Bad Business

          Petroleos Says Social Spending Surpassed Investments

Petroleos de Venezuela SA, South America's largest oil company, said it spent more on social programs than its oil and natural gas businesses last year, continuing a trend that started in 2004.

Caracas-based Petroleos de Venezuela said in an announcement appearing in the country's newspapers that it spent $6.9 billion on social programs last year. Investments on its domestic oil and natural gas operations totaled $3.9 billion. The company said yesterday its profit for the year was $6.5 billion.

"This is pure craziness, social spending is greater than investments, greater than profit,'' said Alberto Quiros, an oil analyst in Caracas and former president of Royal Dutch Shell Plc's Venezuelan operations. "The impact is already apparent. Production is falling and there is a lack of professionalism in the company.''

Venezuelan President Hugo Chavez is tapping Petroleos de Veneuzela to fund the country's missions, or social programs. Chavez, 52, is seeking to avoid the mistakes of past presidents who neglected social development during past oil booms.

   Chavez has picked the right mentor if his intent is to enrich himself at the expense of his nation. You may have noticed that the price of oil is below $60 @ barrel. Conventional wisdom has it that Chavez barely breaks even at $70. The production of Venezuela's oil industry is in steady, but certain decline. It has been for over 10 years. The ONLY way Chavez is able to stay in power is by 'bribing' his electorate with money that should be spent on maintaining, modernizing the production infrastructure and vigorous exploration. The ONLY cache of 'power' Chavez has, is gained by slowly killing the golden goose - oil. Factor in the recent outlays for weapons and it is obvious that his goose is going to be cooked, if things remain static. Now here's a little tidbit that you won't hear elsewhere - The bulk of Venezuela's oil is so viscous, so thick and impure, that it requires specialized and intense refining. All the ballyhoo about China getting Venezuela's oil never takes into account that China, to date, has NO refineries capable of cracking Chavez's oil. We are the only nation with the capabilities. He cannot simply sell his oil on the open market without a substantial discount for this fact. When he should be addressing this, he is instead, buying bread and circuses just to stay in power.

                                        Even the best juggler eventually drops the ball.

                                    

          Petroleos Says Social Spending Surpassed Investments

By Peter Wilson

Petroleos de Venezuela SA, South America's largest oil company, said it spent more on social programs than its oil and natural gas businesses last year, continuing a trend that started in 2004.

Caracas-based Petroleos de Venezuela said in an announcement appearing in the country's newspapers that it spent $6.9 billion on social programs last year. Investments on its domestic oil and natural gas operations totaled $3.9 billion. The company said yesterday its profit for the year was $6.5 billion.

``This is pure craziness, social spending is greater than investments, greater than profit,'' said Alberto Quiros, an oil analyst in Caracas and former president of Royal Dutch Shell Plc's Venezuelan operations. ``The impact is already apparent. Production is falling and there is a lack of professionalism in the company.''

Venezuelan President Hugo Chavez is tapping Petroleos de Veneuzela to fund the country's missions, or social programs. Chavez, 52, is seeking to avoid the mistakes of past presidents who neglected social development during past oil booms.

The lack of investment has led to a string of deadly accidents at the company's refineries, and stalled output at about 2.6 million barrels a day, Chavez critics have said.

``They aren't investing enough in their energy operations to maintain, let alone grow output,'' said Quiros. ``To do that, they need to invest at least $5 billion to $6 billion a year.''

Exploration, Production

Petroleos de Venezuela said in an October filing with the U.S. Securities and Exchange Commission that it spent $4.35 billion on social programs in 2004 and $2.99 billion on ``operating assets.''

Of its investments last year, 73 percent were on exploration and production, the company said.

Petroleos de Venezuela said yesterday that Venezuela's total average output last year was 3.27 million barrels a day. That figure is disputed by most agencies and the Organization of Petroleum Exporting Countries.   Link

Comments

[mdmhvonpa]

Ok ... wait for the riots ... wait for it ... waaaiiittt...

[Phoenix]

Yeah? Another fine example of socialism at its best. This is why the gloom and doom scenarios of China, Venezuela, Korea, India.........any country with a population that is suffering at the hands of its government will never be in a position to cause much harm. People revolt. A government looking to overthrow another country can't be beating back uprisings in its own populace and pull off taking over another country. Nuke or no nuke, it won't work.

Watch Iran. Look at Israel - for the most part, they are as united a country as any on the planet, and they manage well - despite whatever anyone wants to say about the Lebanon crisis.....