Thursday, April 29, 2004

Vzla: Future not so rosy?

Schlumberger, the world's biggest oil field services provider, said Venezuela's oil industry appears to be floundering as a result of mass firings of employees at state oil company Petróleos de Venezuela (PDV) last year, Oil Daily said Monday.

In a conference call on Schlumberger's first-quarter earnings, Chief Executive Andrew Gould said PDV has been plagued by operational and administrative inefficiency since opponents of President Hugo Chávez were purged from its ranks.

Venezuela, a leading supplier of crude to the US, saw its oil industry paralysed in late 2002 and early 2003 as PDV managers, technicians and workers launched a strike against Chávez.

Oil Daily reported that Gould said Schlumberger's recent experience in Venezuela had forced it to adopt a more cautious view on the country's ability to return to pre-strike levels of drilling activity.

"We expect the situation to continue to deteriorate in the near term," he said. "I just worry if they haven't got it together after two quarters, how long is it going to take?"

Gould said that Schlumberger is being paid more slowly for work performed in Venezuela than it was accostumed to in the past, though he noted that Venezuela accounts for only 3% to 4% of Schlumberger's oil field service revenues.

The volatile political situation in Venezuela was also making foreign companies that operate in the country reluctant to commit to investment projects, Gould added.
So, Chavez's threats to withhold oil contracts from the U.S. might be very well caused by his government's mismanagement of Venezuela's oil industry. Of course, Chavez does not have the cojones to say so; instead, he wraps up his insecurities in threatening language that might serve to make him and Venezuela as important as he thinks both ought to be.


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