Most threatening oil crisis brewing in Venezuela

Oil experts in Houston and elsewhere are worried about the possible impact of an oil disruption from the Middle East. But there is an emerging crisis in the Venezuelan oil industry that could have a far more dire and lasting impact on the U.S. petroleum supply than any Mideast oil embargo.

The United States imports 1 million barrels of crude oil plus an additional million barrels of refined products each day. The impact on my country of Venezuela is likely to be far worse. As of Tuesday, the entire country was shut down.

Last week, the public affairs director of Petróleos de Venezuela, or PDVSA, and another executive were fired "for cause." Monday, five more senior executives were fired and 12 others were forced into early retirement. Some refineries have been shut down completely and crude oil production will most certainly be affected. At issue is the blatant and very simplistic politicization of the company, a venerable institution in Venezuela and the source of much of the country's income and economic activity.

PDVSA has long been a beacon of hope for the country, a progressive enclave of professional people where meritocracy ruled. The best and the brightest of my country found their professional fulfillment by working for the company. It was not just the wealth, which was and is considerable, that the company generates. It was also a work ethos, a culture whose emulation was intended to spring the entire nation from the traditional paternalistic and empty populist nationalism, so prevalent throughout South America, and into the modern world. Tremendous progress was made -- or at least we thought so.

Then came the present government, headed by President Hugo Chavez, who likes to think of himself as the modern reincarnation of Simon Bolivar, the legendary South American revolutionary. Chavez believes that somehow wealth is there for the splitting among the "masses." How wealth is to be generated never enters the argument. Have we heard this before in the last 100 years? Have there been any successes to show, anywhere?

"Revolutionary" ideological purity is a linchpin of the Chavez government's appointments. PDVSA, with its imposing presence in Venezuela,was accused by then candidate Chavez of being a "state within a state."

Immediately following his election, Chavez's first act was to replace the old upper management with a new one. This was understandable for a national oil company and did not raise too many alarms. Indeed, his appointee was a very legitimate man, Roberto Mandini, who had been the president of the PDVSA U.S. subsidiary, Citgo, and whose credentials included the fact that he was not tainted in Chavez's eyes by an intimate association with the previous PDVSA president, Luis Giusti, a man who was anathema to the Chavez people.

Mandini did not last long. Seven months later, he was unceremoniously canned and replaced by a highly unqualified ideologue, Hector Ciavaldini, who started a process of "purification." Ciavaldini, a relatively low-level ex-PDVSA employee, had no discernible status among PDVSA professionals or managers. His only qualification was his allegiance to the government (and his animosity toward the old management). New appointments, not just to key positions, but also to run-of-the-mill, routine jobs were, firstly, ideologically based. Merit was only as an afterthought Government loyalist vigilantes were installed in the board of directors.

Both Ciavaldini's management, but especially his moves, brought about a quick reaction among PDVSA professionals and a large public outcry. What was happening was a stark departure from decades of practices. Continued unrest brought another swift change. Ciavaldini was replaced by an army general who had no previous connection with PDVSA. Gen. Guaicaipuro Lameda took over as PDVSA president in October 2000 with some obvious apprehension by the staff. Yet, his tenure was probably not what the government had expected. From the beginning, one of his stated tasks was to depoliticize the company. He ran the company as a progressive entity that responds to internationally recognized business practices and not as a government fiefdom, one intended to respond to ideologically tainted objectives.

Then, about a month ago, the government replaced its own hand-picked president with Gaston Parra, an academic with no knowledge of the workings of a petroleum company. Parra's only real claim to fame has been essays lambasting essentially everything that Venezuela has done for the past 40 years.

Immediately, 44 senior executives (practically the entire upper management of the company) signed a public statement of "no confidence" in the new appointment.

I am certain that the unfolding drama will lead to a crisis whose dimensions and repercussions are hard to fathom. Americans should pay close attention to what is happening in the Venezuelan oil industry. Potentially, this is no less a national security problem than the Middle East.

Venezuelan army general condemns President Chavez for 'passive' attitude toward Colombian rebels -- Wed Apr 10, 3:22 PM ET By FABIOLA SANCHEZ, Associated Press Writer [Full Text] CARACAS, Venezuela - Two Venezuelan military officers rebelled Wednesday against President Hugo Chavez, one of them claiming Chavez had ordered the National Guard to use force to remove protesters from oil monopoly headquarters.

National Guard Gen. Rafael Damiani Bustillos claimed Chavez had ordered guardsmen to remove thousands of protesters who are supporting dissident executives at the oil monopoly Petroleos de Venezuela. The executives want Chavez to rescind top managers he appointed on Feb. 25.

Government officials couldn't immediately be reached by telephone to comment on Bustillos' claim.

Guard troops took positions around the building in eastern Caracas on Tuesday to protect it.

"The president of the republic ordered the National Guard to use force to remove people in front of (the building)," Bustillos told Associated Press Television News.

He urged officers not to obey "a presidential lunacy that is going to (ruin) the name of the armed forces, especially the National Guard." He also appealed for calm, both from the opposition and the government.

Interior Minister Ramon Rodriguez Chacin said earlier Wednesday the government would take any action "under the law" to preserve order.

Also on Wednesday, an army general whose duties included patrolling part of the western border with Colombia accused Chavez of taking a "passive" attitude toward leftist Colombian guerrillas.

Brig. Gen. Nestor Gonzalez Gonzalez said at a Caracas news conference that Colombian guerrillas maintain camps along the remote frontier and that Chavez's government was lying when it denied such camps exist inside Venezuela.

Gonzalez Gonzalez accused Chavez of refusing to govern democratically, of sympathizing with the rebels and politicizing Venezuela's military.

"Mr. President, you have betrayed the country," he said. "Respect the national armed forces."

Defense Minister Jose Vicente Rangel said he had no immediate comment.

Gonzalez Gonzalez is a former commander of army schools and of forces operating in the western state of Tachira, along the Colombian border. He was relieved of his command in January after news reports that he urged fellow generals to refrain from politics.

Last month, Colombian Gen. Martin Carreno said rebels from the Revolutionary Armed Forces of Colombia, or FARC, had camps inside Venezuelan territory and had attacked his forces from the other side of the border. The March 20 battle left at least 41 soldiers and rebels dead. [End]

Venezuelan Army General Nestor Gonzalez departs after speaking to the press, April 10, 2002. General Gonzalez sharply criticized President Hugo Chavez, accusing him of betraying the nation with his leftist policies and of lying about the presence of Colombian Marxist guerrillas in venezuelan territory. The denunciation comes at a time when the populist leader is facing a national anti-goverment strike by labor and business opponents and an escalating protest in the state oil giant PDVSA. REUTERS/Stringer - Apr 10 3:05 PM ET

You said in your earlier post.... "Would that mean less un-needed driving? or smaller more fuel efficient cars?"

"I can live with that! WASTE NOT...WANT NOT."

Why the choice between "un-needed driving" (whatever the hell you mean by "un-needed driving!") and fuel efficient cars?

Good for you by working at home, but as an older retired person, I resent the hell for anyone to suggest that I should cede more of my rights and freedom to anyone for what they believe is "saving" (WASTE NOT...WANT NOT) for the sake of the environment or political correctness.

Maybe your little remark just set me off because I am sensitive against anything resembling political correctness today , but I am damn tired of Americans willing to cede their (and mine) choices for political correctness. Oil is the ultimate political weapon.

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Most threatening oil crisis brewing in Venezuela

Drill ANWR!