6 million bpd according to consultancy firms, traders and insurers used by international bodies, including the Organisation of Petroleum Exporting Countries (OPEC), of which Venezuela is a founding member.

Venezuelan analyst José Suárez-Núñez said that plans to reach an output level of 5.8 million bpd in 2012 have been postponed to 2021. The new target for 2012 is 4.8 million bpd, according to Eddie Ramírez, who is doubtful, however, that this will be achieved because of the international scarcity of drills and other equipment.

Venezuelan refineries have not recovered the full capacity they had in the early 2000s, and the country imports some 50,000 bpd of components for petrol that it used to produce locally, although the deficit is partly due to the increase in the number of cars on the roads.

Whatever conclusions are reached by political or economic experts about its successes and problems, PDVSA has a good reputation in Venezuela.

“Its benefits are very good. I wish we were all PDVSA employees. I wouldn’t mind pumping gasoline in the morning and selling chickens in the afternoon,” joked Jiménez.

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