Venezuela's PdVSA Says Profit Rose 80% In 1Q Of 2008

Venezuela's PdVSA Says Profit Rose 80% In 1Q Of 2008

CARACAS (Dow Jones)--Petroleos de Venezuela SA's, or PdVSA's, first- quarter profit surged 80%, propelled by crude exports sold at record-high oil prices early in the year.

PdVSA announced a net income of $3.45 billion for the first quarter, an 80% jump from the $1.915 billion recorded in the same period in 2007, according to a first quarter financial report posted on the company's Web site late Tuesday.

The PdVSA announcement is the first quarterly financial report in years and follows Oil Minister Rafael Ramirez's recent vow to open up the company's finances for scrutiny every quarter.

PdVSA cited an average daily production in the first three months of 2008, at 3.214 million barrels a day, a 70,000-barrel-a-day increase from the same period in 2007. Crude production was also higher than a 3.150-million-barrel-a-day average for 2007, the company said.

Crude exports sat at 2.821 million barrels a day during the first three months of the year, PdVSA said, slightly lower than the 2.855 million barrels a day exported during the same period in 2007, PdVSA figures show.

Detractors of President Hugo Chavez's oil policy criticize PdVSA's transparency particularly on the issue of the Andean country's controversial oil production figures. Although the government claims to produce more than 3 million barrels of crude a day, the International Energy Agency and the Organization of Petroleum Exporting Countries, or OPEC, put Venezuela's oil output closer to 2.35 million barrels a day.

The price for Venezuela's basket of crude and products rose to $87.89 a barrel during the first three months, an 81% jump from the $48.65 average price maintained during the first quarter of 2007.

PdVSA's overall revenue, including that obtained from overseas subsidiaries, amounted to $31.4 billion in the first quarter, $10.7 billion higher, or a 52% jump from the same period a year earlier, the report shows. PdVSA officials attribute the rise to record-high oil prices, and to the state's controlling stake in key oil projects along the Orinoco basin, following last year's nationalizations.

In 2007, Chavez ordered PdVSA to take controlling stakes in key Orinoco basin oil and off-shore oil ventures. The company did so and offered foreign partners the option of minority participation. Most companies went along, but Exxon Mobil Corp. (XOM) and ConocoPhillips (COP) rejected the terms and have taken PdVSA to arbitration.

A higher stake in these ventures, however, also pushed up PdVSA's costs this year. Overall production costs for PdVSA stood at $24.3 billion in the first quarter, a 38% increase year on year, that derives from higher royalty and extraction tax payments as well as costs associated with a larger participation in key heavy oil ventures.

-By Raul Gallegos; Dow Jones Newswires; +58-212-564-1339; raul.gallegos@dowjones.com

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