Latin America

Big Oil Nervous As Venezuela’s Maduro Seizes More Power

19 Aug 2017   Venezuela

The pro-government constitutional assembly loyal to Venezuelan President Nicolas Maduro seized the powers of the opposition-led congress today, in a move that necessarily has Big Oil nervous that Trump will make good on his economic sanctions threat. Maduro’s bold political move on Friday means further intensifies the dramatic decline of democracy that led Trump last week to threaten economic sanctions that could remove Venezuelan oil from the U.S. refining market. It also comes right after Trump indicated that a ‘military option’ was not off the table. The government has accused opposition leaders of conspiring with Washington to overthrow Maduro. As Venezuela disintegrates politically and economically, big oil is stepping in to urge Washington to refrain from resorting to economic sanctions against the country, the third-largest supplier to the U.S. U.S. energy giants rely heavily on trade with Venezuela—home to the world’s largest oil reserves—and the Trump administration’s move last […]

Venezuela’s constituent assembly assumes power to legislate

19 Aug 2017   Venezuela

Venezuela’s new legislative superbody on Friday gave itself the power to pass laws, superseding the opposition-led congress and fueling criticism by government adversaries that socialist President Nicolas Maduro is consolidating a dictatorship. In practice, the move does little to change the existing situation. The Socialist-dominated Supreme Court has stripped power from the congress and shot down nearly every law it has approved since it was taken over by the opposition in 2016. But the decision suggests the constituent assembly, elected in July in a vote boycotted by the opposition, is more interested in limiting the opposition’s influence than carrying out its official task of rewriting the nation’s constitution. Delcy Rodriguez, a Maduro ally and president of the constituent assembly, insisted the move did not […]

Venezuela’s New, Powerful Assembly Takes Over Legislature’s Duties

19 Aug 2017   Venezuela

Venezuela ’s new Constituent Assembly granted itself wide powers to write and pass legislation on Friday, a move that essentially nullifies the opposition-led legislature and puts President Nicolás Maduro’s party firmly in control of the country. In a decree, the assembly said it would “assume the ability to legislate over matters directly related to guaranteeing peace, security and sovereignty,” as well as a long list of other areas. The move enables the Constituent Assembly to supersede the country’s legislature, the National Assembly, which has been led by opposition parties since last year and is the only branch of government not controlled by Mr. Maduro. It is a decisive step in the quest by Mr. Maduro’s allies to dismantle the country’s legislature, an effort that began in March with an attempt to dissolve it using the court system and shifted last month to a vote to create the powerful Constituent […]

Venezuela’s PDVSA defends ‘perfect’ relationship with Russia

19 Aug 2017   Venezuela

Venezuela’s alliance with Russia is “perfect,” the president of state oil company PDVSA said on Friday, blasting what he said was a U.S.-led attempt to sully the growing ties between the two nations. Reuters last week published a Special Report revealing that Venezuela’s unraveling socialist government is increasingly turning to Russia for the cash and credit it needs to survive and offering prized state-owned oil assets in return, sources familiar with the negotiations told Reuters. Venezuela’s opposition lawmakers say Russia is behaving more like a predator than an ally, scooping up assets on the cheap and gaining control of much of the OPEC nation’s crude for trading at a time when President Nicolas Maduro is […]

Exclusive: Bank jitters over Venezuela stall oil delivery to U.S. refiner

18 Aug 2017   Venezuela

A tanker carrying a cargo of about 1 million barrels of Venezuelan heavy crude has been stranded for more than a month off the coast of Louisiana for lack of a bank letter of credit to discharge, three sources have told Reuters. The tanker’s fate is just the latest sign of state-run oil company PDVSA’s precarious financial position. Major banks are cutting exposure to Venezuela as a result of political upheaval in the South American country. Some banks have closed accounts linked to officials of the OPEC member who have had sanctions leveled against them by the U.S. government and have refused to provide correspondent bank services or trade in government bonds. The United States is considering further economic sanctions that would dry up the country’s access to Wall Street. The Suezmax tanker Karvounis carrying Venezuelan diluted crude oil is anchored at South West Pass […]

