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Venezuela: Corporate Citizen No. 1

3 minute read
TIME

Venezuela’s huge, U.S.-owned Creole Petroleum Corp. has developed a skill that few other companies in the world need to worry about. Continuously harassed by Communist sabotage, Creole has become so quick and adept at repairing its dynamited pipelines that the terrorists actually get defeatist about blowing them up. That skill, plus a line of Venezuelan government guardsmen stationed all along the pipelines, has kept Creole—which is 95% controlled by Standard Oil of New Jersey —operating as Venezuela’s biggest business. It pumps 40% of the country’s oil, provides 25% of the government’s income, employs more than 11,000 Venezuelans, and pays out $125 million yearly in benefits and wages. The company’s sales last year rose to $1,097,799,700 and its earnings to $254 million—after a record $475 million in taxes and royalties to Venezuela.

Anti-Yankee Feelings. This picture of business-government cooperation was not painted without problems. The two Standard Oil subsidiaries that began drilling in Venezuela in the early 1920s, and later Creole (which was set up in its present form by their merger in 1943), were often ripe targets for anti-Yankee feelings. In the early days, only Americans held top posts, employees lived in fenced-in company compounds, and Creole often engaged in shouting contests with the government. But under low-keyed President Harry Jarvis, 55, a 17-year Creole veteran who took over in 1961, the company has tried winningly “to be a good corporate citizen.”

Jarvis, who speaks excellent Spanish, pushed company efforts to break up the compounds and help the workers buy homes in regular communities. He has also expanded the operations of the company’s Creole Foundation, which helps build schools and train teachers in Venezuela, and established the Creole Investment Corp. to provide seed capital for deserving small businesses. In three years, C.I.C. has invested $5,300,000 in 22 small companies, ranging from a mushroom farm to a sugar refinery, has helped create 1,500 new jobs. Said Jarvis at the company’s annual meeting in Manhattan last week: “The investment company has found that the managerial experience it can provide is perhaps of greater importance than the capital itself.”

Jarvis is also the moving force behind the new “Dividend for the Community” program, under which Creole and other big companies in Venezuela donate 2% to 5% of their profits for new hospitals and similar social projects. The company has so emphasized its “Venezuelanizing” policy that it now employs only half as many foreigners (total: 674) as it did in 1950, is continually moving Venezuelans into higher posts. Creole has done so much for Venezuela that President Raul Leoni assured the oil companies in his inaugural address in March that they would continue “to enjoy their granted rights,” and Venezuela’s elder statesman, Rómulo Betancourt, is convinced that the country is getting more out of its oil by leaving it in private hands.

Mideast Advantage. The world’s fourth largest oil producing company (after Kuwait Oil Co., Aramco and the Iranian consortium), Creole still faces serious problems. Because of high labor and production costs and the fact that it pays 70% of gross profits to the government v. a 50-50 split in the Middle East, its crude sells for $2.80 a barrel v. $1.82. It is thus with some pleasure that Jarvis watches the aggressive Organization of Petroleum Exporting Countries (OPEC) and shrewd national rulers whipsaw the Mideast oil companies for higher royalties. An increase in Mideast oil prices could only strengthen the world market position of Venezuela’s good corporate citizen.

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