How Venezuela will spend oil revenues

[Louis Proyect <lnp3@xxxxxxxxx>]

NY Times, July 24, 2004
Oil, Venezuela's Lifeblood, Is Now Its Social Currency, Too
By JUAN FORERO

CARACAS, Venezuela - Seventeen months after an antigovernment strike 
crippled production, Venezuela's state oil company, Petróleos de 
Venezuela, has made what analysts call a Herculean return.

Though energy experts say production remains below prestrike levels, the 
oil-and-gas monolith is, once again, one of the world's great producers 
of crude. Its giant refining arm is talking of adding two refineries to 
the three already operating in the United States. The company says it is 
embarking on a strategy, heavily dependent on foreign oil companies, to 
nearly double production by 2009.

All this is part of a grand design made possible largely by sky-high oil 
prices, which have nearly doubled the expected revenue of Pdvsa 
(pronounced peh-deh-VEH-sah), as the company is known.

But while Pdvsa's talk of foreign investment and ramped-up production is 
welcome in the boardrooms of the world's biggest oil companies, in 
recent months much of the new earnings have been siphoned from 
exploration and production projects that some energy analysts say Pdvsa 
needs to recover fully from the strike. Instead, the windfall is 
financing a social revolution long promised by President Hugo Chávez's 
5½-year-old government to extricate the country from its malaise and 
ease life for the poor, an effort that had been hobbled by the strike 
and a 2002 coup that temporarily ousted the firebrand leader.

And with the Aug. 15 recall referendum that could end Mr. Chávez's 
presidency drawing ever nearer, the spending spree - on everything from 
housing to railroads, health clinics and literacy programs - is an 
increasingly important, and successful, tool for solidifying support for 
Mr. Chávez. Recent polls show he could squeak to victory.

Pdvsa's new role has raised eyebrows among oil executives and in 
Washington, which has long counted on Venezuela as one of the four big 
exporters of oil to the United States and which has been hoping Pdvsa 
will help curtail the reliance on Middle Eastern crude.

The company that has emerged from the ashes of the strike that ended in 
February 2003 is nothing like the button-down, corporate-style company 
that in the 1990's was often the No. 1 provider of foreign oil to the 
United States.

Gone is the by-the-book giant, which had $42 billion in sales, according 
to filings with the Securities and Exchange Commission last October. 
Gone is the multinational whose managers once proudly compared Pdvsa to 
Exxon Mobil. Gone, too, are 18,000 experienced executives and managers 
who were fired for their role in the strike.

full: http://www.nytimes.com/2004/07/24/business/worldbusiness/24venez.html
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