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Venezuela Congress plans to investigate PDVSA, China loans
January 19, 2016 / 9:06 PM / 2 years ago

Venezuela Congress plans to investigate PDVSA, China loans

CARACAS (Reuters) - Venezuela’s new opposition-led Congress plans to investigate state-run oil company PDVSA’s [PDVSA.UL] financial health and hefty Chinese loans, a lawmaker said on Tuesday.

A worker of the Venezuelan state oil company PDVSA holds a flag with the company logo, during a meeting with Venezuela's President Nicolas Maduro outside Miraflores Palace in Caracas January 12, 2016. REUTERS/Carlos Garcia Rawlins

The OPEC member country depends on oil for nearly all of its export revenue. With the political opposition in control of the National Assembly since this month, rivals of leftist President Nicolas Maduro want to use their new perch to push for greater transparency and accountability at PDVSA.

“We want to know the real state of PDVSA’s books,” Elias Matta, an opposition lawmaker and vice president of the energy and oil commission, told Reuters on the sidelines of the National Assembly.

“The country wants to know how the money from the Chinese funds were spent. We also want to investigate what the real cost of production is. And why haven’t they done the output increases they talked about so much? We’re going to have a lot of work in this commission,” he added with a smile.

Venezuela has received some $50 billion in financing from China through an arrangement under which it repays loans in shipments of crude and fuel.

The financing, whose fine print is not disclosed, has been a crucial boost to the South American country, especially as the price of its heavy-oil crude slumps, aggravating a cash crunch and potentially grazing a break-even point in production.

That comes on top of what the U.S. Energy Information Administration figures show is falling or stagnating output in Venezuela, which has the world’s largest oil reserves, for around a decade.

Disputing these figures, Venezuela says it is shoring up production thanks to the heavy-crude-rich Orinoco region, countering natural declines in its mature fields.

Since September 2014, PDVSA has been led by Eulogio del Pino, a Stanford-educated engineer perceived to be trying to reform the Caracas-based company critics say has become bloated.

“I think at some point the president of PDVSA will have to come to the Assembly and the commission so we can resolve some important issues,” added Matta, who hails from the traditional oil-producing state of Zulia, on the border with Colombia.

Congress may also seek to call in Rafael Ramirez, who presided over PDVSA for a decade and is now Venezuela’s envoy to the United Nations in New York, according to Matta.

“We want a healthy oil industry, an oil industry that can generate the income we so badly need right now,” he added before slipping into the legislative session.

Reporting by Alexandra Ulmer; Editing by Sandra Maler

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