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PDVSA Announces Record Profits in Q13 Jul 08The Venezuelan state oil company has posted record profits for the first quarter of 2008 of US$3.451 billion, while the government's take in the form of taxes and social spending rose to US$7.394 billion.
Q1 Profits Up by 80% The Venezuelan state oil company PDVSA has released its financial results for the first quarter of 2008. The report shows that the company recorded a net consolidated profit of US$3.451 billion, up by 80% from US$1.915 billion in the same period of 2007. Meanwhile, its earnings before spending on social development and income tax were up by 92% from the previous year at US$7.464 billion. Spending on social development rose by 376% in the first quarter of 2008 to US$2.676 billion from US$562 million in the first quarter of 2007. The increase in social expenditure was attributed to an increase in contributions to the National Development Fund (FONDEN), created by the government to finance large infrastructure projects using the windfall from higher oil prices. Total contributions to the state in the form of taxes and social spending were US$7.394 billion, up by 112% from the previous year. Gross sales revenue from domestic and international operations in the first three months of 2008 was US$31.404 billion, up by 52% from US$20.709 billion in the same period of 2007. Export revenue was up by 53% at US$10.587 billion and domestic sales rose by 25% to US$133 million. Oil Production Rose, But Natural Gas Output was Down PDVSA said that crude oil output averaged 3.214 million barrels per day (b/d) in the first quarter of 2008 (including production from the Orinoco heavy oil belt), up by 70% from 3.144 million b/d in the first quarter of 2007. Liquids production remained stable at 162,000 b/d in the first quarter, while average natural gas output fell by 5% to 6.405 bcf/d. The oil production figures are higher than those normally used by industry observers, but what is significant is the official confirmation of an increase in production over the period, particularly from the Orinoco belt. PDVSA also said that its investments in the first quarter of 2008 were 46% higher than the previous year at US$1.723 billion, while its costs rose by 38% to US$24.287 billion. Outlook and Implications PDVSA has benefited from the recent surge in oil prices. Prices passed US$100 a barrel for the first time during the quarter, and Brent and WTI prices averaged US$97 and US$98, respectively during the period. The average price of per barrel of Venezuelan crude was lower at US$87.89 per barrel in the first quarter, but still up by US$39.24 from the previous year. The company's improved financial performance is more as a result of higher oil prices than increased production. Higher oil prices have also made it possible for President Hugo Chávez to continue to rely on PDVSA's revenue to fund social programmes and extend the country's influence in the region. Earlier this week at a Mercosur Summit in Argentina, he extended his oil largesse again, proposing to contribute US$1 for every barrel exported at over US$100 per barrel to a fund for dealing with food emergencies in the region. Meanwhile, the forthcoming municipal elections in Venezuela mean that he is unlikely to tighten the purse strings at home in the near future. This has implications for PDVSA as rising costs mean that the company will need to retain more not less revenue in order to be able to continue to increase investment in the hydrocarbons sector. |
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