By Jeremy Morgan
Latin American Herald Tribune staff
CARACAS -- Liabilities at the state oil corporation, Petroleos de Venezuela (PDVSA), have leapt this year to $23 billion compared with $15 billion at the end of 2008, according to a report in the conservative daily newspaper, El Universal, citing what it called the latest internal financial report at PDVSA.
The increase is attributed to a combination of lower oil export revenues in the wake of the world recession and higher spending on social welfare. In recent years, and as a direct result of President Hugo Chavez' policies, PDVSA has increasingly become involved in welfare programs, on which it directly spends oil export earnings which used to be transferred to the official reserves at the Venezuelan Central Bank.
The debt burden has also been fuelled by a string of bond issues this year. PDVSA launched a bond issue worth $3 billion in July and, this week, yet another for a similar value.
The bond issues have been used to bolster cash flow, which is said to have been adversely affected by the slippage in oil exports and revenues -- which may still be continuing despite cautious hope that the worst of the global slump may be over. The Reuters news agency says that, according to documents at the Energy and Oil Ministry, Venezuelan oil exports declined to 2.46 million barrels a day (b/d) in September from 2.55 million b/d in August.
The figures are in some dispute, given that official Venezuelan estimates of oil production are viewed with doubt at the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC), among others. Whereas the government puts overall output at around 3.1 million b/d, eleswhere it's suggested that the real figure is nearer 2.5 million b/d or 2.6million b/d.
The earlier bond issues were successfull, despite caution on local and international money markets. The belief is that the latest issue will also find demand in full. Government officials say one objective of the bond issues is to draw buying interest away from the so-called "parallel" or black market exchange rate. The official rate is fixed at BsF2.15 to the dollar, and the unofficial rate is said to be trading at over twice that.
Meanwhile, PDVSA is poised to disburse funds from a $1.5 billion loan deal negotiated with Japanese companies and financial institutions, as well as credit lines extended by creditors in Russia. Both are expected to add to the liabilities column at the corporation.
PDVSA is also on a list of Venezuelan debtor entities at the Venezuelan-American Chamber of Commerce (Venamcham). According to Venamcham President Edward Jardine, the Venezuelan state owes a total of $13 billion to its member companies, 27 of whom have had their assets expropriated by the state -- of which only six are said to have received any payment.
The most recent notable example of state expropriation of foreign assets was Chavez's abrupt nationalization of about 60 oil field service companies, among them a subsidiary of Williams, one of the largest such oil service co
mpanies in the world. ExxonMobil and ConocoPhillips are chasing the government in international courts for compensation following state takeovers of their investments worth billions of dollars in the heavy oil fields in the Orinoco Basin or "Faja".
In other developments on the economic front, Ecoanalitica, a consulting company, forecast that 2010 would see low growth and high inflation. However, its projection of 1.2 percent growth was higher than the 0.5 percent set out in Finance Minister Ali Rodriguez Araque's recent budget for next year.
The budget forecasts that inflation will come out at 21 or 22 percent next year, after 26 to 28 percent this year. While the reckoning at Ecoanalitica for this year is similar at 27.5 percent, its view of the outcome next year is distinctly gloomier at around 35 percent. Government inflations statistics are skewed in favor of the government after they were revised to only include food pricing from government subsidized Mercal supermarkets.
In his 2010 budget, Rodriguez Araque stuck to the $40 a barrel forecast for Venezuelan oil prices assumed for this year. The current forecast is considerably below the actual current level of prices, but this is to the government's advantage. Everything above the forecast is deemed surplus, and the government has a free hand to spend it more or less how it wishes.
The Energy and Oil Ministry said that the Venezuelan oil price averaged $73.46 a barrel this week, up $5.37 from $68.09 a week before. The official reserves nudged up by $13 million to close the week at $33.17 billion. VenEconomy: PDVSA in the Doldrums