Bloomberg News

PDVSA Profit Surges 42% in 2011 on Record Export Oil Price

April 17, 2012

Petroleos de Venezuela SA, the state oil company, said net income surged 42.4 percent last year to $4.5 billion as the average price for the country’s crude-oil exports rose to a record high.

PDVSA, as the company is known, said that revenue rose 31.4 percent to $124.8 billion. PDVSA’s earnings before social contributions to the central government and income tax more than doubled to $35.2 billion, according to full year financial results published today on the company’s website.

“This reinforces the fact that PDVSA is the most important company in Venezuela,” Rafael Ramirez, the company’s president and oil minister, said today during an event at PDVSA’s headquarters in Caracas. “Very few firms in Latin America have such robust numbers, and we’re among the top companies in the world in terms of revenue.”

Venezuelan President Hugo Chavez depends on oil for more than 90 percent of export revenue and about 45 percent of government spending. PDVSA’s contributions to social programs doubled to $11.6 billion while its transfers to an off-budget development fund known as Fonden surged eightfold to $14.5 billion amid a change in the oil windfall tax to foreign oil companies operating in the country.

PDVSA averaged production of 2.991 million barrels of oil a day last year, a 0.5 percent increase from 2010, according to the report. Exports rose 2.2 percent to 2.5 million barrels a day, the company said. Venezuela’s oil exports averaged $100.50 a barrel last year, a 41 percent increase from 2010, according to the Oil Ministry.

Rising Debt

PDVSA’s total debt surged 40 percent to $34.9 billion last year after selling more than $10 billion in bonds, while debt owed to service suppliers rose to $12.4 billion.

The company will continue to seek financing and take on new debt as it looks to develop heavy crude oil fields in the Orinoco Belt with minority partners, Ramirez said.

Venezuela will need $236 billion of investment through 2019 to boost production to 6 million barrels a day, of which $191 billion will be secured by PDVSA, Ramirez told state news agency AVN today.

“No one develops something of this scale without taking on debt,” Ramirez said. “PDVSA has healthy financial metrics.”

PDVSA signed a $1.5 billion crude oil supply contract with Hutong Trading BV on Feb. 27 that will be paid off over three years with quarterly shipments, according to the financial report. The deal hadn’t been reported previously.

The yield on PDVSA’s 12.75 percent bonds due in 2022 fell 5 basis points, or 0.05 percentage points, to 13.40 percent today at 4:45 p.m. in Caracas, according to data compiled by Bloomberg. The bond’s price rose 0.24 cents to 96.47 cents on the dollar.

Argentine Sovereignty

Venezuela supports Argentina in its move to expropriate Repsol YPF SA’s stake from the country’s largest oil company as a “sovereign” decision to force private companies into reinvesting profits to boost output, Ramirez said.

Venezuela, which nationalized the oil industry in 2007, forcing companies into minority partners in joint ventures, is willing to help consult Argentina in the process, he said.

PDVSA has set aside $1.85 billion to confront pending arbitration cases over investment disputes, up from $1 billion in 2010, according to the report. PDVSA paid Exxon Mobil Corp. a net $250.9 million in February for seized assets in 2007 and is still awaiting a ruling on a case brought by ConocoPhillips.

The Venezuelan state’s stake in the oil industry is 94 percent, meaning that of every barrel sold, 94 percent of the revenue goes to the government, Ramirez said.

“Our fiscal oil policies are criticized by private companies for being strict, but they make a comfortable profit,” Ramirez said today. “That’s why they remain in the country working with us.”

To contact the reporters on this story: Corina Pons in Caracas at crpons@bloomberg.net; Nathan Crooks in Caracas at ncrooks@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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