Liar, liar, pants on fire
Energy and Oil Minister Rafael Ramírez has claimed that PDVSA's audited results for 2010 “consolidate” its position as the world's fourth largest oil company in terms of crude and natural gas reserves, production, and refining and marketing capacity.
But Ramírez is deliberately deceiving the Venezuelan people, because the only thing those results confirm is that the state-owned oil company is continuing its accelerated decline, both financially and from the point of view of operations.
According to PDVSA's audited annual report 2010, its earnings after taxes and royalties came to more than $3.16 billion on consolidated revenues of nearly $94.3 billion. It so happens that, in 2009, the company's audited annual report posted net earnings of $4.39 billion on consolidated revenues of just over $73.81 billion. In other words, in 2010, net earnings were down $1.23 billion from the previous year despite the fact that the company received $20.49 billion more in consolidated revenues.
This “financial miracle” of yielding lower earnings with higher revenues is complemented by another feat: that of plunging PDVSA further into debt despite increasing revenues. The annual report indicates that PDVSA's financial debt at the close of 2010 was nearly $21.3 billion, in other words $2.4 billion more than the figure posted for 2009 ($18.9 billion). As though that were not enough, official total figures considerably underestimate the debts and liabilities that PDVSA registered at the end of 2010, which included a $32 billion debt with the Chinese Government and more than $40 billion in compensation payable as a result of claims filed against PDVSA for the nationalization of foreign oil companies.
Besides that, the oil company's accounts receivable totaled more than $20 billion at the end of 2010, $5.69 billion (39.7%) more than in 2009 ($14.33 billion) and $9.21 billion (85.2%) more than at the close of 2008. Today, PDVSA is one of the biggest creditors of sovereign governments in the Caribbean and Central America.
Ramírez continues to lie when he states that, in 2010, Venezuela produced 2.97 million b/d. According to independent secondary sources, PDVSA's true production averaged, at best, around 2.3 million b/d in 210, in other words 710 million b/d less than the 3.01 million b/d produced in 2009.
And he lies yet again when he argues that PDVSA's low production is due to Venezuela's compliance with its obligations as a member of OPEC.
The fact is that PDVSA's production capacity has shrunk as a result of its having lost specialist human resources, got involved in areas that have nothing to do with its area of expertise, become highly politicized, and allowed corruption to spread to all levels
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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 , on Aug. 05, 2011. Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld News 08/08/2011
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