Thursday, October 24, 2013

Open Space awakening at a Venezuelan campus

Love it!! I think that the Venezuelan Society issue is  we just heard what we have to say, we don't listen what the other has to say.
Open Space awakening at a Venezuelan campus 
By Teresa Sosa Vegas
An adventure awaits in Venezuela, a place of extensive biodiversity with breath-taking views of lush green mountains, the Orinoco River delta and waterfalls. Caracas sits in a valley surrounded by mountains but close to the emerald Caribbean. 
Southeast of the city centre is the tranquil University Simon Bolivar (USB). You stroll past coconut trees and arrive at the food court where you can review your schedule, discuss classes or interact with students. You sit and drink freshly squeezed guava or mango, or a café espresso called “marroncito”. The place captivates the senses with its colours, aromas and vibrant and fresh environment. For me this is a perfect place to teach.
According to Christopher Columbus and even Venezuelans this is a land of grace. But this is hard to find and appreciate during times of political unrest. I often hear that students are difficult and that political factions create tensions. 
The stress, frustrations and boiling passions make it a challenge to teach. But as I look up, I spy a flock of noisy colourful parakeets flitting among the trees, reminding me to breathe slowly the cool refreshing air. Teaching: First quarter. I come from “the field” – I was brought in because academics know theory but few know how it applies to the world. The concern at USB was that our students, mostly engineers preparing for high-tech professions with some in social sciences and humanities, are good in theory but lack insight and practical competencies, skills, tools and know-how needed in a work environment. 
My studies in the United States gave me first-hand experience of a culture fused with the Protestant work ethic. In France, I observed how rationality, culture - and gourmet eating were valued. In Germany, it was obvious that clarity of thought, organization and depth research were prized along with the spirit of being able to wonder. I explored everything from philosophy, business practices, psychology, culture and social sciences, to Buddhism, mystery schools and ritualistic drumming, and worked with the Institute of Cultural Affairs on several occasions. 
I travelled extensively, meeting great minds and everyday people. I knew training and coaching but formal teaching and tutoring require a different form. Now I had entered a high-tech engineering university caught up in political and social unrest created by an old paradigm mind-set, one that is lineal, mechanistic, reductionist, causal and deterministic. 
How would I transfer my findings from the field to this context and introduce “edge” thinking to political science students? 
How would I help them become more informed, effective and innovative leaders? 
How would I help them deal with the future? 
Venezuela is driven by its past, by a foundational myth rooted in military leader Simon Bolivar’s dream of “la Gran Colombia” (the unity of Colombia, Ecuador, Panama and Venezuela). Historians say Venezuela is stuck in its past. Before it can revision its future, it must deal with the past and present emotionally, politically, socially and collectively. 
My experience taught me change is incremental. So my approach was relational. I made students sit with those whom they either did not like or who were of a different political persuasion. I hoped the need to deal with another human being personally would outweigh the demand of ideologies. I incorporated mindful awareness exercises and related that to examples of an idea put in practice. 
This approach was viewed by some faculty with scepticism. However, the breathing, silence and stillness helped ground the students in a way that made them calm and relaxed. Over time, their body postures changed. They were also more open and trusting towards those they had previously seen as enemies. I had them list on a big sheet of paper the topics each person wanted to talk about, their motivations, and what they wanted to learn. 
They posted these on the walls. Using the “Open Space” technique, I made them sit in circles and present what they had written. One rule - they had to sit next to someone they did not know and talk about it that person and then present it to the whole circle. I brought a warm thermos of café and delicious cakes to share. 
As I looked at their issues, I realized that conflict was a recurrent theme. I proposed a simple ToP exercise for the next class, to assign priorities in the context of the class for the quarter. What was unexpected was that half the students were using concepts from the Marxist school of thought. During the last 16 years, the government has been restructuring society and its institutions towards a so-called “New XXI century socialism” and “Bolivarian state”. 
There were two opposing ideas - democratic-socialist and communist. The level of confusion struck me. I used the “The Art of Focused Conversation” tool and used it to teach sociology. Through these participatory-reflective methods, they were able to process what was going on in their lives, move through crisis, pool their wisdom and create a new understanding. They forgot their differences in class, worked through their contradictions, and the tension of the opposing ideas began to dissipate. Students encountered the humanness of each other and connected with Western philosophical principles as I introduced Socrates, Plato and Aristotle, and brought to them a thought-provoking analysis of Karl Marx. 
Bringing myth and metaphor, concepts and theory together was enriching, paving the way for mutual understanding and respect. As I used ICA techniques such as ToP, Focused Conversation, Open Space and Innovative Leadership, theory came alive. By the end of the quarter we were learning, relearning and unlearning together. 
I introduced Ken Wilber’s Integral Theory and 4Quadrants to look at the evolution of consciousness and the difference between collective and individual consciousness. This was a fascinating experience for students, one that brought new meaning to their studies, opened new horizons and called forth courage and an openness to the other. 
They began to see the other where before they had seen only themselves. 
To create change, the individual has to gain back its power. Once empowered, she or he can move from a collectivistic society to one that honours individuality, respects the feminine and finds gratification in merit. This is a challenge. Self-esteem and sense of self-worth evolved among students. They began to look at their life purpose by exploring the deeper knowledge they had of themselves. My students no longer need to “buy themselves out” of a conflict, nor repress or deny it. 
They can move towards recognising differences and set an open space for dialogue over opposing views. Venezuela is a collectivist culture that buys conflict in order not to deal with it. By acknowledging this cultural conditioning, the students were able to understand, trust the process and accept the tension of opposing political views. 
My year and a half of teaching post-graduate students in Political Science involved provoking a personal awakening - helping them move from an “external locus of control” (where there is no control over their lives because everything that happens comes from outside) to an “internal locus of control”. It involved helping them find meaning and purpose as conscious individuals in control of their destiny. 
When a professor is inspired by the Socrates quote “Know thyself” and Pierre Teilhard de Chardin’s ideas about what it means to be human, the student awakens and learning becomes a life experience. 
Teilhard wrote, “Someday, after we have mastered the winds, the waves, the tides and gravity…we shall harness the energies of love. Then, for the second time in the history of the world, man will have discovered fire.” 
Unless we find this fire and use it to burn away everything that blocks the changes needed to transform ourselves and society, it will die out slowly without notice. It is time to wake up and be aware in our thoughts and actions. 
Professor Teresa Sosa Vegas, Soc., M.S.W, teaches at the Graduate School of Political Science, University Simon Bolivar, Caracas, Venezuela

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How Rafael Ramirez bankrupted Petroleos de Venezuela

I like this information, but I am so glad we are not producing 5 MBD, because the politicias would have had more money to steal.
How Rafael Ramirez bankrupted Petroleos de Venezuela?
Gustavo Coronel
Rafael Ramirez is the Minister of Energy and Petroleum of Venezuela.
For the past 11 years he has also been the President of the state-owned petroleum company, Petróleos de Venezuela (PDVSA). I would like to describe in this article how he led the company into bankruptcy. In so doing he has also generated economic and social chaos in the country, since petroleum is the only source of foreign currency for our nation. It represents 96% of all Venezuelan exports.  Bankruptcy is essentially a financial term, but it can also be applied to the operational, organizational and ethical aspects of a corporation. I argue that PDVSA is bankrupt in every one of these aspects. I will use the official data provided by the company in its Annual Report for 2012 to support this assertion.  
(a) PDVSA currently produces about 2.5 million barrels of oil per day. The official production figure is 2.9 million barrels per day, which includes the production of the foreign partners in the Orinoco area, about 0.4 million barrels per day (BPD). PDVSA’s production, therefore, is about half a million barrels of oil per day less than in 1998. In 15 years the company has not only failed to increase production, but has lost production capability. Previous management had left a plan in place to increase oil production to 5 million barrels per day in 2012. This plan was abandoned by Ramirez. Therefore, PDVSA is now producing half of what it should have been producing, if the plan had been executed.The loss to the nation is enormous. 
(b) The huge heavy-oil deposits of the Orinoco area have not been developed. Upgrading plants that are essential to convert these heavy oils into a commercial product have not been built. Instead, the area has been divided into blocks, mostly given to state-owned companies from ideologically friendly countries -Vietnam, Cuba, Russia, China, and Belarus- that lack the technical, managerial or even financial capability to develop these deposits. International private companies have been largely excluded and two of them, ExxonMobil and ConocoPhillips, have resorted to legal actions against the expropriation of their assets. 
(c) The traditional oilfields of light and medium gravity oil are in great neglect and, as a result, the Venezuelan composite basket has lost much value in the international markets. No light oil deposits have been discovered in the last 15 years due to lack of exploration. Only two exploration wells were completed in 2012, compared to about 200 in Brazil. 
(d) The refineries are now operating at some 70 percent of design capacity, while the index of industrial accidents is 10 times greater than the international averages (link). The explosion of the Amuay refinery in August 2012 has been the worst tragedy, but not the only one that has afflicted the installations of the company, due to lack of proper maintenance. 
(e) The deficit of natural gas is increasing, while In Anaco, Eastern Venezuela, there are up to 22 trillion cubic feet of gas reserves undeveloped due to the ineptitude of the company (link). Offshore deposits have not been produced because foreign partners, ENI and REPSOL find it undesirable to invest in development to sell the gas at subsidized prices in the domestic market. Natural gas continues being imported from Colombia. 
(a) PDVSA is no longer an oil company, much less an energy company. It is a multipurpose company that has been ordered by the central government to engage in the most diverse activities, e.g: food imports and distribution, building houses, raising pigs, planting cassava and ideologically indoctrinating its employees against capitalism. It has created dozens of affiliates that spend millions of dollars doing tasks unrelated to its core business. This has led to organizational chaos and to much corruption. In this type of organizational environment no company can be efficient. 
(b) The president of the company is also the minister of the sector. He supervises himself, a no-no in management. The company has no checks and balances. It is simply the political tool of the executive government and has no managerial autonomy. 
(c) The number of employees of the company has quadrupled, from 32,000 in 1998 to about 120,000 today. Not only the number has increased, but their average credentials have deteriorated, as they are selected on the basis of “loyalty to the revolution”. In 2002-2003 about 22,000 technical staff and managers were dismissed by Hugo Chavez, during a two-day period, for political reasons, and their legal severance payments never made. 
(d) The company has practically abandoned outsourcing, in favor of a policy to own most auxiliary services to the core business. This has impacted negatively the overall efficiency of the company, has increased operational costs and led to the expropriation of numerous small and mid-size contractors without adequate compensation. 
