Energy Minister Blames Venezuelan Media for Fabricating Oil Industry Crisis

The Minister of Energy and Petroleum accused Venezuela's media and opposition interests of engaging in a difamation campaign against the country's state-owned oil industry. According to the Minister, rumors of lay-offs and misappropriated funds are all false.

Caracas, Venezuela, May 6, 2005—In a press conference held today, PdVSA President Rafael Ramirez cleared up misconceptions about the production level of Venezuela’s state-owned oil company, denied that it is militarizing oil installations, and clarified rumors and allegations about sabotage and workers’ layoffs. A group of PdVSA workers, including union leaders Hector Ricón and José Arria, also spoke about the current national situation of the petroleum industry.

In his opening statement, Ramírez affirmed that “PdVSA has been submitted to a disinformation campaign.  The people who destroyed this country during the national strike are once again trying to create a climate of uncertainty. It is a crime.  They no longer have the right to talk about petroleum.  We have the receipt of how much damage was done.  They should dedicate themselves to prepare to go before a judge for their actions during 2002-2003.”

A series of articles in Venezuela’s national media appeared recently in which former managers claimed that large layoffs were ocurring and that the oil company was not turning over its dollar revenues to the Central bank, as it is supposed to. Also, opposition leaders insist that Venezuela’s oil production level figures are far below those provided by the government.

The union leader José Arria supported Ramirez’s statements about a disinformation campaign. “We reject the campaign against PdVSA.  People of the CTV as well as the group of leaders in the December 2002-February 2003 national oil strike do not have the moral ground to say what they are saying.  The majority of leaders that are saying these things are outside PdVSA; they are outside of reality.  These are people who feel that they are loosing their privileges,” he asserted, adding, “We want to respond to these sabotage seekers.  We want to say that the people are ready to defend our petroleum.  There is no national oil strike currently going on. However, if it gets to that point, our answer will be two times what it was in December, 2002. We had the largest crisis in the history of our country – it was like a natural disaster.”

Ramírez explained that after the first quarter of 2005, PdVSA reviewed and evaluated its figures.  The company, which has an obligation to produce 3.4 million barrels per day (bpd), found that it was failing to meet this goal by over 100,000 bpd. Ramírez affirmed that this is a problem “principally in western part of the country,” in Zulia, and noted that “we have reached [our goal] in the rest of the country.” The PdVSA President noted that operations in Zulia should be yielding 1,076,000 bpd, however, they are only producing 960,000 bpd.

Ramírez, who is also the Minister of Energy and Petroleum, stated that this underproduction is the result of “extended, constant and systematic work of sabotage against our installations,” in Zulia.  According to the PdVSA President, this sabotage affects electric and gas systems, distribution, production and infrastructure. “This is not happening overnight and it will not be fixed overnight.  This loss is about 25 million barrels of petroleum. We are taking care of this now because now we have the information. We are saying it and we are confronting it… I believe that PdVSA is the most scrutinized company in the world right now.  We will not permit that this behavior is repeated.”

The sabotage caused so much damage that PdVSA and commanders in the Armed Forces designed a special operation called “Black Gold.” Ramírez explained that Black Gold is an “extraordinary reinforcement of security, intelligence, prevention,” to be carried out by the Armed Forces. However, he denied that in any way, shape or form is PdVSA militarizing itself. This is “absolutely false,” declared the PdVSA President, who then proceeded to invite the press to visit the petroleum installation to see for itself.

Ramírez explained that the security of PdVSA operations in Zulia will be the responsibility of the National Reserves.  “We believe that there is not a better security that what the people can give us. Our workers have a lot of morals and a lot of willpower.  PdVSA is facing any problem and we will confront these problems.”

“We are close to an electoral year and we believe that they could be trying to create a crisis,” added Hector Rincón.  “This worries us, the workers…Our position is in favor of the workers, the industry and the country.  Today we are the new petroleum industry.”

When asked if the CIA was in Venezuela, Ramírez responded that “we have certainly detected irregularities, abuses, people taking photos, etc.  However, if the CIA is in Venezuela, it is not PdVSA’s responsibility to deal with it,” explaining that other Venezuelan entities are in charge of this.

According to the PdVSA President, examples of corruption include unjustified contracts being made and businesses that resell materials.  “We have photos of people cashing checks for falsified contracts…We have videos of people who dedicate themselves to this lucrative operation in Zulia,” he stated.

Ramírez also denied the reports about PdVSA not turning the earnings that PdVSA generates over to the Venezuelan Central Bank. “This is false,” he emphasized, adding that if PdVSA did not turn over the money, Venezuela would not be able to sustain itself. He affirmed that part of this money is designated to repair “installations in Lake Maracaibo that have been abandoned, electric systems that are not reliable, gas systems that need to be repaired…In over 25 years we have not invested in electric systems because we were going to privatize them.  President Chávez has set aside 600 million dollars to be invested in these systems.”

Ramírez also denied that PDVSA is engaged in massive layoffs.  Venezuelan newspapers had reported that PdVSA had fired 12,000 workers in the western state of Zulia alone.  “False,” assured Ramírez, “completely false.”

Ramírez explained that 8,800 workers’ contracts had expired on the 31st of April, 2005. 4,400 of these contracts were renewed, the exact number of workers needed. “We are in the right and the obligation of revising our contracts in order to assure that they are to our benefit. We evaluated the expertise of these workers and employed what we consider to be the most capable workers. We are in close contact with the workers to ensure that they do the best possible performance in order to make this the best nation possible.”

According to Ramírez, PdVSA currently employs 44,000 people:  32,000 permanent workers, 6,000 hired through contractors and 5,400 in dispute. He also assured that PdVSA would “absorb” all of the workers that had participated in the contingency of 2002.  For example, the 5,500 workers would be put into an administrative system of employment called that “System of Democratization of Employment” and would be rotated in depending on priorities of PdVSA for future projects. “As we have offered, they are going to enter in our petroleum company in a permanent way, now that we have to award and honor their commitment to the new PdVSA.”

“There was a 1:1 ratio of executive to worker in PdVSA of 2002,” said Ramírez.  “This was extremely expensive due to the overhead. There were 4,000 managers in 2002 and now there are 2,000,” he added.

See also:  Armed Forces Protect Venezuela’s Oil Fields