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VenEconomy :PDVSA pushed
to the brink of financial ruin



At last, PDVSA has published the results for the first semester of 2009! And, as was to be expected, they are discouraging.

To start with, the report reveals that the State’s share of the company’s earnings before the payment of royalties and taxes, social investments and contributions to Fonden, and dividends was a paltry $10.4 billion, 70.3% less than it received in the same period in 2008. Not only that, the amounts spent on social investment plus contributions to Fonden came to only $386 million compared to $7.67 billion the previous year, which explains, to some extent, the deterioration in the government’s performance on the social front.

The report also reflects an exorbitant increase in the payroll, which jumped from 89,487 people (including contractors) in December 2008 to 99,044 people in June 2009, an increase of 9,557 (10.7%) in barely six months. It will be remembered that, in 1998, when PDVSA was an efficient, professional, productive company, 47,000 people worked there and production was nearly
50% more than production posted for the first semester of 2009.

Another piece of information that jumps out of PDVSA’s report is that total liabilities rose by $5.3 billion (8.9%) compared to December 2008. This figure includes a Bs.F.2.15 billion bailout from Fogade and another one for an unspecified amount from Bandes, but does not include the two petro bond issues for $6.2 billion that will be entered on the books in the second semester of 2009.

Another point worthy of note is that commercial accounts receivable increased by 34%, despite the fact that the report covers a period of low prices ($46.57/bbl vs. $95.46/bbl), which means that accounts receivable should be less not more. This would confirm that PDVSA’s decision to reduce exports to the United States in order to benefit new emerging customers was a terrible mistake.

But perhaps the most remarkable aspect of the unaudited figures is that the government insists on lying about production and export volumes. According to PDVSA, oil production in the first semester of 2009 came to 3,058,000 b/d, a far cry from the 2.2-2.3 million b/d estimated by OPEC and the International Energy Agency (IEA). If the OPEC’s and the IEA’s figures are taken as being correct and the 593,000 b/d of domestic consumption reported by PDVSA are deducted, it can be inferred that only 1.85 million b/d, or thereabouts, would have been left for export, and not the 2.75 million b/d PDVSA claims it is exporting. In other words, there is a difference of nearly 900,000 b/d (=$7.6 billion), which could be tucked away in other items of the Profit and Loss Statement, possibly included in the $8.4 billion for “oil and oil product purchases.”

Just one more comment. Based on the production, export, and domestic consumption figures reported by PDVSA, imports of gasoline and other products during the first semester of the year came to 121,000 b/d. This would confirm, to some extent, that the country’s refineries are in a sorry state, as many analysts have been claiming.

No doubt about it, they have pushed PDVSA to the brink of financial ruin. What a sad day for Venezuela!

 

 

VenEconomy has been a Venezuela's leading specialized publisher on financial, political and economic data since 1982. 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.

Editor's Note: This commentary was originally published by VeneEconomy on 11/24/2009. Petroleumworld reprint this article in the interest of our readers .

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Petroleumworld News 11/25/09

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