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 PDVSA.com) 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

29 Responses to “PDVSA Financials: A Magical Mystery Tour”

  1. dillis Says:

    Señor, I know there are problems with Banco Federal lately.
    I tried to use a Banco Federal card in Grenada last month and it declined in supermarkets, shops and ATM’s. Only worked inside the hotel. So if you need baby food or medicine you are in trouble, but you can drink yourself silly at the hotel bar! Madness.
    I also am intending to make online purchases soon so I will go into Banco Federal this coming week and try and get some answers. As Miguel says I guess the Government just owes them too much money so they are severely restricting all access outside the country.

  2. Señor Says:

    Thanks Miguel. It’s from Banco Federal. Previous years this has not been an issue. I’m trying to get in contact with them but no luck so far. I’ll try again later today and if not then perhaps after the weekend…

  3. marc in calgary Says:

    Where are the real numbers? do they exist? I think not. Not until the next government hires a real accountancy firm to audit their recent history. I suspect that then, some people will be marching in the streets.. still looking for their piece of pie.

    A very interesting post Miguel, as always! and another brick to validate what you have been saying for a few years now.. 60,000 new employees with a decrease in production? well they’re not real oil industry workers, it’s obvious what happens when the only qualification is that one was wearing the red shirt at the job interview.

  4. moctavio Says:

    Omar: Well, S$P does not seem to believe it….

  5. moctavio Says:

    There are a number of possibilities. What bank is it from? Some banks have stopped giving dollars on credit cards because the Government owes them too much. I know at least four: Venezoelano de Credito, Bolivar, Banpro and Confederado. They only allow pharmacy and hospitals I believe.

    The only way I know how to solve the problem is to call your issuing bank.

  6. Señor Says:

    Hi, I realise this is completely unrelated to this particular post (apologies Miguel) but I am looking for a bit of help. My Venezuelan credit card (Visa) should have the usual $US 400 for online purchases per year, I haven’t used any of it this year and wanted to use most of it yesterday (I am overseas) buying groceries online. The card was declined with no explanation given, so I don’t know what to do. Does anyone have some advice or know of a site that may help me resolve this issue? I have already experienced the issues with overseas spending via CC, but I expected the online component would work as per normal. Any help appreciated!!!

  7. Arturo Guinand Says:

    Well, S&P just cut PDVSA rating to B+ from BB-


    Just in time for their fishy bond sale.

  8. Jeff Says:

    Chavez is in Dominica in the Eastern Caribbean tomorrow opening a PetroCaraibe Storage facility. The Prime Minister from there is close to CHavez, always in Venezuela and frequently accused of laundering money for Chavez.

    Read this.

    SanFord wants PM Skerrit punished

    Deputy Leader of the United Workers Party (UWP) Claudius Sanford says corrective and punitive action must be taken to restore integrity, accountability and transparency in Government.

    Sanford was at the time referring to Prime Minister Skerrit’s involvement in the rubbish bin controversy which he said clouds the office of the prime minister.

    “What transpired in the “Bin- Bobol” episode evoke deeper questions than just the rhetorical concept of corruption. It registers serious acts of deception, dishonesty and the opportunistic characteristics of Roosevelt Skerrit, he said.

    The Opposition Senator says Roosevelt Skerrit has exaggerated his alignment with the Cuban Government and Hugo Chavez under the pretense that he understands their principles and ideologies.

    “Clearly the Cuban people and the Venezuelan people have sacrificed to build their country. That sacrifice has been extended in assisting us to the limits that they are able. Heroic of course in the face of world imperialist suppression, this struggle cannot be differentiated from the liberation struggles of the African community in the British Caribbean. All these ideals or some can be identified with the early independence struggle in Dominica and the emphasis on state development,” he said.

    The actions of Skerrit and his colleagues according to Sanford stand in contrast to such principles and the unveiling of the “Bin-Bobol” scandal places our government in a different world than its people.

    “While thousands in Venezuela go homeless and continue to live in poverty, thousands of Cuban willingly accepts the lowest possible salary, extending the little of their excess to us, our government are caught swindling over $500,000 in garbage bin bobol. Clearly, Roosevelt Skerrit shows no symptoms of any solidarity with the struggle of the Cuban and Venezuelan people, he said.

