Fire Ramírez

Time to move on
Time to move on

Today’s OPEC meeting in Vienna has all the makings of a turning point in the history of oil, and Venezuela.

In agreeing not to cut oil production quotas in the face of a steep price decline – driving oil prices into the mesosphere – the organization has decided that business as usual … is over. The long-term challenge of shale oil will be confronted head on through a price war, and members will defend their market share. Saudi Arabia, in particular, seemed to be saying to countries that failed to save in good times: “tough.”

The meeting was lapidary for the Revolution’s pretension to continue in its failed model. If $100-per-barrel oil is gone for good, we will need to adapt. We cannot continue living on exploding budget deficits, massive state bureaucracy, enormous subsidies, and restricted imports to sort-of make ends meet. Good luck with that.

It’s over, chavistas, it really is. And you know what should also be over? Rafael Ramírez’s career. This is all his fault.

After his demotion a few weeks ago, Mr. Ramírez was kept in the Cabinet for a single reason: the connections he had cultivated with oil ministers through the years. In the last couple of weeks, Ramírez cashed in those chips, taking the unusual move of traveling to countries near and wide, OPEC and non, to forge a consensus on reducing output in order to defend plummetting prices.

Not only did Ramírez fail to get the reduction he wanted – he wasn’t even able to get a symbolic one at all. The markets were saying 2 million barrels had to be withdrawn, but by agreeing to no cuts at all, the Saudis were adding insult to injury.

Not even one hundred thousand barrels less? Hell no, the Saudis could not be bothered to budge, particularly after knowing that price drops are hurting their arch-enemy, Iran.

Ouch. It’s no wonder that Ramírez left like a raging ball of fire, while Saudi oil minister al-Naimi smilingly called it “a great decision.”

Ramírez didn’t simply fail, he was embarassed, and for that, he has to go. He’s been in the Cabinet long enough, and we face a new reality in oil markets, one that he is ill-equipped for. All the goodwill he has accumulated through the years has evaporated, and any remainders are of no use to us now. He has been reduced to a muttering fool, blabbering nonsense about how shale gas is bad for the environment.

Rafael Ramírez, defender of nature. That’s what iot’s come to. Qué pena con ese señor 

We need someone at the helm who can bring in needed investment and change the face of the oil industry for the better. We need someone who understands the long-term challenges we face with shale oil, and can deal with them effectively. We need someone who can convince the dimwits in charge that business as usual is no longer.

That person is not Rafael Ramírez. Enough of this man and his failed policies.

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  1. Still, not to worry, eh? There’s all those billions stashed away in the FIEM, right? I mean … what’s that? They spent it all? You’re kidding! Oh well, then ….

    • Schadenfreude would be all nice’n good dear friend if you did not live in Caracas… I agree Ramirez did so badly he should go. I think he started his diplomatic push WAAAAY too late and also do not believe he was equipped to deal with the new reality that the Venezuela-USA co-dependent toxic economic relationship is unraveling because they have found “someone else” back home. The Arabs get it, the only way to (maybe) get back to the status-quo is a price war and see who remains standing in two years. But you know what is NOT out fo the question?? A bit more of the ol’ ostrichism with maybe a proposal to create a new, ALBA-style “Revolutionary Oil Producing Countries Alliance” or some such to try and get the losing side like Iran and Ecuador to do something. I can imagine the rethoric… “What are we, the revolutionary nations of the world, doing in league with all those backward Kingdoms? Se acabó…” and all that.

  2. Juan, you talk as if the administration in power are anything but the incompetent and corrupt bunch of people who brought us to this mess on the first place.

    • You know what? Someone’s got to say something. If there is one rational person in the government willing to listen, that’s worth my time.

      • Many rational people will listen to you, Juan, the problem is that the irrational ones will not do it. Your thoughts and arguments will convince only those who are already on your side. Sharing your time and words with them is great and we will keep reading you, that’s for sure, but being aware of the communicative limitations of a blog may help you to find a better general frame for your writing.

      • Sorry, Juan, but this is not only Ramírez’ fault. Even if you had had Juan Nagel in that position right now:
        nothing would have changed. Venezuela’s economy was doomed over a decade ago.
        Ramírez is incompetent but so were all the people who had some power over the last 14 years.

  3. Not that I care one whit about Rafael Ramírez’s career, but you are putting all the blame for this on the one guy within Chavismo who actually tried to implement serious structural economic reforms and got demoted for his efforts. Why would you want to make him the scape goat? The blame for this mess lies with whole corrupt regime who squandered the biggest oil windfall ever in Venezuela, starting with Chavez (who is now beyond punishment) and all the way down to the wide-eyed idealists who bought into and wallowed in the populist rhetoric.

  4. But, in the picture above, I love the expressions on the faces of his aides… “What’s with all the long faces? Who died? Oh, right! — your careers and your political movement.”

  5. Well, in the short run how things play out in Venezuela depends largely on how long the reserves will hold. But in the intermediate to long run the saudis are doing all opec members a favor. And, does this mean opec has run its course? Are the saudis going it alone?

