PDVSA Cuts by Nearly Half '08 Debt with Providers

CARACAS (Dow Jones Newswires), Jun. 10, 2009

Venezuela's state oil company reduced by close to half its outstanding bills from oil-services providers last year after reviewing and renegotiating some of the contracts with these companies.

Oil Minister Rafael Ramirez said Tuesday the $13.9 billion in pending payments Petroleos de Venezuela SA, or PdVSA, had reported in its unaudited year-end report was reduced to the $7.5 billion published in its 2008 financial results.

"Under no circumstances were we going to keep agreements with the kind of tariffs that were reflected there [in the year-end report]," Ramirez said.

Ramirez added the reduction in the outstanding debt with suppliers reflected in part a decrease in oil revenue in the last quarter of 2008 and the renegotiation of contracts with these companies.

"A lot of the tariffs in these contracts were unjust," Ramirez said in a press conference. The oil minister said some companies are discussing their current contracts and that PdVSA was willing to take as long as necessary in these talks to reduce the tariffs.

"The companies, if they want to keep providing their services in Venezuela and stay in the country, have to adjust to this," Ramirez said.

The oil company has already paid $2 billion of its debt with providers from 2008, and hopes to bring the debt level down to zero by year-end, the oil minister added.

Some Venezuela observers say the mounting debt with suppliers was behind a spate of nationalizations of oil-services companies that continues. Venezuela has nationalized 74 oil-services companies and hopes to finish the nationalizations by the middle of the year.

Ramirez said new lists of the seized companies would continue to be published in the government's Official Gazette, the same as in previous cases.

He added that the nationalizations wouldn't affect all oil-services companies operating in Venezuela and said the government didn't have any plans to seize drill operators because they aren't viewed by the government as having monopolistic control in their industry.

The oil minister said that for 2009 PdVSA would continue to seek financing from countries such as Japan and China and that Venezuela is seeking $1.5 billion for upgrading its El Palito and Puerto La Cruz refineries.  

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