Just a few days before a key OPEC meeting, Venezuela President Nicolas Maduro named a military leader the nation's new oil supremo as it grapples with U.S. sanctions, overdue bond payments and dwindling production.
Major General Manuel Quevedo will replace both former PDVSA president Nelson Martinez and oil minister Eulogio del Pino, Maduro said Sunday on the state television program “Domingos Con Maduro.”
“The time for a new oil revolution has come,” Maduro said, waving his hands emphatically as he promised to rein in corruption at state oil producer PDVSA.
Venezuela's government has embarked on a wide-reaching purge at PDVSA, with more than 50 officials of the company and its joint ventures arrested since August. Last week, Venezuela Public Prosecutor Tarek William Saab arrested the acting president of Citgo, PDVSA's U.S. refining arm, and promised to put more executives in jail. The company also asked employees last week to slash costs in half in an austerity drive that reflects the economic crisis that's hitting the OPEC nation.
Spokesmen for Venezuela's oil ministry and PDVSA declined to comment.
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Quevedo was formerly the housing minister and headed up the national social housing program known as “Barrio Tricolor” -- “Tricolor Neighborhood” in English. He will be replaced by General Ildemaro Villaroel Arismendi.
Maduro has been “steadily making the military his co-pilots to ensure that they sink or swim together and that he is coup-proof,” said Helima Croft, a former Central Intelligence Agency analyst who directs global commodity strategy at RBC Capital Markets LLC in New York.
Venezuela is part of a global deal between OPEC members and non-OPEC producers. Led by Russia, the group has voluntarily reduced production since the start of the year in a bid to drain a glut and boost prices. Oil ministers are due to meet in Vienna on Thursday to decide whether to extend those cuts beyond the end of March. Venezuela's internal problems mean that the producer with the world's largest reserves has pumped less than its own target.
According to the latest report from the International Energy Agency, the cuts by Venezuela in October have been the second biggest among OPEC nations compared with a year ago: production fell by 240,000 barrels a day 1.91 million in October, from the same month in 2016. Earlier this month , the consultancy Rystad Energy warned some crude fields in Venezuela may see natural declines of as much as 30 percent next year.
Rumors about the shift had been circulating at PDVSA, but management was surprised by the announcement, said a person with direct knowledge of the matter.
Maduro also announced additional cabinet appointments in a reshuffle that has resulted in other military leaders getting top posts. General Carlos Osorio has been appointed to the ministry of transportation and Jose Vielma Mora to the ministry of foreign trade, among others.
Volatile oil prices have rocked PDVSA, which has seen crude output plummet and its refineries paralyzed. Profit fell almost 90 percent for 2016. Even after paying billions of dollars in the past month to make debt payments, PDVSA is behind on other bond interest payments, prompting credit rating companies to cut the firm's credit to selective default.