Venezuela's PDVSA pays suppliers $2.7 billion

Venezuela’s state-owned Petroleos de Venezuela SA (PDVSA), partly using the proceeds of a recently launched bond issue, said it has repaid most of its outstanding debts to suppliers.

Jul 20th, 2009

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, July 20 -- Venezuela’s state-owned Petroleos de Venezuela SA (PDVSA), partly using the proceeds of a recently launched bond issue, said it has repaid most of its outstanding debts to suppliers.

PDVSA officials, confirming an earlier claim by Rafael Ramirez, company president and oil minister, said that the state firm has repaid all but $536 million of its outstanding debts after making payments of $2.7 billion.

According to a report in Venezuela’s El Nacional newspaper, PDVSA began the delayed payments to national contractors last week, its finances buoyed by the “successful placing” of the entire $3 billion Petrobono issue.

The paper cited representatives of the firms being paid who said they are not receiving complete payments but that “every little bit helps companies under financial duress for over 9 months (the period in which PDVSA has been dragging its feet in this respect).”

Earlier, El Nacional said that “priority in the payment process will be given to those firms that reduce the amount PDVSA is said to owe them and which reduce the tariffs they charge for their oil-sector services.”

To help repay the outstanding debts, PDVSA announced on June 25 a $3 billion issue of Petrobono 2011 bonds, maturing in July 2011. It said the bond issue has been approved by the central bank.

Last week, PDVSA said it accepted offers to issue bonds worth a total of $1.42 billion, less than half the $3 billion it had hoped to raise.

The state firm claims to have received 19,034 offers for a total of $7.89 billion but only accepted 1,905 offers as the remainder were highly "speculative." PDVSA expects to offer the remaining Petrobono 2011 bonds this week.

Earlier this year, Ramirez announced that Venezuela would be cutting back on payments to oil service companies.

“It’s clear that we can’t have the same level of spending as last year,” said Ramirez, whose spending cuts come down to renegotiating deals with 250 contractors that were reached last year as prices climbed to record high levels. Such cuts will enable PDVSA to drop production costs by 40%, Ramirez said (OGJ, Mar. 9, 2009, p. 35).

Contact Eric Watkins at hippalus@yahoo.com.

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