VENEZUELA - The OPEC Countries - Part 11.

Under President Chavez, decision-making in the Venezuelan petroleum sector has become far simpler than in the previous decades. As a military man turned civilian who came to power through the populist route, Chavez now rules by decree and controls this sector as well as all other matters of importance in the country. The decision-making system has been changed continuously since February 1999, with Chavez having brought in allies. Management at the state-owned Petroleos de Venezuela (PDVSA) now is run mainly by military associates.

Chavez has the reputation of a demagogue who will say and do whatever it takes to boost his populist standing. He was first sworn in on Feb. 2, 1999, as the most popular president of Venezuela in the country's history. Representing a return to nationalism symbolised by his 19th century hero Simon Bolivar, the man who championed the liberation of Latin America, Chavez has brought into force a constitution, approved by referendum on Dec. 15, 1999, which renames the country as the Bolivarian Republic of Venezuela.

The new constitution, voted for overwhelmingly, gives much power to the president and guarantees that the state will retain ownership of PDVSA and the country's petroleum reserves and other resources. OPEC solidarity was a Chavez promise before and after the Feb. 2 ceremony, attended by Saudi Oil Minister Ali Naimi. His promises were fulfilled on Sept. 27-28, 2000, when OPEC's second summit since March 1975 was held successfully in Caracas. From then on the OPEC members became more united, thanks to efforts by Chavez and then Energy Minister Ali Rodriguez, who is now President of PDVSA.

During his presidency, Chavez has frequently toured OPEC countries to secure consensus and success for the organisation's policies. He has also made a high profile visit to Iraq, where he was personally looked after and driven around by Saddam Hussein. In the Latin American region, Chavez has proposed creation of a multinational Latin American petroleum company, Petroamerica, which should combine the assets of PDVSA, Petrobras of Brazil, Pemex of Mexico, and other NOCs. This is part of his proposed energy integration and political alliances with fellow Latin American countries. Energy and Mines Minister Rafael Ramirez reiterated this theme at a recent conference in Rio de Janeiro (see following pages).

However, Chavez has faced problems in his relationship with the US. He has the image of what the Washington Post on Nov. 3, 2000 described as "a Venezuelan Castro". Since the Sept. 11, 2001 attacks on New York and Washington, Chavez has turned Venezuela into the Western Hemisphere's sharpest critic of the US war on terrorism. And Washington has responded by adopting a less tolerant approach. In meetings in Caracas with his US congressional supporters, Chavez has been warned he risks a lasting break with Venezuela's largest oil market, unless he quiets his criticism of the US war on terrorism".

The Venezuelan leader is not likely to let this happen. He has a strong pragmatic streak, which will reassert itself if his populist rhetoric appears to be getting out of control. Earlier this year, for instance, Venezuela reassured the US that it would boost production to make up for any shortfalls that may occur in the event of turmoil in the Middle East (see a detailed profile of Chavez in APS Review's Oil, Gas & Downstream Trends Vol. 57, No. 25).