Venezuela oil income back on stream-Cenbank official

Read More Reuters, 03.27.03, 5:36 PM ET By Ana Isabel Martinez

CARACAS, Venezuela, March 27 (Reuters) - Income from Venezuela's vital oil exports is slowly flowing again into the central bank coffers after a two-month opposition strike battered the petroleum industry and cut revenues to a trickle, a senior bank official said on Thursday. Venezuela's oil income collapsed dramatically during December and January when opposition leaders and dissident state oil workers spearheaded an economic shutdown aimed at ousting leftist President Hugo Chavez. Central bank director Armando Leon told Reuters that state oil firm Petroleos de Venezuela (PDVSA) has transferred on average about $150 million a week to the bank since the start of March. Those transfers this week included an additional $550 million as part of delayed payments. "The flow of payments from PDVSA to the Central Bank has been reactivated. But it is below the level it was before the strike," Leon said in a telephone interview. Leon's comments came amid growing speculation about how far the world's No. 5 oil exporter has managed to restore the flow of its much-needed oil dollars even as it ramped up crude production severely disrupted by the two-month strike. Leon said PDVSA has forecast it will transfer about $200 million to $400 million weekly between April and the middle of May to the central bank. "If that flow is maintained with a combination of optimum prices and volumes, oil export earnings will be around $1 billion a month, which will allow international reserves to increase or stay stable even with impending foreign debt payments," he said. During periods of high oil prices, PDVSA has managed to hand over to the Central Bank on average around $1.2 billion a month or $14.4 billion per year. COLLAPSE OF OIL INCOME Chavez described the opposition strike as a "blow to the economic heart of the nation." The stoppage fizzled by February as many businesses reopened in the face of bankruptcy. Chavez has rebuffed opposition calls for early elections. According to Leon, the central bank only received about $200 million in February from oil exports and in January that income was "very low" because the government had to pay for huge gasoline imports to offset domestic shortages. The government, which has fired more than 16,000 PDVSA employees for taking part in the protest, says it has managed to restore oil production and the exports that account for half of state revenues. Still, Venezuela's oil-reliant economy contracted about 9 percent during 2002 and most analysts forecast that it will continue its downward slide in 2003 because of the lingering aftershocks of the crippling strike. Government officials now put oil production at around 3.1 million barrels per day (bpd) -- similar to levels reported in November before the strike -- and say crude exports have reached around 2.8 million bpd. But former PDVSA workers estimate that oil production is closer to 2.45 million bpd. Analysts have cast doubt on how far Venezuela can reactivate its strike-hit oil sector and say those difficulties will be reflected in its international reserves. Reserves fell dramatically as political instability drove capital out of the country and battered the local bolivar currency's value against the U.S. dollar. That crisis forced the government to close the foreign exchange market from Jan. 22 and later introduce strict currency controls that cut off dollars even to priority sectors such as food, medicine and primary goods. Central Bank reserves stood at $12.94 billion on March 25 compared with $11.24 billion at the end of January. Reserves including the government's FIEM rainy-day savings fund rose from $13.83 billion in January to $14.35 billion on March 25. Before the strike, Central Bank reserves were at $12.49 billion and total reserves were at $15.84 billion. Leon said that a rise in reserves had not been evident because Venezuela had paid $950 million in external public debt obligations during the first quarter of this year. "One must recognize that despite the complicated economic situation there was cash to deal with these obligations. The payments for this year are tough, but they will not be crushing if income is efficiently managed," he said. Leon said that in the second quarter Venezuela must pay around $1.2 billion in external public debt obligations with most concentrated in June when payments total around $800 million. For the second half, those payments total around $2.2 billion, he said.