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Thy sin’s not accidental

Venezuelan finances on my mind

I was sent the report linked here last night by a friend and the article cannot be recommended highly enough. Written by Juan Carlos Boué and dated May 4th 2009, it is all about the Venezuelan oil industry and lays to rest the old argument about just how much oil is produced by PDVSA.

Really, it does. As well as being a solid argument, it is also rigorously academic (but fortunately also readable by the layman). It looks into the recent history of oil production reporting in Venezuela and shows exactly how the foreign secondary bodies deliberately underestimate Venezuela’s oil production numbers. It also suggests a couple of reasons as to why…interesting stuff.

At the end of the show, Boué nails down the last five months of numbers and shows that, once internal demand figures are factored in, Venezuela’s oil production is running at around 3.1m barrels per day. This is just where PDVSA says it is and importantly it’s demonstrated without relying on company figures because detractors and know-nothings are always quick to shout ‘propaganda’ at PDVSA’s reported numbers. Three-point-one-million is, of course, a mile away from the 2.35m barrels that is quoted by English speaking media and gleaned from bodies such as the IEA that are shown by Boué to use simple statistical manipulation in their underestimations. However it’s always the lower IEA figures that are picked up by the rabid Anti-Chávez brigade as they wail how PDVSA is going to hell in a handbasket (amazingly, the same song is sung every year….every year they’re proved wrong and every year they say “yeah, but you wait til next year!”). Strange that, innit?

It got me thinking about the importance of oil to Venezuela, too. To put into context (for the miningheads that read this page anyway), try this: Consider all the gold that’s underground in the Bolivar state region of Venezuela, including all the gold underground at Las Cristinas, Brisas, the Chocos and all the other concessions parcelled off and owned by Rusoro and all the other smaller players down there. Now dig up all that gold, process it and sell it all at once. The revenues from that gold would be the revenues from six months or so of Venezuelan oil production, and at current rates of extraction there’s enough oil to last for the next 200 years.

Ever wondered why Chávez cares more about oil than he does about gold?
Anyway, go read Boué’s most excellent English language note about Venezuela’s oil production. It really is the recommended link of the week, superbly educational and wise. Here’s the link again, just in case.

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