Pdvsa fails to receive forex for 25% of oil export
Ecoanalítica estimates that since 2006 the state-run oil holding has stopped charging USD 800,000 barrels per day
ERNESTO J. TOVAR | EL UNIVERSAL
Saturday February 08, 2014 12:00 AM
Venezuela's economy undergoes a significant restriction in the access to foreign currency which harms the import of inputs and primary goods for production-related activities.
The Venezuelan oil basket amounted to USD 99.49 per barrel in 2013 and USD 103.42 in 2012. However, the Foreign Exchange Administration Board (Cadivi) owes the Venezuelan private sector at least USD 13 billion in payment for authorized imports.
Nevertheless, the Venezuelan economy, which gets 96% of the foreign exchange from the oil income, shows a decline in the barrels of oil effectively charged.
For more than one decade, the oil diplomacy of the Venezuelan government has focused on shipment of oil to allies in Central America, South America and the Caribbean, in exchange for goods and/or services and with relaxed payment terms and conditions. Add to this the repayment of the Chinese-Venezuelan Joint Fund,
under which China pays in advance and with loans denominated in foreign currency the oil barrels to be sent from Venezuela.
Exports with payment in kind or against credits do not leave US dollars for the cash flow of Venezuelan state-run oil company Petróleos de Venezuela (Pdvsa), lessening, in this way, the amount available to the Central Bank of Venezuela (BCV) and intended to thicken international reserves.
At least 25% -620,000 barrels per day (bpd) of oil- out of 2.48 million bpd exported by Pdvsa last year gave no foreign currency to Pdvsa funds. They form part of the aforementioned trade agreements or borrowing facilities.
Based on Pdvsa's latest Annual Report 2012, during that fiscal year, Pdvsa shipped to Petrocaribe Member States 121,000 bpd of oil and byproducts; 117,000 bpd to the parties to the Cooperation Comprehensive Agreement (Argentina and Cuba), and about 29,000 bpd to the parties to the Energy Cooperation Agreement of Caracas (Bolivia, Paraguay y Uruguay).
As to the Chinese Fund, about 350,000 bpd are counted to honor the loans granted by China.
Control and discretion
Venezuela's oil output in 2013 was around 2.78 million bpd, according to data of the Organization of Petroleum Exporting Countries (OPEC).
By adding the Venezuelan domestic market (about 700,000 bpd are sold at very subsidized prices with annual losses of USD 12 billion on account of gasoline and diesel) to the oil exports not charged in cash by Pdvsa, Venezuela has not received foreign currency for approximately 1.32 million bpd, almost 47% of its production.
Asdrúbal Oliveros, the CEO of think tank Ecoanalítica, notes that Pdvsa charges 1.3 million-1.4 million bpd.
"Comparing this with 2006 (when Venezuela charged 2.15 million bpd), it happens that now 800,000 less barrels produce cash. Had the cash producing output remained by 2013, this means USD 29 billion in losses," Olivares underscored.
In his opinion, the design of the exchange control is mistaken, but he also suspects of cash troubles.
The expert recommends a revision of cooperation agreements. "First thing is Petrocaribe. They'd rather pay in cash."
Olivares noted the geopolitical character of Petrocaribe, as well as the fact that the Venezuelan government controls the trade of goods and services. "Distribution and management of such products is in the hands of the (Venezuelan) Executive Office."
Also, in this regard, a paper recently released and signed by 47 Venezuelan economists notes that "international reserves should raise as the BCV will receive again a high percentage of the foreign currency for oil export; both the Republic and Pdvsa should outline at once a prompt recovery plan with regard to the enormous numbers of oil sales financed in the long term or in arrears, to several countries in the (Latin American) region."