De: Gustavo Coronel [mailto:gustavocoronelg@
Enviado el: sábado, 09 de enero de 2016 07:30 a.m.
Para:
Asunto: FW: 40 years of Petroleos de Venezuela
Enviado el: sábado, 09 de enero de 2016 07:30 a.m.
Para:
Asunto: FW: 40 years of Petroleos de Venezuela
Sábado,
9 de Enero, 2016
January
2016 By
Gustavo Coronel
Gustavo
Coronel, is one of the pioneer
explorationists in Venezuela
The idea
of nationalizing Venezuela’s oil
industry had been in the wind
for a few years leading up to
1976, and conditions in the
global oil market lent
considerable momentum to the
popularity of the proposal.
Weighed in the balance of 40
years of hindsight, though,
nationalization has proven to be
nothing short of tragic for the
nation’s oil and gas sector.
The
Road to Nationalization
Meeting
in Caracas in December 1970,
OPEC decided to cut oil
production as necessary to
defend oil prices.
Pressure
for national control of the oil
industry in producing countries
increased to such an extent
that, by early 1972, an
editorial in the Washington Post
warned U.S. readers about
Venezuela’s preparations for a
takeover of its petroleum
assets.
In 1973,
OPEC took a more dramatic step
of actually cutting oil
production to put pressure on
Israel to retreat from occupied
Arab territories. In addition,
it posted a 70-percent increase
in oil prices and imposed an
embargo on oil exports to
countries that were friends of
Israel.
This
geopolitical upheaval coincided
with the landslide electoral win
of Venezuelan presidential
candidate Carlos Andrés Pérez,
who had promised to nationalize
the Venezuelan oil industry.
After taking power in December
1973, he promoted an intense
debate over the pros and cons of
the idea.
At this
point in time, and thanks to a
combination of laws and
government decrees, Venezuela
was obtaining a very large
percentage of the oil industry
income without any risks, since
all investments were the
responsibility of the foreign
oil companies acting as
concessionaires.
Nevertheless,
investments were very low, due
to the political uncertainty
surrounding the future course of
the industry. At the end,
however, the decision to take
over the Venezuelan oil industry
was driven more by political
considerations than economic
factors. Venezuelan leaders
believed complete ownership of
the oil industry was essential
if the country wanted to enjoy
true sovereignty over its
petroleum resources.
As this
political drama was developing,
I was a middle manager working
for Shell Venezuela.
For many
years Venezuelan oil industry
managers and technical staff had
been a highly disciplined group
who did their jobs efficiently,
without getting involved in the
country’s political give and
take. But this time we felt it
was different. The decision to
nationalize the oil industry was
a matter of the most critical
national importance since oil
accounted for almost all of our
national income. We felt, as
Peter Drucker once said about
strategy, that the country “not
only had to do the right thing
but had to do it right.”
One
morning in 1974, over a cup of
coffee with my colleagues
Odoardo León Ponte and Marcos
Marín Marcano, we concluded that
we had to participate in the
debate. We knew more than the
politicians did about the
technical, operational,
managerial and financial
challenges involved in
nationalizing the industry. Why
should we allow them alone to
make decisions of such
importance without our input?
Deciding
to act, we rented a conference
room for 30 people in the
Caracas Tamanaco Hotel and sent
out an invitation to our
colleagues. Half an hour before
the meeting we had about 500
people at the door, struggling
to enter! The owner of the
hotel, Rafael Tudela, showed up
and decided to lend us the
Ballroom at no extra cost. That
night we formed AGROPET, the
Association of Oil Industry
Employees, to participate in the
nationalization debate, and I
was named president.
Predictably,
the political sectors, from left
to right, accused us of being a
front for the foreign oil
companies. We had to endure the
most vicious attacks in which
terms like “traitors” and
“mercenaries” were among the
kindest.
However,
after only two weeks, the
association had 1,100 registered
members and had begun to
participate in the debate. We
went to the radio, to the press,
to television to talk about a
subject we knew well, often
debating live with
representatives of the political
parties.
These
debates quickly brought to the
surface the validity of our
arguments and culminated in an
invitation from President Carlos
Andrés Pérez to meet with us at
the presidential palace. This
meeting was attended by 400 oil
industry managers and
technicians and several of us
made presentations to the
president and his cabinet about
the different issues we believed
had to be faced in nationalizing
the industry.
I believe
this meeting represented a
turning point in the
nationalization process.
The
political decision to
nationalize had already been
taken but the manner in which it
finally took place was largely
the product of our input to the
highest levels of government.
