About transparency, Derwick and PDVSA

      

                      PDVSA's  (dis) organization chart            

Several reports on the nature of the association between Derwick and Associates and PDVSA, the Venezuelan state oil company, have recently been produced by journalists and oil industry analysts. I have commented on some of these reports in my  blog www.lasarmasdecoronel.blogspot.com.   See, for example: http://cronicasvenezuela.com/2013/02/16/derwick-boyd-and-the-need-for-transparency/ . The company has been involved in two important legal actions in connection with its activities. One as a plaintiff against a Venezuelan banker, which was settled out of court and another as a defendant, in an action brought by U.S. former diplomat Mr. Otto Reich, in which Mr. Reich makes  grave accusations concerning  lack of transparency in the contracts signed by this company  with Petroleos de Venezuela and other Venezuelan state-owned companies. 

My purpose is not to take sides in this controversy but to stress the need for transparency and accountability in the Venezuelan petroleum industry. As an oilman of more than 35 years I am naturally interested in the manner this industry is run and feel I have the right and the duty to demand, as a shareholder of PDVSA, that activities in this sector be conducted according to good management practices .

Looking at the Registry of Contractors of Petroleos de Venezuela I can appreciate some of the reasons why the contracts signed by Derwick and Associates with state companies have been subject to criticism.  

 (1), In the registry of Derwick as a public contractor, see National registry of Contractors:  http://rncenlinea.snc.gob.ve/planilla/index/420401?anafinanpub=Y&mostrar=INF  the average number of employees of the company is given as 15. Is this a number compatible with the magnitude, complexity and sophistication of the projects Derwick has been doing for Petroleos de Venezuela, or is the company simply sub-contracting the work to be done with other companies? If the latter, this would not seem to be in the best interests of the state company and the nation.

(2), the registry mentioned above establishes the company’s capital at Bs. 500.000, only Bs. 100.000 paid. Is this a capital that assures clients that Derwick’s obligations in projects of considerable magnitude are sufficiently supported by the company’s assets?  It is not sufficiently safe for the nation  to contract projects involving millions of dollars with companies having a very modest capital.

(3), the registry states that the experience of the company is only one year. This is confusing and suggests that the company has not had enough experience to engage in big, complex contracts. This is more properly an issue that relates to poor management practices on the part of PDVSA but there should be, I believe, a shared responsibility between the client and the contractor.    

(4) In the registry already mentioned it can be seen that two very big contracts, one in Morichal and one in Barinas, were started by Derwick for PDVSA within two days of each other, in November 2010. These contracts call for multiple activities. For example, Proyecto Barinas: Instalación de dos turbinas para generación FT4 TwinPac, asi como el suministro e instalación de los siguientes elementos: Una (1) estación de descarga de combustible liquido, almacenamiento y tratamiento de planta. Dos (2) transformadores elevadores de la Generación. Esta propuesta prevé el suministro de toda la ingenieria, equipos auxiliares BOP, construcción, herramientas de construcción, alquiler de equipos, gestión de proyecto, arranque y puesta en marcha de la obra..  Were these contracts executed with the company’s own personnel or were they sub-contracted? If such were the case, PDVSA would be incurring in poor management practice. To obtain a contract the contractor should prove that it can execute it efficiently with its own resources.

(5), From March to May 2010 four big contracts were signed by Derwick, two with PDVSA and two with Electricidad de Caracas. How could the company supply manpower to all these contracts which had to be executed almost simultaneously? The two contracts for PDVSA were:

Proyecto Furrial: La obra comprende todos los trabajos civiles, mecanicos, electricidad e instrumentación, para el desarrollo de ingenieria, procura y construccion de los trabajos de fundaciones para equipos.Instalación y puesta en servicio de dos transformadores, instalación de interruptores, construcción del sistema de protección catodica, skid de acondicionamiento de gas combustible, fabricación de tanques para almacenamiento de agua sin tratar, construcción de bancadas electricas, construccion de malla y sistema puesta a tierra, cableado electrico para la alimentacion electrica de equipos, trabajos de soldadura, tendido de cables de potencia, entre otras actividades.

Proyecto Las Morochas: Diseño y construcción de las obras civiles, electromecánicas, pruebas y puesta en marcha, incluyendo la procura y suministro de materiales y la construcción de todas las facilidades requeridas para la ejecución de la obra

These contracts would call for multiple, specialized personnel that, according to the registry, the company did not seem to have. Again, I would say that this manner of contracting does not seem to be in the best interests of the nation.

(6), In http://derwickassociate.hubpages.com/hub/Derwick-Associates-Venezuela the company is described in the following manner: “One of the leaders in the energy power-plant field, Derwick Associates is recognized for its experience and expertise. Through years of practice over many different projects, our expert team of project managers has overseen the design, procurement, construction, operation and management of many power-plants across Venezuela. Over the years, these activities have allowed Derwick to acquire experience in: Technical Services…. “.

Considering that the company was initially registered in 2009, less than 4 years ago and that its work for   PDVSA only dates back to 2010 or so, this would seem to be a somewhat  misleading representation of the company’s experience.  

(7), recently Mr. Jose Aguilar has stated that numerous energy contracts signed by PDVSA show gross overcharges. See http://infodio.com/tags/jose-aguilar. Some of these contracts were signed with Derwick and Associates, some with other companies. It would be desirable to have an answer to this claim by Mr. Aguilar, both from PDVSA and the contractors involved.    

  I think it would be good for the nation to know that oil industry contractors and PDVSA deal in a transparent manner. They should be accountable to the people of Venezuela, the real shareholders of the company. It would be greatly desirable to see Derwick and Associates and PDVSA disclosing sufficient information to set the record straight.