    He said Prime Minister Skerrits current actions undermine the integrity of the country’s independence and its “trustworthiness in the eyes of the world”.

    “The corruption they spread saps the self respect of Dominica’s Christian values and honest people. The social attitude and materialistic behaviours of those in the Labour Party Administration is alien to the sacrifices of our working people in Dominica. While they engage in acts like those of the “Bin-Bobol” and ignore the needs of the masses, real social forces are clashing in Dominica,” he said.

    He said there are over the limit homicides in the last 5 months while no one knows for sure the extent of the illicit drug trade, HIV infections and obeah. “The vagrants in town show case the depth of destruction drugs are causing to our youths, while daytime ‘soocooyah’ highlight the evils. Hardly anyone can deny that the Nature Island has hit rock bottom. The Labour government is ashamed to give the measure of unemployment as we speak,” Sanford said.

    The depth of this deception and dishonesty according to him is made further resolute in the direct interference of President Hugo Chavez in the internal politics of Dominica by his show of solidarity to Roosevelt Skerrit at the height of unveiling such corruptible events.

    Sanford, who contested the Carib Territory constituency in 2005 and lost said Dominican youths will continue to leave the country amass in search of jobs “but this is not the story that you will see on the front page tomorrow morning, it will be the marriage among two dictators posing under the disguise of revolutionary principles and ideologies, preying on our ignorance, hungry for our votes, desperate for power to concoct yet another “Bobol”.

    Meantime, Prime Minister Skerrit said that Andre Dowel Sr. of Logistical Supply Solution, a Pennsylvania-based supplier for the purchase of rubbish bins, is expected to pay a sizable refund to the Government.

    He told an address to the nation that he had consulted officials and various departments of government to ensure that all transactions and procurements by the various councils and statutory boards over certain limits are governed and regulated by proper procedures and guidelines.

  9. Andromeda Says:

    And the same way Carmona cut a deal to escape from his condo while being guarded by DISIP.

  10. Kepler Says:

    Thanks, GWEH.
    Baduel, geez…Do all Venezuelans get born ‘con un rabo de paja’?
    How do you say that in English?

    Miguel, I wonder if someone having a rabo de paja is the reason why Tal Cual did not publish you-know-what.

  11. ErneX Says:

    Another offtopic:

    “La Línea 5 del Metro de Caracas que comunicará la Zona Rental con el sureste de la ciudad será replanteada. Así lo informó el presidente de la empresa, Claudio Farías, quien explicó que prevén eliminar algunas de las cinco estaciones del proyecto, por considerar que ese tramo de 7,5 kilómetros de longitud que transportaría cerca de 300 mil usuarios diarios sólo beneficiará a la oligarquía.”


    Too long, didn’t read: they are going to revise the plans for the 5th metro line because in the current plan of stations it “benefits the oligarchy”

    Oh, the revolution.

  12. revbob22 Says:

    So did Lapi cut a deal too?

  13. GWEH Says:

    The mercurial Baduel is a piece of work: 11 children from 7 women many who are/where military subordinates. The Baduel nudes posted on the ‘hacked’ AN website homepage where part of a smear campaign by Chavez. Who else has access to Baduel’s home computer files and the AN website servers? You have to hand it to Chavez’s plumbers… they sure must have had a good laugh.

    Baduel may have had a chance of staying out of jail had he not actively campaigned against Chavez once he was a civilian. I think that Baduel’s intervention during the election sealed his fate.

    One last thing: nobody gets out of jail unless Chavez says so. Chavez pardoned many including officers implicated in Paracachitos caper and Carlos Ortega. Yes Carlos Ortega cut a deal with Chavez. Does anyone really believe that he walked out of Venezuela maximum security military prison? Ortega is keeping his end of the bargain by staying mum.

    Conspiring against the government in most countries is punishable by jail for the duration of that government. Chavez has shown leeway by letting many out of prison but a high-profile guy like Baduel may be screwed.

  14. GWEH Says:

    Ernex, Brian Nelson’s book is good but falls far short of telling the whole story. Many key major details are omitted. Who is going to tell a gringo what really happened thus implicating themselves and others? Those who know are not going to talk.