    Another thought: Ramirez should have attempted to secure a friendly loan from the saudis, as a consolation Prize. And: Ramirez is just another chavista that allowed pdvsa to be mismanaged. This is just another nail in his coffin.

  6. 100% in agreement with all the above. BTW, Eulogio del Pino should also resign. Being President of PDVSA and yet being benched for these all-important and crucial talks and OPEP meeting is humilliating, to say the least. He wasn’t even included in the delegation as an expert aide (he’s a geophysicist). Hell, I would say “Chao contigo, presidente”…

  7. Hey, living here in the US, I’m really happy with gas at $2.80 a gallon and even happier it might be a long term thing. Perhaps we might be able to enjoy this for a whole year, even longer. It makes life cheaper, transport, food , hey even airline ticket prices could drop. And as a Venezuelan I’m anxious because it will make life a living hell next year for my next of kin but I hope, I just hope the pains endured will lead onto reflection and lots of collective rage, the sort which is historically known to topple unjust tyrannies.

  8. Chavistas stuffing their heads underground claiming this was “el golpe petrolero” in 3, 2, 1…

    I mean, chavismo was warned during years that this would eventually happen, I doubt that they were so naive to believe the high oil prices were going to last forever, or at least 30 years, the amount of time they wanted to keep their power grip on Venezuela to ensure they wouldn’t get any comeuppance at all for their crimes.

    Now the chavismo faces its toughest challenge ahead: Applying the full FMI packet in Venezuela, and surviving the incoming shitstorm that’s gonna hit them fully for doing so, plummeting into the history’s trashcan for ruining the country for decades to come.

    • The ones I’m laughing at in this scenario aren’t the opportunist chavistas but the ideological chavistas (independent of their actions and wether they get swept into the former group), I’m talking about those who preach so fervently about the all powerful holiness that is socialism, who now have to swallow the bitter reality that even tho they can make their precious “Socialismo del Siglo XXI” (patent pending!) work within the confines of our battered country, the rest of the world functions via market economy. If you’re looking for a number lower than the price of oil, I’ve got it for you, it’s a zero, and it’s the number of fucks Saudi Arabia gives.
      Yes our economy will suffer and our quality of life will continue to dwindle, but I see this occasion as a moral victory, the triumph of economic freedom and pragmatism over populism and opportunist parasitism.
      P.S. I vomited a little in my mouth by calling whatever the hell these people are doing our economy!

  9. Well I believe the opposite. Ramirez was the perfect jefe for the Venezuelan oil industry and he had a good record. The Opposition couldn’t have had a better partner. The Venezuelan oil industry needs to go down, further than at present, so that only puffs of gas, hiccups of oil and mountains of sand are seen in the flow lines.
    Yep, no dosh for the revolution. That’s what it’s about. To think otherwise is to be no more than a closet Chavista – or a just a bit confused.

  10. OK, splitting hairs mode on here, but:

    Ramírez should be fired, villified, mocked and possibly jailed, for missing PDVSA’s production-expansion targets EVERY SINGLE YEAR since 2003.

    Holding the guy responsible for what the Saudis or the oil market do or fail to do seems a bit ambitious to me.

    • Agree!!

      JC, apart from what Quico is saying, could you please erase this:

      “All the goodwill he has accumulated through the years has evaporated, and any remainders are of no use to us now.”

      Goodwill and Ramirez in the same sentence do not make sense

    • Yep, basically that. Unless one think Ramirez is Professor X and can brainwash the whole OPEC, this was something outside his control.

      Failing to have Venezuela’s industry working as it should IS his fault. The fact that the OPEC pan is in the Saudi’s hand and they use it has they see fit, is not.

  11. According to many experts , high oil prices will likely come back in a couple of years , its happened before, shale oil will likely add years to crude oil as a basic energy source , the problem is that for a country sunk in the deepest abyss the next years will be hell unless we use the time to clean up our act and rationalize the management of the countrys economy . Big task of course , not that the regime will be up to it , something is got to give.!!

  12. Curiously, Reuters took back its words on Ramirez anger, and they changed them for:

    “Venezuelan Foreign Minister Rafael Ramirez said he accepted the decision as a collective one and hoped that lower prices would help drive some of the higher-cost U.S. shale oil production out of the market.
    “In the market, some producers are too expensive,” he said.”

    Almost every journalist on the field tweeted about his “roja rojita” face, nevertheless. Did he count to ten in the restroom and came back for a polite statement? LOL.

  13. Ramirez has no leverage. What was he supposed to do? For an oil producer used to sane, important people fawning all over the place, that must hurt. More of that to come.

  14. Since regular Venezuelans aren’t going to see a drop of that money anyways, the death of the OPEC is to be celebrated. Also, the death of the myth of the regime’s foreign influence. The big geopolitical players take the decisions, the small ones get told to shut up and deal with it.

    • “The big geopolitical players take the decisions, the small ones get told to shut up and deal with it.”

      Theoretically speaking, yes; but I believe that if Chávez were still alive, things would have unfolded differently for Venezuela. That man had a particular charm, it’s hard to deny it.

