Monthly Archives: July 2010

Making drivers pay for gasoline? Capitalismo sauvage, etc etc

Chile is “changing” its fuel tax regime, with the goal of eliminating costs to the state that added up to $2.34 billion between 2000 and 2009, according to the finance ministry. To put that into plain English (or Spanish, as the case may be), they are going to raise fuel prices and reduce the state subsidy. (It would be deceptive to say they are making drivers pay for the full costs of their fuel, as they still don’t pay for the incredibly high cost of lousy air in Santiago. But I digress…)

A few little points:
-Hooray for consistency in free-market rhetoric. Fuel subsidies are one of those places where right-wing talkers usually fall silent. Given the painfully high cost of being poor in Chile, it’s nice to see a measure that will disproportionately tax the rich.
-It will be interesting to see if there’s any effect on the government’s popularity. I doubt it. Personally, reading the press release, and the even more complicated PDF presentation I have no way of knowing who will pay more, or when, or how much.
-I can think of a few bigger energy consumers that might benefit from a fuel price stabilization fund that boosts fuel prices when they are low and cuts them when high.

Maracaibo maritime industry collapses, El Mundo says

Check out this incredible report from today’s El Mundo. A reader who alerted me to the story points out that the main topic has little to do with the headline, and sends this synopsis:

Report on economic situation from east coast of Lake Maracaibo. Several service company owners report that they were owed millions of Bs by PDVSA before the nationalization. Since being expropriated they haven’t been paid anything at all. Minister Ramirez now says they won’t be paid because they’re “golpistas”.

Many of the assets that were taken over (boats, tugboats, cranes, barges, etc.) are falling into disuse or have simply disappeared. One ex-owner owned crew boats, he went to check recently. Several boats have been destroyed by fires; or engines ruined due to misuse and lack of maintenance.

Also mentioned is loss of income to the municipalities. Formerly they received the municipal sales tax, which was 2% of the gross sales made by each of those companies to PDVSA. That was one of the acknowledged purposes of the expropriations; to cut off funding to local opposition government
bodies.

Setty here: my favorite paragraph, translated:

PDVSA took a total of 97 tugs, of which only 20 are currently working. The dive boats absorbed by the state add up to 80, of which only 16 are active. While of 30 barges expropriated, half are stopped.

Worth a read.

PDVSA nationalization notes from here and there

T-shirt: Contra la agresiĆ³n imperialista, no ExxonMobil

T-shirts distributed by state oil company Petroleos de Venezuela SA during court fight with Exxon Mobil Corp. over a $12 billion asset freeze, Valentine's day 2008.

Along with the ongoing hullaballoo over PDVSA’s takeover of 11 oil drilling rigs from U.S. contractor Helmerich & Payne, there are other, lower-profile Venezuela nationalization stories floating along.

As Reuters noted last week, OPIC (not the U.S. government agency, but the Taiwanese oil company) filed June 16 for arbitration against Venezuela through the International Centre for Settlement of Investment Disputes. The case arises from OPIC’s stake in an oilfield that Venezuela took over when the operator, ConocoPhillips, left the country in a fight over another nationalization. Confused yet? This brings to 11 the number of pending ICSID cases in which Venezuela is the respondent. Still a long way to go to catch up to Argentina, which has 28 active cases against it. (Still #1 in something, those Argentines!)

Meanwhile the usually reliable Petrofinanzas is reporting that PDVSA reached a settlement with Williams Cos. for the purchase of Williams’ stake in Accroven, one of the projects that Venezuela took over last year in its blitz on oilfield service companies that had control over strategic assets. The article goes on to cite “industry sources” (really horrible term) that PDVSA will soon settle up and buy the expropriated Pigap and Furrial natural gas injection plants. If this happens, it should be big news for Williams Cos.

I don’t know if any of this is true. But if so, it would be business as usual for PDVSA — make a big fuss about the being such hard-core nationalists and seizing assets and stickin it to the Man, while at the same time, with no press releases, paying up and getting on with business. I’m not going to tell anyone with money at stake that they should count on PDVSA’s good intentions, but it’s also important to note that a lot of the revolutionary blah blah blah is just a bunch of hot air for domestic consumption.

Tidbits from the region

Light posting continues, but here is a quick roundup of stories you may have missed:

Tasty tidbits

Mmmm tidbits

PDVSA says its Lake Maracaibo oil leak is just 8 barrels a day. Or is it 8,000? Someone is mishearing something somewhere.

A leaked poll of Venezuelan public opinion finds that raising gasoline prices is even less popular than converting the country to socialism. (See page 33.)

Clean diesel comes to Medellin, Colombia, causing grave concern for makers of childhood asthma medicine.

Venezuela electricity figures are offline. The CNG, which runs the web site at OPSIS.ORG.VE, say it’s just a server problem, and not the Obama-esque new secrecy decree.

Before the site went down, some of us grabbed the May data, which showed that diesel consumption in power plants grew to 74,000 barrels a day, 28 percent higher than a year earlier. The opportunity cost of burning diesel fell to $6.31 million a day from $6.41 million a day in April, as Gulf Coast diesel prices fell. What, you want a pretty picture?

When the last data was provided June 21, Guri Lake was filling at an average of almost a foot a day. If these rains keep up, the authorities will have to open the floodgates before the end of the rainy season. And weather forecasts from IRI keep getting rainier.

Non-energy item: Something weird happened with the Mercer cost of living survey this year. Caracas fell from the 15th most expensive city worldwide down into the middle of the pack, at #100. I’m guessing that the nice people at Mercer realized they didn’t have to convert local prices at the official exchange rate — not only don’t you convert at the old 2.15 a dollar, but you don’t convert at the new 4.3 either. Convert at a black market rate and Caracas becomes manageable. As long as you’re not trying to buy a country club membership. Does that say 900,000 bolivars? Why yes it does.

While the world waits for Chile’s oil company, ENAP, to privatize some shares a la Ecopetrol and Petrobras, the government prefers to shift the company from one ministry to another and sell some bonds.

Did I say bonds? Oh yeah, Citgo sold a much reduced number of bonds, just $300 million rather than $1.5 billion. It got another $1.8 billion from banks. The general idea remains the same as I previously reported: they got earlier creditors to accept a higher debt-capital ratio, and they are still mortgaging the refining business and accounts receivable in return for the loans.

PDVSA got a new syndicated credit for $1.5 billion from Chinese and Portuguese state banks. Year-end 2009 debt report available here if you’re feeling wonky.

Petrovietnam will pay $584 million to PDVSA to start up a joint venture to pump oil from the Junin 2 block of the Orinoco Belt. Ah, and to think it was just a year ago that a big Vietnamese delegation visited and was given badges that identified them as coming from “Vietnab.” And didn’t PDVSA just recently pull out of the joint venture refinery project in Vietnam, which would have secured the investment. Oh well. First thing you learn is you always gotta wait.

In other news: men kick balls.