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Hernandez G. at petroleum forum
Private firms seeking to invest
in oil industry will have to wait
By Psyche Pascual
Daily Journal Staff
Private businesses calling
for more opportunities to
invest in Venezue la's pet-
roleum industry will have to
wait until the next adminis-
tration for change, Energy
and Mines Minister Arturo
Hernandez Grisanti said
Wednesday.
The energy minister,
speaking to a group of oil
officials at the Venezuelan
Petroleum Chamber's 10th
anniversary forum, asked for
patience from private oil
companies calling for a
change in the state's
hydrocarbon law, which re-
serves the nation's oil in-
dustry . to government -run
companies.
Although a six-year-old
proposal currently before the
government deserves atten-
tion from members of Con-
I gress, "times like the present
are not the most opportune
for an exhaustive study of
this nature," Hernandez
Grisanti said.
Chamber officials who
spoke at the "Venezuela and
CAP upbeat about future of petroleum industry
■ From Page 1
that the nation's current oil
crisis and liquidity are re-
lated, saying, "If we had not
nationalized petroleum, vve
would have gone through
more difficult times .... Today
our industry is strong and
robust," he said.
The former president, who
began his term in 1975 and
led the petroleum industry to
government control, pre-
! sented an upbeat future for
private businessmen attend-
ing the Venezuelan Pet-
roleum Chamber's 10th an-
niversary forum, called "Ve-
nezuela and Petroleum: the
21st century."
"I believe there's a series of
signs that show a recovery of
petroleum," Perez told a
group of about 200 busi-
nessmen.
The nation's huge reserves
Fernandez raps current PDVSA spending policies
■ From Page 1
petroleum industry are "an
unmistakeable symptom of
the mistakes made in the
economic policies put forward
in the last few years," the
Copei candidate told a group
of oil company officials at the
Venezuelan Petroleum
Chamber's 10th anniversary
forum.
"The effects of this situa-
tion of drainage on liquidity
on our petroleum industry
are not difficult to foresee,"
Fernandez said.
Fernandez's comments,
airrted at private Venezuelan
oil companies who are
clamoring to invest in the
nationalized oil industry,
Natlon
(PDVSA), the state-run oil
company.
''The domestic petroleum
industry must be conceived as
a single unit in which the
private and state sectors are
wed," said Erwin Arrieta
Valera, secretary genera l of
the petro leum chamber.
Private companies already
play a large role in the in-
dustry, supplying a lion's
share of goods and services to
PDVSA's subsidiaries, said
Edgar Romero Nava, presi-
dent of the petroleum
chamber.
An estimated 88 percent of
engineering contracts and 97
percent of construction con-
tracts will be granted to
private industries in 1988
alone, according to figures
Romero Nava compiled.
"We in the Venezuelan
Petroleum Chamber believe
that there already exists a
Arturo Hernandez Grisanti possible participation of the
domestic private sector in
Petroleum: the 21st Cen- areas that are capital and
tury" forum said they wanted techno logy-intensive, (and)
reforms which would allow which require criteria much
domestic companies to invest more flexible on the part of
in companies run by Pet- the state petroleum industry
roleos de Venezuela, S.A . ... " Romero Nava said.
and heavy crude resources in
Despitecriticismof Vene- domestic capital ... have great
the Orinoco petroleum belt zuela's nationalized pet-
will make Venezuela a strong roleum industry, it is going to
petroleum power, _ he said. hold a prominent place well
"These are just not optimistic
into the 21st century, be said.
words, these are the realities
But it is going to need large
of the petroleum wor ld." amounts of capital, both from
foreign and domestic in-
Venezuela must also main- vestors, to assure that place.
tain its role as a member of
To do that, the petroleum
the Organization of Pet-
roleum Exporting Countries industry must "interna -
and increase ties to European tionalize," he said, forming
and United States interests joint ventures with com-
willing to work towards panies willing to foot the bill
higher petroleum prices, he for capital investments.
said. One key to bolstering the
crunch in capital, he said, is to
Perez acknowledged that cultivate the nation's fledgl-
times have changed, howev- ing petrochemical industry
er. The Iran-Iraq war, as well and open investment to
as competition from other oil overseas and national com-
companies, will make it more panies willing to put money
difficult for OPEC to main- into developing new pro-
tain its role as an effective oil ducts.
cartel, he said. "Foreign capital and
drew applause when he change under his administra -
vowed to encourage tion, Fernandez portrayed
participation by private in- the past decade of oil policies
vestors. as bureaucratic and ineffi-
"I imagine a powerful cient. Using figures taken
government that does not from PDVSA's 1989-94 plan,
have a complex about pro- he said current policies would
moting its private companies put the government-run oil
and can stimulate and help company in debt within five
them convert into a fun- years.
damental factor of develop- During 1989 alone,
ment in our country," he said. PDVSA's budget deficit is
Instead of lauding the last expected to be Bs.10 billion,
12 years of nationalization, with an additional Bs.25
Fernandez emphasized the
billion to Bs.30 billion to be
current petroleum crisis. added during the four years
He called for a ''V enezue-
after that, he said.
lanization of the petroleum But the liquidity problem
industry" while still main- does not end there,
taining foreign investments Fernandez said. Central
through joint ventures with Bank figures show PDVSA's
overseas firms. deposits, which topped Bs.17
To back the need for billion at the end of 1 1987
The Daily Journal Page 3
Private firms are particu-
1a r l y interested in
geophysica l exploration and
drilling, two areas which can
be strengthened and de-
veloped by private firms,
Romero Nava said.