Many of
us felt that the decision to
nationalize had not been the
right one, but we had to do it
right, at least. The political
sector wanted a takeover without
compensation to the foreign
companies, and a nationalized
industry operating with a total
self-sufficiency that was
impossible to attain. We knew
there would have to be a
transition in which the former
concessionaires would continue
to play a subordinate support
role.
The
Difference a Day Can Make
First
and second Boards of PDVSA.
Gustavo Coronel , second row,
back of General R. Alfonzo
Ravard.
The day
before nationalization – Dec.
31, 1975 – all was as it had
always been. On Jan. 1, as if by
magic, the names, logos and
colors of the well-known
international oil companies had
been replaced by those of the
new state companies.
In a
decision that deviated from
other examples of
nationalization, the
organizational model adopted by
the Venezuelan state-owned oil
industry was not that of a
single state company, but a
financial and coordinating
holding company, Petróleos de
Venezuela, and four integrated
operating companies, which would
allow the holding company to
compare their relative
efficiencies.
The
company would be totally owned
by the state, reporting to the
Ministry of Petroleum as the
representative of the
shareholders and was designed,
by law, to be a commercial
enterprise.
In a
surprising move for me, my
family and almost everyone in
the industry, I was chosen as a
member of the first board of
directors of Petróleos de
Venezuela, PDVSA, doubtless as a
result of having led the
association of employees who
participated in the debate.
During a
presentation to the president, I
had said that an essential
prerequisite to become a member
of the board of the new company
was “not to be a politician.”
This made the president laugh
heartily and his ministers
grimace. The president probably
felt that naming me to the board
would guarantee the new company
would not become politicized.
When I
notified Alberto Quirós, my
company’s president, of my new
job he told me: “Gustavo,
congratulations and you are
fired!” and proceeded to give me
a big hug.
A few
days later, when meeting with
the new board for the first
time, President Pérez said to
us, “If you ever receive from me
a request to employ anyone or
assign a contract to anyone, do
this …” and he threw a wrinkled
piece of paper into the
wastebasket.
Getting
to Work
The new
holding company and its
operational affiliates had a
tough job ahead: exploration was
at a standstill, production
levels were reasonable but
needed to be increased,
refineries were bordering
obsolescence, plus technological
and marketing contracts had to
be negotiated and signed with
former concessionaires.
And, to
top it all, we had inherited 14
operating concessionaires that
had to be fused into four
integrated companies. This
process of “rationalization” was
not a simple elimination of some
of the companies but involved a
study of the existing operations
and of the best potential
synergies to be found among the
different companies.
This task
was to be supervised by a
committee of the holding company
and coordinated by one of the
members of the board. I was
chosen to coordinate this
process, which proved to be very
complex, as are all tasks that
involve people.
We had 14
companies, some small, some
medium-sized, some large and,
predictably, each organization
wanted to survive, which was not
possible. We worked
systematically, meeting with the
top management of all the
companies, listening to their
arguments.
This was
a very intense, emotional
process, rich in personal and
even political conflict but also
in demonstrations of true
professionalism and intellectual
honesty. Our work, done in
combination with international
management consultants, clearly
indicated there were three main
companies into which the others
should be incorporated: the
original Exxon (Creole), now
called Lagoven; the original
Shell, now called Maraven; and
the original Gulf, now called
Meneven.
Combined,
they accounted for about 85
percent of total oil production.
Months of discussions and
analyses finally concluded in
the structuring of four main
companies: Lagoven (the previous
Exxon/Creole + Amoco); Maraven
(the previous Shell + Phillips +
Chevron + Sun Oil); Meneven (the
previous Gulf + four smaller
companies); and, finally,
Corpoven, an amalgam of CVP, the
original state oil company, plus
the assets of Mobil, Texaco and
Sinclair.
This type
of organization allowed
Venezuela to escape from the
single state oil company model
that had proven unsuccessful all
over the world: in Indonesia,
Argentina, Mexico, Nigeria,
Brazil, Bolivia and Peru. It was
more costly, yes, but it
preserved the spirit of
competition among the operating
companies and allowed for
comparison of relative
efficiencies.
As one of
the members of the board most
up-to-date with operational
facts, also known for having a
gift for writing, I was chosen
by the president of PDVSA,
General Rafael Alfonzo Ravard,
to write his speeches. He gave
three or more speeches per week
to the most diverse audiences
and would give me the specific
points he wanted to include in
each, while the rest was
essentially up to me. His main
guidelines, which I would have
to repeat as a mantra in every
speech, were about PDVSA’s need
to always:
§ Have
professional management.
§ Be
free from politicization.
§ Enjoy
financial self-sufficiency.
§ Keep
normal, uninterrupted
operations.
