In a surprise move, Venezuelan President Nicolas Maduro named a National Guard major general as the new head of PDVSA and the country's oil ministry. The appointment does not bode well for Venezuela's troubled oil sector and economy: Manuel Quevedo is a former housing minister with no experience in energy, Reuters notes.
The purpose of the appointment seems to have nothing to do with oil. When he announced the change, Maduro urged his new appointee, Manuel Quevedo, to root out corruption from PDVSA. The new minister then tweeted that "We're going to turn PDVSA into the sacred temple of the people!" vowing to bring the company closer to the ideals of Hugo Chavez.
The new appointment follows a string of arrests on corruption allegations, with more than 50 PDVSA executives detained since August as part of the government's "crusade" on corruption. Last week, the Venezuelan authorities also arrested the president and six senior executives of PDVSA's U.S. business, Citgo. At the time, Maduro said these will be tried as traitors. Five of these have dual Venezuelan and U.S. citizenship, but Caracas refused to release the U.S. nationals, with Maduro saying "These are people born in Venezuela, they're Venezuelan and they're going to be judged for being corrupt, thieving traitors." Related: Who Gains The Most From The New Silk Road?
Amid the corruption crackdown, which some see as the government's way of consolidating and strengthening its hold on the country's oil industry, PDVSA launched a cost-cutting drive aimed at slashing expenses by half as the company continues to struggle with declining oil production and unpaid debts.
The company sent to all its divisions and joint ventures a list of reforms, declaring a "national economic emergency". The reforms, however, must not affect daily oil production in any negative way, the memo circulated in the company said.
Some of the reforms involve suspending new projects that have not yet found financing and requiring joint venture partners to submit financing plans for the projects they develop. Videoconferencing will be encouraged, to replace costlier face-to-face staff meetings, and use of PDVSA airplanes and any other international transportation is to be reduced to a minimum.
By Irina Slav for Oilprice.com
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