Archive for June 10th, 2009

PDVSA Financials: A Magical Mystery Tour

June 10, 2009

For the last three days I have been staring at PDVSA’s financial statements. There are 161 pages of them. Supposedly audited by the same firm that has been doing that job since a while back. I like stuff like that. It may seem like boring reading to some, but numbers about Venezuela have become like a detective story. You keep tabs on Fonden, so that you can keep tabs on PDVSA, so you can check what the Central Bank says.

But it no longer works.

Assume for the sakes of argument, that PDVSA’s financials are right, audited after all by the local partners of a well known international accounting firm. Let’s say that is written in stone. I believe it. You too.

Then we are in trouble. Real trouble. Because in February the Venezuelan Central Bank (BCV) told us (and I believed them) that PDVSA had paid US$ 36 billion in taxes and royalties.

So, now that PDVSA reports that this number is US 8.3 billion lower at US$ 27.7 billion, who do I believe?

I have no clue.

And I look further…

In one of the many press releases (can’t link to them, but they are all in except that somehow they use non-standard links. But one of them shows us the ever controversial export table.

Let’s assume we are a bunch of stupid radical morons who don’t know how to count oil barrels. Ramirez is right, PDVSA is exporting 3 million plus barrels a day.

Except, that in the line item about the heavy crude operations, the table says PDVSA is exporting 785,000 barrels a day.

Wait! If the Faja only has an installed capacity of 600,000 barrels a day. And if some of the heavy crude upgraders were shut down for maintenance, how can you be producing 185,000 barrels a day more than the maximum, well above the installed capacity?

I have no clue. (Unless they add the crude used to upgrade, but true output is lower, exports are lower, so the table is misleading)

And Hugo Chavez exaggerated (Noooo!) when he said that people said PDVSA is bankrupt. Nobody has said that. PDVSA is not bankrupt, what it “owns” underground is worth a lot more than what it owes. But PDVSA is in trouble.

In trouble, because according to fourth quarter figures not published (derived from what was published) PDVSA lost money in the fourth quarter of 2008. And the average price of the Venezuelan oil basket in the fourth quarter of 2008 was US$ 52.87 per barrel, way above the average price so far in 2009, so we should see losses again in 2009. Not pretty.

Take any line item. Say assets. In June 2008, PDVSA said it had assets of US$ 135.7 billion. Then in December 2008, in the unaudited financials, PDVSA said it had assets of US 144 billion. But then surprise, surprise, assets went down to US$ 131 billion, that’s US$ 13 billion drop. I wonder, I know accounting can be an art, but losing 9% of your assets when you consolidate is certainly strange. What did you double count?

But it gets even worse with liabilities. In the unaudited financials, they reached US$ 144 billion, in the final audited version they are only US$ 106 billion. Incredible, no? That’s a 26% difference. Do these guys have a clue? Or are we being screwed?

Even profits changed drastically.

In December we were told in the “Memoir” that PDVSA made US$ 12.1 billion, but the auditors somehow turned that down to only US$ 9.4 billion.

While Chavez will have you believe PDVSA is one of the strongest companies in the world. Except that, for example, Petrobras made more money. Twenty years ago, Petrobras was a tiny company. And PDVSA was a monster. Petrobras seems to be the monster these days.

It’s sort of downhill from there. PDVSA said that accounts payable was US$ 16.4 billion in December, it is now only 10.8, despite Pdvsa not announcing any major payments.

And you can also dig out that despite record oil revenues in 2008, social contributions went down.  So much for the revolution…

Anyway, I will try to understand it better and if I have anything believable, will post. I seriously doubt I will, I am giving up in understanding these now very obscure subjects.

It is a Magical Mystery Tour

The good, the bad, the ugly and Coca Cola Zero

June 10, 2009

Reporting on the Devil’s Excrement gets tiring and Chavez and his buddies make it even more tiring.

Take for example Globovision. Can I be surprised at the harrasment? Certainly not. The raid on Zuluaga’s home because of the stuffed animals was something out of the Marx Brothers or Peter Sellers movie. I mean, a country with over thirteen thousand homicides, 20% of which are committed by the cops themselves, but the Government finds the resources to have 100 heavily armed cops, intelligence police and soldiers to raid the home. We have yet to see any of these “environmental Prosecutors” around Maracaibo Lake, looking at the problem there.Now, THAT is a real environmental problem! But no time for it.

Or take the new Electoral Bill. How many times can I have the energy to write about a new manipulation of the Law that can give Chavez’ PSUV an edge? But then, the Bill is ready and we hear they have backtracked on it, because they realize there is a loophole: If the opposition unites, THEY could get the majority in the National Assembly without having a majority of the votes. A charade, just another one.

Even the Vergatario cell phone seemed too silly (imbecile?) to even mention, let alone write a post about it.

But then tonight, the Health Ministry comes out with one of those creative bursts that the Chavez Government is well known for: They prohibit a product that I have seen in dozens of countries “because it contains a susbtance that could be harmful to the population”.

I am not talking about a new pharmaceutical product or an imported Chinese root, I am talking about a product which I believe was launched in most of the world before Venezuela and that as far I have been able to determine, it represents a marketing move by the manufacturer.

I am talking about Coca Cola Zero!!!

Yeap. As of right now that product is banned without telling us what is that mysterious component that may damage our brain, or sex life, or skin.

This is simple harassment of a multinational. Nothing else to it. It’s a revolutionary pose.

Kids get poisoned regularly by products given to them at public schools. Nothing happens.

PDVSA is giving away UHT milk that is about to expire, because they purchased too much. Nothing happens.

All over the country you can buy vitamins, “natural” products  and pharmaceuticals that are not registered  or approved and are certainly smuggled into Venezuela. Nothing happens.

But the Minister gets this idea of screwing with a large multinational, now, that has sex appeal! That sounds revolutionary! That really makes headlines.

That is the true parody our poor country is living today. There is little that is good. A lot that is bad. Many things that are ugly, but the Government is worried about Coca Cola Zero!

Personally, I take offense. While I have not had my first Coke Zero in Venezuela (They had yet to phase out Coca Cola Light), I consider myself an addict of Coca Cola Light. In fact, in my family the running joke is we drink so much Coca Cola because we are missing a piece of DNA that does not allow you to digest food and Coke compensates for it. It even has a name: “Octaviosis”. Well known  genetic disease.

So, robolutionaries:  don’t mess with us! We might get really mad!