We interrupt the Devil’s vacation for a short note on the Big Lie that Venezuela’s oil production represents. While I have not been keeping track of the news in much detail, I am after all on vacation, I do read my mail and the comments you make on the blog. One reader, call him VJ, sent me this incredibly revealing document above of a request by Minister Ramirez for Chavez to approve that PDVSA withdraw money from the Chinese funds to pay royalties and taxes as well as paying for the production of the oil that goes to pay for the Chinese loans.
When I return, I will analyze this document further, but for now, this document confirms clearly in page 3, the Big Lie that Venezuela’s official oil production represents.
According to the recently published financials of PDVSA, the country produced 2.95 million barrels of oil a day. These financials are audited, but using standard accounting rules, only financial aspects are audited, oil production is simply not part of the audit.
However, this document on page 3 contradicts this official number, as reader VJ notes. If 430,000 barrels of oil a day is sent to China to pay for the loans, as is clearly stated in the document, then Venezuela’s real oil production is 2.687 million barrels of oil a day, some 262,500 barrel a day less than the official numbers in PDVSA’s 2010 financials.
This number is higher than IEA or OPEC’s by a couple of hundred thousand of barrels of oil a day, but when one considers that in 2008 PDVSA said it was producing 3.3 million barrels a day, but this was reduced to comply with OPEC production cuts, you know the lie was even much bigger than it is today.
Not that one has any reason to believe this number either, after all: Would Ramirez tell the President the whole truth about his incompetence and the lies he has been telling since 2003? I doubt it, so take this number with a grain of salt. Do remember however, that PDVSA’s and CITGO’s US registered debt was repurchased in 2004 so that the members of the PDVSA Board could not be held liable in the US for lying. In Venezuela, they can lie all they want, there is no punishment for it.
But let’s assume for a moment the 2.687 million barrels a day is the truth.
Subtract Venezuela’s daily consumption of around 700,000 barrels
Subtract 430,000 barrels of oil a day to pay the Chinese loans
Subtract some 85,000 to Cuba, 20,000 to Argentina and 120,000 to Petrocaribe.
That’s some 1.355 million barrels of oil a day that do not generate any cash flow for the country in foreign currency (Except of Petrocaribe which we are told generates 50%). Subtract that from 2.6875 and you get 1.352 millions of barrel a days that generate foreign currency, according to official numbers. At US$ 100 per barrel that is less than US$ 50 billion a year, US$ 49.3 billion to be exact, a number smaller than CADIVI exports.
So, the Big Lie says that the Government is betting the farm on Chavez getting reelected. To Hell with the future, the future is NOW, borrow everywhere, issue bonds, borrow from China and hope for the best, unless the hand of God intervenes…
But the Big Lie is right there and it should be punishable by law at least as deception or misleading, at most as treason. But unless there is change, it will simply not matter. Ramirez can lie, deceive and manipulate all he wants as he allows PDVSA to be destroyed for the sake of Hugo’s reelection.