PDVSA Said to Hire London PR Firm as Venezuela Struggles

Petroleos de Venezuela SA hired a public relations agency founded by Margaret Thatcher’s press adviser, two people familiar with the matter said, as Venezuela sells U.S. refineries and responds to World Bank court rulings.

PDVSA, as the state-owned oil producer is known, contracted Tim Bell’s Bell Pottinger Private in May to improve its image abroad, said the people, who asked not to be identified because it hasn’t been made public.

It’s the first time the company has hired an international PR firm since late-President Hugo Chavez began his so-called Bolivarian revolution in 1999. PDVSA, which accounts for 97 percent of Venezuela’s dollar earnings, is struggling to fund record social spending and subsidies, leading to shortages of everything from razors to flour in a country with the largest oil reserves. President Nicolas Maduro, Chavez’s handpicked replacement, is facing the world’s fastest inflation and foreign reserves near 11-year lows.

A spokeswoman for London-based Bell Pottinger declined to comment, citing policy that restricts disclosure of clients.

The agency has worked for figures sanctioned by the U.S. including Belarus President Aleksandr Lukashenko, as well as Russia’s state oil company OAO Rosneft, whose Chief Executive Officer Igor Sechin is a frequent guest of Venezuela’s socialist government. It also represented the Pinochet Foundation during its campaign against the former Chilean dictator’s London detention, The Guardian reported in December.

Pending Payouts

A spokesman for the state oil producer, who asked not to be named in line with company policy, declined to comment when asked if Bell Pottinger had been hired. Commercial arrangements signed by outgoing company president Rafael Ramirez are valid under the new administration, the official said.

Maduro this week removed Ramirez as vice president for the economy, energy minister and president of PDVSA. Ramirez’s deputy on the PDVSA board, Eulogio Del Pino, replaced him.

PDVSA, which has been on the U.S. sanctions list since 2011 for aiding Iran, had $11 billion of unpaid debt to contractors at the end of last year, according to a company bond prospectus released in May.

Maduro is considering selling PDVSA’s U.S.-based refining and marketing subsidiary, Citgo Petroleum Corp., and raising the world’s cheapest gasoline prices for the first time in 18 years, among initiatives to address a cash shortage.

About 28 cases are filed and unresolved at the International Centre for Settlement of Investment Disputes by mining and oil companies that operated in Venezuela. The three largest cases alone -- filed by Exxon Mobil Corp., ConocoPhillips and Gold Reserve Inc. -- represent potential damages of about $12 billion, according to Bank of Nova Scotia.

Before it's here, it's on the Bloomberg Terminal.