World
Institutional
links
Welcome back on
26 -29 August,
ONS 2008
Bridging
the energy gap
is ONS 2006 theme,
from 22-25 August,
in Stavanger, Norway
Petroleumworld
Business
Partners:
Centre for
Global Energy
Studies
  |
|
Editorial Commentary
VenEconomy: The collapse of PDVSA of all trades
On January 11, President Hugo Chávez presented the Report and Accounts for 2007 before the National Assembly. Apart from saying that he consumes coca paste daily, recommending the practice to others, and calling on the nations of the world to recognize the belligerent status of the FARC and the ELN, drug traffickers and terrorists, he explained the “achievements” of the state-owned oil company, PDVSA. He assured nation that 2007 was “a great year for our oil industry, here and throughout the world.”
Unfortunately, there are serious signs that these “achievements” are merely mirages with no true foundations.
For example, it is common knowledge that the government’s claim that PDVSA is producing 3.2 million barrels a day is a monumental lie. OPEC reports that Venezuela’s production in December 2007 was 2,389,000 b/d, 100,000 b/d less than in December 2006.
According to official announcements, the industry invested $10 billion in 2007, and while this figure may be true, the fact is that everything points to this money not ending up in the industry.
One indicator is that the firm Baker Hughes reported that the number of active drills in Venezuela in December 2007 was only 71, five less than a year ago and 37 less than in December 1997 when the industry was being operated properly and truly expanding its capacity.
This information from Baker Hughes, plus the constant accidents and refinery shutdowns, the importing of gasoline components that were previously exported, and the shortage of gas, gives grounds for inferring that PDVSA is not really investing in the oil business and provides confirmation that production is as low as reported by OPEC.
Now, if one takes the transfers of $120 million a week ($6.24 billion during the year) to Fonden, officially confirmed, plus the $1.2 billion in debt assumed by PDVSA with the two companies in the Orinoco Oil Belt that were expropriated, that leaves only $2.5 billion of that sum of $10 billion to invest in the new food affiliate, PDVAL, and in PDVSA’s main business.
As though that were not enough, on January 23, PDVSA sprang a surprise by publishing a report from the firm of auditors KPMG, which reveals that, as at December 31, 2007, PDVSA’s long-term debt was $16 billion, in other words $13.6 billion more than a year ago.
All this makes it quite clear that PDVSA’s production is plummeting, that the company is not generating sufficient cash flow, and that the cash flow it is producing is insufficient to cover social spending or to feed the population through its new subsidiary, PDVAL, much less to meet the industry’s investment requirements.
VenEconomy is a Venezuela's leading specialized publisher in the economic and financial area. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.
This commentary was originally published by VenEconomy, on 01/24/2007. Petroleumworld reprint this article in the interest of our readers. Petroleumworld does not necessarily share these views.
All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.
Fair use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.
Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
Internet web links to http://www.petroleumworld.com are appreciated
Petroleumworld welcomes your feedback and comments: editor@petroleumworld.com. By using this link, you agree to allow E&P to publish your comments on our letters page.
Petroleumworld News 01/29/08
Copyright© 2008 VenEconomy. All rights reserved.
Send this story to a friend
Your feedback is important to us!
Readers' comments: share your thoughts on this article.
We invite all our readers to share with us
their views and comments about this article.Write to editor@petroleumworld.com
Any question or suggestions, please write to:
editor@petroleumworld.comBest Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels