Venezuelan state oil company PDVSA's 2012 revenue slipped 0.2 percent from the year before despite an increase in oil prices as the company sold more fuel on the subsidised domestic market, the oil minister said Friday. The Opec nation's fuel subsidy leaves the cost of gasoline and gas oil for power generation at less than 10 cents per gallon, which creates consistent losses for the state oil giant.
The company paid $43.9 billion to finance social programs and a development fund created by the late socialist leader Hugo Chavez, who died this month after a two-year battle with cancer. Under his leadership, PDVSA evolved from a profit-oriented company into the financial engine of anti-poverty efforts. "This is not a company designed to generate profits. This is a national company. We're not here to provide benefits to private individuals," Oil Minister Rafael Ramirez, who is also PDVSA president, said in comments to reporters.
Revenue slipped to $124.5 billion, while profit fell 6.1 percent to $4.2 billion. Analysts and bondholders tend to give less relevance to PDVSA's profits than it would for publicly listed oil companies because of its heavy social spending. Debts to service providers, which began accumulating after the 2008 financial crisis, rose 35 percent to reach $16.5 billion.
Ramirez said the company was setting up financing arrangements to help pay off debts to oil services giant Schlumberger to ensure the company can continue operations in Venezuela. He did not say how much was owed. Active drilling rigs in Venezuela rose from the year before to reach 381 by the end of 2012. Investment jumped 37 percent to reach $24.5 billion.
PDVSA funds programs ranging from free health clinics to sports and cultural projects. Last year, it led an ambitious government plan to build hundreds of thousands of homes. Critics have said the government has not invested enough in increasing production and that it has scared off many foreign investors by nationalising most of the industry. Venezuela's oil production was targeted to reach 3.5 million barrels per day (bpd) in 2012. Ramirez said the 2012 production figure would be given on Monday.