Other representatives of
the minerals industry also
called for a clear-cut law that
outlines areas of business ac-
tivities between government
and private ventures.
Amador Hernandez, presi-
dent of the Metallurgy and
Mining Industries Associa-
tion (AIMM), called the laws
governing domestic interests
in nationalized industries "in-
compatible.''
"We need to consolidate
and intensify the interaction
between the public and
private sectors," Hernandez
said.
However, changes will not
be made soon, Hernandez
Grisanti said.
"We respect this
criticism," the energy minis-
ter said. "The state can't
always agree with the plans
of the petroleum chamber,
but there's always a will and a
sensitivity to hear you."
possibilities in these chemical
activities in Venezuela,"
Perez said.
Perez also downplayed
charges leveled by Social
Christian (Copei) candidate
Eduardo Fernandez that
PDVSA is draining the coun-
try of cash.
Perez said that "malevolent
news about illiquidity have
surfaced about Petroleos de
Venezuela, S.A. This creates
uncertainty because the fi-
nancial problems of the na-
tion are known, and the pos-
sibility that (the nation) could
resort to PDVSA's money to
cover it in these difficult
times, would be there." He
said, however, that "it's not
true that we're having dif-
ficult financial times in
PDVSA."
have dipped to less than
Bs.5.8 billion today.
PDVSA's total funds held
in cash and securities, which
totalled Bs.31.1 billion at the
end of 1987, are now just
Bs.16 billion for the first
quarter of this year,
Fernandez said, and it is not
likely to reach a budgeted
Bs.23.5 billion for the end of
the year.
Government officials have
known about trouble in the oil
market since 1982, and a
rebound in the slump in oil
prices is not expected in the
near future, he said.
A drop in world oil con-
sumption, increasing foreign
competition and the Mideast
crisis has only complicated
the picture Fernandez said
RAFAEL TUDELA: Venezuelan consulates and em-
bassies are 'outright discriminatory.' (DJ file photo)
Tudela says gov't hindering
private off shore expansion
By Daily Journal Staff
Prominent businessman
and oil expert Rafael
Tudela urged the gov-
ernment Wednesday to
reverse an obstructionist
policy against the expan-
sion of private energy-
related Venezuelan con-
cerns abroad and offer
them full support in their
export efforts.
Tudela;who is also an millian, equivalentto 3.5
independent member of
the Chamber of Deputies
Energy Committee
charged that most VVene- irnportance
zuelan consulates and em
bassies are "outright dis-
criminatory" and in some
cases even discourage
potential clients from do•
ing business with V enezue-
lanprivate firms.
"While the heads of
state, ambassadors and
consular officials of all
developed nations are
permanently supporting
and promoting their coun-
try's private concerns,
ours not only fail to do that
but look upon the firm that
asks for help with anxiety
and lack of interest,"
Tudela said.
In a speech delivered
before a full house of the
Venezuelan Petroleum
Chamber forum, the con-
gressman warned that the
nation will not succeed in
its attempt to increase
non-traditional exports
without the private sector
receiving "total support"
from the government.
He said that to be in-
ternationally competitive
Venezuela needs to be
competitive within its
boundaries and this was
equivalent to attaining
.
maximum management
efficiency.
"Let us start by accept-
ing the axiom that state
enterprise, because of its
characteristics, will never
be more efficient than the
private enterprise,"
Tudela said.
He charged that state
. ..
companies are receiving
"excessive and unsuita-
ble" government support
such as that which is fuel-
ing the aluminum in-
dustry.
The enormous invest-
ments in the aluminum
and steel industries
totalling Bs.12 billion and
which produced a return
on investment of Bs.400
percent, are "not really
profitable," Tudela said
Because of the vital
electricity
plays in the production of
alurninum, Tudela termed
the aluminum industry
loan front .Japan as a "Ve-
nezuelan subsidy of un-
derpriced electricity" to
the oriental industrial
giant.
"I can assure you that if
Venezuela had invested
the Bs.12 billion in tourist
facilities, the results and
revenues would be ex-
traordinary. Spain re-
ceives three times the
amount of dollars from
tourism that Venezuela
obtains from petroleum,"
the congressman said.
Tudela called for the
adoption of a "realistic"
single rate of exchange
that would stimulate
exports and at the same
time avoid too steep a drop
in real per capita income.
Finally, he urged the
government to do away
with unnecessary red tape
which he said discourages
the private sector's export
drive.
"Venezuela " Tudela
concluded, '
"is at a
crossroads at which it can
choose the road to
becoming the leader of an
impoverished and h0peless
'Third World' or, thanks
to its characteristics
(assets), can take the dif-
ficult decisions that are
required to plunge down
the path leading to the
developed world."