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 For years, PDVSA employees were encouraged to wear red shirts in
support of late President Hugo Chavez's socialist movement. Rafael
Ramirez, the former oil czar famously vowed the state-owned firm
would be "redder than red" and sent workers to state rallies.
Over the past few months, however, the company's new management -
led by president Eulogio del Pino, a low-profile Stanford-educated
engineer - has eased up on revolutionary garb and attendance at
militant gatherings, according to sources within and outside the
company.
New posters inside its Caracas headquarters request employees don
normal office wear, visitors say, a telltale sign of what could be
the most sweeping changes in over a decade at a firm that controls
the world's largest crude reserves and generated some $78 billion in
exports in 2013 - 96 percent of Venezuela's hard currency revenue.
The sartorial shift symbolizes the new management's effort to regain
focus at a firm that has become a haven for political friends and
operatives, according to people familiar with the strategy.
It marks a sharp pivot after a decade under the helm of Ramirez as
shoring up the nation's main cash cow trumps ideology in the face of
the collapse in global crude prices.
The changes go well beyond the symbolic: PDVSA is granting its
minority partners more financial and operational sway in joint
ventures, according to sources close to the company. A dozen of
those foreign oil companies are also poised to tap the most
favorable exchange rate of Venezuela's complex three-tiered currency
system.
Some of the firm's roughly 150,000 employees have been laid off,
particularly those with overt political roles, and hundreds of oil
ministry staffers have also been let go, according to a union leader
and a source close to the government.
"They're trying to find mechanisms to give people confidence in
investing, and also trying to increase production," said one
foreigner close to joint ventures.
To be sure, success is by no means guaranteed, given that oil prices
have halved in the past year, currency controls complicate even the
most basic operations and the nation is stuck in an economic crisis.
Del Pino walks a tightrope between managing government involvement
and ploughing on with his business plans, and some industry analysts
fear his hands may ultimately be tied.
PDVSA and the oil ministry did not respond to requests for comments
about changes in the sector's management.
OUT WITH THE OLD
The first sign that PDVSA might be in for a revamp came last
September when Ramirez, a former confidant of Chavez, was demoted
from his triple role as head of PDVSA and the Oil Ministry, and
vice-president for the economy.
Asdrubal Chavez, the former president's cousin and oil industry
veteran, took over the oil portfolio, but Ramirez remain the head of
Venezuela's OPEC delegation until late December when President
Nicolas Maduro sent him off to New York as U.N. envoy.
 Away from the limelight, Del Pino, until September in charge of
PDVSA's exploration and production, has been revamping joint
ventures' and refineries' operations, sources say.
Minority partners are to garner more control over their oil fields,
including hiring rigs themselves instead of relying on a PDVSA
service unit, possibly saving tens of millions of dollars, people
familiar with the matter say.
PDVSA holds 60 percent stakes in joint ventures, and minority
partners have long complained of delays in dividend payouts as well
as complicated operations, in part due to lack of dollars for
imports.
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The company is now offering some partners an increase in ownership,
which could attract more much-needed capital.
PDVSA holds majority stakes in joint ventures with energy majors
including Chevron, Repsol, Eni, Rosneft, Total, ONGC, Statoil, and
China National Petroleum Co [CNPET.UL] (CNPC)
The government says production has already risen in the heavy-crude
Orinoco region, where the joint ventures operate, and forecasts
output to reach 1.37 million barrels per day (bpd) by the end of the
year compared with 1.25 million in 2014.
ARRESTS AND LAYOFFS
The new management has also started trimming PDVSA's workforce,
which, including contractors, tripled between 2001 and 2013 to
nearly 157,000 even as Venezuela's crude production has fallen to
2.899 million bpd from around 3.1 million, according to annual
company reports.
"There are more arrests and layoffs coming. That's what we hear in
all the offices," said Ivan Freites, a leader of the oil workers'
union and a government critic.
For example, there had been layoffs of people technically employed
at the massive Paraguana refinery, but who actually performed
political duties, Freites said.
Hundreds of employees close to Ramirez are also being shown the door
at the Oil Ministry and the oil giant, according to a former
ministry employee and other people familiar with the matter.
The most striking case of what some call a witch hunt is the arrest
of PDVSA's regional production boss Jose Luis Parada and his sister
Gladys Nubia Parada, a senior oil ministry official, for alleged
corruption in distribution of highly-subsidized gasoline.
The powerful siblings were close to Ramirez, according to company
insiders.
Some recent appointments at the company also suggest Del Pino does
not enjoy full autonomy.
New Chief Financial Officer Carlos Malpica is a relative of Cilia
Flores, Maduro's wife and close adviser, while some former members
of the military have been tapped for posts in the supply and trade
departments.
Some experts also warn that despite his best intentions Del Pino's
mission is doomed as low oil export prices depress the revenues and
Maduro will look to tap the oil giant's resources to spend on
parliamentary election campaigns this year.
"The strong pressure on PDVSA to generate resources is increasing,"
said Richard Obuchi, local economist and energy specialist.
"Actually, I think it would almost be a big success if they managed
to maintain current production levels."
(Writing by Alexandra Ulmer; Editing by Andrew Cawthorne and Tomasz
Janowski)
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