miércoles, 20 de noviembre de 2013

I doubt the Bank of America numbers on PDVSA


 

 

The Bank of America numbers on PDVSA, 2013

 

In a report on the income of PDVSA BoA shows optimism about the capacity of PDVSA, the state-owned oil company of Venezuela, to pay its bills. However, I find their estimats over-optimistic in several important aspects. For example, they say the following concerning cash flow:

… cash flow greatly reduced by G2G & prepaid exports

For 2013, over 750 mbpd or production will be shipped by PDVSA under govt- to govt

(G2G) programs or pre-paid export agreements (mainly with China) for

which PDVSA will receive either no direct payments or sharply reduced

payments. The largest pre-paid exports are to China (est. 500 mboed), while the

most important G2G shipments to go Cuba, Argentina and Petrocaribe. With prepaid

exports, the Republic (and not PDVSA) gets the funds directly from the

Chinese, deposited in a BANDES account in China. PDVSA should be

reimbursed by the Central Government for its shipments, but amounts and timing

are always highly uncertain. For a while, it was able to deduct these receivables

against its royalty payments, but that was later partially suspended, or at least

greatly reduced.

I believe this volume of 750 mbpd quoted by BoA is under estimated.  Did not see that they consider the domestic consumption, which has been growing and is sold at grossly subsidized prices. My list would be:

Utilization                  1000’s barrels per day

Domestic market                       800

To China                                    600

To Cuba                                     100

PetroCaribe                               200

Argentina, Bolivia,

 Nicaragua                                    50

Total, about                                1750

Even accepting the official production figure of 2,9 mbpd quoted by BoA we have to deduct from that volume the 400,000 bopd going to the foreign contractors in the Faja. When all of these deductions are taken into account the volume generating full rent for Venezuela is only ofabout 500,000 bopd. The BoA calculations for PDVSA’s oil income could be overly optimistic.

 
Regarding CAPEX, capital expenditure,  the BoA quotes a figure of $25 billion for 2013, only half of which is E&P (Exploration and Production). And, we ask, where does the other half go? I doubt PDSA invested almost $13 billion in other oil sectors. This is what the BoA says:

Capex plan for 2013 is near US$25bn

PDVSA has budgeted capex plans for 2013 similar to 2012 levels - just below

US$25bn. Of this amount, only half, or US$11.2bn is for E&P capex. It is

estimated that this is the minimum amount needed to maintain production at

current levels.

Regarding the level of debt this is what BoA says:

PDVSA Year-end 2013 debt estimated to be US$45bn

After ending 2012 with total debt of US$40bn, we estimate that PDVSA will end

2013 at about US$45bn of total debt. This includes a net increase of roughly

US$3bn in bonds, including the recent announcement of US$4.5bn in new 2026

bonds.

BoA, I believe, underestimates the amount of debt.  Do they take into consideration monies owed to contractors? Employees? Contingencies for arbitrations?  To the Venezuelan Central bank? Obviously not. Those amounts are mostly debt already existing or potentially so.