Thursday, April 24, 2003

The New York Times

February 18, 2003
Venezuela Says Oil Industry to Rebound Soon From Strike

BOGOTÁ, Colombia, Feb. 17 - The state-owned oil company in Venezuela,
though hobbled by a faltering 78-day strike by oil workers, could be
producing 2.8 million barrels per day within a month, Venezuela's quota as
set by the Organization of the Petroleum Exporting Countries, the
president of the company said today.

Reaching 2.8 million barrels per day would be a milestone for the
state-owned company, Petróleos de Venezuela, once the world's
second-largest oil company and a major supplier of petroleum to the United
States. The company used to produce 3.1 million barrels a day until an
antigovernment strike paralyzed production, devastating Venezuela's
economy and severely testing the leftist government of President Hugo

The announcement by Alí Rodríguez, president of the company, was quickly
challenged by dissident oil executives who on Dec. 2 led a walkout of
thousands of workers that continues to this day. The walkout was part of a
nationwide general action, but the strike in the other sectors fizzled out
earlier this month.

The government and the opposition agreed today to an eight-point
resolution to reduce tensions, the first development in three months of
talks guided by the Organization of American States, Reuters reported,
quoting a source close to the talks as saying, however, that a deal to end
the conflict seemed no closer.

The striking oil executives say that production stands at 1.4 million
barrels per day, and that reaching 2.8 million per day will take many more
months because Petróleos de Venezuela lacks the managers and technicians
to reactivate the industry quickly and properly. Mr. Chávez has fired
nearly 13,000 striking workers, many of them senior executives and highly
trained engineers.

"Without these people what will Pdvsa do?" José Toro Hardy, an oil analyst
and former company board member, said in a recent interview, using the
name by which the company is widely known. "Instead of producing 3.1
million, it could produce 1.5 to 1.8 million."

Indeed, oil analysts outside Venezuela say Petróleos de Venezuela would
probably never again be the same giant it once was because it has been so
hobbled by the loss of qualified workers, the damage to its reputation
caused by the strike and financial losses estimated at $3 billion.
But Mr. Chávez's government has touted its efforts to restart the oil
industry, saying the company is now producing more than two million
barrels each day as blue collar workers returned to their jobs. Today, Mr.
Rodríguez also announced that the company would soon be meeting domestic
demand for gasoline.

Mr. Rodríguez, and other managers at Petróleos de Venezuela, are going
through with a restructuring of the company that they say will see it
split in two. The plan is to cut jobs and streamline operations, which has
prompted speculation that the company's refineries in the United States
could be sold.

Today, Mr. Rodríguez denied that the government was considering selling
those refineries, operated by Citgo, but he did say that Petróleos de
Venezuela was reviewing all of its worldwide assets to determine if any
should be sold. "At the moment, we are in the process of a review of all
of Pdvsa's businesses, domestic and international," he said. "Once that
review has been completed, once we have a new business plan set out, which
is being drawn up, then we will make the decisions about businesses at
home and abroad."