Venezuela: Oil Company Protest Continues

NotiSur - South American Political and Economic Affairs, March 22, 2002 | Go to article overview

Venezuela: Oil Company Protest Continues


A standoff between the Venezuelan government and management at the state-owned oil monopoly Petroleos de Venezuela (PDVSA) over the company's new leadership is in its fourth week. Protesters, mostly management and administrative personnel, are demanding that the board of directors appointed by President Hugo Chavez in February resign.

Disgruntled executives, with the support of Fedepetrol, the largest oil union, claim the appointments were politically based, while Chavez says the protests are political, part of efforts by opponents to destabilize the government. Chavez says he will not reconsider his appointments. "I have always said that PDVSA cannot be a state within a state," Chavez said. "Those who don't agree can leave."

The crisis began in mid-February when Chavez replaced Gen. Guaicaipuro Lameda as head of the oil company because the two disagreed on company policies. Chavez named Gaston Parra to take his place, and named five new board members, out of a total of seven.

Since Venezuela's oil industry was nationalized in 1975, the president of the republic has been in charge of appointing and removing PDVSA executives.

The major complaint by company executives seems to be that the new board members are low-level managers and not qualified. "For us, the meritocracy is an inviolable principal that has been violated," said Juan Fernandez, PDVSA head of corporate finances.

"Lieutenants were promoted to give orders alongside the generals," said Gustavo Gabaldon, a former PDVSA director. "Legally, the president is right, but in practice he has created a serious problem, which is going to cause difficulties in the efficient running of the industry."

The new board members and Parra support the government's policy of strict adherence to production quotas set by the Organization of Petroleum Exporting Countries (OPEC) to keep oil prices up. Chavez was a key figure in working out a series of OPEC cuts that sent oil prices soaring in 2000. But critics say that Venezuela has lost production capacity and market share because of its new OPEC policy.

The protests by PDVSA employees and the publication of newspaper ads supporting the "uprising" have brought sharp responses from pro-Chavez groups both within and outside of the company.

"The PDVSA board of directors is free to resign," said Parra. But meanwhile, "We continue running the industry, whose activity is moving along at full operating capacity." Parra remains confident that the dispute can be resolved. "We have opened a frank and open dialogue with top executives," he said.

Despite Parra's optimism, executives continued their protests and made vague threats of a strike. On March 17, Chavez threatened to "militarize" the company if managers called a strike. "I have the constitutional authority to name the board of directors and absolutely no one can question that," said Chavez. "If they stop work, I will militarize the company."

Chavez said the managers were not working for the good of the company, but to preserve their personal benefits. The military might occupy installations, but they do not know how to run them, responded Mary Lizardo, a vice president at PDVSA's petrochemical division. "It would be very irresponsible to think that the National Guard or any other military body could run our plants," she said.

On March 21, managers and administrators staged a one-day work stoppage, although production was not affected. But the action exacerbated tensions at the company, which employs 40,000 people and is Venezuela's key income source. Still, a full-blown strike appears remote. Some managers have said they would accept a compromise in which additional directors are appointed whom they feel would better represent company interests.

Dispute is part of larger political conflict

The dispute is part of the larger conflict involving organized labor, whose leadership openly opposes Chavez. …

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