Let’s wiki-audit PDVSA

In the red

In the red

Setty just posted a first-glance analysis of PDVSA’s audited financial statements for 2013. How about all you accountants, economists, and number geeks out there wiki the thing? Let’s see just how “pragmatic” Mr. Ramirez really is.

If you have time, go through the thing and highlight the relevant aspects. Here’s hoping it makes for an interesting discussion, and we can uncover some nuggets.

The money quote from Setty’s first pass:

… [T]he ongoing fiction that Petrocaribe and other cheap oil deals are liabilities of the Republic, and not of PDVSA, appears to be well-dead. “Dividends were declared for $10,000 million, paid by offsetting with account receivables from the Republic” means that the national state simply eliminated $10 billion worth of debt to the state oil company. That that came from “the sale of crude oil and oil products in the framework of contracts and agreements subscribed with the governments of other countries.” (If you follow the reference to note 8-b, it is just a description of Petrocaribe. It says oil supply under that framework has dropped to 377,000 bbl/day in 2013 from 463,000 in 2011.) This could set up some uncomfortable political situations in coming years. Some Caribbean countries, like Jamaica, have built up big debts to this program. PDVSA managers are going to be stuck playing the heavy, collecting debts from impoverished nations. It means that Venezuela as a state will avoid being in such an embarrassing position.

$10 billion in Petrocaribe debt! Yowza.

10 thoughts on “Let’s wiki-audit PDVSA

  1. Seriously, arranging a small team to study this in detail would be really cool. Usually, they published the Informe de Gestion and other relevant documents adjunctly or .

    A first thought is: that’s a hell of a jump in financial income (3bn to 20bn). Where does it come from? From note 12 it seems its from selling and interest in a subsidiary and from previously non-existent “Net foreign exchange gain”. Following up on note 32, it seems that that’s all related to the whole ENA transaction with BCV. That topic itself seems fishy enough to follow up.

    Setty did so: http://settysoutham.wordpress.com/2014/06/26/about-that-12-billion-gold-miner-in-venezuela/

    The real value of those assets and reserves is likely to be orders of magnitude below the $30bn mark. And if I understand correctly, BCV gave ENA to PDVSA for free, and now it’s buying part of it back at that price?

    On the other hand, was there a sudden drop in the Int’l reserves of that magnitude? Is this related to the massive Bolivares debt that PDVSA has been running with BCV?


    • As I commented on setty’s site:

      This is the most ridiculous thing I have ever heard!! Basically, PDVSA and the BCV are saying that ENA IS WORTH AS MUCH AS Barrick and Newmont COMBINED!! – And these companies produced 12 million ounces of gold last year (2013). ENA’s production is more that of a junior miner – if that. Who audited these valuations I want to know!

      And the farce goes on…


  2. A suggestion: why don’t you write that report in SPANISH?e
    Do we want people in Venezuela to find out as soon as possible?
    Sorry I can’t help now but that is because I am already working on a couple of
    things in Spanish already, one being
    , another on FONDEN, which will appear later (and not in Wikipedia)
    and another on thCNE.


    • Good luck with the Chavista Wiki Brigade. They used to be strong, instransigent, and sometimes nasty on the english Wikipedia site, I assume the same for espanol.


      • I’m trying to be as careful as possible. I know Chavistas do disasters in Wikipedia but it doesn’t help when some of our people try to intervene by clumsily writing “X stole Y” or “Z is a dictator” and that without even writing proper Spanish.
        One has to be fastidious here: “Deputy Q said X stole Y”, “Costa Rica’s Nobel Prize … said Z has reached dictatorial levels”…and we need to back it up with the most famous sources available (The Economist, El País, etc, only then El Universal, Tal Cual, etc).


        • Yes, there are both Chavistas and oppos who clearly are not interested in contributing meaningfully and in good faith to wikipedia. Far more chavistas, however, and they will outlast their opponents in a war of attrition…particularly on smaller pages.

          Luckily, some of the important pages have good neutral administrators help things out. Some of them have incredible patience (and time!)

