Venezuela’s Political Rollercoaster Roils Exporters
By CHRIS CZIBORR
Venezuela’s topsy-turvy politics is making for tough going for Orange County exporters.
Officials at Orange-based Petrotherm, a maker of heaters used in oil production, said the South American country’s recent political instability is just the latest in a series of headaches it has faced trying to do business with Petroleos de Venezuela SA, the national oil company.
“We’re not doing business there at the moment,Mr. Chavez took care of that,” said Petrotherm President John Rau.
Hugo Chavez, the country’s populist president, regained power April 13,a day after being ousted by business leader Pedro Carmona and some military supporters.
Popular support for Chavez had waned after he enacted a number of measures, including restricting the media and opposition parties and attempted to reorganize Petroleos.
Chavez left office on April 12 after demonstrations in Caracas that led to the deaths of at least 15 people. A day later, he was back in power after Carmona dissolved the National Assembly and removed the country’s Supreme Court, a move that alarmed some military leaders.
Several years ago, Petrotherm sold Petroleos a bottom-hole heating system that heats oil to reduce viscosity so that oil producers can pump crude at a higher rate.
“We had one order and it did very well,they had a 20-barrel-a-day well that went to 70 barrels a day after we installed,” Rau said.
With proven oil reserves of 78 billion barrels, Venezuela is a top U.S. oil supplier and is among the top 10 crude oil producers, making the country a huge market for U.S. oil production gear makers.
Rau said Petroleos initially had planned to buy 20 systems for $800,000.
“Then Chavez came in and stripped the national oil company of all its cash,so they could only order four instead of 20,” Rau said. “We shipped the four systems and then it took a year to 18 months for them to get enough money together to install. We don’t really know what happened since then because there’s been tremendous upheaval in (Petroleos) several times over.”
Rau said Chavez cleared out top management during his first few months in office in 1998.
“What’s going to be happening now,we have no idea. We’ve been working on trying to re-establish bus-iness down there, but there’s been so much turmoil,” Rau said. “When the president of a country fires all the executives and directors and puts in army buddies and then gets rid of them and puts in yet another set, the oil workers end up kind of paralyzed.”
Petrotherm has four employees in Orange and another six at its Long Beach production facility.
Bigger OC companies also are adopting a wait-and-see stance with Venezuela, which remains a small market for county companies.
Fullerton medical equipment maker Beckman Coulter Inc. has a dealer in Venezuela, and company officials remain optimistic for the country’s future in the long haul.
“In the past, Venezuela has been attractive to us,” said Ed Ehrman, Beckman’s director of worldwide business planning. “We are obviously being a little conservative at this moment, but we have long-term hopes that Venezuela will turn around.”
Huntington Beach food tray maker Cambro Manufacturing Co. has seen little business activity in Venezuela.
“Because of the political instability Venezuela is going to be a problematic country,” said Ken French, Cambro’s Rio de Janeiro-based manager of Southern Hemisphere sales. “Day-to-day business is a little bit slowed up given the state of affairs right now. The local currency has devalued quite a bit in the past year, too.”
Cambro has won a number of Venezuelan government projects in the past.
“We’ve done as much as $400,000 in a year (in Venezuela), but last year I don’t know if we even did $50,000,” French said. “Business for us has less to do with the economy there and more to do with government projects that we’ve won.”
