Archive for September 7th, 2007

The grave has been dug by Veneconomy

September 7, 2007

While the militarization of PDVSA continues in the name of sovereignty,
true sovereignty is being thrown overboard as the company is not
investing, not drilling, production is down, projects are being
rejected even by oil companies from “friendly” nations, nobody (even
OPEC) believes the country’s production numbers and by the way,
whatever happened to the company’s financials? These guys can’t even
come up with them in the name of “sovereignty”. They are over five
months late and there are no excuses after so many years running the
the “sovereign” company. Whatever happened to transparency and
efficiency?

All that really matters is silly military games and
virtual enemies and obeying the autocrat. But they seem to be the enemy
as the Editorial from Veneconomy below clearly describes. They are the
true traitors to the sovereignty of the Nation.


(Note this guy is a financial analyst at PDVSA, maybe if he was not
playing military macho games and was at work, the company’s financials
would have been completed on time)

The grave has been dug by Veneconomy

This
week oil experts agreed on one point: a favorable outcome of the crisis
Venezuela’s state-owned oil company is going through is far from
certain.

It looks as though the absence of trained technical and
management staff, the lack of planning and the politicization of the
business, added to widespread corruption, will push PDVSA into
bankruptcy sooner rather than later.

The symptoms are already
apparent: PDVSA is not meeting its production expectations, the
refineries are in a calamitous state, a large number of wells have been
shut down, there is a deficit of some 120 drilling rigs, and production
barely reaches 3,300,000 b/d (according to inflated official figures),
a far cry from the production goal of 5,800,000 b/d.

Added to
this is the fact that Venezuela is apparently on the threshold of an
international lawsuit with ConocoPhillips and ExxonMobil, if the clear
contradictions between statements by John Lowe, ConocoPhillips’
Exploration and Production Executive Vice-president, and Energy and Oil
Minister Rafael Ramírez are anything to go by.

This Wednesday
Lowe stated that ConocoPhillips had agreed with the Venezuelan
government that compensation for its shares in Petrozuata and Hamaca
would be based on their “market value” and that negotiations were still
being conducted to determine that “value.” Then, on August 30, Minister
Ramírez declared that Venezuela would only pay compensation based on
the “original book value.”

According to estimates by analysts
with investment banks in New York, the difference between the two
values is considerable. The “original book value” of the four upgraders
is around $17 billion, whereas the “fair market value” would be in the
order of $33 billion.

Although ExxonMobil has not said whether
it has reached an agreement similar to ConocoPhillips’, it is to be
assumed that it did.

ConocoPhillips and Exxon have already
declared losses for the second quarter of some $5.25 billion
(ConocoPhillips $4.5 billion and Exxon (Cerro Negro) $750 million). If
these losses reflect the “original book value,” then the “market value”
could be in the order of $10 billion, at least. Venezuela does not have
that amount available and what is most likely is that Chávez will not
accept paying such a high sum to oil companies of the empire.

And
to complicate things still further for PDVSA, the most important of its
deals with China and Brazil are apparently falling through. What is
more, Chávez’ promises to build refineries all over the replace are on
the way to becoming empty words owing to the lack of funds, unless he
sells off other assets, Citgo for example, in order to be able to make
good his promises.

Unfortunately, the only things that do seem
to be functioning at PDVSA are communist proselytism led by Ramírez and
corruption at the highest levels, which has been extensively reported
by journalists who support the regime and revealed in the scandal of
the briefcase with nearly $800,000 confiscated in Buenos Aires.

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