 3. Moral Bankruptcy 
This is the worst aspect of the company: the loss of transparency, accountability and ethics that prevails within the corporation. 
 (a) The company has been totally politicized. Mr. Ramirez openly says that the company is an arm of the “revolution”, and that no one can work there unless is totally loyal to the government. Any employee showing signs of political dissidence is immediately expelled or called a saboteur. See speech of Ramirez to PDVSA managers (part 1) and, in particular, part 2. 
 (b) Oil income has been diverted from the Venezuelan Central Bank, where it should go by law, to parallel funds without transparency (like FONDEN). Money is handled by four persons: the president (Chavez and now Maduro), Jorge Giordani, Nelson Merentes and Rafael Ramirez. As Mr. Ramirez said to Hugo Chavez: “fortunately we don’t have to account to anyone…”. 
(c) No-bid contracts are the norm, given to friends and relatives, as I have documented in previous papers and articles. See here and here. Newer cases of extreme corruption within the company include the case of the barge Aban Pearl (see here) the case of Derwick Associates (see here) and the case of the oil tanker Carabobo (see here). 
(d) The giving of subsidized or, even, free oil to Cuba, Nicaragua, Ecuador, Bolivia and to Caribbean states in exchange for bananas, black beans and other staples. In particular the delivery of 100,000 BPD to Cuba during the last 7 years or so, in exchange for bodyguards, sport trainers, pseudo medical staff and other diffuse services, represent an act of political treason involving a loss to the country of some $3-4 billion per year. 
 4. Financial Bankruptcy Thanks to Sergio Saez and his very detailed analysis of the financial situation of PDVSA (personal communication) I can summarize the extent of the financial catastrophe of PDVSA, as reflected in the Consolidated Financial Statements of the company for 2012. 
 (a) Income effectively received by PDVSA in 2012: $59,579,000,000 
This is the net income because of the $121,000,000,000 of total gross income during 2012, PDVSA had to spend $40,000,000,000 in oil bought abroad and 24,000,000,000 had to be paid to other countries. Less: Operational costs $24,401,000,000 Contribution to the National Budget $26,404,000,000 Given to Parallel Fund, FONDEN $8,311,000,000 Total $59,116,000,000. As we can see the income only served to cover the above expenses. In order to finance “social” programs and to attend to capital investments the company had no other alternative than to borrow money. 
(b) The total production of the company and foreign partners was 2,9 million BPD. 
 Volume required by the domestic market 0,8 million BPD Given to Cuba, practically free*
 0,1 million BPD Distributed via PetroCaribe and ALBA, highly subsidized**
 0,3 million BPD Given to China to pay for loans
 0,4 million BPD Given to Belarus, Portugal and Iran to pay for loans 0,1 million BPD 
 Total deductions 1,7 million BPD 
*Note: Venezuela paid Cuba $284 million, in cash, on top of the oil. 
**Note: Price obtained averages $62 per barrel, little paid in cash. 
Therefore, the net volume that PDVSA sold at commercial prices in the world markets was only about 1,2 to 1,3 million BPD. The average income received by PDVSA for every barrel of oil was only about $54. The nation is only receiving half of the world commercial price for very barrel of oil produced. This would be enough to dismiss Mr. Ramirez and place him under criminal investigation. 
(c) As a result of this tragic financial situation PDVSA is now forced to borrow money to invest and, even, to help paying ordinary expenses. 
They owe the Venezuelan Central Bank the equivalent of $30 billion that this bank has printed in order to give it to the company. They owe China about $30 billion. They have issued about $25 billion in bonds. They have received about $6 billion in loans from foreign companies, theoretically to be used in the Orinoco área. They owe suppliers and contractors about $27 billion. They have financial contingencies of the order of $10 billion. As a result PDVSA had debts or financial commitments of some $128 billion by the end of 2012 and surely a greater amount by the end of 2013. 
I am not a financial expert, by any means, but I suspect I am looking at a bankrupt company, especially since the value of their assets is lower than this figure, specially since the oil reserves are the property of the nation and are not a part of PDVSA’s assets. 
As a Venezuelan citizen it is my duty to denounce this situation to fellow Venezuelans and to international public opinion. I believe a gigantic crime against the nation of Venezuela has been committed by Mr. Rafael Ramirez and his collaborators. I believe this crime has to be the object of immediate intervention by Venezuelan authorities. I am also aware that there are no independent Venezuelan authorities existing at this moment in time. However, I hope this accusation finds an echo in international public opinion and contributes to a proper understanding of the Venezuelan tragedy, one that many of my countrymen still do not comprehend.

