Caracas Chronicles

So I realize it’s Friday night and nobody’s reading blogs right now, but I couldn’t let this item pass un-commented…

Venezuelan oil firm to inject $45 billion into refineries

Venezuela’s state owned oil company, PDVSA, announced it will invest $45 billion this decade maintaining its existing refineries and building new ones…

You’ll note the article tracks back to EFE, which hasn’t exactly been covering itself in glory in its Venezuela oil reporting recently. Still, you have to wonder, do these people realize how crazy that number is?

PDVSA is now a company sitting on the world’s biggest untapped oil reserves, yet it can’t even raise project finance to develop them. And that’s crude extraction, by far the most profitable segment in the oil industry. Refining, which is an industrial rather than an extractive industry, tends to generate much more ‘normal’ profits. If PDVSA can’t raise the money it needs to finance the Golden Goose-ish Faja projects, how the heck is it supposed to raise $45 billion to fix up its creaky old refineries?

Again, nowhere in the article does EFE’s flunkie give any indication that s/he is in any way aware that s/he’s reporting a crazy impossibility. Worse, the PDVSA manager making the announcement just tosses out the number all casual like, like it’s the most natural thing in the world, never pausing to reflect that these days it costs PDVSA more to borrow money than some first world credit card holders.

Sorry to get curmodgeonly about this, but it’s maddening. There’s no sense of scale in our public conversation about these topics. As soon as a big number is thrown out people cower in awe at it, leaving their BS filters on standby. Grrrr…