Venezuela slashes oil investment

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State-owned Petroleos de Venezuela S.A. (PDVSA) has cut its investment plan for this year by almost 40 percent to $12 billion, PDVSA Vice President Eulogio Del Pino told an industry group. 

He said, however, that PDVSA “is maintaining its policy” of devoting at least 10 percent of its investment budget “to social development,” state news agency ABN reported Thursday.

Regarding the remaining 90 percent, Del Pino said Thursday that the money would go to projects that include the modernization of two refineries and continued efforts to develop the Orinoco Belt, where some 30 oil companies from different parts of the world are carrying out a program to certify that area’s total reserves. 

The Venezuelan government expects that the heavy-oil certification program will confirm that the country’s certified reserves amount to 314 billion barrels, the highest in the world and almost double the Andean nation’s current total. 

The average price of Venezuela’s mix of medium-grade and heavy crude oil has fallen this year to an average of $40 and that forced the government to announce an adjustment package this week to the 2009 budget, which had been based on oil at $60 a barrel. 

As part of the investment plan for this year, Del Pino said an agreement already has been signed with a conglomerate of Russian companies in the Orinoco Belt’s Junin 6 block and that “14 new Chinese drills have arrived that will be immediately be put in service.” 

In its latest financial report, published at the beginning of the year and containing results through September 2008, PDVSA’s total debt came in at $14.82 billion, more than half of which is owed to suppliers. 

PDVSA continues to post a statement on its Web page defining itself, based on figures through Dec. 31, 2007, as “the most solid state hydrocarbons company in Latin America,” a status borne out by its “financial indicators of solvency and debt servicing ability.” 

Those figures demonstrate “the successful results of the strategy it has applied, as well as the productive use of funds received,” PDVSA said, adding that its global assets total nearly $107 billion. 

It also lists its consolidated global equity at the end of 2007 at $53.85 billion, meaning that debts represented 14.96 percent of assets and 29.72 percent of equity. 

Venezuela is a major oil exporter and the fourth-biggest supplier of crude to the United States. 

The country’s leftist president, Hugo Chavez, first elected in 1998, sees PDVSA as the main source of funding to help the poor and the foundation of his plans to lead Venezuela to 21st century socialism. 

Chavez this week announced an adjustment to the nation’s budget for this year, reducing it from $77.9 billion to $72.73 billion due to the reduction in the price of oil. 

The budget cut will not affect any of the government’s social plans and will be achieved, the president said, through “strict execution of (public) spending.” 

Chavez announced that he will order the immediate elimination of any excessive spending by the government, including executive vehicles, the remodeling of offices, new buildings, advertising and propaganda and even “unnecessary corporate gifts and missions abroad by officials.” 

To increase revenues flowing into the treasury’s coffers, Chavez also announced an increase to 12 percent in the Value Added Tax, or VAT, and greater efficiency in its collection.

Copyright 2009 Efe

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