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A Perturbing Budget Presentation in Venezuela

Scary how Venezuela is in hands of these people, scaaary

A Perturbing (Or Is It Disturbing?) Budget Presentation in Venezuela
Miguel Octavio.
So, Minister of Finance and former Vice-President for the Economy Nelson Merentes presented the budget yesterday in front of the National Assembly and made us all feel at ease, projecting inflation for 2014 at “only” (my words) 26-28%. This is actually quite scary, because a year ago he was projecting 28.8% for 2013 ( including the decimal) and now it is almost 50% and in 2009 affable Nelson was projecting single digits by 2012, which he also had projected for 2011. 
But the whole speech was quite disturbing, if only because Minister Merentes suggested that the Venezuelan economy faced three perturbations: inflation, shortages and the foreign exchange system. 
Well, when you think about it, there is only one perturbation: The Chavista-Madurista Government that imposed the exchange controls that have led to shortages and spent and printed money, causing inflation. That is a single explanation, a single perturbation. But quite disturbing. 
But maybe you can add a second one: The fact that the Venezuelan economy has been mismanaged by non-economists like Nelson Merentes for too long. Because nobody understood what he meant when he said that inflation is “out of range”. 
Venezuelan inflation has been “out of range” for too long due to irresponsible policies and Government officials. Inflation is what it is, it has no range, ask Mugabe. Venezuela has the second highest inflation in the world. At least five times the rate of any other Latin American country. 
Maybe Minister Merentes should coldly think about the numbers he presented. He is a mathematician after all, he knows no economics, but he should be able to at least understand orders of magnitude, no? 
For example: -He proposed a budget of Bs. 550.36 billion Bolivars, US$ 87.37 billion dollars at the official rate of exchange, a full 38.8% higher than that presented a year ago by his predecessor the non-economist Jorge Giordani. But wait! Before you think about that 38.8%, it turns out that since it was presented and up to October 2013, the same budget has been increased by 61%. Yeap! 
With two months to go the Chavez/Maduro Government has spent a full 61% more than was budgeted. -And if you compare the 2014 budget to the 2010 budget, as presented originally, which is the only fair comparison, the 2010 budget was only 159.40 billion Bs., so that the 2014 budget is “only” 3.45 times the budget of only three years ago. 
-And in his budget, Merentes proposed to issue debt in the amount of Bs. 112.7 billion in 2014, which is an amount almost identical to the projected income of the Government from oil, which will be, according to the same presentation Bs. 114.59 billion in 2014. 
Think about it, the Government will issue debt equal to the amount of money it will receive from oil. Talk about being irresponsible. -And in 2013, up to today, monetary liquidity has increased by 35.5%, a huge (and inflationary!) number and that if it grows like it did last year in the last two months, it will end growing by at least 50% by December 31st. (This happens every year, a huge jump in M2 due to seasonality) 
But despite all of the above, Merentes called for the need to “investigate” why inflation in Venezuela has been in double digits for thirty years in Venezuela. 
There is nothing to investigate: Irresponsible Governments is the explanation. Period. 
And despite all this, Merentes projects GDP will grow between 4% and 6% in 2014. Funny, last year he projected 6% for 2013 and we are unlikely to go over 2%. And, yes, there will be no devaluation… At this point, the fantasy was complete, I changed channels and turned to watch a more realistic movie about a Martian invasion. 