          I just despise that Venezuelanalysis.com is continued to be used as a source in so many controversial pages. It may have gotten better in recent years, I’m not sure.


  3. Here is one for you (posted earlier in Setty’s site)

    First fact:
    As December 31st 2013, according to the official financials statements of the Central Bank, the PDVSA promissory note was Bs. 407.800 million, or US$64.300 million at official exchange rate of 6,3 Bs/$.

    Second Fact:
    PDVSA sold to BCV 40% of Empresa Nacional Aurífera, S.A. (ENA) for $12.000 million, as referred by Setty.

    Third fact:
    The PDVSA financial statements also say (page 62) that in December 2013, PDVSA offset promissory notes for $21.524 million by way of payment method of the sale to BCV of 40% of the PDVSA’s interest in Empresa Nacional Aurífera, S.A. (see notes 10-a and 12). They also say (page 81) that the whole ENA selling to BCV was for Bs.135,600 million equivalents to $12.000 million.

    –Note that this offset would be around a third of the total debt of PDVSA with the BCV–

    —Note that PDVSA does not appear to have clear notion of what is the proper exchange rate to value that transaction, either is Cencoex rate of 6,3 Bs/$ (US$21.524 million) or some sort of SICAD I rate of 11,3 Bs/$ (US$12.000 million)—

    Fourth Fact:
    The offset of the BCV liability mentioned by PDVSA is nowhere to be found in the official BCV financial statements, as a matter of fact, according to BCV the PDVSA “pagaré” is untouched and growing since PDVSA “paid” it. Maybe PDVSA really paid it, sent the check and the motorizado got lost in his way to Carmelitas, maybe.

    Well, don´t let me start with the monetary implications of PDVSA paying its debt with the Central Bank with shares of phantom enterprises…


  4. First problem for the Regime and Pdvsa is not to go broke by failing to pay the forex bonds and other forex financial papers as they become due at the end of this year and the next couple of years . Thats Pdvsa and the regimes first priority , That means convincing the world that its safe to roll over the payment of those bonds until much later . That in turn needs Pdvsa and Regime improving its forex external balance . To begin to do that first they have to put on hunger rations all the forex needed by the country to maintain or import the supply of services and goods it needs to carry on with its life (except that the rationing will be less severe for food staples and the like ) ,Second they have to come up with new forex revenues or free up forex resources which are currently commited to other purposes such as the supply of oil to Petrocaribe.

    To increase forex revenues they have to increase production , because production in future is of necessity mostly of extra heavy crude oil more which can only be sold by upgrading it or by mixing it with distillates and other refined products or with light crudes (which production is fallen and which import is very expensive ) thus they are forced to invest heavily in new upgraders in new refinery installations and in new production and transportation infrastructure which is very costly and time consuming to build , because there isnt enough money for those investments they have to convince international oil companies and service companies to do the investment for them , that in turn requires making those international companies confident that any commitments will be honoured ( despite the past) and that the money will be there to pay them back their investment in the future , There are a lot of deals with international parties along these lines but the money has been very slow in coming ( maybe because the confidence is not altogether there)
    The other (quicker) way of improving the forex financials is to cut down seriously on supplies to petrocaribe ( we know however how emotionally difficult that would be for the regime)

    If that werent all, there is the added problem that despite Giordanis defenestration , Ramirez represents just one faction within the regime and that there are other factions ( including Maduros and Cilias own) that hunger to control the ‘riches’ of Pdvsa and which see the shadow of Ramirez influence as threatening their own dominant position within the power structure .

    At the end we might see Ramirez become the new Giordani , unseated from Pdvsa, bearing the blame for all the regimes failures and corruption or see how after the regime use his plans to get to the roll over of the bonds payments it ruthlessly attends to his political beheading . .The games played inside the regime inner circle are nothing like those played in a kindergarten . The full story of these internal rivalries have yet to unfold., we are in for an interesting period . .


    • Bill,

      It is axiomatic that once a totalitarian communist regime has plundered and destroyed the crops and herds, they will resort to cannibalism. The pie is getting smaller and smaller. The debate within Chavismo is who to sacrifice. Indeed, it will get “interesting”.


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