11 May 2009 21:30 [Source: ICIS news]
CARACAS (ICIS news)--The financial crisis and lack of natural gas for feedstock is a serious threat to Venezuela’s ambitious multi-billion dollar revolution plan to expand its petrochemical operations, said an industry source Monday.
But a number of fiscal-tightening measures point to a lack of hard cash in government coffers, which brings those announcements into doubt. The socialist-inspired leader released a new budget to reflect an average price of $40/bbl instead of $60/bbl and moved $12bn (€9bn) from the nation’s central bank reserves to a loosely audited development fund.
Also, the government has halved the amount of foreign currency it will allow Venezuelan travellers to draw and has forced more importers into the black market for dollars, worsening what is already the region’s highest rate of inflation and leading to shortages in basic consumer goods.
Some local banks have told customers they can no longer honour credit cards charges made abroad because the government has not disbursed millions of dollars owed to them.
Given the deteriorating economic situation, it was just a matter of time, said sources, that Pequiven also announced it was being forced to tighten its belt. The state producer recently announced it was reducing costs by 40% this year, but insisted, without giving too many details, that it could cut expenses and still stick to the petrochemical revolution’s initial time table.
Even accepting the government’s assertions that its chemical projects can survive the downturn, many industry observers question whether
“Lack of gas has always been a delicate subject with them,” said the source. “New projects to exploit gas are still some years away.”
The nation’s energy minister, Rafael Ramirez, has said that the nation expects to double natural gas output to 12bn cubic feet/day by 2013 from 6.3bn cubic feet.
But the national oil company, PDVSA, the state’s cash cow, currently owes hundreds of millions of dollars to contractors and oil service companies and is on the hook for billions of dollars each year to fund the president’s social agenda. Many believe oil production in the OPEC-nation could fall below 2m bbl/day for the first time in twenty years.
“We are sure all petrochemical projects are on stand-by status,” the source said. “They have no money to continue them. In the end I think the petrochemical revolution will be no more than a slogan for the media.”
Officials at Pequiven and Coramer, the producer's marketing arm, have ignored several requests for comment.
($1 = €0.73)
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