Venezuelan President Nicolas Maduro on Nov. 26 tapped a National Guard major general to lead state oil company PDVSA and the oil ministry as the OPEC member labors under near 30-year lows in oil production.
Industry analysts and sources said the surprise appointment of Manuel Quevedo, a former housing minister with no known energy experience, was a bad omen for the country’s already deteriorated oil industry.
Quevedo takes over from two industry veterans to become one of the most powerful players in the country, which is home to the world’s largest crude reserves. He will have to tackle corruption scandals and an attempted debt restructuring within the context of a deep recession and debilitating U.S. sanctions.
“The time for a new oil revolution has come,” leftist Maduro said in his televised address Nov. 26, urging Quevedo to purge PDVSA of corruption.
Last week, six executives from U.S.-based Citgo Petroleum Corp., or Citgo, a Venezuelan-owned refiner and marketer of oil and petrochemical products, were arrested in Caracas on graft allegations.
About 50 officials at state oil company PDVSA have been arrested since August in what the state prosecutor says is a “crusade” against corruption.
Sources within PDVSA and the oil industry said Maduro’s administration was using corruption allegations to sideline rivals and deepen its control of the industry, which accounts for over 90% of export revenue.
‘Sacred Temple Of The People’
Quevedo, whom two sources close to the military identified as a Maduro ally, will take over his new roles Nov. 27 before he is officially sworn in Nov. 28. He vowed Nov. 26 to bring PDVSA closer to the ideals of late leftist leader Hugo Chavez.
“We’re going to turn PDVSA into the sacred temple of the people!” tweeted Quevedo, who Maduro said would still dedicate 20% of his time to the “Grand Housing Mission,” a Chavez-era project.
It was unclear how Quevedo planned to increase oil production, or what position he would have in Venezuela’s complex attempt to restructure its debt, although his appointment is likely to worry bondholders.
A half dozen current and former PDVSA sources, who were taken aback by Quevedo’s appointment, said his arrival would likely deepen a brain drain and could complicate everything from daily operations to negotiations with bondholders.
One PDVSA source, who asked not to be named, said a PDVSA board reshuffle was due in the next few days.
Military Moves In
Quevedo’s rise also highlighted the increasing power of the Venezuelan military, which has gained clout in Maduro’s Cabinet and in key industries like mining and food distribution. While military appointments had also been increasing in the oil industry, PDVSA so far had been led by chemist Nelson Martinez and the Oil Ministry by engineer Eulogio Del Pino.
“The military has achieved its aim of controlling PDVSA. The forecast is somber,” said Francisco Monaldi, a fellow in Latin American energy policy at the Baker Institute in Houston, echoing much of the mood in the local oil industry.
Quevedo also faces accusations from the opposition of violating human rights during the National Guard’s handling of anti-Maduro protests.
U.S. Senator Marco Rubio, a vocal critic of Maduro, had included Quevedo on a 2014 list of Venezuelan officials who should be named in U.S. sanctions, although Quevedo does not appear in the list released by the U.S. Treasury Department.
“This is a game changer for international oil companies. If political and reputational risk could get any higher for oil companies, this is it,” said Raul Gallegos, an analyst with the consultancy Control Risks.
PDVSA is closely allied with Russian state oil giant Rosneft and state-owned oil major China National Petroleum Corp., although Western oil companies like U.S. major Chevron and France’s Total also operate in Venezuela.
Recommended Reading
Ithaca Energy to Buy Eni's UK Assets in $938MM North Sea Deal
2024-04-23 - Eni, one of Italy's biggest energy companies, will transfer its U.K. business in exchange for 38.5% of Ithaca's share capital, while the existing Ithaca Energy shareholders will own the remaining 61.5% of the combined group.
EIG’s MidOcean Closes Purchase of 20% Stake in Peru LNG
2024-04-23 - MidOcean Energy’s deal for SK Earthon’s Peru LNG follows a March deal to purchase Tokyo Gas’ LNG interests in Australia.
TotalEnergies to Acquire Remaining 50% of SapuraOMV
2024-04-22 - TotalEnergies is acquiring the remaining 50% interest of upstream gas operator SapuraOMV, bringing the French company's tab to more than $1.4 billion.
TotalEnergies Cements Oman Partnership with Marsa LNG Project
2024-04-22 - Marsa LNG is expected to start production by first quarter 2028 with TotalEnergies holding 80% interest in the project and Oman National Oil Co. holding 20%.
Is Double Eagle IV the Most Coveted PE-backed Permian E&P Left?
2024-04-22 - Double Eagle IV is quietly adding leases and drilling new oil wells in core parts of the Midland Basin. After a historic run of corporate consolidation, is it the most attractive private equity-backed E&P still standing in the Permian Basin?