Jan. 15 (Bloomberg) -- Petroleos de Venezuela SA’s debts to oil-service suppliers have “vanished,” Venezuelan state oil Company President Rafael Ramirez said today.

The Caracas-based company owed oil-service suppliers, including drilling companies Schlumberger Ltd. and Helmerich & Payne Inc., as much as $5 billion in October and had debts of $7.56 billion at the end of 2008.

“The debts vanished,” Ramirez, who is also Venezuela’s oil minister, told reporters in Caracas. “We’re up to date with our service providers and in a situation of equilibrium.”

PDVSA, as the company is known, sold $6.3 billion of bonds last year to help reduce debts, and also cut managers’ pay by 20 percent after first-half profit fell 67 percent from the year- earlier period. In early 2009, Venezuela cut more than 300,000 barrels a day of production to comply with OPEC quotas to bolster the price of oil.

Crude oil for February delivery dropped $1.42, or 1.8 percent, to $77.97 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Earlier, oil touched $77.70, the lowest price since Dec. 24. Futures have fallen 5.8 percent this week, the first weekly decline since Dec. 11, and have more than doubled in the past year.

The average price of Venezuelan crude oil and petroleum exports fell 1.6 percent in the week of Jan. 15 to $73.29 a barrel from $74.35 the previous week, the Oil and Energy Ministry said today.

To contact the reporter responsible for this story: Jose Orozco in Caracas at jorozco8@bloomberg.net; Daniel Cancel in Caracas at dcancel@bloomberg.net.