PDVSA has posted online English versions of its 2009 full year, 1st-half 2010 and 1st-half 2009 financial statements. Now you know.
Monthly Archives: October 2010
Another little bit on Citgo
One more little bit about the possible sale of Citgo and other overseas assets. I hear anti-Chavistas now and then slam the idea of selling overseas assets as a giveaway or otherwise stupid.
These sales are pure profit. Venezuela bought the refineries cheap. Ruhr Oel, recently sold for $1.6 billion, was bought in 1983 for $250 million ($548 million in constant dollars), all of which is surely depreciated away. Explain to me again how it’s bad to cash out on an investment after tripling your money? I suspect that critics don’t really think selling Citgo is a bad idea. They just want the sale to wait so they and their pals can handle the billions of dollars in a more responsible manner — which in Venezuela is a euphemism for the money goes into my Miami condo, not yours.”
Citgo’s Corpus Christi refinery was bought in two parts for a total of $249 million. Lake Charles was $965 million. All of this money was spent in the 1980s, more than 20 years ago.
Some say Venezuela will lose an outlet for its crude. They ignore that when NuStar bought Citgo’s asphalt refineries, the new owner was very happy to sign a long-term supply contract with Venezuela. A refinery without crude isn’t very useful. There are other sources for heavy crudes, but PDVSA can certainly structure a sale to ensure that it keeps access to the U.S. market.
Even former PDVSA President Luis Giusti, who is no fan of Chavez, told me in an interview back in 2007 that it made sense to consider a sale of Citgo if the price was right.
Special note to the many new readers from Citgo: Thanks for visiting. You should feel comforted knowing that many of your coworkers have been visiting too. Any thoughts are welcome. Even if you just want to tell me I’m wrong. Your confidentiality assured, of course. One hint: if you do want to share anything confidential, do yourself a favor and don’t write from your work computer.
Is a Citgo sale really in the cards?
Yesterday morning I was surprised to see Jose Suarez Nuñez, one of the most connected and knowledgable oil reporters in Venezuela, saying that the country would sell Citgo because it didn’t have enough oil to supply both Citgo and its new commitments to China. Venezuela has had Citgo up for sale for years, but there have been a few problems:
1. It’s awful useful for Venezuela to keep it.
2. Nobody wants to buy it — at least not at the prices that Venezuela wants.
Long-overdue post on Chavez punishing Tea Party
Venezuelan President Hugo Chavez said weeks ago he would nationalize Fertinitro, the fertilizer company. That’s the same one I mentioned months ago as being controlled by Koch Industries, the same Koch that created two of the five richest men in the United States and the same Koch that has funded the Tea Party movement. There are those up north who seem to think that their enemy’s enemy is their friend, and so this nationalization is good.
Chavez makes Charles Koch his bitch!
I wonder what would happen if Bloomberg had used that headline.
Fertinitro, aside from being a Koch property, is also partly owned by Eni SpA unit Snamprogetti. The Italian oil company just can’t catch a break in Venezuela. It previously lost its Dacion oilfield. It didn’t like Venezuela’s offer of compensation and filed for arbitration. But then, when Pdvsa dangled an Orinoco Belt project in front of it, Eni rushed to cancel its arbitration process and accept a settlement. That Orinoco Belt project is officially happening, but as far as I have heard, it’s going slower than tar-like crude in the snowy Alps. Now this.
Speaking of the Alps, totally off-topic, I have been loving these videos.
More Chinese rigs to South America
This time via Peru, according to this report from the Peruvian state newswire. (h/t China South America):
# Lima, Oct. 22 (ANDINA). Chinese corporation Kerui Group announced its interest in entering the Peruvian market by setting up an oil and gas equipment plant with an initial investment of US$10 million.
The President of Shandong Kerui Group Holding Corporation, Yang Xian, explained that this venture into our market aims to meet oil equipment demands of countries such as Colombia, Ecuador, Venezuela, Bolivia and Brazil
The company’s purpose is to benefit from the excellent geopolitical location and the favorable business environment of Peru.
“Politics and economic activity in Peru is better than in other Latin American countries such as Venezuela. We can strengthen our presence in Latin America from there, that would be our next task,” he pointed out.
