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  HOME | Opinion (Click here for more)

Michael Rowan: The Opening and Closing of Venezuela's PDVSA
As Venezuela's oil production falls to lows not seen since 1949, Latin American guru Michael Rowan compares the PDVSA of 1998 when Chavismo arrived to the disastrous shell of PDVSA today.

By Michael Rowan

Looking back 20 years, it’s interesting to compare PDVSA’s CEO in 1998, Mr. Luis Giusti, to its CEO in 2018, Major General Manuel Quevedo. The comparison describes well what Venezuela wanted to be in 1998 and what it is striving to be in 2018, the lesson being: be careful what you ask for, because you might just get it.

Production. Giusti was producing 3.6 million barrels a day very profitably and planning to reach 5mbd by the early 2000s. Quevedo is producing 1.4mbd today unprofitably and could fall below 1mbd in coming months.

Knowledge. Giusti internalized the science, information technology and global market of oil from exploration to wellhead to gasoline pumps worldwide. Like his revolutionary predecessors, Quevedo is suspicious of any information from outside the cult of personality to which he has pledged his total loyalty; and may not realize he is running a company not a battalion.

Meritocracy. Giusti rewarded and recognized independent employees, partners and suppliers for productive performances. Quevedo, like his military predecessors, is loyal to his ideological superiors no matter how ignorant they might be about the oil business.

Transparency. Giusti was transparent with all stakeholders including partners, suppliers and international markets; Quevedo is secretive and suspicious, so very little is known about PDVSA including production, sales revenues, operations or where the $300 billion in revenue missing from the accounting books over the last 20 years might be found.
Win-Win Strategies. Giusti created win-win deals with his shareholder, partners, employees, suppliers and customers, which is how global companies get to be very big. Quevedo is applying old lose-lose strategies in which Venezuelans, customers, employees and the environment, are treated like adversaries, which is why PDVSA is getting smaller by the day.

Lawful. Giusti honored domestic and international law and was rewarded with global credit and profits which strengthened his company and country. Quevedo dishonors domestic and international law and contracts which weaken his company to avoid bankruptcy and his country to avoid regime change. Are Venezuela’s real rulers – China, Russia, Cuba and Iran – going to save PDVSA?

Democracy or Military Dictatorship? From 1958 to 1998, Venezuela’s democracy appointed smart civilians who improved PDVSA’s performance over time; from 1999 to 2018, Venezuela’s military cult has bankrupted the company and morphed Venezuela from the richest nation in Latin America to a basket case like Cuba. And they’re proud of it! Go figure.

Michael Rowan is an author and political consultant who has advised presidential candidates throughout Latin America, including Governor Manuel Rosales in Venezuela, President Jaime Paz Zamora of Bolivia and President Oscar Arias of Costa Rica. In the U.S., he has advised winning candidates in 26 states. He has been an award winning columnist for El Universal, The Daily Journal -- predecessor to LAHT -- and the Latin American Herald Tribune since the 1990s. He is the author, with Douglas Schoen, of The Threat Closer to Home - Hugo Chavez and the War Against America.


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