Pdvsa's deals hit 1.3 million oil barrels per day

Petróleos de Venezuela (Pdvsa) has become a stronghold of the Bolivarian diplomacy and the economic mainstay of the Venezuelan government. The oil giant's commitments to supply oil and byproducts have increased, while its cash flow runs dry due to its unorthodox commercial practices and operations, according to Reuters.

The state-run oil company produces approximately 3 million crude oil barrels per day (bpd), including liquefied natural gas. Out of total output, it is calculated that an average of 2.4 million bpd is destined to exports.

Nevertheless, these overseas sales are not cashed in by Pdvsa. The data of Pdvsa's 2011 Management Report highlights that the oil giant has not collected one single US dollar in cash for the sales of 43% of the crude oil and byproducts it produced. This is a remarkable hike in comparison to 32% in 2009, informed Reuters in a special report.  

Including the oil barrels sold in the domestic market, the oil and oil byproducts shipments to the Caribbean oil alliance Petrocaribe, the Caracas Agreement on Energy Cooperation and the Integral Cooperation Agreements (such as the ones signed with Cuba and Argentina), and the payments of the Chinese Fund credit, an average of 1.3 million oil barrels of Pdvsa's daily production are not collected in cash (in the case of the subsidized oil sales to Petrocaribe or Cuba), or they are cashed in Venezuelan bolivars (VEB) in the domestic market (with a subsidy of more than USD 16 billion in 2010, according to the International Energy Agency (IEA).

Also note that since 2009, the accounts receivable of the state-run company soared 121% to USD 38.7 billion and the accounts payable to suppliers hit a record of USD 12.37 billion ending last year.

Pdvsa faces a gloomy outlook, as the oil giant's debt has increased twelvefold in the last six years, oil prices have tumbled recently due to the European crisis and China's economy has slowed down.

However, for Venezuelan authorities the level of indebtedness of Petróleos de Venezuela is not a problem.

Minister of Petroleum and Mining and President of Pdvsa Rafael Ramírez has stressed that the company is in a "comfortable" situation regarding assets and liabilities.

"We are showing that this company (Pdvsa) has enough room to maneuver to manage its finances," stated Ramírez during the presentation of the Pdvsa's 2011 Management Report. He insisted on the fact that the state-run oil company is implementing a billionaire plan, and that no company in the world could finance its investments with its own cash flow.

"I could have a financial debt of USD 34 billion and owe contractors. However, if I have an amount of assets and financial resources, such as the ones I am showing here, there is no problem," added Ramírez.

Nevertheless, the accounts payable to suppliers, as well as the fiscal status of the minority partners in oil joint ventures, jeopardize the continuity of the investment projects and the urgent goal of achieving a production of 3.5 million bpd at the end of 2012.

Payments

Higher debts have forced Pdvsa to seek financial aid from Venezuelan agencies, such as the Central Bank of Venezuela (BCV). In fact, the oil giant has begun paying the debt.

By April 20th, the BCV's aid to the state-run oil company amounted to USD 22.7 billion. Due to the debt burden, the company began to repay its obligations in this month of May. And, in four weeks, the debt decreased by USD 2 billion to USD 20.7 billion by May 18.

This fall came after Pdvsa issued USD 3 billion in bonds, which were sold directly to the BCV.

Translated by Karen Daza