    I will give you this major tidbit that Brian missed: Baduel was in on the coup from the very beggining as he was on the payroll of coup financier Isaac Perez Recao (they were partners in casinos which Baduel protected) and attended many of the meetings at IPR’s place. Baduel was double-crossed by the rest of the coupsters and thus he flipped to Chavez’s side in a fit of anger and opportunism. Chavez the did the smart thing: he kept his enemy Baduel very close. Chavez hesitated in naming Baduel defense minister but did so after neutralizing Baduel by appointing key commanders of combat units (via Diosdado) thus Baduel never had command of firepower needed to overthrow Chavez.

  15. ErneX Says:

    Offtopic: good piece @ The Economist about the 2002 coup


  16. Alex Dalmady Says:

    Knock those profits down to $7.4 billion. Minority interest (third party stockholder’s portion of the profits of consolidated subsidiaries), should be excluded from PDVSA’s net income.

    I’m just getting started, this is 161 pages long.

  17. moctavio Says:

    This is strange, I can not find them in the website. Here is a copy:

    Click to access pdvsa2008-1.pdf

    I originally got it from:


    then there click on informe de gestion financiera.

    There you have the earlier reports, but I don’t know why the audited full year is no longer there and there is now a short version only.

  18. Alex Dalmady Says:

    Those available on a pdf somewhere? I’d like to see.

  19. Another item: PDVSA’s production costs are almost double those of 2007. How can this be?
    Another item: PDVSA lists gross income is about $132 billion. That figure is impossible even at the level of 3.2 million barrels per day they claim to be producing (most observers estimate production at only some 2.4 million barrrels per day) When you deduct 1.5 million barrels per day they are not selling commercially but at highly subidized prices in the domestic market, Cuba, Central America, South America, and the Caribbean and paying back to China for a loan they obtained last year, the most probable income for exports is closer to some 60 billion. When the subsidized income is added no way they can ever get to $132 billion.

  20. OA2 Says:

    “Do these guys have a clue? Or are we being screwed?”

    No and Yes. Do we really need to ask?

  21. Not Dan Burnett Says:

    KPMG does not audit production data … that means going to the field and getting dirty. They don’t do that and would not know how and where to begin.

  22. Not Dan Burnett Says:

    KPMG does not audit production data … that means going to the field and getting dirty. They don’t do that and would not know how and where to begin. (or

  23. Not Dan Burnett Says:

    earth to Dan Burnett come in over …

  24. Juan Cristobal Says:

    So, if we are to believe KPMG is being honest the BCV is lying to us – their financials are not audited, right?

    Also, does an accounting firm audit production numbers too? They’re not really qualified to do that, right? So, in that sense, production numbers could be made up, even in the context of an audited financial statement.

    The other possibility – could it be that the 3+ million per day figure includes oil that was purchased and re-exported?

  25. Bois Says:

    This is good stuff.

    I’m not an accountant, but with my trusty little calculator I can add up the figures and come within a couple of million, that’s pretty close for me when you’re working with billions.

    When you check with all the other sources, somebody is blowing a lot of hot air. You’ve got PDVSA reporting their brilliant performance and then you got all the other Venezuelan institutions reporting a completely different set of figures. Who do you believe?

    The international community does not believe PDVSA’s figures, although they do not come out and say they are liars, they use politically correct language to get their disbelief across.

    I guess what convinced me Chavez and the gang are lying to us is Petrobras has now passed up the once great PDVSA. That speaks volumes.

    I wonder what kind of spin Chavez is going to put on that?

    It’s amazing how these people can have a press conference and report these figures with a straight face. These idiots don’t even know how to fudge the books, what a bunch of morons.

  26. Alek Boyd Says:

    Good post Miguel, I also started reading it and then, I stopped: Chavez’s PDVSA has managed to fuck up production, productivity, income, installations, its future, etc., in spite of having increased its staff by 60,000 new employees.

    It speaks volumes about professional capacity of chavismo, a basket case that can be extrapolated to country or any other area under ‘revolutionary management’.

    I suggest you save your copy, before they realize that someone can pull an Alex Dalmady on their accounts…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: