US embassy cable - 04CARACAS2038

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 002038 
 
SIPDIS 
 
 
NSC FOR TSHANNON AND CBARTON 
ENERGY FOR DPUMPHREY AND ALOCKWOOD 
 
E.O. 12958: DECL: 06/13/2014 
TAGS: EPET, VE 
SUBJECT: PDVSA:  AND YET MORE RESHUFFLING? 
 
 
CLASSIFIED BY: AMB. CHARLES S. SHAPIRO; FOR REASONS 1.4 (B) AND (D) 
 
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SUMMARY 
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1. (C) RUMORS OF UPCOMING SENIOR LEVEL 
DEPARTURES/REASSIGNMENTS WITHIN VENEZUELA'S ENERGY SECTOR ARE 
ONCE AGAIN REACHING FEVER PITCH IN CARACAS WITH PETROLEOS DE 
VENEZUELA (PDVSA) PRESIDENT ALI RODRIGUEZ, CITGO PRESIDENT 
LUIS MARIN, AND VICE MINISTER FOR HYDROCARBONS LUIS VIERMA 
THE MOST POPULAR TARGETS OF THE RUMORS.  THESE RUMORS OF 
SENIOR LEVEL CHANGES ARE IN ADDITION TO CONTINUING PERSONNEL 
CHANGES AT MORE JUNIOR LEVELS WITHIN PDVSA.  THE MANAGEMENT 
OF THE COMPANY IS ATOMIZED WITH DECISION-MAKING PARALYZED IN 
THE FACE OF POWER WRANGLING.  END SUMMARY. 
 
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THE RUMORS 
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2. (C) PDVSA PRESIDENT ALI RODRIGUEZ IS SAID (AT LEAST IN 
PETROLEUM CIRCLES) TO BE LEAVING PDVSA, AND POSSIBLY ON HIS 
WAY TO HEAD PRESIDENT CHAVEZ'S ELECTION CAMPAIGN.  RUMORS ON 
THE STREET HOLD THAT HE WILL BE REPLACED BY JOSE LUIS PRIETO, 
AN ARMY GENERAL AND FORMER DEFENSE MINISTER FIRST ASSIGNED TO 
THE PDVSA BOARD IN MARCH 2004 AND RAPIDLY PROMOTED TO THE 
POSITION OF VICE PRESIDENT.  CITGO PRESIDENT LUIS MARIN IS 
ALSO SAID TO BE ON THE VERGE OF RETURNING TO THE BOARD.  THE 
    RUMORS HOLD VARIOUSLY THAT HE WILL TAKE PRIETO'S POSITION ON 
THE BOARD OR THAT HE WILL ASSUME THE EXTERNAL DIRECTOR 
POSITION NOW HELD BY VICE MINISTER LUIS VIERMA. 
 
3. (C) VIERMA, WHO NOW HOLDS THE TITLES OF VICE MINISTER OF 
HYDROCARBONS, EXTERNAL DIRECTOR OF PDVSA, PRESIDENT OF PDVSA 
AFFILIATE CVP (CORPORACION VENEZUELANA DE PETROLEO), AND VICE 
PRESIDENT OF PDVSA GAS, IS A PARTICULARLY POPULAR TARGET FOR 
RUMORS.  ONE HIGHLY REGARDED INDUSTRY SOURCE REPORTED ON JUNE 
11 THAT VIERMA WILL NOW ADD THE PRESIDENCY OF PDVSA'S 
RESEARCH ARM, INTEVEP, TO HIS PORTFOLIO.  HOWEVER, THE TITTLE 
TATTLE AT THE JUNE 15-17  LATIN AMERICAN PETROLEUM SHOW IN 
MARACAIBO HELD THAT VIERMA WILL BE REPLACED AS VICE MINISTER 
AT THE BEHEST OF MINISTER RAFAEL RAMIREZ_ WHO WANTS VIERMA OUT 
BECAUSE "HE IS A BACKSTABBER."  THE GOSSIPS CLAIMED THAT THE 
VICE MINISTER POSITION HAD BEEN OFFERED TO LUIS MARIN WHO 
TURNED IT DOWN IN ORDER TO RETURN TO THE PDVSA BOARD.  CITGO 
VICE PRESIDENT FRANK GYGEX WAS RUMORED TO BE A POSSIBLE 
SUCCESSOR TO MARIN AS CITGO PRESIDENT. 
 
