Venezuela No Longer to Certify Oil Export and Production Numbers

March 30, 2011

Just when Venezuela needs to send positive signals to world markets, as it intends to sell more and more debt internationally, the Venezuelan Government and PDVSA do exactly the opposite and decide to cancel the contract with the independent auditor Inspectorate that was hired two years ago to try to convince the world that Venezuela’s production and export numbers as reported by OPEC and the IEA are wrong. Both of these institutions have been reporting that Venezuela’s official oil numbers are significantly above those obtained by them from their independent analysis.

Neither PDVSA nor the Ministry of Energy and Oil gave much of an explanation for the cancellation of the contract. The auditing company is closing its offices in Venezuela.

What this will do is create further uncertainties in the country’s numbers which will not aid in reducing the so called credit risk of Venezuela at a time that the country needs to issue more and more debt. This means that issuance of the country’s debt will be more costly that the country’s numbers justify. Last week, Knight Securities suggested that the country’s handling of official news and statistics and the lack of a clear spokesman for the country on financial matters is making it more expensive for the country to issue debt. In a report entitled “The Monk’s exorcism boosts our faith in Venezuela” the company suggests it costs Venezuela 200 to 300 bps because of the way information is managed by Minister Giordani.

In the same report, PDVSA said that exports in February were 16% lower than those in January and this week international reserves at the Venezuelan Central Bank dropped to their lowest level since 2007, despite the Venezuelan oil basket averaging over US$ 100 per barrel last week.

17 Responses to “Venezuela No Longer to Certify Oil Export and Production Numbers”


  1. [...] Venezuela oil output: “Audited” no more Devils Excrement gets around to the story before me. [...]

  2. Alek Boyd Says:

    To be expected, I sort of cringed when I read Setty not long ago bragging about some back of the envelope calculations he did based on “a guy who knows a guy who knows another guy from some company…”

  3. tleon Says:

    Cristina Fernandez wipes away tears, the president is dressed entirely in black, the color of mourning that she has worn each day since the death of her husband five months ago for Hugo the great human rights and freedom of the press supporter has arrived with another suitcase full of money to help in her election.

    Makes one wonder what else Hugo gave her in his private meeting with her. Guess all will know when she changes her dress color and panties to red.

  4. geronl Says:

    I don’t think people should believe statistics from any government, especially one like Hugo’s.

  5. Gordo Says:

    It believe that if Venezuela gets into a cash flow crisis, it can cause serious paralysis of the economy. Am I wrong?

  6. moctavio Says:

    The Government can always devalue and solve the problem…it has been the standard solution for almost 30 years. The people pay for it with inflation.

  7. Guglielmo Tell Says:

    Miguel,

    It would be interesting to know the speed PDVSA’s of the oilfields decadence rate. It is not linear, as data from depleted oilfields in the USA, Mexico, and the North Sea have shown.

    I am no expert, but I would bet mismanagement has aggravated this geological situation.

    On the other hand, and with only a hunch as support, I think Venezuela’s finances are a mix between Friday the 13th and The Exorcist:

    – PDVSA is exporting and getting paid for roughly 1 mi bbl/d. That adds up to some $80 mi per day or $2,4 bi a month.

    – But… This is only gross revenue. What are PDVSA’s lifting costs, Capex and so on?

    – And… Equally important, how much is PDVSA-Government spending on foodstuffs? We know that to continue with their “revolution”, i.e. a systematic process of blackmail and “limosna”, they need to import vast amounts of sugar, meat, corn, wheat, etc., all of which have rallied more than oil in the las 12 months!

    And unfortunately, those exporters do not accept devaluated bolivars as payment method. In fact, I would be surprised they even extend normal credit (BL + 30 days, etc.).

    Really, my guess is that Venezuela’s cashflow is getting doubly squeezed by PDVSA’s ruin and the soft commodities rally.

    Anyone shares this point of view?

  8. Ira Says:

    Guglielmo:

    Do you think Hugo would be playing nice with SANTOS to restart Colombian imports into VZ, unless he knew how desperate the situation was?

    And do you believe that Hugo knows or cares about the horrible financial impact this has on the country–importing basic foodstuffs that should, and were in the past, produced in VZ?

    This asshole has no long-range plans for VZ prosperity, because he simply doesn’t care. He only cares about staying in power, and he spews out a new bullshit every other day to convince the morons that his motives are otherwise.

    So yeah–I agree with you.

    And did you know that the Continental Congress and after wanted George Washington to run for another term, but he refused, saying basically:

    “The foundation of ANY democracy has to be a President serving a very limited number of years. Otherwise, corruption and the destruction of democracy is inevitable.”

  9. Speed Gibson Says:

    its fun to watch a slow motion train wreck

  10. Groucho Marxist Says:

    Speed Gibson: “its fun to watch a slow motion train wreck”

    So long as you’re not IN the train, then yeah.

  11. Carolina Says:

    To add to the mix, I saw this in the news yesterday:

    http://www.nytimes.com/2011/03/31/us/31obama.html?pagewanted=all

    I’m in Alberta, so this was good news for the local oil industry. At the same time I thought to myself how would affect Venezuela’s oil exports.

  12. Kepler Says:

    Alberta in California or Alabama? Or Alberta in Virginia?

  13. An Interested Observer Says:

    This is news? It certainly doesn’t change anything.

    Hey, there is a bright side here – the government stopped throwing money into something that accomplishes absolutely nothing. If only there were a reason to think this was the beginning of a trend.

  14. Deanna Says:

    Interesting, isn’t it, that Obama is starting his re-election campaign soon!!!!


  15. [...] Venezuela No Longer to Certify Oil Export and Production Numbers [...]


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