But by the end of 2004, PDVSA was on its feet and beginning to normalize production, thanks to swift and decisive action from Venezuela’s executive branch, as well as the hard work of thousands of loyal employees. PDVSA was also aided by record oil prices, which allowed the company to rebuild its infrastructure without sacrificing production. The rapid stabilization of PDVSA should have been the biggest petroleum story of the year, but in the world of Venezuelan politics, perception often trumps reality.

Some PDVSA saboteurs fled Venezuela to escape prosecution, using press contacts and financial resources to paint a wildly inaccurate picture of the company in the international media. Each month, new rumors emerge. Many are ignored – too outrageous to be believed – but some have taken hold. Last September, the Washington Post published an editorial erroneously claiming that Venezuelan oil production “may have fallen by almost half.” The fact is, since 2003, PDVSA has not substantially changed the way it does business. True, some profits have been redirected toward anti-poverty programs, but its overall business model remains the same.

Unlike many countries with state oil companies, Venezuelan law encourages foreign investment. According to a recent Wood Mackenzie analysis, in terms of the taxes and royalties applied to foreign investors, Venezuela falls in the middle of 65 oil-producing states – slightly higher than Colombia or Denmark, but lower than Peru or Norway. Today, overall private drilling in Venezuela has increased. (OPEC’s Annual Statistical Bulletin 2005 cites many statistics that support this. Overall number of rigs increased from 60 in 2001 to 75 in 2005. Companies drilled 981 new wells in 2001, and 988 new wells in 2005.)

According to the BP Statistical Review of Energy, Venezuela’s 2005 crude oil production surpassed 3 million bpd, an increase over 2004 production, and equal to pre-Chávez era production. Controversy remains over production levels reported by the International Energy Agency. While in May 2006 the IEA numbers were consistent with the BP Review, in its September report these numbers were inexplicably lowered, without comment.

Today, a large percentage of PDVSA’s revenue is earmarked for projects that bring education, health care, and job training to poor Venezuelans. While these investments are grounded in social values, they serve a pragmatic purpose as well: a healthy, literate population means a productive labor force and a stable middle class.

Critics argue that by spending on social programs, PDVSA is neglecting operations and infrastructure, but record-high oil prices allow the company to do both. As a result of exploration investments, Venezuela’s proven crude reserves have increased from 77 billion barrels in 2003 to 87 billion barrels today. Technological investments have made extraction of heavy crude in the Orinoco profitable. PDVSA’s business plan through 2012 calls for overall investment totaling $75 billion, hardly a starvation diet.

Venezuela remains the third largest exporter of petroleum products to the U.S., and despite strained relations between the two governments, Venezuela has not decreased this supply. Indeed, immediately following Hurricanes Katrina and Rita, Venezuela was among the first countries to offer assistance, diverting 2.5 million barrels of additional petroleum to the Gulf Coast.

Venezuelan officials have stated that a supply disruption would only be considered should the U.S. initiate military action in the region. Given the U.S. Defense Department’s acknowledged role providing “support to individuals and organizations” involved in the 2002 coup against Chávez, such statements seem an appropriate response to possible aggression, rather than a threat.

Venezuela’s economy relies on a stable and productive oil sector; its leaders have no interest in undermining PDVSA’s profitability. Rhetoric aside, PDVSA will continue to function and grow in the coming decade. .

Eric Wingerter, the former director of the Venezuela Information Office, is a Washington, D.C.-based writer.