4. (C) AT THE MINISTRY OF ENERGY AND MINES (MEM), 
HYDROCARBONS DIRECTOR EDITH GOMEZ HAS BEEN REPLACED BY 
VENEZUELA'S OPEC GOVERNOR, IVAN ORELLANA.  AN INTERNATIONAL 
OIL COMPANY EXECUTIVE INFORMED ECONOFF JUNE 9 THAT ORELLANA 
MAY WELL BE DESIGNATED AS VICE MINISTER TO REPLACE VIERMA. 
INDUSTRY SOURCES TELL US THAT HE WOULD BE A SOLID CANDIDATE 
FOR THAT POSITION. 
 
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THE TURMOIL CONTINUES 
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5. (C) THESE SENIOR LEVEL CHANGES ARE, OF COURSE, IN ADDITION 
TO THE CONTINUING PERSONNEL CHANGES AT LOWER LEVELS IN PDVSA. 
 HERVE GEHIN, VENEZUELA COUNTRY MANAGER FOR THE GIANT SERVICE 
COMPANY SCHLUMBERGER, COMMENTED TO THE AMBASSADOR ON JUNE 12 
THAT THE MANAGEMENT OF THE COMPANY IS ATOMIZED WITH 
DECISION-MAKING PARALYZED IN THE FACE OF POWER WRANGLING. 
GEHIN ADDED THAT FOUR DISTINCT GROUPS CAN STILL BE SEEN 
WITHIN PDVSA.   ACCORDING TO GEHIN THE GROUPS BREAK DOWN AS 
FOLLOWS:  THE ADHERENTS TO THE FATHERLAND FOR ALL (PATRIA 
PARA TODOS - PPT) PARTY LED BY ALI RODRIGUEZ; ADHERENTS OF 
CHAVEZ'S MVR PARTY STILL DEEPLY FRUSTRATED BY THE POWER OF 
THE PPT WITHIN VENEZUELA'S ENERGY SECTOR; THE MILITARY, SAID 
BY GEHIN TO BE ANXIOUS TO GET THEIR HANDS AS DEEPLY AS THEY 
CAN INTO PDVSA'S TILL; AND, FINALLY, THE "OPPORTUNISTS" WHO 
STAYED IN THE COMPANY AND CLIMBED UP THE LADDER FOLLOWING THE 
DEPARTURE OF MORE SENIOR (OR MORE TALENTED) EMPLOYEES.  GEHIN 
COMPARED PDVSA TO THE IRANIAN NATIONAL OIL COMPANY, SAYING 
THAT THERE IS STILL TECHNICAL EXPERTISE THERE BUT POLITICS 
RULES THE DAY.  GEHIN'S COMMENTS TO THE AMBASSADOR ECHO THE 
STORIES WE REPEATEDLY HEAR FROM OTHER SERVICE COMPANIES AND 
THE INTERNATIONAL OPERATORS ABOUT THE FRUSTRATIONS THEY FACE 
 
CARACAS 00002038  001.2 OF 002 
 
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CARACAS 00002038  002.1 OF 002 
 
DVSA/MEM ROADSHOWS DESIGNED TO SHOW THE 
WORLD (AND PARTICULARLY THE FINANCIAL WORLD) THAT ALL IS 
NORMAL WITHIN THE VENEZUELAN ENERGY INDUSTRY, THIS IS STILL 
FAR FROM THE TRUTH.  THAT LUIS VIERMA STILL ENCUMBERS NO LESS 
THAN FOUR SENIOR MANAGEMENT POSITIONS SHOWS THE SHALLOWNESS 
OF THE POOL OF LIKELY MANAGEMENT CANDIDATES.  THE CONTINUED 
SHUFFLING OF THE MANAGEMENT IN PDVSA AND THE MINISTRY PERHAPS 
DEMONSTRATES A LACK OF TRUST IN THEIR REVOLUTIONARY ARDOR. 
AT THE END OF THE DAY, WE WOULD NOT BE SURPRISED TO SEE THE 
MILITARY, ALWAYS CHAVEZ'S MOST TRUSTED ADHERENTS, TAKE MORE 
CONTROL OVER THE INDUSTRY. 
SHAPIRO 
 
CARACAS 00002038  002.2 OF 002 
 
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      2004CARACA02038 - UNCLASSIFIED