Then, once the foreigners leave, reality hits. Oil in the ground might as well be on the moon, since the oil production process requires complicated technology. All this became obvious on July 18 when Luis Vierma, vice president of exploration and production at PDVSA, the state oil company, spoke to Venezuela’s National Assembly. Vierma said his company is undergoing a “significant operational emergency,” because the first tender for drilling rigs, part of the “oil-sowing plan,” was never awarded, and the second tender “did not have positive results.”

Only 22 out of 63 companies invited to bid on the contract actually completed the process, and just 12 were awarded bids to supply PDVSA with 27 drilling rigs. But according to Vierma, of the 12 companies only five complied and actually supplied the needed equipment.

The upshot: instead of the 191 active oil drills PDVSA wanted in place by the end of this year, it will have only120 rigs, a 36 percent shortfall.

But Vierma’s National Assembly appearance did not stop just with the explanation of PDVSA’s dire situation. He was also questioned about alleged irregularities in the acquisition of the rigs, irregularities that involve hundreds of millions of dollars.

Vierma first insisted that he had nothing to do with the matter, saying PDVSA’s board of directors and lawyers told him what to sign and when. He mentioned that energy minister Rafael Ramírez is part of the legal team. But then he expanded his comments, saying, “Venezuelan is headed towards technological independence, but it will take us a long time. It cannot be done with a magic wand.”

Vierma talked about the “silent sabotage” of the transnationals, which provide drill rigs to local companies and refuse to participate in tenders organized by PDVSA. The main reason for this is that according to the new tender law, 10 percent of the contract must be allocated to “social development.”

And then Luis Vierma went for the clincher. He said that producing oil is not like “sewing or singing” and that the oil business “is very complex, because we have to locate profitable oilfields, many times at more than 20 thousand feet deep.”

He continued, “In spite of 100 years of oil activities and 30 years of nationalization, we do not have a single electrical logging truck, no hydraulic fracturing, and not one drilling rig that may be operated efficiently by Venezuelans, and therefore we have to depend on the transnational companies.”

He pointed out that the companies “that have not wanted to participate in these processes are waiting for us to slip. What do I mean by that? They know that we will not find drill rigs with national companies and that when the water reaches our neck, they will say that ‘now the rigs showed up, but I am not going to charge you $70,000 or $75,000 per day, but $130,000 per day…’ That is what is happening.”

So what is Vierma’s solution? He told the legislators that PDVSA is creating an affiliate company, PDVSA Servicios. But doing so, he said, will take “a long time…it cannot be done with a magic wand, it will take us 10, 12, or 15 years to have that technological independence.”

What all this means is that despite Venezuela’s repeated claims that it produces 3.3 million barrels per day, the actual figure is closer to 2.4 million, as reported by both the EIA and the International Energy Agency. And that lower output – which may go yet lower – is one of many reasons oil prices are not coming down any time soon.