Bloomberg News

PDVSA May Pay Debt to Oil Service Providers With Bonds

September 06, 2012

Petroleos de Venezuela SA is studying different options to pay down debts to oil service providers including paying the companies with bonds, Vice President Eulogio Del Pino said.

“We’re evaluating and discussing different options and that will be announced when it’s time,” Del Pino told reporters in Puerto La Cruz today when asked about paying down the debt with bonds. “The situation is totally manageable.”

PDVSA, as the state oil company is known, said that debt to service suppliers rose to $12.4 billion at the end of 2011 while total debt surged 40 percent to $34.9 billion. The Caracas-based company is evaluating different financing options, citing a $1.76 billion loan from minority partner Eni SpA (ENI) as a best case scenario to raise funds.

Chevron Corp. (CVX:US) provided a $2 billion loan to PDVSA this year to boost output at its Petroboscan joint venture by about 20,000 barrels a day.

Debt to service suppliers has risen along with activity in the oil industry as PDVSA looks to develop heavy oil fields in the Orinoco belt in the hopes of boosting production to 4 million barrels a day in 2013 from a current 3 million barrels, Del Pino said.

“I told some of the companies, ‘we’re not going to return to the activity of two years ago where payments were made within 90 days,’” Del Pino said. “They want to continue to grow with us. We’re going to help them and there are different mechanisms we’re discussing.”

Investment Plan

PDVSA expects to invest as much as $130 billion through 2019 to raise total production in the country to 6 million barrels a day. Del Pino said the company will need to finance part of that investment and is in position to take on more debt given the size of its reserves which OPEC recognized as the largest in the world with 297 billion barrels of proven reserves.

After issuing a record of more than $10 billion of bonds last year, PDVSA sold $3 billion of securities due in 2035 in a private placement with the central bank in May.

“We’re going to take on debt at the pace that our growth plan requires and that is manageable,” he said. “It doesn’t make sense to have it all come out of your own pocket.”

To contact the reporters on this story: Nathan Crooks in Caracas at ncrooks@bloomberg.net; Jose Orozco in Caracas at jorozco8@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net


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