El Nuevo Herald
February 23, 2008
Some experts questioned the production capability of Venezuela's state-run oil firm as a result of its heavy spending on matters other than exploration.
The financial situation of state-run Petróleos de Venezuela S.A. could reach critical levels that might affect its production capability, both short- and mid-range, experts said Friday.
The financial muscle of the Venezuelan oil company, which has earned gross revenues exceeding $650 billion in the nine years of President Hugo Chávez's administration, could be severely weakened by the extensive social expenditures the company is underwriting in Venezuela, the low level of investment in exploration and exploitation and an unusually high debt.
Just last year, PDVSA acquired a debt higher than $12 billion and it could be forced to pay about $10 billion to energy transnationals, including ExxonMobil, to compensate for the nationalizations the government carried out in mid-2007, said economist José Guerra, a professor at the Central University of Venezuela.
PDVSA's president, Rafael Ramírez, has defended the company's economic performance, claiming that last year 92.5 percent of the oil exports were under state control and that its fiscal contribution increased by 15 percent to more than $42 billion in 2007.
But the weakening of PDVSA's finances could even compromise its compliance with the accords Chávez signed with more than a dozen Caribbean countries in an alliance called PetroCaribe, said Horacio Medina, an oil engineer and a former PDVSA executive.
During a forum organized by the University of Miami and the El Venezolano publishing group, Medina and Guerra this week analyzed in detail the financial health of the Venezuelan company, revealing a situation with important consequences for the United States, which receives about 1.3 billion barrels of Venezuelan crude a day.
A sudden cutoff of Venezuelan shipments to the U.S. is unlikely, but the Chávez administration is preparing ''a scenario to exit the U.S. market in the medium or long term,'' Medina said.
Among the indications of this strategy, is the sale of Citgo's participation in the Lyondell refinery in Texas in August 2006 and the dissolution of the alliance that Citgo maintained with the convenience-store chain 7 Eleven, Medina said.