Ex-oil czar sees Venezuela's economic collapse accelerating

Ex-oil czar Rafael Ramirez President Nicolas Maduro in the wake of his re-election. Photo / AP

Venezuela's former oil czar said crude production in the OPEC nation will continue to plummet in the aftermath of President Nicolas Maduro's re-election, as the embattled socialist leader takes the country down an increasingly authoritarian path that scares off private investment and leads to more international sanctions against his government.

In a rare interview, Rafael Ramirez on Friday blasted Maduro, saying that in the wake of his recent victory he has showed no signs of reversing policies blamed for hyperinflation and widespread shortages.

"The demons have been unleashed," Ramirez, who went into exile after a bitter split last year with Maduro, said in a phone interview from an undisclosed location. "Maduro keeps insisting on the same rhetoric, taking no responsibility for his own actions."

Maduro coasted to another six-year term in an election Sunday that was boycotted by the biggest opposition parties and condemned as rigged in his favor by several foreign governments.

The Trump administration responded by tightening sanctions on the government, making it tougher for state-run oil giant PDVSA to raise badly-needed cash to pay off creditors and jumpstart production.

Ramirez, who headed the oil industry for a decade until 2014, said a purge that started last year and has led to the arrest of more than 80 PDVSA managers, including its president, as well as the arrest last month of two managers at Chevron, has paralyzed oil production.

Since Ramirez was removed from his dual post as Energy Minister and PDVSA boss in 2014, production has tumbled almost 40 per cent, to 1.4 million barrels of oil per day, the lowest level in seven decades.

He predicts that unless Maduro changes course, it could fall soon to 900,000 barrels per day, the bulk of which is already sold at a huge loss domestically or used to pay off debts to China and Russia.

He also pointed to a recent decree signed by Maduro giving PDVSA's newly installed president, Maj. Gen. Manuel Quevedo, special powers to rewrite the terms of PDVSA's joint ventures with foreign oil companies, circumventing the constitutionally-mandated oversight of the opposition-controlled National Assembly.

"There's a climate of terror inside the oil industry and everyone is afraid to make decisions," he said.

PDVSA and Venezuela's Information Ministry didn't respond to requests seeking comment.

Ramirez, who was close to the late Hugo Chavez, quit as the country's ambassador to the United Nations in December amid a public feud with Maduro over the direction of economic policy.

Ramirez had been arguing for a more pragmatic course that included unifying Venezuela's multi-tiered exchange rates while Maduro doubled down on policies to attack criminal "mafias" and going after opposition groups he blamed for waging an "economic war" with the backing of the U.S.

In January, chief prosecutor Tarek William Saab announced he would seek Ramirez's arrest for allegedly profiting from illegal oil sales.

Several close associates including his nephew have already been arrested in Venezuela and two former deputies were picked up in Spain last year on a U.S. warrant as part of a separate probe led by prosecutors in Houston into corruption at PDVSA under Ramirez's watch.

Ramirez rejects the accusations and said that his conscience is clear. Since leaving the U.S. last year, he said he's moved among cities around the world and avoided returning to Venezuela for fear of arrest.

"It hurts me because in the name of pursuing corruption Maduro has destroyed the industry so he can take control of PDVSA," he said.

He said that none of the people running PDVSA today have experience in the oil industry, and coupled with the departure of thousands of oil engineers, the company that is the source of almost all of Venezuela's export earnings is on the verge of collapse.

A recent display of what he considers the current management's incompetence was its failure to outmaneuver Houston-based ConocoPhillips' attempts to collect on a US$2 billion ($2.8b) arbitration award, which forced PDVSA to scramble and divert oil tankers from its facilities in the Dutch Caribbean for fear of seizure.

Ramirez said that he headed off a similar legal action years ago by Exxon Mobil in the United Kingdom.

"What's surprising, and concerning, is that PDVSA didn't anticipate this," he said. "If the actions of a single company have jeopardized the entire country, imagine what will happen if the U.S. imposes sanctions."

- AP