PDVSA Could Issue Debt to Finance 2005-2009 Business Plan

Venezuela's state oil firm PDVSA has announced it is considering issuing new debt denominated in foreign currencies to finance part of its US$43.8bn 2005-2009 business plan, PDVSA internal director Eulogio del Pino told reporters on Wednesday.

Issuing new debt denominated in US dollars or euros is being evaluated, Del Pino told reporters on the sidelines of an energy conference sponsored by Venezuela's national oil chamber, which groups foreign oil companies in the country.

Del Pino said that PDVSA would "very soon" present the US Securities Exchange Commission (SEC) with financial results from 2003 and 2004, which is a necessary step for any major international company planning a new debt issue. PDVSA has not delivered information to the SEC for the past two years only because tougher US legislation enacted after the Enron scandal has made it more difficult, the official said. "The new law demands that you not only have to hand over your company's balance sheet, but also the balance sheet of every related [subsidiary] company," Del Pino said.

PDVSA president and energy and oil minister Rafael Ramírez announced on Monday that the total investment in 2005-2009 would be US$43.8bn, of which US$31.3bn will come from PDVSA's own coffers. The company hopes to finance the remaining US$12.5bn with the help of business partners in several different ventures.

The company has a debt-equity ratio of 9%, according to Del Pino, which certainly works in its favor in terms of issuing new debt. "We have a much larger capacity to take on debt, we are working on this business plan and we will evaluate all the financing mechanisms we have, including financing from private investors and financing from banks," he said.

The bulk of the expenditures will be aimed at increasing exploration and production of crude and natural gas, building new refining facilities, upgrading and retooling existing refineries and building at least one liquefied natural gas (LNG) facility.

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