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Oil zar who ran Venezuela's PDVSA for decade predicts fast demise

Jewel Samad/AFP

Former oil minister Rafael Ramirez speaks from exile in Europe. Sees output shrinking by 600,000 a year on lack of investment

By Jose Enrique Arrioja

NEW YORK
Petroleumworld 05 07 2018

Rafael Ramirez, the once all-powerful Venezuelan oil czar, says the state producer he ran for almost 10 years is on the brink of collapse.

He blames it on a power grab by the government that's after him.

President Nicolas Maduro, an old rival of Ramirez within late Hugo Chavez's inner circle, last year carried out a purge at Petroleos de Venezuela SA that saw many former allies of the oil man go to jail on corruption accusations. Ramirez himself came under investigation and now lives in exile.

“PDVSA may fall into an accelerated spiral downward” from the already low oil output of about 1.5 million barrels a day, he said during an 80-minute telephone interview from an undisclosed European city. He estimates 600,000 barrels a day of production could be lost each year because of a lack of investment.

Ramirez, 54, became oil minister in 2002 during Chavez's regime and two years later started his decade-long tenure as president of PDVSA, while remaining minister. He broke a long-standing separation between the ministry he headed and the company it oversees.

Production at PDVSA has been shrinking since the late 1990s, when it reached almost 3.5 million barrels a day. During Ramirez's time as head of the company, output dropped about 10 percent. It has slumped more than 30 percent since he left, especially over the past two years as the country's economy spiraled deeper into mayhem.

PDVSA's declining production reflects the “lack of knowledge and experience” of the current board of directors and the political infighting taking place at the oil conglomerate, Ramirez said.

The “grave situation” facing PDVSA, he said, is worsened by a recent decree granting overarching power to Major General Manuel Quevedo, who took over as head of the company in November after former oil ministers Eulogio Del Pino and Nelson Martinez were arrested. The decree has given Quevedo “exorbitant, unprecedented powers,” he said.

As a result of the “collapse in production and refining,” Venezuela will increasingly surrender control of PDVSA to international companies operating in the South American nation, Ramirez said.

“Under the argument that we destroyed the company, PDVSA will be de facto privatized,” he said. “It's being taken out of the control of the Venezuelan state.”

People like Luisa Ortega, a former Venezuelan chief prosecutor who split with Maduro last year, say his war on graft is a farce to strengthen his grip over the country, and Ramirez says he's the victim of political persecution.

Two Probes

In December, Venezuela's public prosecutor, Tarek William Saab, announced the opening of two investigations against Ramirez involving an alleged scheme to sell crude oil illegally and a “corruption plot.” He also faces an older accusation from the nation's Congress that $11.3 billion went missing from PDVSA between 2004 and 2014 when he led the producer.

“I can demonstrate that I live from my work,” Ramirez said, rejecting the accusations. “Nothing related to ill-gotten wealth or that I have allowed acts of corruption. The accusations are politically motivated.”

Ramirez resigned from his post as Venezuela's ambassador to the United Nations Dec. 4, claiming he was forced out by Maduro for criticizing the government's economic policy.

Venezuelan bondholders have been stuck in limbo since early November, when Maduro said the nation would seek to restructure its roughly $65 billion of obligations amid a shortage of hard currency he blamed on an international financial conspiracy. PDVSA owes $28 billion, including $842 million due this year.

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Story by Jose Enrique Arrioja; With assistance by Fabiola Zerpa, Noris Soto, Patricia Laya, Andrew Rosati, Ben Bartenstein, and Katia Porzecanski from Boomberg.

bloomberg.com/ 05 04 2018

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