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CARACAS, Tuesday September 11, 2007 | Update
 
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Pdvsa domestic profits plummet 65 percent

The subsidiaries of the Venezuelan state-run oil conglomerate Pdvsa in foreign countries spent USD 53.76 billion to purchase crude oil and byproducts

Domestic net profits amounted only to 3.5 percent of revenues (File Photo)
  NUEVOMEDIA
Tuesday September 11, 2007  09:52 AM

MARIANNA PÁRRAGA
EL UNIVERSAL

Venezuelan state-owned oil giant Pdvsa's total profits in fiscal year 2006 amounted to USD 6.48 billion, USD 1.03 billion (15.9 percent) below the profits in 2005. The figure represents the state holding's consolidated domestic and foreign results, based on the audited financial statements the shareholders' meeting approved last September 7.

However, Pdvsa's domestic profits amounted only to USD 1.98 billion. The figure -which comes amidst a 19.3 percent in the Venezuelan oil basket price- represents a significant fall of 65.7 percent competed to domestic profits of USD 5.78 billion in 2005.

Based on domestic revenues, which soared from USD 45.69 billion in 2005 and 55.27 billion in 2006, Pdvsa's domestic net profits last year was 3.58 percent, versus 12.65 percent in the previous year.

Plummeting domestic profits are chiefly attributable to increasingly growing domestic costs. Operational costs related to Pdvsa's core businesses were USD 8.09 billion, with the purchase of crude oil and byproducts as the second largest cost at USD 5 billion. Overall, costs and expenses climbed from USD 14.53 billion to USD 18.28 billion, a 25.8 percent increase.

Further, domestic expenses such as royalties and other taxes went up from USD 13.31 billion in 2005 to USD 18.43 billion in 2006, while expenses in social development virtually doubled, from USD 6.09 billion in 2005 to USD 13.7 billion in 2006.

In his statement before shareholders, Pdvsa CEO and Minister of Energy and Petroleum Rafael Ramírez underscored that migration from operational agreements to joint ventures where the holding has a majority stake resulted in savings amounting to USD 1.5 billion in 2006.

Consequently, if migration had not taken place, the conglomerate's profits could have been virtually nil.

Ramírez also hailed the fact that Pdvsa's total contributions to the Venezuelan Treasury -including fiscal contribution and social expenses- was USD 39.2 billion, or almost 40 percent of overall consolidated revenues -including subsidiaries' revenues.

Increased costs, growing profits
It is noteworthy that, based on Pdvsa's foreign subsidiaries' financial statements, costs climbed from USD 51.77 billion in 2005 to USD 61.89 billion in 2006, boosted by purchases of crude oil and byproducts -which totaled USD 53.67 billion and swallowed over 83 percent of their total revenues last year.

However, from the amount foreign subsidiaries devoted to purchase crude oil and byproducts, USD 19.89 billion (37 percent) corresponded to purchases of Venezuelan crude oil and byproducts.

In 2006, Pdvsa's foreign subsidiaries net profits were USD 3.07 billion -55 percent higher than domestic net profit-, which represented 4.77 percent of Pdvsa's revenues.

Pdvsa's subsidiaries income tax contributions totaled USD 1.66 billion, significantly higher than in 2005, but represented only 2.5 percent of total revenues.

Further, Pdvsa's subsidiaries expenses were only USD 116 million in financing. They devoted only USD 3 million to social development compared to USD 13.78 billion provided by their parent company for such purposes. Further, they received the revenues from the sale of Citgo's stake in Lyondell-Citgo, which amounted to USD 1.43 billion.

mparraga@eluniversal.com

Translated by Maryflor Suárez R.

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