Friday, 16 January 2009

PDVSA Falls Behind on Payments to Large Oil Services Companies. We Stick to Our Limited Default Scenario

Dow Jones reported that Venezuela's state-owned oil company has fallen several months behind on payments to oil service companies including Schlumberger Ltd. and Halliburton Co., as well as other suppliers (we heard from authoritative sources last week that some of the latter are rig leasers and fuel components suppliers.) Here is the link to the DJN story. The source of the Dow Jones information is PDVSA head of finance Eudomario Carruyo (yes, the guy in the photo.)

According to executives of the companies affected, PDVSA stopped paying them in August and the debt to all suppliers may have risen by as much as $3 billion, said Dow Jones. One of Market Memorandum sources put those debts at $4.5 billion -- in the nine months through Sept., unsettled accounts with suppliers jumped 39 percent to $7.9 billion, compared with $5.7 billion in the same period of 2007. ''French oil services company Schlumberger and Halliburton are now owed a combined $800 million to $1 billion by some estimates,´´ according to DJN, which added that Carruyo said "the amounts (owed) are important, but manageable.´´

We reiterate that PDVSA will continue delaying payments to suppliers, and perhaps soon will begin reworking joint ventures to build refineries in friendly countries, especially in Latin America. The situation will exacerbate until at least Feb. 15 (the date of the referendum that seeks to eliminate presidential term limits.) A PDVSA's default on bondholders is highly unlikely at the moment.


  1. The question I have is what money has PDVSA actually spent on capital investments in other countries up to this point. I've seen subsidized fuel for Cuba, diesel for Bolivia, and heating oil for the Kennedy Family program for the poor of Boston (whatever anyone thinks of Chavez, the heating oil program run by young Kennedys has been a great and important social program for a couple of decades now and should not be tarnished for taking handouts from anyone). We've also seen lots of talk about refineries in Brazil, the Caribbean and Central America and on E&P plans for Cuba, Bolivia and I believe Ecuador, but has anything actually been spent on anything but subsized fuel handouts, even when the price of oil was at in the stratosphere? I suspect they spent just about nothing. The refinery in Recife with Petrobras has yet to receive a penny from Chavez despite three dedication ceremonies, two of which Chavez attended. Petrobras publically says they will build the refinery with or without Chavez. PDVSA seems almost totally incapable of planning and carrying out anything more complex than fuel sales, half-assed refinery operation and output from easy, technically unchallenging fields. If they couldn't spend the money when there was lots of it they are not going to spend any more now that the money has dried up. Solidarity be damned.

  2. Yes .. Cuba had a refinery reworkedd, and the Vennies are building refinreries in Jamaica and Nicaragua too. They are also commotted to build three refineries in China (they wont escape from that one.) They are investing, yes, but fore sure the biggest chunk is realted to fuel subsidy programmes.

    thnaks for writing Grouch!