Note the little dig at Venezuela. Like the USA or any other commercial powerhouse, China is happy to jab countries in the ribs for being unfriendly to investment. In the case of Venezuela, Chinese companies have had to back out of a lot of plans because of slow permitting and because local laws that require the Chinese firms to use mostly Venezuelan workers, rather than their usual tendency of hauling in a bunch of expats. I don’t know much about how Peru compares on these fronts.
One thing this Chinese company may find is that South America’s road and rail network isn’t well set up for international trade. Moving an oil rig from Peru to eastern Colombia, Venezuela or the new prospects in Suriname and Guyana? May as well haul it over from China.
Gold ugliness from Peru
Gold mining in Madre de Dios, the area of eastern Peru near Brazil. Some photos from behind these disturbing numbers. It’s a fantastic photo essay. Among other things, it shows that some people can work their way up from poverty in the gold fields, such as the lady who used her money to buy heavy machinery, and it shows that the “legal” mining, while permitted, lacks such basics as “knowing what to reforest” and “a system for collecting solid waste.”
Nothing will be done
Today’s El Mercurio shows that Chile isn’t likely to do squat to improve worker safety in the wake of the San Jose mine disaster.
While the country has leapt to jail a stressed-out kindergarten teacher who killed a student by forgetting the girl in a hot car, the owners of the San Jose mine continue to walk the streets.
El Mercurio has the scoop of what the country is planning to do to reform workplace safety. Will state companies stop buying from mines with active safety complaints? Will gross negligence become a criminal, rather than civil, affair? No and no (unless you’re a kindergarten teacher).
The measures being contemplated are a portrait of mealymouthed bureaucratese:
-Certify workers in best safety practices
-Do something or another to get the safety organizations to focus more on small companies
-Encourage small companies to create “joint committees,” which I guess means worker-manager committees
-Move bureaucrats from one part of the labor ministry to another
I think the test of the reforms should be “would any of these have prevented the San Jose mine collapse?” And the answer in this case is clearly no. The workers didn’t need more safety training — they knew damn well the mine was unsafe. The insurers and the government safety company didn’t need more knowledge — they are world leaders in knowledge of mine safety. Joint committees? To discuss what? A reorganized labor ministry? Why? The problems here were a lack of mine inspectors and a lack of teeth in any inspections that may have happened. The mine was closed for safety violations and was reopened. The opening of any inherently risky workplace like a mine or factory should require a complete safety inspection, paid for by the company. Any owner of a workplace where workers die on the job should be investigated. Any workplace that accumulates some amount of valid complaints from workers and authorities should lose its right to exist, much less to sell its products to the state.
This is the bad news of the mine rescue. By saving the workers’ lives, the government seems to think it has excused itself from real reform.
You saw it here first
Nice to see Bloomberg & Reuters following me on the PDVSA arbitration story. Note to potential clients: scouring obscure documents is something I’m pretty good at. Let me know if you have something you want me to look for: email@example.com.
Now we’re all friends here (literally!) so I’m not going to get bitchy about this, but I need to note that when a small publication like this one scoops the big guys, it’s considered to be the polite, ethical thing to do to give a little link or mention. For future reference, the phrasing is something like “The change was first reported on the Web site Setty’s notebook.” But you already know that.
Update: Thanks for the linky, Financial Times!
PDVSA-Exxon arbitration in home stretch
The following is all from a preliminary version of the new PDVSA bond offering circular. I am quoting it at length and highlighting in bold the parts that strike me as newsworthy. This is much easier than writing my own article, and in times like these (lots of paid work, not much time to kiss my girlfriend), lazy works for me. Your quick guide: below the jump is news on Exxon Mobil and ConocoPhillips, plus a little note on PDVSA’s provisions.
PDVSA revives “social contributions” in 1h10
PDVSA released some unaudited 1st-half 2010 financial figures and as usual there is a lot of weirdness there. A few of the interesting items to keep an eye on:
“Social development contributions” are up more than 10-fold in the first half, compared to the year-earlier period, at $4.47 billion.
PDVSA has restarted its contributions to FONDEN, with $691 million, a nice change after having received billions from FONDEN in recent years.
“Finance expenses” are listed at $3.38 billion in the first half.
Crude oil output fell 138,000 barrels a day, or 5%, liquid petroleum gas output fell 8% and natural gas production fell 13%.
Accounts payable at June 30 were $7.5 billion, about the same as at the beginning of the year.
(more to come soon, PDVSA-heads)