Is Venezuela’s New Oil Minister Actually Iran’s Pick? - OZY | A Modern Media Company

WHY YOU SHOULD CARE

Tareck El Aissami will preside over the wold's largest oil reserves.

By selecting Tareck El Aissami as his new oil minister, Venezuelan President Nicolás Maduro has given the enormous task of fixing the country’s most important industry to a man who has little expertise in the sector — and who is wanted in the U.S. on drug trafficking charges.

Maduro gave El Aissami the job on Monday after sacking army general Manuel Quevedo, who has presided over a dramatic collapse in the industry during his 28 months in charge.

The president also removed Quevedo from his job as head of state oil company PDVSA, replacing him with Asdrúbal Chávez, an oil industry expert and cousin of Venezuela’s late president Hugo Chávez.

Analysts are divided on what the moves meant. Some say Quevedo has been dismissed for straightforward incompetence. Others suggest El Aissami’s appointment is a sign of Venezuela’s ever-closer relations with Iran.

The announcement comes a month after the U.S. offered a $10 million bounty for El Aissami, as part of a series of indictments against Maduro and his inner circle. U.S. prosecutors charged El Aissami with drug trafficking in 2017. He has denied the allegations.

A leading member of government for years, El Aissami, 45, has held numerous posts. He has been interior minister, minister of industry and national production, and vice president of Venezuela, overseeing the country’s feared intelligence service, the Sebin. He has also served as a member of congress and state governor. However, his only direct experience of the oil industry was as external director of PDVSA in recent years.

There is no gasoline in the country with the largest oil reserves in the world.

Russ Dallen, Caracas Capital

His appointment comes amid acute petrol shortages in Venezuela, which in turn have caused food scarcity as farmers struggle to get their produce to market. There has been looting at some supermarkets as desperate people defy the coronavirus lockdown in search of food.

Venezuela has been struggling to import petrol, largely because of U.S. sanctions, which have forced the trading arm of Russia’s Rosneft to break its ties with Caracas. To get around the problem, Venezuela has been trying to repair and convert its oil refineries so they can produce petrol. The Iranians have supplied workers and equipment, flown from Tehran to Las Piedras in northwest Venezuela, close to the country’s biggest refinery, Amuay.

Earlier this month Maduro and his Iranian counterpart, Hassan Rouhani, agreed to cooperate on energy and financial projects. El Aissami, who is of Lebanese decent, has long had connections with Venezuela’s allies in the Middle East.

“Putting Tareck El Aissami as head of the oil ministry is the price that Iran is charging for their support for keeping Chavismo in power,” says Vanessa Neumann, the U.K. envoy of Venezuela’s opposition leader Juan Guaidó and an expert on Middle Eastern affairs.

She says she thinks Iran will eventually “throw Maduro to the wolves” and is positioning El Aissami as his eventual replacement.

Guaidó — whose claim to be Venezuela’s legitimate interim president is supported by the U.S. and numerous other countries — has condemned El Aissami’s appointment. “It’s not via an air bridge from Tehran to Las Piedras that we’re going to restore confidence [in the Venezuelan oil industry],” he has said.

Other observers are skeptical of the Iranian link and say Quevedo has simply been sacked for his dismal performance.

When he took over in late 2017, with no experience of the oil industry, the general vowed to double Venezuela’s oil output. Instead, it has dropped by 65 percent to fewer than 660,000 barrels per day — a figure not seen since the 1940s.

Venezuela Vice President Tareck El Aissami Delivers Annual Report To The Supreme Court

Tareck El Aissami

Source Carlos Becerra/Bloomberg via Getty

“Oil has collapsed under Quevedo and U.S. sanctions put the final nails in his coffin,” says Russ Dallen, head of investment bank Caracas Capital. “There is no gasoline in the country with the largest oil reserves in the world.”

Francisco Monaldi, an oil expert at Rice University in the U.S., says Quevedo had proven “abysmal” and that Maduro wanted someone better in the job. “He wanted someone close to him and smart to see how he can maneuver with the little cash flow from oil that remains,” he says.

El Aissami’s appointment comes days after the U.S. tightened its sanctions on the oil industry even further, prohibiting American companies in Venezuela from doing anything other than essential maintenance.

One of the companies, Halliburton, has said it is winding down its work there as a result. “We will cease our primary operations in Venezuela in order to comply with the sanctions,” it said in a filing to the U.S. Securities and Exchange Commission. “It is unlikely that we will be able to remove our assets that remain in Venezuela and those assets may be expropriated.”

+

OZY partners with the U.K.'s Financial Times to bring you premium analysis and features. © The Financial Times Limited 2020.

Sign up for the weekly newsletter!