Future of Venezuelan oil company will have ripple effects far and wide

…Since Chavez took power in 1999, oil production in Venezuela has declined by 28 percent, the company’s debt has soared, corruption has flourished, foreign oil partners have pulled out, PDVSA’s payroll has skyrocketed and the company has taken to hiring employees for their fealty to Chavez, not their expertise.

PDVSA will continue to supply mountains of money to Chavez as long as oil prices remain high, said David Mares, a professor at the University of California at San Diego who co-authored an in-depth analysis of PDVSA last March.


”But PDVSA is not generating more money through better performance,” Mares told The Herald. ”PDVSA is generating this money in spite of its deteriorating performance. The threat to PDVSA will be when prices go down, and I don’t mean collapse. When the oil market weakens, PDVSA won’t be able to increase output to keep up income.”

What happens to PDVSA has enormous ramifications, from Caracas to South Florida and throughout the region…

McClatchy Newspapers