The other day, I presented a back of the
envelope calculation showing at what price of oil does the country start
having problems in its balance of payments. I am still reviewing those numbers,
my main small mistake was only that imports are higher than I assumed.
Today, I paid attention to
this Central Bank press release on the same subject. The first thing it
says is that the balance of payments was positive to the tune of US$ 2.93
billion in the second quarter of 2008. That sounds ok at first sight.
However, the report says that oil exports in the quarter, in
which the average price of the Venezuelan oil basket was US$ 109.9, was US$ 28
billion. Of course, such a number only makes sense if Venezuela exported 2.7
million barrels of oil a day. This does not even fit with official numbers!
The problem is that all of this data is simply fudged. They
talk about exports, but don’t mention imports of oil. Venezuela consumes at
least 800,000 barrels of gasoline a day, but Venezuela does not produce such a
large amount. Thus, the reality is that Venezuela may be “exporting” 2.7
million barrels of oil, but Venezuela is not getting paid for that many and in
the end it has to also import to satisfy the local market.
In fact, that the numbers are fudged, can be seen in the
next paragraph on the “financial account”. After telling us the country exports
US$ 28 billion, the Central Bank tells us that there was a full US$ 11.1 billion
in a financial deficit, a full 39% of the “income” from imports, which
corresponds to “the increase in the oil credits given to foreign clients which
are not related to PDVSA”
What than means in plain language is that PDVSA is not
charging for a full 39% of its exports or 1.05 million barrels of oil a day.
Which I don’t believe either, it is simply too large a number. The fudging is
simply getting too absurd. We don’t give away so much. As simple as that.
But let’s look at this from a different point of view:
The Government claims Venezuela produces 3.3 million barrels
The country consumes 800,000 barrels a day.
That only leaves 2.5 barrels a day for import, so the 2.7
million number given in the BCV report and calculated on the basis of the average
price of the Venezuelan oil basket in the second quarter has to be fake.
And so has to be the 11 billion in credits, we just don’t
give away so much oil.
It is just creative accounting. I am sure that these “credits”
hide the value of a lot of the gasoline imports of the country.
But we can “redo” my calculation using the final fudged numbers
given out by the Central Bank. The final numbers should be fine, they are harder to fake:
The Central Bank says that the surplus in the current
account was US$ 2.9 billion
The total for oil imports was US$ 28 billion. Thus, the “net”
surplus, including everything is only 10% of the amount from oil imports. Since
the average price for the quarter was US$ 109.9, then ten percent of this is
US$ 11, which says that if the price of oil dropped to US$ 98.9 per barrel, the
balance of payments will be negative!
Think about it, my very approximate number was too low!