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Venezuela’s state-owned oil company, PDVSA, said its debt fell by 5 percent last year to US$34.6 billion, Reuters report, citing a statement in a Venezuelan newspaper. Payables to bond holders fell to US$24.7 billion in 2018 from US$25.1 billion a year earlier.
PDVSA stopped paying the interests on most of its debt excluding a 2020 bond that is secured with its U.S. business, refiner Citgo. The accumulated late interest payments since the end of 2017 when Caracas stopped paying stands at almost US$8 billion, according to Reuters.
According to the information, the debt decline was attributable to two PDVSA subsidiaries: the parent company of Citgo, PDV Holding, and the Venezuelan Petroleum Corporation, the entity that takes care of the management of PDVSA’s joint ventures.
PDVSA tried to restructure a lot of its debt, but U.S. sanctions have prevented it from doing so, except for debts owed to Russian creditors. The sanctions include a ban on trade in Venezuelan debt for U.S.-based entities. Since any debt restructuring and refinancing involves the issuance of new debt, the sanctions have effectively closed the door on this option for PDVSA.
At the end of last year, Bloomberg reported that a group of PDVSA bondholders had gotten together and hired lawyers to see if there was any way to get their money back. Another group had demanded immediate payments from the troubled Venezuelan state company, and an individual bondholder filed a lawsuit against PDVSA at a U.S. court. The report suggests a lot of bondholders are beginning to lose patience, although what they could achieve in reality remains unclear.
PDVSA is already struggling to reverse a decline in production resulting from years of mismanagement and the outflow of qualified professionals to maintain the fields, which has caused a slump in its revenues from oil exports. It has agreed with its Chinese and Russian creditors to accept oil shipments as payment, but other creditors are unlikely to accept this option even if Venezuela had the oil production rate to make it possible.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.