PDVSA’s Self-Inflicted Wound

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What do you do when you run a state-owned oil company whose finances are a wreck, is billions of dollars in debt, with sharply declining oil production and in technical default, with lots of billionaires who are nervously tracking your every move and contemplating suing your ass? If you roll like chavismo, you fire the last few minimally competent people left in the company and appoint a non-entity with no experience as their replacement, of course!

Maduro just appointed National Guard general Manuel Quevedo as new PDVSA CEO and Oil Minister, replacing both Nelson Martínez and Eulogio del Pino in one single stroke. It amounts to a military takeover of the company. Martínez and Del Pino were among the last few people left with any knowledge of the oil industry in the company, who gave some assurance to PDVSA’s partners and creditors that the inmates hadn’t completely taken over the asylum. It remains to be seen what will happen with the powerful Simón Zerpa, who, as PDVSA’s CFO, was rumored to be the real power behind the throne.

Several media outlets have erroneously reported that Quevedo is an OFAC sanctionée, but although he was on a list prepared by US senator Marco Rubio, he hasn’t made the cut yet and that’s probably the best thing that can be said about him.

It remains to be seen what will happen with the powerful Simón Zerpa, who, as PDVSA’s CFO, was rumored to be the real power behind the throne.

Until his appointment, Quevedo was Housing Ministry and is a relatively obscure figure within chavismo. His experience in the oil business is non-existent; the guy who will be leading PDVSA in the middle of a default and a staggering output decline probably cannot distinguish upstream for downstream and doesn’t know what an indenture is. And we can now count on the fact that as the drop in oil production continues, corruption will escalate because Quevedo and the cronies he’s bringing along with him don’t know how or don’t want to fix any of this, they just want to get richer.

Yet the move is not as completely deranged as it sounds. Maduro’s hold on power depends on keeping a delicate equilibrium among chavismo’s many cliques including, of course, the military, who are probably demanding more power and money as the situation becomes more dire. Maduro was probably forced to appoint Quevedo and others to PDVSA, to keep the military faction happy.

The predicament is that other pressing goals like a coherent restructuring of the country’s external debt, ending hyperinflation and keeping PDVSA minimally functional are not workable if every top level policy decision is made exclusively to placate one faction or another. As long as Maduro keeps prioritizing his commitments to power cliques over sane policy-making, things will only get worse.

Maduro acts as though he has to choose between either holding onto power or avoiding an economic cataclysm, and his instinct is to always go with the former. That’s a tragedy, but not for chavismo; it’s a tragedy for the thirty million people who have become their hostages.

14 COMMENTS

  1. Chavismo truly believes in itself and its ways. They are still in power and they have this to give them confidence. So they will try to submit their opponent, namely the international financial system. Surely “un general arrecho” can do it, “como el comandante Chavez!”

    Ask Alan Garcia how did it go for him in 1986. Ask the Peruvian people how did the country fair cut off from the financial system.

    • Ask Alan Garcia how did it go for him in 1986. Ask the Peruvian people how did the country fair cut off from the financial system.

      Given Peru’s experience with Sendero and with populist economics, it is no surprise that Chavismo has little support. Peruvians look at Venezuela and say “Been there, done that.” Not to mention that Peru also had 12 years of left wing military rule from 1968-1980.

  2. “either holding onto power or avoiding an economic cataclysm”. No. Again. No. I keep going: it’s really, but really, about retaining power. It has never been about solving people’s problems.

    Do kidnappers care about their victims? Do they care if their victims are hungry or have a headache or even if they die? They only care if some of the victims (or a group of them) organize, grab some weapons and counterattack. Or if the police from abroad comes.

    So “avoiding an economic cataclysm” is not even close.

    • “… grab weapons or the police from abroad come”

      There you have it, people here again advocating violence or a foreign military overthrow (as Drumpf promised). Shameful.

      By the way, putting an oil company in the hands of the people is exactly what is needed. Venezuela provides an example. Capitalism is destroying the earth. A new model is needed. Cudos to Venezuela for attempting that.

      https://mobile.nytimes.com/2017/11/20/opinion/climate-capitalism-crisis.html?referer=https://www.google.com/

      • Dear Commie Judi,
        “Capitalism is destroying the earth. A new model is needed. Cudos to Venezuela for attempting that.” Shame on you for this fake post.

        Socialism and PDVSA are polluting the planet, wasting resources, impoverishing millions, and will never be as efficient as a free market oil company. Capitalism has taken over 1.5 billion people out of poverty in the last two decades. Unfortunately, socialism is putting people into poverty at a faster rate.

        I will pay for you to move to Cuba away from the tourist sites. If you leave before 10 years have passed, you need to write an apology.

      • Obviously Judi is not old enough to remember when the Iron Curtain fell and the world got a glimpse of the environmental hell caused by two generations of commies. But you would think she at least would have heard of Chernoble.

      • Judi

        This regime is a catastrophic failure on every front. Economic, human rights, representative democracy, health, AND the environment. It has only excelled in corruption, destruction, and criminality. The country is still emptying out of any one who can leave, and those left behind suffer misery daily.

        Waste is dumped into rivers, mercury is in drinking water sources near all sorts of mining operations in the mountain, and the state is either doing it or complicity in it (through bribery) etc.

        Open your eyes.

  3. Whats important that as the stench and rot arround Pdvsa reaches its highest points in the publics conscience and Pdvsa is close to a total breakdown , the person appearing at the head not be linked to any of the power cliques that have controlled it for the last decade , Eulogio was probably close to Ramirez and the fired Pdvsa boss (formerly head of Citgo) was close to Cilia so the two of them have been expelled from being figure heads in the regime so as to avoid embarrasing the cliques they belonged to !! Remember political farce is the only game in town whatever the loss and damage to the life of ordinary venezuelans !!

  4. Depending how you see this, the PDVSA thing is:

    a. Raspando la olla

    b. Feeding the tiger so it will eat me last

    c. Hanging there while “el arco minero” begins to make money

    d. Another outrageously crazy thing for the rational people but the new normal of #tropicalmierda

    d. All the above

    Meanwhile, Ramirez is on a crusade to wash his hands and (who knows) setting the stage for the “chavistas criticos” to come back to become the third presidential alternative….you chooosseeee

  5. Seems pretty obvious that most of the CC staff effort is going to the paid sites. Can’t blamed them but it was nice when this site had full voltage. Might need to pony up for the other reports cause Rome is burning.

  6. What a great post. The internal fighting between the chavista factions is one of the main drivers that has gotten us into this hellhole.

    LOL: that he is not on the list that’s probably the best thing that can be said about him. jajajaj

  7. I hope no one really finds it unusual that a military man with no energy experience is at the helm of PDVSA when you have an uneducated former bus driver running the country!!

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