Quico says: This Dow Jones wire story, by-lined Raúl Gallegos, makes for compelling reading. The entire thing is really quite stunning, but if I had to pick just a couple of grafs:

Oil company executives say PdVSA stopped paying service firms in August and the debt to all suppliers may have risen by as much as $3 billion. As of September, bills owed to suppliers stood at $7.86 billion, a 39% jump from the same nine-month period in 2007, according to PdVSA figures. […]

In a recent meeting with service companies, a PdVSA board member asked them to cut down on their charges by 40%, according one executive with knowledge of the meeting. The proposal did not sit well with those firms.

“This is worse than the oil strike,” an oil executive said, recalling a three-month oil industry strike that began in December 2002. “At least back then we were getting paid.”

Note that PDVSA stopped paying its bills before the oil market collapsed: in August 2008, prices were still in triple digits. And now Reuter’s says Helmerich & Payne is also shutting down drilling rigs until PDVSA pays up.

This time last year, the talk was that PDVSA was livid that it couldn’t find enough rigs to hire amid the boom-time worldwide rush to drill. All the usual canards were trotted out, including the predictable, evidence-free allegations that the CIA was organizing an international boycott by oil service firms against the revolution.

Back then, most big rig operators shrugged the whole thing off, saying they had multiple offers and would just as soon go work in places where they could be sure they wouldn’t have any nasty surprises. One year later, PDVSA is proving the doubters right, and guaranteeing that the next time it puts out a tender for a rig, contractors will be even more leery about bidding.

And, y’know, I may not know much about the oil industry, but I do know this: no rigs, no oil.