Venezuela's oil minister replaced in a shake-up amid economic crisis

Venezuelan President Maduro replaces the country's energy/mining minister who ran the state-owned oil company

President Nicolas Maduro replaced Venezuela’s petroleum and mining minister, who ran the state-owned oil company, in an apparent move to shore up support for the socialist economic model put in place by late leader Hugo Chavez.

Rafael Ramirez, who became energy and mines minister in 2002, is thought to have been pressuring Maduro to make more free-market concessions in a bid to ease the economic crisis gripping the country. Venezuela suffers from accelerating inflation, rising debt and declining oil revenue.

Maduro, who announced a Cabinet shake-up during a three-hour televised speech late Tuesday, briefly praised Ramirez, who has been appointed foreign minister.

“He was at the front line for 12 years of revolutionary oil politics, rescuing our industry from the clutches of oligarchical and imperialist meritocracy,” Maduro said.

Ramirez’s departure from the two posts had been rumored for weeks as reports filtered out that Maduro opposed his urging that state-owned oil company PDVSA sell its U.S.-based Citgo subsidiary and that the current parallel foreign exchange regimes be changed. Ramirez also apparently lobbied for an increase in the price of gasoline, which costs pennies per gallon, thanks to subsidies.

Ramirez leaves PDVSA at a time when Venezuela’s oil output has declined and accumulated debt has risen to $48 billion. The country has taken out increasing sums in loans, much of them in the guise of advance oil sales agreements with China to finance social programs.

“PDVSA’s debt is more than 250% of the value of its foreign reserves, while the production of crude declined by 505,000 barrels a day from 2008 to 2013,” said Einstein Millan, a Venezuelan consultant based in Kuwait.

Some analysts blame Ramirez for the country’s failure to invest in infrastructure. Venezuela has also relied too much on foreign partners to finance new energy development projects in the eastern Orinoco Belt, one of the world’s richest crude deposits, critics say.

“Under Ramirez’s management, PDVSA increased its payroll by more than 260% while its performance fell from 81 barrels a day per employee in 2005 to only 21 barrels per worker in 2013, “ Millan said. “It’s a situation that won’t be cured by simply changing the manager.”

Ramirez had also become a visible proponent of economic “adjustments” that apparently were put to the annual Congress of the ruling socialist party PSUV, which concluded Monday with Maduro present. The proposals were fiercely opposed by the conservative factions of the Chavista party, analysts said.

Maduro has been expected to announce some reforms, but his talk Tuesday night made no mention of policy changes.

The new head of PDVSA is Eulogio Del Pino and the new energy and mining minister is Asdrubal Chavez. Both men are longtime PDVSA executives.

Meanwhile, shortages of basic food and household items continue, a problem that the government is addressing by trying to clamp down on the trafficking of contraband goods to Colombia. The inflation rate remains at more than 50% and the black market exchange rate in recent days has soared as high as 90 bolivares per dollar, far above the official rates of 6.3 bolivares and 11.5 bolivares per dollar.

“There will be no changes in the established economic path. Humanist and socialist [concerns] will prevail over the economic ones,” Maduro said Tuesday. “Our problems are a result of economic war waged by the opposition and private business.”

Special correspondents Mogollon and Kraul reported from Caracas, Venezuela, and Bogota, Colombia, respectively.

Special correspondents Mogollon reported from Caracus and Kraul from Bogota, Colombia.

Copyright © 2016, Los Angeles Times


7:01 p.m.: This post has been updated throughout.