PDVSA investment surged in 2011, missed goal (and other annual report stuff)

PDVSA, Venezuela’s state oil company, spent $17.5 billion on capital investment last year, 32% more than it spent in 2010. The spending was lower than the goal of $18.4 billion it announced in July 2011, and much lower than the $31 billion it projected a year before that. Still, investment is investment — and it’s something that actually matters for a state oil company, unlike net income.

The investment plan has been pushed back again, as usual. See if you can spot the difference between these tables:

Well, enough about investments.

Production

The company claims to be producing 3 million barrels a day of crude. The country’s own reports to OPEC give a lower figure (2.8 million in March, according to Platts). It’s like the guy who confesses an affair at church, and then goes home and lies to his wife. Really bizarre behaviour.

Natural gas output was 7.1 million cubic feet a day, with 2.9 million getting reinjected and 4.2 million available for consumption (gestion, p. 65). Meanwhile, PDVSA says it sold 1.5 million cubic feet a day of gas on the internal market (gestion, p 136). WTF?

Exports, domestic consumption

PDVSA says domestic consumption fell 4.2% to 646,000 barrels a day of products, mostly on reduced use of gasoline for motor vehicles. It may be true, I don’t know. Since so much of the consumption is contraband, it’s possible that the reduced availability of fuel along the Colombian border is paying off. Or maybe, with the end of the drought in 2010, hydroelectricity supply has become more stable, and companies are probably using fewer portable generators. The average price of liquid hydrocarbons in Venezuela in 2011 was $7.23 a barrel, about 93% less than the $100.11 average price for exported oil and products, and indeed lower than the official production cost of $7.53 a barrel (gestion p. 65). The weird part of that is that the domestic sales price supposedly doubled from $3.67 a year earlier, going back to the pre-devaluation 2009 level. Did PDVSA start charging more for fuel in 2011 and not tell anyone? WTF?

Natural gas consumption fell 17%, even as a power plant switched to gas from fuel oil. The average price of natural gas on the internal market was 88 US cents per standard thousand cubic feet — almost US$5 less than the price of buying the stuff in Colombia.

The report claims 225,000 barrels a day of oil shipments to “China.” It’s unclear whether that means, China the country, or China the owner of big oil companies that pick up Venezuelan crude and take it wherever they feel like. I am guessing the latter — it’s one of the better ways to make the numbers add up.

The good news

Hey, it’s not all bad news. The report came out the most promptly I’ve ever seen. I am betting that they were able to get this work done because Pres. Hugo Chávez has been busy dealing with cancer and hasn’t been calling up all the top executives to spend endless hours in meetings every few days, sending every accountant and lawyer to endless hours of rallies and hauling oil engineers off to pursue pet projects. Heck I think it’s been a good six months since PDVSA got a new mandate.

This may bode well for Venezuela’s fortunes. Maybe the state oil company is for once in a decade trying to produce oil in a safe manner rather than running around like a $100 billion a year presidential concierge.

Sources

For those of you who can be dicked with this sort of thing, here are the reports, all in PDF format in Spanish:
PDVSA 2011 informe de gestion
PDVSA 2011 social & environmental report
PDVSA 2011 financial report

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8 thoughts on “PDVSA investment surged in 2011, missed goal (and other annual report stuff)

  1. ghfha

    “I am betting that they were able to get this work done because Pres. Hugo Chávez has been busy dealing with cancer and hasn’t been calling up all the top executives to spend endless hours in meetings every few days, sending every accountant and lawyer to endless hours of rallies and hauling oil engineers off to pursue pet projects”

    LOL

    ergo, if HC moves permanently to Cuba, Venezuela will turn around.

  2. Dr. Faustus

    “The average price of liquid hydrocarbons in Venezuela in 2011 was $7.23 a barrel, about 93% less than the $100.11 average price for exported oil and products, and indeed lower than the official production cost of $7.53 a barrel (gestion p. 65).”

    Imagine how much revenue could be generated to Venezuelan coffers if the price of gasoline were ‘only’ 50% less than the current world market rate. The insanity here boggles…….

  3. hvalbye

    $7.53 is an amazingly low production cost level. Is that an average of all on-line fields? Including all operational and capital costs? Brake-even level? Shipment ready crude?

    Oh, and they’re not ramping up capital expenditure for the upcoming election and oil financed PSUV propaganda?

    1. sapitosetty Post author

      Their words: El costo de producción por barril (para el petróleo, el gas natural y el líquido del gas natural), es calculado dividiendo la suma de costos
      directos e indirectos de producción (excluye la depreciación y el agotamiento), entre los volúmenes totales de la producción de petróleo, de
      gas natural y el líquido del gas natural.

      No, not ramping up capex, actually planning to cut back this year, to $16 billion from $17.5 billion in 2011. Apparently, even PDVSA accountants don’t consider elections to be capex. I rather appreciate that they are overt about planning to spend less on capex this year than last.

  4. AIO

    I really like looking at the out-year investment figures. In 2007, they’re minimal, pretty much double in 2008, close to double again in 2009 before getting cut almost back to 2008 levels in 2010. Then in 2011, they’re back to 2009 predictions. They know full well they need to invest in huge quantities to remain viable, but they can only sometimes admit it. And here’s one little shocker – real 2011 investment exceeded 2011 investment as projected back in 2007.

    I like how they started projecting “refinacion internacional” for 2011, and in the 2010 report just included “refinacion existente.” I wonder how much of that was paying other people to refine their stuff because capacity at home was failing.

    1. sapitosetty Post author

      It is interesting, though I maybe didn’t give enough context. In the 2009 crisis, they did some strategic retrenchment and eliminated plans for refineries in Nicaragua, Cuba, Jamaica, etc. The only ones still on the drawing board are in China and, I think, something in Cuba.

      Also, I’m not sure about this, but my impression is that part of the change is that the cost of materials changes a lot from year to year. It looks like the company’s planning outlook varies with current pricing in the market, rather than being based on a fixed projection for the cost of materials, oil price, etc. Hence, when materials are expensive, as in 2008 and early 2009, the projections soar, and then they drop hard in 2010 as market prices and costs decline.

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