VenEconomy: Maduro's Government is Alone, Weak and Without Resources 
 From the Editors of VenEconomy
Latin American Herald Tribune
November 13, 2014

The government of Nicolás Maduro finds itself desperate because of a continuous drop in oil prices that has lasted over a month, surely after realizing that the long oil boom period has come to an end, and that it wasted one of the best opportunities that the country has ever had for catapulting into development over the past 15 years.

A period in which decisions would have been made completely different and aimed at continuous improvement of the industry, its facilities, agreements, development of technologies and ultimately a better and greater production of crude oil, if it had been managed by the more than 20,000 highly-qualified professionals dismissed by the late Hugo Chávez over a decade ago. Professionals, managers and technicians who were trained for decades to develop the oil industry focused on its core business: produce and export oil and its derivatives.

Unfortunately, the "Bolivarian" PDVSA has been fully politicized and shifted its raison d'être to focus its goals on a range of non-oil related businesses. Because of that not only has PDVSA to deal today with a decline in oil production, but also with a fall in its revenues after the slump in oil prices. Prices that will continue at low levels for at least two or three years, during which time, according to experts, the OPEC Reference Basket would not exceed $85 per barrel, with which Venezuela, Russia and Iran will be the most affected countries.

Trying to control the uncontrollable, Maduro requested an emergency meeting of OPEC ministers a month ago in order to analyze the strategies that would help deal with the oil prices issue. That effort not only was unsuccessful, but it ended up being a big mistake: OPEC didn't even listen to him, but the prospective investors of Venezuelan global and/or PDVSA bonds did as they began to assess the impact that a drop in prices may have on Venezuela's payment capacity.

Last week, Venezuela's Foreign Minister Rafael Ramírez expressed his concern over the low prices to the Minister of Petroleum of Saudi Arabia, Ali Al-Naimi, who attended a ministerial meeting on climate change in Margarita Island, Nueva Esparta state, but apparently he did not pay too much attention to Ramírez because the Saudis keep insisting that prices remain within "reasonable" limits.

Now Ramírez is touring several OPEC member countries, including, among others, Russia, Algeria, Iran and Qatar, in a drive to define a joint strategy that would allow balancing oil prices before the next meeting of the cartel on Nov. 27.

The feather in his cap is an absurd thesis raised by Maduro a few days ago that the U.S. "is using an explosion method in the earth's crust," (when referring to the exploitation of shale oil and gas) that represents "a great danger to Planet Earth (…) and may result in the destruction of large cities in the U.S."

Without having to analyze this ridiculous argument, the reality is: 1) That the U.S. developed a strategy to strengthen its own oil industry and became self-sufficient to meet its domestic demand, while it prepares to compete in the international market. 2) That the development of shale oil and gas deposits, as well as of other alternative energy sources, is here to change the energy market. 3) That other more reliable producing countries of heavy crude oil on the market have emerged as strong competitors, as is the case of Canada and Mexico. 4) That OPEC has already stopped being the benchmark for oil prices and that non-OPEC oil countries have significant market power. 5) That Venezuela, by taking a political position in conflicts of countries challenged by the international community, also lost its area of influence that characterized it in other periods of global belligerence.

So now, with a drop in oil prices, Venezuela not only finds itself alone and without pressure forces in the oil market, but internally it has an industry that has been torn apart, one without proprietary technology for thinning down and refining its own bitumen, one without professionals or a structure for research and development, one without money to pay for its 60% stake in the alliances to develop the Orinoco Belt, and one trying to sell its assets abroad so it can cover the costs of a political project that is starting to show cracks.

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