MARIANNA PÁRRAGA
EL UNIVERSAL

In the blink of an eye and as part of the new role of Pdvsa, last May 1st the joint ventures that replaced the partnerships at the Orinoco oil belt turned one year.

Rafael Ramírez, Minister of Energy and Petroleum and Executive Director of state-run oil holding Petróleos de Venezuela strikes a positive balance of this first year.

Oil output is rising, after reversing the cuts under the Organization of Petroleum Exporting Countries (OPEC) implemented at the Orinoco oil belt. However, payments to joint ventures are overdue.
Most importantly, nationalization closed the oil opening. This has enabled us to take the control. Pdvsa was not operating (…) it had surrendered the fleet, the docks…

Pdvsa former management identified these activities as non-essential.
It was very essential, as well as ports, the fleet, steam drive and, lastly, operations. Pdvsa had a stake neither in operational agreements nor in the belt. Further, new developments, such as offshore, would not be operated by Pdvsa. The point at issue is that Pdvsa recovered the control of the land. In an oil-producing country, we need companies that know how to drill, instead of companies that hire Schlumberger to drill or Halliburton to interpret a reservoir. Such a control enabled us, as the state, to reestablish the whole tax system. Since 2002, we have accounted for additional USD 40 billion. This amount would have been enough to finance a coup. Now, we operate. We know where the numbers are and opened a huge black box that had obscure segments for the company itself.

However, what Pdvsa knows now continues being unknown for the public opinion.
O.K. We will work on it. Do not forget that the oil sabotage was not a trifle. As late as this year we managed to update the financial information. From now on, we will release this information quarterly.

Cannot we say exactly the same thing right now?
No. Everything should pass through the ministry.

You continue being both minister and Pdvsa CEO, that is, the same decision maker.
Each institution plays its role. The state has been questioned for choosing the partners of the blocks based on its geopolitical interest. Yes, it is a more transparent way. Formerly, the meritocracy decided at will: there were Pdvsa sectors on behalf of Exxon, of Shell, etc.

And now there must be on behalf of China, Malaysia, and so on.
No, there are not. There is an orientation for we to take part in the state geopolitical game; we are a tool for it.

What if the strategic partner chosen by the state shows a poor technical performance?
It does not pass. Giving rights to certify reserves in an area does not imply immediate rights to develop the area.

How will the method to access the oil belt be?
It is delegated to the state.

According to the Hydrocarbons Law, in the event of national interest, the state shall choose partners in a discretionary manner.
And then it goes to the National Assembly and the Council of Ministers.

Trade up the sleeve
Ramírez deems it meritorious not only the control exerted nowadays by the state over the oil belt assets, but also over the commercial policy, including the destination of exports.

Is there any plan to change the destination of the upgraded oil from the belt, which goes almost completely to the United States?
Absolutely. The destination of the belt outgoing barrels will be diversified, without violating current agreements. The people of Reliance (India) were here. They have capacity to process 5.5 million bpd. Our goal is to place there 600,000 bpd of heavy crude oil.

We cannot forget about the competitive advantage that means sending oil to the United States.
I take issue with this advantage, because, today, a VLCC (very large crude carrier) with a capacity of one or two million barrels generates economies of scale. In an increasingly global world, proximity is questioned. We have shown with China that a lot can be sent indeed.

Have the operations of joint ventures improved?
We are producing 600,000 bpd, which is almost the top amount. Multinationals had convinced this country that we lacked technical skills. Exxon produced in Cerro Negro a 16-degree crude oil that nobody could handle. We took it up to 18 degrees and will take it to 20 degrees in order to send it almost anywhere.

Still, there is delay and the term to implement the plans moves us farther from countries like Brazil.
Brazil has an industrial wonder behind. For this reason, we worked hard to assemble a rig. Bringing it in would be much easier. We had to stay in the waiting list of pipes manufacturers to lay a gas pipeline. We had to bring the last ones from Singapore.

How does the Cabinet assess these issues?
Hence the need for nationalization. We must take control. How can we tell Sidor to put aside its multinational strategy and take up our strategy? Sidor left the pipes plant in a box. We sell them iron at subsidized prices; they send it to Mexico, and the pipes are made there.

Is state monitoring failing?
(Central Bank of Venezuela ex director Domingo) Maza Zavala said that Venezuela is not even a developing country, but a peripheral country which implements others' policies. We buy USD 300 million in pipes every year. This is an attractive cash flow for any manufacturer.

But if you talk businessmen about joint management or seizure, how can they have assurances for investment?
Are you to sign with blood and promise not to touch them?  At the oil belt, for instance, almost all the managers of multinationals left. They were wrong, because they failed to understand that this government came to remain. Some companies even plotted against it and we have found on our way who was with us and who was not.

Was it preferably for these managers to accept a 70-percent cut in their wages?
We offered them a bonus package for a portion of their wages; but people make their own decisions.

What are the plans at the Orinoco oil belt?
All the companies that agreed to turn into joint ventures will receive additional areas.

Are these areas defined?
Yes. Now, they should pay for the sharing bonuses for the new areas. There will be no public auction in this case. A list of five companies can be prepared.

Translated by Conchita Delgado