OREANDA-NEWS. May 17, 2018. Venezuelan energy minister Manuel Quevedo ordered an audit of monthly crude production volumes by state-owned PdV's joint venture partners.

Quevedo, an active duty national guard general who was named energy minister and PdV chief executive last November, is seeking to obtain "precise, accurate production volumes" for each joint venture, a ministry official told Argus.

The audit comes amid rapidly eroding production and an unprecedented economic crisis in the Opec country.

Quevedo "suspects there is a possibility that PdV's minority partners in many joint ventures are paying less than their fair share of taxes and lifting more than their fair share of crude," the ministry official said.

The audit was motivated in part by successive scandals at several joint ventures since January for which over a dozen senior management officials have been arrested on corruption charges that include falsifying production numbers reported to the ministry, skimming crude for illegal export, and rigging procurement contracts.

PdV joint ventures rocked by alleged corruption incidents in the past six months include PetroZamora in Zulia in which Russia?s Gazprombank has a 40pc stake, the PetroCedeno upgrader in which France?s Total and Norway's Equinor (formerly known as Statoil) hold a combined 40pc stake, and the PetroPiar upgrader in which US major Chevron has a 30pc stake.

The alleged irregularities at these joint ventures was uncovered in a broader investigation within PdV that acting attorney general Tarek Saab launched in August 2017, which to date has led to the arrest of over 80 senior PdV executives, including former chief executive Nelson Martinez and former energy minister Eulogio Del Pino.

National intelligence service (Sebin) officials last month arrested two Chevron employees, both Venezuelan citizens, at the PetroPiar upgrader in Anzoategui state after they refused to sign a procurement contract for refractory bricks that had been awarded bid-free to a local supplier.

Teams of inspectors from the energy ministry's oil metrology service (SAMH), the Seniat national tax authority and the national guard are jointly conducting the audits. Lack of resources including vehicles, computers and cash for salaries and per diems have hindered the auditing process, the ministry official said.

SAMH, created by presidential decree in May 2007 as then-president Hugo Chavez moved to nationalize dozens of foreign-owned upstream oil ventures, is tasked with electronically measuring every barrel of oil produced in Venezuela from wellhead to export terminal.

But SAMH is understaffed and underfunded, and its automated measurement equipment is in disrepair because of steep budget cuts, the official said.

Critics including local executives of foreign oil companies partnered with PdV told Argus that the audit teams are unqualified, particularly heavily armed national guard officials who appear to be overseeing the work of the data technicians.

"SAHM doesn't have the instruments or trained personnel, Seniat tax inspectors have no experience counting barrels of oil, and the national guard contingent intimidates everyone present and stands guard over the technicians supposedly measuring production volumes," one executive said.

Three critics of the audit agree that better production controls including precise volume measurements are necessary.

The auditors appear to be looking for "data anomalies that could justify administrative procedures to impose fines and more taxes against the minority partners," one local executive with a foreign oil company said. "The underlying premise appears to be that since PdV executives managing joint ventures like PetroZamora and PetroPiar are corrupt, then PdV's foreign partners in these joint ventures must be corrupt too."

PdV currently has 47 upstream crude joint ventures with 37 foreign and local companies, including 26 joint ventures in the Orinoco division, 15 in the company's western vision in Zulia state, two eastern division ventures and four offshore ventures.