Identifier
Created
Classification
Origin
09CARACAS1129
2009-08-27 13:44:00
CONFIDENTIAL
Embassy Caracas
Cable title:
VENEZUELA: PDVSA PAYMENTS PROVIDE TEMPORARY RESPITE
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C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001129
SIPDIS
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR MKACZMAREK
COMMERCE FOR 4332/MAC/WH/JLAO
NSC FOR DRESTREPO AND LROSSELLO
E.O. 12958: DECL: 08/26/2019
TAGS: EPET EINV ENRG ECON CU VE
SUBJECT: VENEZUELA: PDVSA PAYMENTS PROVIDE TEMPORARY RESPITE
REF: A. (A) CARACAS 852
B. (B) CARACAS 827
Classified By: Economic Counselor Darnall Steuart, for reasons
1.4 (b) and (d).
C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001129
SIPDIS
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR MKACZMAREK
COMMERCE FOR 4332/MAC/WH/JLAO
NSC FOR DRESTREPO AND LROSSELLO
E.O. 12958: DECL: 08/26/2019
TAGS: EPET EINV ENRG ECON CU VE
SUBJECT: VENEZUELA: PDVSA PAYMENTS PROVIDE TEMPORARY RESPITE
REF: A. (A) CARACAS 852
B. (B) CARACAS 827
Classified By: Economic Counselor Darnall Steuart, for reasons
1.4 (b) and (d).
1. (C) SUMMARY. Drawing on funds raised though its July bond
issuance, PDVSA has made significant payments on its
outstanding arrears. PDVSA appears to have paid domestic
companies owed less than ten million dollars in full and to
have made significant payments on larger debts. END SUMMARY.
PDVSA Makes Bolivar Payments to Domestic Service Companies
-------------- --------------
2. (C) According to Alvaro Perez (strictly protect
throughout),a board member and treasurer of the Petroleum
Chamber, PDVSA used the approximately 12 billion Bolivars
raised in its bond issuance to make significant
Bolivar-denominated payments of outstanding arrears to its
contractors (ref A). (NOTE: Post estimates that PDVSA should
have pulled in approximately 12 billion Bs from the Petrobono
(valued at 3 billion USD): Tranche 1: USD 1.4 billion face
value x 180 percent price x 2.15 Bs/USD = Bs 5.5 billion; and
Tranche 2: USD 1.6 billion face value x 190 percent price x
2.15 Bs/USD = Bs 6.5 billion) Since many international oil
service company contracts are paid in a mixture of USD and
Bolivars, Perez heard that PDVSA is investigating a USD-bond
issuance to raise funds to pay off USD-denominated debt.
3. (C) Perez explained that PDVSA fully paid Petroleum
Chamber members who were owed less than ten million dollars
in arrears. PDVSA has made some increased payments to
companies owed more than ten million dollars, but continues
to demand that they first offer a discount on the outstanding
balance due. He also claimed that any company that offered a
ten percent "facilitation fee" received payment in full, even
if it did not offer a discount on PDVSA's arrears. He also
knows of companies that offered discounts without a
facilitation fee and were paid nothing.
Payments to International Service Companies
--------------
4. (C) Mauricio Moreno (strictly protect throughout)
BakerHughes (BHI) Venezuela Sales Manager informed Petroleum
Attache (PetAtt) about recent Bolivar-denominated PDVSA
payments to major international services companies.
According to Moreno, in the last week of July, PDVSA paid BHI
the Bolivar equivalent of $32.4 million, representing 58% of
its registered debt with PDVSA West, bringing the total
received in July to $41.5 million. Moreno claimed that
Halliburton received the Bolivar equivalent of $31 million in
late July from PDVSA; Schlumberger received the Bolivar
equivalent of $70 million (of a total debt of $880 million;
$480 million invoiced and $400 million not yet accepted by
PDVSA for payment); and Weatherford received the Bolivar
equivalent of $42 million (of a pending $80 million in PDVSA
arrears). Superior Energy's Mac McVay (strictly protect
throughout) told PetAtt that his company had received Bolivar
payment from PDVSA representing 40% of its total arrears.
(NOTE: Based on past reporting, PDVSA's debt to Superior was
roughly $20 million.) Moreno does not expect PDVSA to
continue with this payment trend, but noted that PDVSA has
told companies it is preparing to issue increased dollar
payments as early as September. Moreno added that he had
heard as well that PDVSA might be planning a new bond
issuance to raise dollars.
