Venezuela, struggling to pay for essential items, such as food and medicine, amid strict foreign currency controls, might have failed to collect about one-third of its potential oil revenue last year, a Reuters analysis suggests.
The OPEC member nation likely realized a little more than US$50 billion in oil revenue last year, according to an analysis of publicly available data and estimates based upon past performances of Venezuela’s oil sector.
However, as a result of generous financing mechanisms to allied nations through cooperation agreements, and imports of crude oil and various products, Venezuela potentially deprived itself of about US$24 billion in oil revenue last year, the analysis suggests.
An exact figure for both realized and deprived revenues is unavailable given the absence of specific data from Venezuela’s state-owned oil company, Petroleos de Venezuela (PDVSA), and the government.
That the nation holds the world’s largest proven crude reserves has generally persuaded investors that it can afford to service its debts, in spite of Caracas’ rhetoric lambasting capitalist imperialism.
That confidence is eroding amid the collapse in oil prices and the crumbling of the state-led economic model, resulting in prices on sovereign and quasi-sovereign US dollar-denominated debt dropping to levels typically associated with a default.
Analysts have found it increasingly difficult to square how PDVSA plans to bring in enough revenue to meet its obligations, given its underinvestment in production operations that jeopardize oil output.
The company has not yet released its audited financial results for last year.
Venezuela’s practice of subsidizing the cost of gasoline for domestic consumption for less than it costs to produce, as well as agreements to ship oil under barter pacts to Cuba or relaxed credits to other Caribbean nations, hurts the flow of revenue to the government.
China has loaned Venezuela more than US$50 billion since 2007, to be repaid with crude oil and product shipments. Nearly half of that amount has been paid off, including about US$14.5 billion worth of oil last year, according to the Reuters analysis.
Venezuela and China agreed to change the terms for its debt repayment starting in the fourth quarter of last year, implying fewer barrels were being sent to pay off its debt to Beijing.
However, the renegotiated deal with China late last year, and adjustments to its barter pacts and relaxed credit agreements with Cuba and other Caribbean nations create uncertainty as to how much money Venezuela has been finally collecting in recent months.
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