(Forbes, 28.Apr.2020) — In a total about-face on the “socialism” and “communism” and the Yankee-Go-Home attitude of the ruling Socialists United of Venezuela (PSUV), the country’s beleaguered and bankrupt oil firm PdVSA has apparently thrown in the towel. They think it’s a good idea that the closed economy starts selling some of its oil assets in order to get the oil economy moving again.
Reuters broke the news on Tuesday from Caracas, the nation’s capital.
The article stated that PdVSA recommended forming a committee, spearheaded by president Nicolas Maduro, to restructure the country’s hamstrung oil and gas industry. The goal: allow the private sector to participate more fully.
The move likely comes after Russian and Chinese money has basically deserted Venezuela following an announcement last month by the U.S. State and Treasury Department that designated the PSUV as a narco-terrorist organization working in cahoots with the FARC, an anti-American, Marxist guerilla group that self-funds through the cocaine trade into the U.S.
With Russia and China not wanting to get slapped with sanctions for working with a group whose leader, Maduro, is wanted in connection with aiding and abetting in narcotrafficking, PdVSA has lost its sexiest suitors.
Moreover, Russia and China, like Iran, a distant third place supporter of Maduro, are busy dealing with a public health crisis. Venezuela’s financial problems and its oil is of not top-of-mind.
PdVSA has been in financial dire straits for years, even before oil prices fell into the teens. The company was no better when oil was in the $80s, despite Venezuela’s advocates in Washington continuing to say that the only reason why the company is broke is because of sanctions. PdVSA was already defaulting on debt before sanctions were imposed.
The company produces around 700,000 barrels per day, but has few buyers. Its main market, the U.S., doesn’t want it. China doesn’t need it.
“Venezuelan oil production has stopped being strategic for the world due to the existence of new producers and the precarious state of national oil production,” the PdVSA document seen by Reuters states. “Given this situation, in order to reach the objective of increasing production and returning Venezuela to its role as a global oil producer, it’s necessary and urgent to restructure PdVSA,” the document said.
It won’t be lost on any Venezuela watcher that PdVSA, which flexed its muscles like Schwarzenegger in his “Pumping Iron” days under PSUV found Hugo Chavez, has spent decades telling its workers that capitalism was contrary to any true Venezuelan.
The foreigners were all coming for their oil, no different than the Spanish conquistidores came for their gold.
The foreign-loving, dollar-loving, Miami apartment-owning Venezuelans were part of Venezuela’s post-colonial problems. Those people wanted Venezuela’s natural resources all to themselves so they can oppress the masses, keep them poor in their shanty towns.
That was the story. That is still the story, so how on God’s green earth Maduro and PdVSA management sells this to their employees and to the public will be fun to watch.
But today, as the Reuters report suggests, PdVSA knows that if it wants to grow, it cannot let the government continue to run it into the ground.
PdVSA used to have foreign partnerships. PSUV kicked them out. Now PdVSA, ironically, wants them back. Seeing how PdVSA is imperative to Venezuela’s economy, PSUV will let them back in. If they don’t, post-PSUV Venezuela absolutely will.
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