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VenEconomy: The same ill

In June, six months after the close of the fiscal year 2009, PDVSA presented its “preliminary” Report and Accounts. More serious than the delay in presenting the accounts, is the fact that the figures have not been validated by an auditor.

As Gustavo Coronel says in his blog, the figures in the report's 339 pages clearly reveal the magnitude of the disaster at the corporation that is Venezuela's main source of revenue.

In 2009, PDVSA had revenues of $72.95 billion, 42.3% less than in 2008. Before-tax earnings fell by 31.1%, from $13.64 billion in 2008 to $9.39 billion in 2009; and contributions to the nation were also considerably reduced, from $53.12 billion in 2008 to $23.83 billion in 2009, 55.1% less, whereas liabilities came to $74.85 billion, up 24.1% from a year ago.

These shrinking revenues are due, apart from political factors and the lack of administrative transparency, to a decline in average production, which fell from 3.4 million b/d in 2008 to 3 million b/d in 2009. The company attributes this 400,000 b/d drop in production to the severe blackouts caused by the electricity crisis (provoked, in turn, by bad management and the lack of investment), and also to the drop in associated gas, in particular, in the Maracaibo Lake basin, where nearly 50% of its oil production capacity is located.

On top of the decline in production, there was a 34% drop in the average oil barrel price, from $86.49 per barrel in 2008 to $57.08 per barrel in 2009.

As a direct consequence of these poor results, PDVSA's direct contributions to social development and Fonden fell by 87.3%, from $14.73 billion in 2008 to only $1.87 billion in 2009.

The report also contains some details that tell of the bad management and strategic failure of the “Bolivarian” revolution.

One is the whopping increase in PDVSA's payroll, which rose by 13,936 workers in just one year to nearly 100,000 employees. This payroll is very far from the 45,000 plus workers that the company had in 2002-2003, when Chávez started with his political and indiscriminate weeding out of 20,000 excellent professionals and technicians.

Even more serious than this swollen payroll, today the company is complaining of a lack of qualified personnel to carry out key gas and crude production and refining projects. Ironically, that is a problem that has been generated by the company's criteria of “selecting” personnel à la Bolivarian.

PDVSA is definitely a reflection of the same ill that has the Castro-Chavista revolution in its death throes, where what prevails are the scourge of corruption, bad management, and a wrongheaded country project.

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 Veneconomy , June 29, 2010. Petroleumworld reprint this article in the interest of our readers

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Petroleumworld News 06/30/2010

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