As Socialist Economy Implodes, Venezuela Creates Army-Run Oil Firm

Camimpeg, the new Venezuelan state-run oil firm, will operate alongside near-bankrupt PDVSA. (VTV)

EspañolAs if the Venezuelan government didn’t have too much on its plate, it has decided to set up a new state-owned oil firm — and give it to the army.

On Wednesday, February 10, Venezuela’s Official Gazette quietly announced the creation of the Anonymous Military Corporation of Mining, Oil, and Gas Industries (Camimpeg). It carried President Nicolás Maduro’s signature and that of all his ministers.

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Operating alongside PDVSA, Venezuela’s main oil exporter, Camimpeg will be tasked with repairing and maintaining oil wells, administering oil drilling, importing, exporting, distributing, and selling chemical products for the mining sector. The company will also be in charge of managing sea transportation and building infrastructure.

The Venezuelan state is the new company’s majority shareholder and it follows the executive’s guidelines. It will be run by a board composed of five members, to be appointed by Vladimir Padrino López, Venezuela’s Defense Minister.

The company’s creation has been met with criticism, even within the ruling socialist party.

A critical columnist in Aporrea, a Chavista propaganda outlet, labelled the move as a “quiet coup d’état” against PDVSA by Padrino López. The article attacks the Maduro administration’s “complicity and submission” for allowing the creation of a parallel oil firm.

The article assures that Camimpeg will have an autonomous budget, which means it will not depend on the Ministry of Oil and Mining. At the same time, it will not be subject to Congress’s authority to evaluate public tenders.

According to the Aporrea article, the new oil concern will operate above the law since the government is leaving “the country’s entire economic apparatus” in the hands of the military.

Maduro’s Appeasement to the Army?

José Toro Hardy, an economist and former director of PDVSA, told the PanAm Post that the Venezuelan army has no experience in the oil and mining sector, so he doesn’t see a valid reason for creating Camimpeg.

Defense Minister Vladimir Padrino López will appoint Camimpeg’s directors. (Aporrea)

“We all hold the same fear, that it’s some kind of offer or tribute to the military who are loyal to the regime … It’s curious that the firm not only operates simultaneously [with PDVSA], but that it has also been entrusted to the army,” Toro said.

Suspicions have arisen, he explained, because  there is no training in managing petroleum or mining ventures within the Venezuelan army.

It is still unknown whether PDVSA, which is near bankrumptcy, will continue operating or, if it does, in what capacity.

“I have no doubt that PDVSA is financially and productively damaged … it should be producing over 5 million oil barrels a day but the current output is not even half of that,” Toro explained.

“Nowadays, we’re not producing the gasoline that we need. Crude oil drilling plants are not operating, and we’re importing crude oil to be able to meet international deals … PDVSA is the example of a true disaster,” he said.

[adrotate group=”7″]Toro argued that the Venezuelan economy is in no shape to create another corporation like Camimpeg, because “you need management skills that the army doesn’t have. You also need investment, which the state will supposedly provide, but the state doesn’t have anything to contribute.”

While run by the Venezuelan military, where corruption is notorious, Camimpeg will not improve Venezuela’s reputation abroad, Toro said. Currently, the state-run oil giant PDVSA is under investigation for money laundering in the United States.

Translated by Daniel Duarte.

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