Leader says former PDVSA workers still hope to win battle

May 9, 2003
Thousands of former employees of Petroleos de Venezuela SA, fired for participating in a 63-day general strike aimed at toppling Venezuelan President Hugo Chávez, still hope to return to jobs with the state-owned oil company under "a new leadership, a different leadership" in that country.

Sam Fletcher
Senior Writer

HOUSTON, May 9 -- Thousands of former employees of Petroleos de Venezuela SA, fired for participating in a 63-day general strike aimed at toppling Venezuelan President Hugo Chávez, still hope to return to jobs with the state-owned oil company under "a new leadership, a different leadership" in that country, said a former PDVSA executive at the Offshore Technology Conference in Houston.

Luis Vielma, former managing director of production at PDVSA, said the new company formed by Venezuelan officials after eliminating 18,000 employees and splitting its East-West operations in Venezuela into two separate subsidiaries, is actually "a throwback" to PDVSA's past, when the company was concerned primarily with extracting and selling Venezuela's oil resources.

Former PDVSA professionals—managers and engineers from both upstream and downstream—are looking for work outside of Venezuela, where the unemployment rate is now at 23%, he said.

Exploration and production specialists are seeking jobs through a PDVSA "talent pool," but only under 1-year contracts, "because I tell you we are going to get back to PDVSA," said Vielma. That statement brought most of a large crowd of listeners to their feet in sustained applause at an OTC topical luncheon Wednesday.

However, a Hispanic man, who identified himself as an employee of an energy-related company that "worked for PDVSA before and after" the strike, later peppered Vielma with a list of prepared questions until an OTC moderator called him out of order during a question-and-answer session following Vielma's speech. Among the issues raised was whether PDVSA employees were actually fired or "abandoned your jobs" to participate in the strike. The man also asked Vielma "what do you say" to previously high-paid engineers who now eke out livings "selling cheese" after they "followed you out" on the general strike.

At a press conference Monday in Houston, PDVSA Pres. Alí Rodríguez Araque claimed 18,000 employees left the company "not because of mass dismissals but rather as a consequence of a mass abandonment of their posts" (OGJ Online, May 5, 2003). Rodríguez also said there is a 3-step program in place to make the firm even more productive and profitable in the near future, despite the loss of most of its previous work force of 33,000.

"I never abandoned my place," Vielma replied. He said he and other top PDVSA officials were working under "a contingency plan" to keep the company partially operating during the strike until he was fired Dec. 26, 2002, by Rodríguez personally when he refused to go along with government action against the striking workers.

Newspaper dismissals
Massive firings of PDVSA employees were announced in Venezuela's newspapers; Rodríguez and other officials "did not even call the people" to tell them they were fired, said Vielma. As a result, he said, "more than 6,000" PDVSA workers are currently unemployed who never received any official notification of their termination, not even through the newspaper lists.

Among those fired, he said, were 70% of PDVSA executives, 55% of the company's highly skilled professional and technical workers, and 22% of other workers.

In his response to questions, Vielma said, "You can call (the strike) a political issue, yes. But in Venezuela, you have the political right (to strike)." PDVSA employees were participating in the general strike as Venezuelan citizens, not as representatives of the company, he said, to applause.

Vielma blamed the government for events leading to the general strike, including "a military attack in front of my building in which people were hurt." After that, Vielma said he couldn't stop "Venezuelan citizens who worked for PDVSA" for joining the strike.

"Of course, I care about my people," said Vielma. "I don't work for any company because I need to play a role with my people."

During the Q&A session, another former PDVSA director urged Vielma to discuss a pending contract by the Chávez administration to supply Venezuelan oil to Cuba. However, Vielma declined, saying the "political" topic was not appropriate for the OTC forum.

Prior to the start of the general strike by Venezuelan workers from several industries in December 2002, PDVSA was generally described by many outside observers as one of the most efficient state-owned oil companies in the world, with operating costs competitive with those of publicly traded major international firms. Analysts said the company maintained a lean and effective staff compared with many countries that used state-owned companies to manufacture jobs for their growing ranks of unemployed.

Latin American problems
Vielma said, "Latin America has a lot of problems"—including "undefined economies, large internal and external debt, social and political disruptions, more and more poverty"—affecting "all of the countries from Mexico down to Patagonia."

He said, "Some people don't recognize the dilemma" facing executives of state-owned companies. "I remember one state oil company president who used to say, 'It is easier to run (Royal Dutch/)Shell (Group) than Petrobras (Petroleo Brasileiro SA, Brazil's national oil company), Petroleos de Venezuela, or Pemex (Petroleos Mexicanos SA in Mexico),'" he said, because of the extra pressures on state oil company executives.

"On one side, we have to run the business with a business orientation," said Vielma. "On the other side, we have every day more state control. The government wants to maximize the government's share through increasing tax and royalty participation. But it also plays the role of the shareholder and wants to have a big piece of the dividends."

As a result, he said, "sometimes" national oil company executives "have to think more on the side of government than on business."

PDVSA builds
Still, over the years, he said, PDVSA managed to build itself into an effective company with highly qualified people. It acquired US-based Citgo Petroleum Corp. and entered into agreements with other US refiners because "we did not want to be only crude producers, but wanted to incorporate more value for the corporation and the shareholder," said Vielma. In the process, PDVSA increased its refining capacity to 3.3 million b/d from 1.1 million b/d "to be competitive" with other international integrated companies, he said.

Vielma claimed PDVSA had among the lowest production costs of any major international company.

But PDVSA was "a pain in the neck" to the Chávez government "because as a big company, it was hard for the government to control," Vielma said.

Under its former relationship with Venezuela's Ministry of Energy and Mines, said Vielma, the roles of the ministry and the state-owned company were "very clear," with the ministry determining Venezuela's energy policy and PDVSA implementing its guidelines, "with all the capability to develop its business plan."

Now in addition to the energy ministry, PDVSA answers also to the Venezuela's Ministry of Planning and its Ministry of Finance, with more interference in the company's field operations.

Chávez, a left-leaning former lieutenant colonel in the Venezuelan army who once attempted a bloody coup against the government, was elected president in December 1998. In 1999, when Chávez named a new board of directors at PDVSA, close to 300 professionals—"an important group"—left the company on early retirement. At that time, said Vielma, "The business strategy was redirected. The rules of the game started to change."

The government demanded additional cost reductions at PDVSA. The company's international business investments were questioned. PDVSA's "flexibility to handle OPEC requirements" also was limited, Vielma said.

At the same time, he said, government demands on the company's contributions to revenue increased.

Three boards of PDVSA directors were named in as many years, he said. Venezuela's president names PDVSA's president and board of directors, with four directors selected from among company executives and three picked from outside sources. Directors previously were "selected on meritocracy," said Vielma. "Everyone respected that merit system."

However, he claimed Chávez picked directors who were not qualified. That sparked a coup in which Chávez was briefly deposed last year. When returned to power, Chávez asked forgiveness from PDVSA employees and other Venezuelans. Rodríguez, then secretary general of the Organization of Petroleum Exporting Countries, was picked to head a new PDVSA based on merit.

Still, Vielma said, the government continued to make more demands on PDVSA so that "trust was amiss." When other social and political opposition leaders called for a general strike last December in another attempt to oust Chávez, he said, most PDVSA employees joined the effort.

Contact Sam Fletcher at [email protected].