Venezuela's Privatisation Process Would Be Stalled If Chavez Wins Presidency.

If the leftist former coup leader, Hugo Chavez, wins the presidential elections on Dec. 6, he would stall the privatisation process in Venezuela. He has promised that he would change the entire board of directors at Petroleos de Venezuela (PDVSA) and alter its course.

To Chavez, the influences of global economics on Venezuela have been negative, requiring drastic political reforms. He has turned the oil wealth, and its failure to benefit most Venezuelans, to a winning campaign issue. Chavez has said he would get PDVSA's overseas assets to be sold. He charged last month that PDVSA was using these assets to channel a major part of Venezuela's foreign exchange earnings abroad. He said the overseas operations were not yielding adequate returns to Caracas. PDVSA has major downstream investments in the US and West Europe, with refineries and retail stations securing market shares worth 1.3 million b/d for Venezuela. The biggest refinery in the US, Citgo, is a major player on the North American market and has helped make Venezuela a top oil supplier there. In Germany, PDVSA has the Ruhr Oel JV which is a big refiner and retailer (see Venezuela survey in Vol. 49). However, APS sources in Caracas do not expect the overseas assets to be sold off by a Chavez administration. With oil prices low and expected to be even lower in 1999, the sale of such assets would not bring in an adequate value to Caracas.