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PDVSA demands service discounts

Venezuela's PDVSA has sent a letter to a large group of service providers and vendors demanding a discount on the money the state-oil company owes them, several recipients of the letter said today.

In the document, the companies are told they must present by today bills with the discount included for goods and services provided.

The letter was sent on 1 July, according to a Reuters report.

Several of the companies involved are owed money for services from a year back and some said they had already declared dividends based on what they are owed, making it difficult to retroactively apply a discount.

Some of the companies are publicly owned enterprises.

With oil prices tumbling, PDVSA ran up debts of $7.6 billion dollars with contractors by the end of last year, compared to $3.1 billion the year before.

Oil Minister Rafael Ramirez said last month that the company had already paid down $2 billion this year.

Companies from small transport firms to multinational giants such as Schlumberger are owed large amounts of money and PDVSA has been pushing hard to convince them to drop their fees by 40% to reflect lower oil prices.

"They can't expect me to recognise a debt under contracts I do not recognise," Ramirez said in June.

PDVSA is issuing a bond to cover some of the remaining debts to service providers.

It said today it had sold two-year, zero-coupon paper with a face value of $1.4 billion at an average price of 180%, giving a total of $2.6 billion from the sale.

In May, the government nationalised dozens of service companies it owed money to and is in the process of valuing its new acquisitions for compensation purposes.

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