Growing doubts about Pdvsa's accounts

The Ministry of Finance and state-run oil company Pdvsa pay higher interest rates than Belarus to get funds (File photo)

Oil & Gas
In a context where the state-run oil company Petróleos de Venezuela (Pdvsa) and the Ministry of Finance have to pay high interest rates for borrowing in the world market, Pdvsa decided to terminate an agreement with Inspectorate Venezuela SCS. The independent consulting firm had been hired to audit its oil export and production data.

Although the figures provided by Inspectorate were reticently viewed by investment fund analysts because they do not totally agree with Pdvsa's production levels reported by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), the government decided to close this information source, and Pdvsa did not provide any explanation. Therefore, there is a growing perception in the market about the lack of transparency in the Venezuelan state-owned oil company.

"There has been no explanation about the reasons why (the Venezuelan oil company) decided not to continue with audits. It is a negative signal at a time when Pdvsa lacks sufficient transparency," said a debt trader from New York.

Pdvsa has officially maintained that its oil production stands at 3.1 million barrels a day, whereas the auditing data of Inspectorate shows an output closer to 2.78 million barrels. Experts say that 95 out of every 100 dollars of Venezuelan revenues come from oil.

In addition to the doubts about Pdvsa's production, there has been an inefficient communication with investors by the Venezuelan Ministry of Finance.

According to a report released last week by the investor firm Knight Securities, Minister of Finance Jorge Giordani "does not talk with investors" and barely speaks with people related to the foreign or domestic financial market.

According to the company, between August 2010 and February 2011, the Ministry of Finance and Pdvsa have placed several bonds issues that have taken market traders by surprise, particularly in terms of their maturity and interest rates.

As a sign of the lack of communication and transparency, Knight Securities noted that Pdvsa bonds expiring in 10 years have an interest rate higher than Belarus' bonds, a country with fewer resources than Venezuela and at a higher political risk.

Translated by Gerardo Cárdenas

Victor Salmeron
EL UNIVERSAL