PdVSA Lube Chief Arrested

The president of Petroleos de Venezuela S.A.’s lubricant business was one of several company officials arrested early this month on corruption allegations by a committee appointed to reform the national oil company.

The committee, Alli Rodriguez Araque, has a stated purpose to root out corruption and to improve operations, but critics contend that it is taking action against political foes of President Nicolas Maduro.

The executive arrested was Oscar Rafael Aponte Landaeta, president of Venezolana de Aceites y Solventes Vassa, which is PdVSA’s engine oil and lubricant subsidiary. It is commonly known as Vassa.

According to the restructuring committee led by Minister of industries and National Production Terek El-Aissami, the Public Prosecutor’s office arrested Landaeta based on allegations of smuggling Vassa products, receiving commissions on overpriced transit contracts and the irregular use of company facilities for personal benefit and third-party companies. The executive allegedly diverted strategic material such as lubricants, greases and sulfonic acid from Vassa by manipulating the company’s computer systems and hiding irregularities in the dispatch of those products, local TV channel NTN24 reported.

The VASSA facility, which was being used for illegal lubricant refills and to divert some of which is used for vehicles, was located in the city of Barinas, according to local research and data group La Table.

Among the other executives now behind bars are Oswaldo Vargas, who is president of PdVSA shipping subsidiary PDV Marina. He was charged with fuel smuggling. In addition, two former PdVSA managers were accused of espionage for the United States, local news service Entorno Intelegente reported. They are PdVSA special operations manager Alfredo Marcial Chirinos Azuaja and General Manager of Crude Oil Operations Aryenis Torrealba.

According to local political risk and oil consultant Jose Chalhoub, all of this PdVSA shakeup is actually happening, but he is unconvinced that it will lead to anything really positive for the lubricant market. “The situation is critical. We need real changes and not just superficial temporary solutions,” Chalhoub told Lube Report. The Venezuela lubricant market has struggled with severe shortages for more than a year as the domestic economy crumbles.

As for Landaeta, besides being president of PdVSA Vassa, he is commissioner of Venezuela’s national drug enforcement office and a National Guard Colonel.

Focused on the production and commercialization of petrochemicals and automobile lubricants, Vassa was nationalized in 2010 by Bolivarian Revolution leader Hugo Chavez to increase production and incorporate the working class, according to state-run Venezuela TV. The company was formerly known as Industrias Venoco.

“Actually, not much of the lubricants and motor oil in Venezuela is coming from PDVSA, and most of it is being imported from the United States, some coming from Shell,” said Chalhoub.

“However, the quality of some of the motor oil and gasoline being imported into the country – mostly from Russia and Spain – is not the best and this has been damaging some cars. Generally speaking, I’ve heard that the U.S. product is good,” the consultant added.