One thing I learned during an eight-year stint in Latin America is that magical realism is not just a literary device popular among writers there.
Sometimes it is a worldview, such as when a government minister of a certain Latin American country assured a group of journalists that vastly increasing its oil production was just a few weeks away as all they had to do was “turn on” some non-producing wells. This was the same minister who gulped down brackish water from a lake to “prove” that an oil spill there had been cleaned up. He said it tasted just fine.
Not that politicians anywhere on the planet are immune from this, but Venezuela’s officials must have swallowed a lot of this magical water. A recent comparison of figures purportedly recording Venezuela’s total crude and fuel oil exports to China, which in part pay for some $36 billion in loans from the Asian country, show this to be particularly true.
This doesn’t come as much of a surprise, as Venezuela’s overall oil production figures have long been far above any independent estimates. Platts news stories that include Venezuela’s government production figures always run with the tagline that their usual count of about 3 million b/d is “a number rejected by most oil industry analysts,” who mostly put it in the mid- to low 2 million b/d range. Platts says it’s 2.32 million b/d.
For Venezuela’s crude and fuel oil exports to China, there seems to be four sets of numbers: one from a PDVSA annual report, one from a separate PDVSA audited financial report, another given in verbal comments by oil minister and PDVSA President Rafael Ramirez, and another from China.
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The figures from China roughly line up with that of the PDVSA financial report, although the metric tons-to-barrels conversion, which is always problematic no matter where you’re talking about, makes it hard to be too exact.
The PDVSA annual report figures may be OK, if you add in some export figures going to China but possibly through Singapore…but officials haven’t made that clear. And Ramirez’s verbal figures are generally off the charts.
The PDVSA annual report says that it exported 353,000 b/d of crude and other products to China in 2012, comprising 269,000 b/d of crude and 84,000 b/d of products. The separate PDVSA financial statement audited by the US firm KPMG, also recently released, shows that PDVSA in fact sent higher volumes, some 451,000 b/d of crude and products to China in 2012, or 22% more than claimed by the annual report. The statement did not give a breakdown of the volumes.
Our China staff found that numbers there show the country imported 4.77 million mt of fuel oil and 15.29 million mt of crude oil from Venezuela in 2012. Using a conversion factor of 6.7 for both fuels, the fuel oil imports averaged 87,500 b/d while crude volumes were about 280,000 b/d. That would add up to a total of about 367,500 b/d, so roughly in line with the annual report.
Ramirez has said this year that oil volumes to China have reached 450,000 b/d, or even 640,000 b/d. Perhaps that is on one single day, but he isn’t clear. The first number would line up with the financial report, but not if he was only discussing crude oil volumes, as he seemed to be at the time.
Whoops, a ministry employee later said off the record to our Venezuela correspondent, he was probably talking about fuel oil, too. What the ultimate total is, at least about 230,000 b/d go specifically for debt repayment.
A fairly exact figure is important because it would show whether Venezuela might be even more in the hole with the Chinese than it appears to be. Venezuela says it has paid off about $16 billion of the loan, but the Chinese seemed to have reined in their loan program. China’s vice president signed no new big loan deals during a recent trip to Caracas, and looked quite cheerful throughout the visit while Venezuela’s officials seemed a bit glum, Platts’ correspondent there said.
Sources have said the Chinese are becoming wary of getting as much return as they had hoped for these cash-for-crude deals, partially because of possible political instability after the dominating Hugo Chavez died in March. His anointed successor in the “Bolivarian Revolution,” Nicolas Maduro, won the April elections, it appears, but faces high inflation, crime, a fragmented political base and a deficit of Chavista charisma.
Maduro will, however, apparently continue the beyond-belief policy approach. Maduro earlier this year–as the presidential election to replace Chavez heated up against opposition leader Henrique Capriles–claimed that the spirit of Chavez appeared to him in the form of a “little bird” and whistled into his ear. (Maybe Chavez missed his own prodigious Tweeting.)
The latest is that the recent toilet paper shortage in Venezuela is the fault of the media and speculation, and has nothing to do with government currency and price controls that seem to lead to a lack of many household goods on store shelves. Maybe a little bird can help them with that — just hopefully not like those in in the realismo mágico of Colombian writer Gabriel García Márquez. Those birds were usually bad news.
“In that Macondo forgotten even by the birds, where the dust and the heat had become so strong that it was difficult to breathe, secluded by solitude and love and by the solitude of love in a house where it was almost impossible to sleep because of the noise of the red ants … ” — “One Hundred Years of Solitude”