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$2 to $4 Billion Foreign Exchange Discrepancy in PDVSA sales

By Mayela Armas H. | El Universal

José Guerra estimates: Official figures show discrepancies in deposits of foreign currency by PDVSA at Banco Central de Venezuela (BCV). According to former executive of Banco Central, income from oil was $8.8 billion.

8 May 2005 | Foreign exchange figures provided by Petróleos de Venezuela (PDVSA) and BCV suggest that there is still an imbalance in the accounts, according to former manager for Economic Research at BCV, José Guerra.

Judging from the production figures furnished by Energy Minister Rafael Ramírez, Guerra estimates that income from petroleum exports was higher than that indicated by the official, allowing one to record a difference of $2.391 billion.

According to [the Energy Minister], who is also president of the government oil company, production now stands at 3.3 million BPD. If one were to subtract domestic consumption, the export figure drops to 2.8 million BPD. The former executive from BCV adds that taking into account that particular number of barrels being sold, combined with the average quote for Venezuelan crude, which in the first quarter of the year was $39.33, the foreign income has to have been $9.904 billion.

After discounting the $600 million deposited during the January to March period into the rotating fund, as well as deposits into the Special Fund for Economic and Social Development (FONDESPA) in the amount of $480 million, the BCV had to have received from the oil firm $8.824 billion. “Minister Ramírez assured this Friday that foreign exchange transactions had been for $6.433 billion; which shows that if one takes into account the official figures for production, then there is a difference of $2.391 billion,” assured the former official of the BCV.

But he then points out that the difference is greater when contrasted to the calculations made by the [current] director of the issuing institute [the BCV], Domingo Maza Zavala. In the judgment of the director, the oil firm, on a weekly basis, deposits $400 million, which makes monthly foreign currency transactions average turn out to be $1.6 billion. Guerra adds that “if one were to rely on that figure, then PDVSA, during the first quarter, must have deposited some $4.8 billion at Banco Central.

Judging from that figure, he says, the breach is even greater and ascends to $4.024 billion.

According to Article 113 of the Banco Central de Venezuela Laws, "foreign currency derived from exportations must be exchanged exclusively at Banco Central. The equivalent value in bolívares originating in those exports shall be deposited in accounts at the Bank. The BCV is to furnish PDVSA with foreign currency requested by the firm for covering its needs according to the budget for foreign currencies as approved by the Assembly.”

Nevertheless, the calculations reflect a half-hearted compliance with the stipulation.

More details

Looking elsewhere, José Guerra points out that the figures furnished by Rafael Ramírez reflect that what was being produced must not have been what in fact is being reported either.

The president of PDVSA expressed that first quarter income from exports was $7.513 billion. To any economist this shows that exports were 2.1 million BPD. If one adds up the barrels earmarked for domestic consumption, production turns out to be approximately 2.6 million BPD.

“That situation suggests that either [the amount of oil] actually produced is not how much they say it is, or the foreign currency being converted is not how much is being reported. Something is going on.”

This week Maza Zavala made it understood that "in my judgment there is no accuracy as to how much oil is being produced. PDVSA reports; but there are international sources, such as OPEC and the International Energy Agency, who have other figures. There ought to be a single reliable and official report. I do not have that report." The Organization of Petroleum Exporting Countries, as well as the International Energy Agency and the [US] Energy Information Administration, for months have been reporting that the supply of crude has not surpassed the 2.6 million BPD ceiling.


José Guerra states that the difference in figures between the BCV and PDVSA “shows that there exists something which deserves an investigation. Transparency is necessary so that criteria can be managed with rectitude....If, in fact, PDVSA is going to maintain the same practice, then let us proceed to reform Article 113 of the BCV Law, so that the use of resources can be defined, so that the transaction of funds can then be a constitutional act. Laws are to be obeyed, not violated.”

Translation by W.K.

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