My comments on an article on PDVSA by the Wall Street Journal

Re: http://www.wsj.com/articles/eulogio-del-pino-battles-to-turn-around-venezuelas-energy-giant-1435794777

In reference to your excellent article on Mr. Eulogio Del Pino I would like to offer the following comments:

1.    Legally and technically speaking PDVSA has no oil reserves, which belong to the Nation. PDVSA is authorized to develop and produce them but they cannot appear as Assets in the financial statements of the company. Furthermore, these reserves are not the largest in the world. The certification ordered by Chavez some time ago failed to comply with the international rules to define oil reserves. What Venezuela has should be more correctly termed the world’s largest oil resources (proven reserves + probable reserves + possible reserves). The graph in the article does not convey the exact situation.

2.    Mr. Del Pino was for several years Vice-president of Exploration and Production of the company and, under his watch, Exploration practically died and Production has either declined significantly (if we believe the IEA and OPEC or remained stagnant (if we trust PDVSA’s official figures that few believe in), at considerable loss to the Nation.

3.    Today PDVSA is a company that cannot be recovered. It has 150,000 employees, owes some $150 billion internally and externally and engages in a multitude of non-oil related activities, from food imports to pig raising and cassava planting. Its “social” nature, defined by the “revolution” cannot be discarded because it is essential to the political philosophy of the regime.

4.    Rafael Ramirez was probably the most damaging member of the Chavez/Maduro government but Del Pino was his very close collaborator and his dismal record cannot be whitewashed.

5.    No one can be so gullible as to think that Mr. Del Pino is going to hit a reset button, after being one of the strongest members of the Ramirez gang. He is a political survivor who will navigate the waters in order to keep in power

6.    The Orinoco project keeps being mismanaged by the association with mediocre foreign companies from Russia, China and other countries ideologically friendly. Little or nothing has been accomplished during the last 16 years of rule by this regime. And raising $274 billion from foreign investors or from the open financial market is science fiction. The logistical requirements to increase production significantly from the Orinoco are beyond PDVSA’s capability. In parallel, their desire for total control is such a core ideological value of the regime that could not be dispensed with, without the government’s political narrative being destroyed.