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PDVSA losing money under Chavez's socialist management

By Aleksander Boyd

London 28.03.07 | The Associated Press reports "net profits fell 26 percent to US$4.77 billion in 2006, down from US$6.48 billion the previous year, Petroleos de Venezuela SA, or PDVSA, said in a statement on its Web site." Further down in the article the following cite appears "PDVSA said that "spending on social development" skyrocketed to US$13.26 billion in 2006 from US$6.9 billion in 2005." This is the sort of stuff that would make any socialist glee, wouldn't it? Mind you compromising the earnings and output capacity of one Big Oil co in order to meet its 'social responsibilities?' Hasta la victoria siempre no joda!!

But Hugo Chavez, ever the strategist, did not miscalculate the place for PDVSA's latest bond offer. Instead of placing the offer in Speaker's Corner on a Sunday afternoon, so as to garner the support of great socialists, eco-warriors and other such economic luminaries, he decided to do so in Caracas, cradle of '21st Century Socialism' where some very capitalist bankers are buying millions of dollars worth of bonds and will surely make a nice profit out of them, thank you very much.

A friend in the financial sector called from Caracas last night to say "this is incredible stuff; Chavez is financing the so called enemies of his socialist revolution. One banker I know has purchased $20 million in bonds under different identities."

But is it a surprise that PDVSA is losing money under revolutionary management? Does it shock anyone that in spite of record high oil prices PDVSA may be the only mayor oil co whose profits are decreasing? But more importantly, what does this say about PDVSA's real output? How come a company that's allegedly producing 3.3 MBD is seeing its profits fell by 26%? And can the 2005-2006 difference in 'social development' expenditures -read $6.36 billion- be taken as the approximate cost of Chavez's 2006 presidential bid? Will 'economic guru' Mark Weisbrot please explain this to us?

In closing, the revolutionary domain belongs to me and is up for sale. Interested parties should get in touch.

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