sábado, 10 de agosto de 2013

In Venezuela, a revolution comes-what else- to a full circle

Sometimes I wonder why  politicians define as a revolution an action that should convey  the opposite image, that of deviating from an orbit. A revolution, in astronomy, is a complete cycle that ends at the starting point. In politics it pretends to be a radical departure from the path.

The concept of revolution that is prevailing in Latin America is more the astronomical than the political.  The Cuban revolution is now nearing its complete cycle, getting back to where they were 60 years ago, by becoming, again, a capitalist society.  In Venezuela, the revolution criminally named Bolivarian by its perpetrators is also coming full circle.  Among many reluctant admissions of ideological failure the regime is just starting to engage in a petroleum mini-aperture, which represents the exact opposite of what they claim is their oil policy. This mini-aperture is a pallid imitation of the one undertaken by the pre-Chavez PDVSA that resulted in significant progress in the development of the Venezuelan oil industry. The recent version is a move to allow private contractors to take over the operations of inactive wells, in order to put them back into production. The regime is desperate to increase oil production, something that has not happened during their 15 years in power due to their inept and corrupt management. By opening up to the private sector, although in a limited manner, they are simply using strategies that they had systematically denounced as unpatriotic. In a similar vein, the loans given to PDVSA by foreign oil companies are being put in escrow accounts controlled by the foreign partners, to guarantee that they are not used for different purposes by PDVSA. This is another admission of the defeat of the so-called national sovereignty that the regime had raised as their main banner.  

Yes, the revolution comes full circle. That’s what revolutions are supposed to do! Even if the traveler thinks they are coming to a new place.
As T.S. Eliot said: We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time”

3 comentarios:

Jacob Sulzbach dijo...


You have been predicting for years that PDVSA would have to return to accepted practices of professionalism in the petroleum industry because nothing else will work.  You have specifically mentioned the need for transparency in the handling of profits generated from projects as a precondition for encouraging international investment and that you saw almost none of that in PDVSA's operations under Chavez.

So I congratulate you on seeing a prediction you have been making for some time come true.  That's just one more in a long list.

I will also say that I am curious--not for reasons of politics, but rather from what I know about oil production--as to just where the non-productive wells are concentrated and what types of drilling operations (land-based, marine barge, offshore platform) are involved?  I wonder what it is that made maintaining production of these wells so difficult for the non-industry "professionals" (please do not choke on this Gustavo) who took over after the political purges at PDVSA in the early part of the last decade.

Gustavo Coronel dijo...

Hello Jacob:
The Venezuelan petroleum industry is one of the oldest, becoming important in the 1920's. This means that many of the oil deposits are now pretty senior and offers less economic margins for a large company such as PDVSA, which is not only large but badly managed. What they cannot do profitably a smaller, more efficient private contractor can. There are about 15,000 inactive wells in Venezuela due to many reasons: low production, mechanical condition, need for collecting pipelines, etc. Most of them are inland, easily accessible. I suspect the private contractors take a look at the areas and the wells and say, I can produce these wells for you. The payment involved can be in cash, in oil or both. It is a win-win situation for the contractor and PDVSA.Unless,of course, it become a corrupt practice, with contracts going to friends who simply subcontract the operation askimming part of the payment. There is a joke about a case of food poisoning in Caracas restaurants. Upon investigating, it was found the fish had been sold to different local distributors by an old fisherman from Margarita island. When arrested he said: "You mean to say that they ate the fish? Stupid of them! That fish was not for eating! It was for doing business".
Let's hope this contracting does not become one more case of the fish which is not for eating but for filling someone's pockets!

Jacob Sulzbach dijo...

Thank you Gustavo.

I have seen a lot on the subject of the reclamation of older wells, and even a few small fields, that are being brought back into production here in Louisiana, with similar information coming out of Texas and Oklahoma.  Reclamation has become a significant sub-sector of the petroleum industry down here.