      The real ‘Revolución’ died in the same day he died, what we have now is a travesti.

      • A lot of Chavez’s “charisma” was basically propaganda bought with money from the oil boom.

        Because I don’t think for a second that smart countries bought his bullshit for a second.

        Even the guy that Ecuador sent told Ramírez to go pound sand, according to the EFE article.

  15. The big mistake here was not putting someone like Iris Varela in charge of PDVSA. She wouldn’t have suffered a severe case of the vapors in Vienna like Ramirez did. No way. The fire-spitting, loopy-eyed harridan would have made mincemeat out of those Arab sheikhs. Big mistake.

  16. Aside from the subject of RR’s personal political fate , this Opec decision means that the govt is going to be in desperate financial straits this coming year. This might make it necessary for it to consider something that turns their stomach , i.e. to mend fences with the US as much as possible and maybe to ask for help from much scorned international institutions.

    Citgo is not going to be sold at any half decent price with oil prices this low , suspect that Lazard ( Ramirez boys) are just trying hard to land a deal that will get them some fees. There are people in Citgo with Caracas support who dont think the time is ripe to attempt to sell Citgo .

    The Chinese recent release of 4 billion USD was obtained by Pdvsa once again committing to supply China with a hefty volume of additional bls. Dont think that there is much more money coming to the regime from the Chinese.

    • I believe Citgo will be sold, if at all possible, solely to avoid its being attached by Conoco/Phillips in their court award. Just another weasel attempt by Maburro, et al to avoid compensation to those the government has screwed over. The end of this regime keeps drawing closer. Unfortunately, the population will suffer more before it crumbles. Get ready for the “Periodo Especial” ala Cuba amigo’s!

        • Yep, no way Venezuela realizes any proceeds for Citgo. The refineries are forfeit for debts owed, those adjudicated and those pending.

        • The govt wants to sell Citgo but doing it right now at a half decent price is going to be tough with prices falling and Conoco starting a legal battle to have a first claim against the proceeds from any sale so they would be wise to defer any effort in this respect . Exxon tried to do the same before the Dutch British courts and failed , it tried to do so in Europe and not in the US because legally its not so easy to enjoin the disposal of Pdvsa owned companies in the US . (think about it) .

          What cooler heads inside the regime might realize is that for Venezuela the Citgo refinery markeing network is strategically very valuable SPECIALLY were prices are down because it allows Venezuelan oil to continue being sold even where the prices of competitors are lower . In a price war the only way of maintaining a market is by offering to sell at a price lower than that of your competitors , but if you own a market outlet , you can keep a presence in that market whatever the price your competitors offer. Thats what internationalization was designed to do in the first place.

          Not sure that what Conoco is going to get the amount it seeks from the arbitration tribunal , Exxon is an example that these things arent so easy, The coming years are going to be tough for oil companies that dont plan ahead to protect their markets , Citgo is not just a set of refineries , its a door to the worlds biggest most important market. Just the refinary assets alone can be worth a zillion to a producer of heavy crude .

  17. … and all the Saudis can do is sit it out and wait until shale oil production is no more due to production costs? Yeah, right, like Americans are sucking their thumbs …

    • They can afford to wait. But their arch rivals Iran are already squeezed badly, and will be hurt by low oil prices. The more Iran is hurting, the better for the rivalry for dominance in the region.

  18. Ramirez is loyal, that is all that matters. He should not have been sent, it was just that the man that replaced him would be incapable of holding meetings with all these countries. Who knows? Maybe Ramirez will be promoted to Vice President, that is how the failed revolution works.

  19. I’m nothing short of thrilled that Ramirez, for all his contacts and all his schemes, failed to convince the Cartel to cut oil production. It’s high time that these bastards had some pressure put on them. Plus, it´ll bring some comfort knowing that hardcore chavistas like that woman who blamed shortages in State-owned markets on the private sector will feel the full sting of this disaster.

  20. Chavistas can now exhale! Maduro has pronounced that the drop in oil prices will NOT affect the budget:

    The catch? He’s selling what remains of Venezuela to the chinese. He’d also like to remind everyone to “unite in work, in the fight, in sacrifice, and to give yourselves with discipline”. Please follow the signs to the slaughterhouse, single line please, thank you…

    • That reminds me from a guy in noticiero digital that claimed that an opposition government would have to do some speech on the lines of “tighten that ass, people”, but it seems the chavismo itself is doing it already xDD

  21. My comments: This is not something to blame only to Ramirez, this is a problems that has been growing since we put a distance between the Gulf countries and us by getting close to Iran and play political games in the middle east that are way far from our interests (a recurrent problem that comes from the 4th Republic).

    However, i would like to see that the main problem is the fact that all our economy is based on a state monopoly on oil production and whose revenues are handled by a big and fat state, since a long time ago. Pretending that total public handling was “for the best” has proven ti be the dumbest idea: just see the cases of PEMEX and PETROBRAS cases, they show that public handling of natural resources are costly and incentives corruption, but hey, at the end the oil belong to us all… Right… Right?


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