§ Possess
a meritocratic organization.
He would
tell me, “Gustavo, these are the
main concepts we have to hammer
into the political minds if we
want to win this fight.”
Coronel,
with PDVSA's President Rafael
Alfonzo Ravard in the cardon
refinery, 1977
For
almost a decade from 1976 the
nationalized PDVSA won that
fight. The company enjoyed the
respect of the political world.
It gained international
credibility and improved in
almost every aspect. Proven
reserves increased. Production
was kept at about 2.3 million
barrels per day. The refineries
underwent a dramatic
transformation, from producing
62 percent of residual fuel oils
to producing 65 percent of
gasoline and distillates, while
accepting a diet of heavier
oils. International marketing
was progressively done in-house.
In 1977 I
was temporarily assigned as
general manager of the Cardón
Refinery, to start planning for
the change in the refining
pattern of this plant. This task
required complicated logistics
and additional human resources
since we did not have enough
engineers in the country. I sent
a team to India where we
recruited a group of (mostly)
excellent professionals who
helped us during this stage.
By 1986
the job in the four big
Venezuelan refineries had been
essentially completed.
The
End of the Honeymoon
At first
imperceptibly, later in a more
pronounced manner, the honeymoon
between PDVSA and the political
sector weakened.
As the
government grew familiar with
the operations of the industry,
they started to see real or
imaginary warts in PDVSA’s face.
Increasing friction appeared
between the company and the
Ministry of Energy and Petroleum
since the ministry staff wanted
to assert their authority at
operational and planning levels
and had never been quite
satisfied with letting the
managers trained by the
multinationals do the job.
Many
influential members of the
political sector felt that
Venezuelan managers, trained by
the multinationals, were not
patriotic enough.
In 1979,
the Venezuelan Society of
Engineers demanded the
Venezuelan oil industry employ
“all newly graduated engineers”
to replace the technical
assistance contracted with the
former concessionaires.
Also that
year, the naming of the new
board of PDVSA had a political
flavor not present before. The
board would now be replaced
every two years, increasing the
tendency to politicize the
organization. From then on the
government would have the final
decision about the size and
contents of the budget of the
company and could assign
responsibilities to members of
the board – clear signs of
political interference.
Hugo
Pérez La Salvia, the new
minister of Energy and
Petroleum, said, “With the
advent of nationalization we
inherited the management of the
multinationals and I think these
managers already had a mentality
derived from their work with the
concessionaires. This situation
must change!”
Although
PDVSA would still work in an
acceptable manner for some more
years, the changes represented
the “writing on the wall” for
the nationalized oil industry.
Instead of public administration
adopting the good habits brought
by professional management to
public business, the bad habits
of public bureaucracy began to
invade the oil industry.
For me
and many of my colleagues, this
was the end of a dream. As we
had feared when the decision to
nationalize was taken, keeping
the oil industry free from
politicization was impossible.
Today, 40
years after nationalization took
place, Petróleos de Venezuela
has been run into the ground.
The government that came in
power in 1999 ended all
pretenses of autonomy for PDVSA.
Oil income started being
diverted into the hands of the
executive without providing
PDVSA the required funds for
reinvestment and proper
maintenance.
The
company was redefined as a
social company in charge of
multiple activities that had
little to do with oil, such as
importing and distributing
subsidized food. Production
levels went down about 600,000
barrels per day as compared to
1998 levels. The number of
employees quintupled. Company
debt went from $2 billion in
1998 to about $70 billion today.
Currently
refineries are running at 65
percent capacity. Much of the
oil exported is going into the
hands of ideologically-friendly
governments at non-commercial
prices. Worst of all, the ratio
of production to proven reserves
is the lowest among all oil
producing countries.
In
particular, the huge deposits of
heavy oil in the Orinoco Belt
area have remained essentially
undeveloped for the last 16
years while the most capable
foreign companies have left the
country.
The
negative results of
nationalization have been seen
in other countries as
illustrated by the examples of
Pertamina in Indonesia, PEMEX in
Mexico, YPF in Argentina and
PETROBRAS in Brazil. But the
case of PDVSA is, in my opinion,
the most tragic illustration of
what can happen to a
nationalized oil industry.
I knew
all along that, in 1976,
Venezuela made a wrong decision
but, together with a large group
of professional managers, did my
best to implement it well. We
nationalized all the risks for
the sake of nationalistic pride.
It could
have ended differently, but … we
are not Norwegian!
VER MI RESPUESTA AL PLANTEAMIENTO DE G CORONEL EN UNA PUBLICACION ANTERIOR EN ESTE MISMO BLOG. S LA POLITICA EN EL PDVSA.
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