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Friday, October 18, 2013

A session with the US Energy Security Council

Gustavo Coronel 10/16/13
A session with the U.S. Energy Security Council 
The U.S. Energy Security Council is a group of very distinguished Americans: former Washington cabinet members, top military leaders and former CEO’s from big corporations, coming together to address the issue of oil’s monopoly over transportation fuel. 
The Council “advocates proven transformational policies designed to diminish oil’s strategic value by opening the transportation fuel market to competition”. 
In March of this year I was honored to address this group by telephone on the outlook of the oil Venezuelan oil industry, see
Tuesday, October 15, I was invited to a meeting of the Council, held at the National Press Club, in downtown Washington. I took it to be an invitation to listen, but I ended up as a member of a round table, sitting together with many legendary figures: TV’s Ted Koppel, James Schlesinger (former Secretary of Energy and of Defense), Norman Augustine (Former CEO, Lockheed Martin), John Hofmeister (Former CEO, Shell), Robert McFarlane (former National Security Advisor) and several other political and corporate big leaguers. 
The meeting began with a conversation between Ted Koppel and James Schlesinger about the Arab Oil embargo of 1973. Both Koppel and Schlesinger were main actors in that drama and they recounted it for us, Schlesinger providing very interesting recollections. After the Koppel-Schlesinger conversation, the Council discussion began. I felt more like asking for autographs from these people than as a participant in the round table. 
I was the second person to be asked for comments by the Moderator, Anne Korin. Her question had to do with the current situation within OPEC, given that some of the members have an excess of money (Saudi Arabia) while others need it desperately (Venezuela). I said that (see  , at about minute 57) Venezuela was no longer a powerful member of OPEC and that OPEC itself had lost much power since it was not a monolithic block. 
In parallel the U.S. was riding a big wave of energy abundance, thanks to shale gas and oil and did not need to import as much oil as before. I added that Venezuela/PDVSA were technically broke and depended on China to provide funds since oil production had declined and much of the oil exports went to ideologically friendly countries that did not pay. I said OPEC was no longer the powerful cartel of yesteryears. 
This opinion of mine seemed to run against the perception of some of the members of the Council that still see OPEC as holding consumers hostage. 
The fact is that OPEC provides today a much smaller share of the global oil supply. Consuming countries, on the other hand, enjoy many energy source alternatives: conventional oil, unconventional oil (Canada), shale oil and gas (several countries), and renewables, particularly the rather new alternative of producing Methanol (not to be confused with Ethanol) from natural gas. 
This alternative is gaining great momentum in the U.S. since it is both economically and technically feasible. 
An article in the Wall Street Journal, October 10 , : “A chemistry breakthrough that could fuel a revolution”, by George Olah and Chris Cox, describes how shale gas and recycled carbon dioxide can be converted into methanol, a fuel that can be mixed with gasoline to be used as transport fuel. 
As this technological breakthrough is taking place, the Council’s priority task is to promote the legislation that could put methanol on the same tax footing as ethanol, in order for the new technology to become an alternative at the pump. Dr. George A. Olah, the co-author of the WSJ article, is a Nobel laureate in Chemistry. 
In the round table the person sitting next to me was Dr. Surya Prakash, a partner of Dr. Olah in Methanol research. It was announced during the meeting that this team had been awarded a one million dollars prize by the government of Israel, as the best energy initiative of the year to find alternatives to gasoline as a transport fuel. I congratulated my neighbor. 
Statements supporting methanol as an alternative to gasoline came from MIT expert Daniel Cohn ( MIT Energy Initiative), Greg Dolan( Methanol Institute), Deron Lovaas (Natural Resource Defense Council), Joseph Cannon ( Fuel Freedom Foundation) and Frank Gaffney ( Center for Security Policy). 
The meeting was open to members of the China Embassy in Washington and to Chinese experts such as Dr. Liu Quiang. I had a brief talk with Dr. Liu and he said they were producing methanol from coal and that this process proved to be economic. I asked him about the position of China in Venezuela but he just smiled.
The message of the Council is that there is a need for free choice of fuel at the pump. This choice should not simply be, as Mr. Augustine pointed out: premium, extra and regular, but it should include alternatives that would make transport fuels cheaper and environmentally safer, certainly methanol. I will elaborate on this topic in another post.

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