He took Venezuela's economy with him to the grave
In 1998 the corporate debt of Petroleos de Venezuela, the state-owned petroleum company of Venezuela, amounted to some five billion dollars. Today this debt exceeds $140 billion. The debt is made up of: (a), about $30 billion in bonds; (b), $65 billion owed to the Venezuelan Central Bank, and (3), about $50 billion, partly to be paid back in future petroleum deliveries to China, Japan, Chevron, and partly owed to former employees an expropriated contractors, as well as contingencies for potential liability payments related to existing international arbitrations.
This enormous debt has been acquired in the last 15 years, in spite of oil prices reaching over $100 per barrels. The Venezuelan Oil Fund that had some $3 billion in the early years of the century has now totally disappeared. In addition a significant percentage of oil exports, are not receiving commercial payment, such as the oil supplies being sent to Cuba, Caribbean and Central American countries, Nicaragua and Bolivia under significant subsidy and the oil sent to China as payment for loans already received.
The size of these commitments already exceeds the value of the company’s assets. To complicate matters further, oil production has decreased significantly during the last 15 years and no significant increase is in sight. The Orinoco region of southeastern Venezuela, which holds very large heavy oil resources, remains grossly underdeveloped, due to the unstable political conditions in the country and to the reluctance of foreign companies to engage in large capital investments in such an uncertain climate. In fact, some of these companies have left or are leaving the area, as has been the case of ExxonMobil, Conoco, PETRONAS and the Russian consortium made up of four companies.
The case of Petroleos de Venezuela is a very sad example of how bad management, corruption and the prevailing of political over commercial considerations can run a company into the ground.