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PDVSA Finances Suffer

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Venezuela's state oil company PDVSA will likely have to cut staff as a result of falling revenues and growing costs, risk analysts warn.

BY CHRONICLE STAFF

Thanks to falling oil prices, declining production and growing costs, Venezuela's state oil giant PDVSA may have to cut staff, reduce investments and even consider asset sales, warns UK-based risk analysis consultancy Exclusive Analysis.

Royal Bank of Scotland recently denied the company short-term credit, while PDVSA's unsettled accounts with suppliers jumped 39 percent to $7.9 billion between January and September 2008, compared with $5.7 billion during all of 2007, according to Exclusive Analysis. Meanwhile, costs soared 56 percent in the first nine months of 2008.

"Plummeting oil prices will likely force Venezuela's state oil firm, PDVSA, to look for fresh funding, cut staff, reduce investment and even consider asset sales," the risk consultancy said in an analysis today.

The warnings come a day after President Hugo Chavez announced plans for PDVSA to invest $125 billion in 88 projects between 2009 and 2014.

HIGH PAYMENTS, COSTS WORSEN

This year, PDVSA faces interest payments on debt around $2.3 billion, while costs -- which are generally pegged to the U.S. dollar...

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