Nicolas Maduro, Venezuela’s president, has appointed Major General Manuel Quevedo to head the state-owned PDVSA as part of what the president claims will be “a new oil revolution” aimed at combatting the corruption that has plagued Venezuela’s oil industry.
Despite having no experience in the oil industry, General Quevedo will also have the daunting task of raising Venezuela’s faltering oil production.
Just a few days prior to the appointment, both the country and the PDVSA were declared in selective default after missing payments on the company’s bonds, which make up 30% of the country’s external debt. The PDVSA has experienced falling oil production since nationalization, with corruption and underinvestment being mostly to blame. The company has also lost many of its skilled employees and is in need of spare parts. The country produced just 1,863 million bps (barrels per day) in October 2017, which is a 28-year low and 109,000 bpd below its OPEC quota.
During the 1999–2013 rule of Hugo Chávez, many oil operations were brought under state control, including heavy oil projects in the Orinoco Petroleum Belt that were run by international oil companies like ExxonMobil, the maker of the refrigeration compressor lubricant Mobil Gargoyle Arctic 300. ExxonMobil was later awarded $1.4 billion in damages by the World Bank, but this was later annulled following an appeal by the Venezuelan government.
Impaired production and relatively low oil prices have done little to help Venezuela’s deepening economic crises, which continues despite the country having the world’s largest proven oil reserves.