Sun, Dec 12, 2010 - Page 5 News List

Chavez’s oil sector crumbling: cables


US officials detailed declining conditions in Venezuela’s oil industry in memos released by WikiLeaks, saying the country’s growing economic problems are taking a toll on Venezuelan President Hugo Chavez’s popularity.

In one confidential document dated Oct. 15 last year, the US Embassy said “equipment conditions have deteriorated drastically” since the government expropriated some 80 oil service companies earlier that year. It said safety and maintenance at the now state-owned oil facilities were in a “terrible state.”

The documents report on then-ambassador Patrick Duddy’s talks with business leaders in oil--producing Zulia state.

Another of the US Embassy reports, dated Jan. 22 this year and posted online on Thursday, said that “mounting economic problems have contributed to a decline in Chavez’s popularity” — a view supported by Chavez’s lower approval ratings in polls, though he remains the country’s most popular politician.

The latest documents add to a growing list of critical assessments that US officials have made -privately while examining the leftist leader’s standing at home.

The January report noted that Chavez was looking to increase spending and “is betting that short-term measures can delay the long-term consequences of his ill-conceived policies.”

The embassy also reviewed the government’s seizures of private companies, concluding that “the mostly negative economic consequences of nationalizations ... will continue to play out in 2010.”

The report from October last year on the oil industry reviewed the ambassador’s conversations with officials of Chevron Corp and oil field services company Baker Hughes Inc about growing difficulties in doing business with state oil company Petroleos de Venezuela SA and also about decreased private investment.

It said Baker Hughes’ “strategy continues to be to minimize its exposure; it is not investing in Venezuela.”

Another confidential report, dated Feb. 4 this year, concluded that the search by Venezuela’s oil monopoly for loans and other funding “suggests it continues to suffer from a lack of liquidity.”

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