5. (C) COMMENT: PDVSA relieved some of the pressure of
outstanding arrears by making significant payments to
contractors, but continues to carry large USD-denominated
CARACAS 00001129 002 OF 002
arrears to international companies. The Bolivar-denominated
payments to the large service companies will help them
maintain operations in the short to medium term. Higher oil
prices may help PDVSA pay dollar-denominated debts or it
might issue new debt to raise USD, though it is not clear
what the international appetite for new PDVSA debt would be.
END COMMENT.
DUDDY
SIPDIS
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR MKACZMAREK
COMMERCE FOR 4332/MAC/WH/JLAO
NSC FOR DRESTREPO AND LROSSELLO
E.O. 12958: DECL: 08/26/2019
TAGS: EPET EINV ENRG ECON CU VE
SUBJECT: VENEZUELA: PDVSA PAYMENTS PROVIDE TEMPORARY RESPITE
REF: A. (A) CARACAS 852
B. (B) CARACAS 827
Classified By: Economic Counselor Darnall Steuart, for reasons
1.4 (b) and (d).
1. (C) SUMMARY. Drawing on funds raised though its July bond
issuance, PDVSA has made significant payments on its
outstanding arrears. PDVSA appears to have paid domestic
companies owed less than ten million dollars in full and to
have made significant payments on larger debts. END SUMMARY.
PDVSA Makes Bolivar Payments to Domestic Service Companies
-------------- --------------
2. (C) According to Alvaro Perez (strictly protect
throughout),a board member and treasurer of the Petroleum
Chamber, PDVSA used the approximately 12 billion Bolivars
raised in its bond issuance to make significant
Bolivar-denominated payments of outstanding arrears to its
contractors (ref A). (NOTE: Post estimates that PDVSA should
have pulled in approximately 12 billion Bs from the Petrobono
(valued at 3 billion USD): Tranche 1: USD 1.4 billion face
value x 180 percent price x 2.15 Bs/USD = Bs 5.5 billion; and
Tranche 2: USD 1.6 billion face value x 190 percent price x
2.15 Bs/USD = Bs 6.5 billion) Since many international oil
service company contracts are paid in a mixture of USD and
Bolivars, Perez heard that PDVSA is investigating a USD-bond
issuance to raise funds to pay off USD-denominated debt.
3. (C) Perez explained that PDVSA fully paid Petroleum
Chamber members who were owed less than ten million dollars
in arrears. PDVSA has made some increased payments to
companies owed more than ten million dollars, but continues
to demand that they first offer a discount on the outstanding
balance due. He also claimed that any company that offered a
ten percent "facilitation fee" received payment in full, even
if it did not offer a discount on PDVSA's arrears. He also
knows of companies that offered discounts without a
facilitation fee and were paid nothing.
Payments to International Service Companies
--------------
4. (C) Mauricio Moreno (strictly protect throughout)
BakerHughes (BHI) Venezuela Sales Manager informed Petroleum
Attache (PetAtt) about recent Bolivar-denominated PDVSA
payments to major international services companies.
According to Moreno, in the last week of July, PDVSA paid BHI
the Bolivar equivalent of $32.4 million, representing 58% of
its registered debt with PDVSA West, bringing the total
received in July to $41.5 million. Moreno claimed that
Halliburton received the Bolivar equivalent of $31 million in
late July from PDVSA; Schlumberger received the Bolivar
equivalent of $70 million (of a total debt of $880 million;
$480 million invoiced and $400 million not yet accepted by
PDVSA for payment); and Weatherford received the Bolivar
equivalent of $42 million (of a pending $80 million in PDVSA
arrears). Superior Energy's Mac McVay (strictly protect
throughout) told PetAtt that his company had received Bolivar
payment from PDVSA representing 40% of its total arrears.
(NOTE: Based on past reporting, PDVSA's debt to Superior was
roughly $20 million.) Moreno does not expect PDVSA to
continue with this payment trend, but noted that PDVSA has
told companies it is preparing to issue increased dollar
payments as early as September. Moreno added that he had
heard as well that PDVSA might be planning a new bond
issuance to raise dollars.
5. (C) COMMENT: PDVSA relieved some of the pressure of
outstanding arrears by making significant payments to
contractors, but continues to carry large USD-denominated
CARACAS 00001129 002 OF 002
arrears to international companies. The Bolivar-denominated
payments to the large service companies will help them
maintain operations in the short to medium term. Higher oil
prices may help PDVSA pay dollar-denominated debts or it
might issue new debt to raise USD, though it is not clear
what the international appetite for new PDVSA debt would be.
END COMMENT.
DUDDY