The lost money in oil

respinassaRamón Espinasa, former chief economist of PDVSA and currently a professor at Georgetown, published an outline of the oil industry fifteen years after Chávez was elected (here, in Spanish).

I thought it contained interesting tidbits. For example:

  • In 1998, each PDVSA employee was responsible for producing 83 barrels of oil per day on average. Today, it is 23 barrels of oil.
  • Average costs per barrel have shot up from $4 to $24.
  • Had we maintained production levels and other commercial conditions just like they were in 1998, in 2013 we would have increased our oil sales by a whopping $63 billion.
  • PDVSA has to shell out $4 billion every year … just to pay interest on its debt, most of which was acquired during the last fifteen years. That’s roughly 10% of its annual income – not profits, income.

Read the whole thing. It paints a bleak picture of what our bread-and-butter industry has become. #PeroTenemosPatria

3 thoughts on “The lost money in oil

  1. There is a presentation made by Espinasa in Harvard last may in which he examines the history of Pdvsa and the various stages in its growth consolidation and ultimate fall with a lot of interesting data , specially towards the end . It might be read in conjuction with this paper to have a full picture of the present situation .!!

    Thank Espinaza for a much needed really meaty piece of information on the Venezuelan Oil Industry .


  2. But the Venezuela’s loss was others’ gain specially Colombia (“No country has benefited more from the Venezuelan exodus, however, than one next door. Colombia’s oil output was declining at the time of the purge, falling from 687,000 barrels a day (b/d) in 2000 to 526,000 five years later. Today, average daily production stands at around 1m b/d. Much of this renaissance is thanks to the Venezuelans”), Canada, Mexico, USA,…. Nice piece in The Economist this week on the Venezuela’s oil diaspora, Brain hemorrhage;

    The nation biggest loss is in these professionals and the Oil intelligence spell allover the world, production declining rates in Venezuela’s conventional fields require maintenance and investments to extend production of wells/fields so with all the expropriations of services providers to PDVSA (not compensated to date) and the mismanagement explained very well by Ramón Espinasa is why there is a decline from 1998 up to now of -40% production in Conventional oil in Venezuela! The country has increased production only at Faja extra heavy and at very high cost. At times of revolution the cost of Services in the Oil industry for Venezuela (thru PDVSA mismanagement) is the highest in LATAM (as per public reports of firm working in Venezuela making high profits and getting pay!) definitely having a Che Guevara post or the Comandante Supremo picture at PDVSA walls instead of Technical and Reservoir Engineering plots and diagrams and being run like a political party is definitely not helping our most valuable asset, until this changes there is not a very promising recovery in horizon for “La gallina de los huevos de oro”


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