The Make Or Break Moment For Argentina’s Shale Boom

18 Aug 2017   Argentina

Argentina’s abundant shale resources have attracted a growing number of major international companies since the beginning of this year—all of them interested in developing the prized Vaca Muerta shale formation; but mid-term elections are making everyone nervous, and a change in the current pro-business climate could mean bust rather than boom for shale. Much is at stake. Vaca Muerta is thought to be a highly prolific basin, and even though it’s in the early stage of development, well performance there is already catching up with some U.S. shale plays. A lot of investment would be needed for a play-wide development at Vaca Muerta, but attracting investment and luring more and more experienced drillers to the country hinges on Argentina’s energy, tax, and pro-business policies. Currently, right-of-center President Mauricio Macri is betting big on welcoming more foreign investment into Vaca Muerta. He’s introducing various reforms to make doing business in […]

Venezuela mulls ‘law against intolerance,’ aimed at dissenters

17 Aug 2017   Venezuela

Venezuelans who express “hate or intolerance” will be jailed for up to 25 years under a bill pending in the country’s newly-formed constituent assembly, a measure the opposition fears will be used by the government to further crack down on dissent. President Nicolas Maduro has faced a cacophony of international criticism – from the United Nations to Pope Francis – since he installed the 545-member assembly stacked with Socialist Party allies earlier this month. The president defends the new legislative superbody as Venezuela’s only hope for peace and prosperity The OPEC member has been rocked by anti-government unrest that has left more than 120 people dead while the country sinks further into a recession compounded by triple-digit inflation and acute food shortages. Local rights group Penal Forum estimated […]

Cuban trade with Venezuela plunges over two years

16 Aug 2017   Cuba, Venezuela

Cuban trade with socialist ally Venezuela has fallen 70 percent since 2014 due to the South American oil producer’s inability to meet delivery contracts and purchase goods as it struggles with low oil prices and a resulting economic meltdown. A cash crunch and lower oil supplies from Venezuela have forced the Communist-run Caribbean island to slash imports and reduce the use of fuel and electricity, helping tip its centrally planned economy into recession in 2016 for the first time in nearly a quarter century. Merchandise trade with Venezuela fell to $2.2 billion in 2016, compared with $4.2 billion the year before and $7.3 billion in 2014, the Cuban National Statistics Office reported on […]

Oil traders expect Asia to import more Venezuelan crude if U.S. sanctions kick in

15 Aug 2017   Venezuela

Asia would be the biggest beneficiary of any potential sanctions by the United States on Venezuela’s oil sector, said traders and analysts, as exports from the South American OPEC member could be redirected to the region, filling a vacuum left by producer supply cuts. Washington is considering sanctions on Venezuela’s oil industry in response to the ruling Socialist Party’s crackdown on officials and parties opposed to the government. An embargo against Venezuelan crude could block imports of about 740,000 barrels per day to the U.S. Asian refiners would welcome the so-called heavy, or higher density, crude since production cuts by the Organization of Petroleum Exporting Countries (OPEC) have mainly curtailed this type of oil. At […]

Oil Tycoon Pushes For Venezuela Sanctions

15 Aug 2017   Venezuela

The U.S. has stepped up sanctions against Venezuelan individuals in the wake of the July vote in Venezuela aimed at rewriting the constitution, which is further eroding democracy in the country with the world’s largest proved oil reserves. Further sanctions— namely against Venezuela’s oil industry by imposing a ban on U.S. imports of Venezuelan crude— are not off the table either, as the U.S. contemplates additional measures to stymie the progress of Nicolas Maduro’s authoritarian regime. The possibility of Venezuelan oil import restrictions has divided White House advisors, and now is pitting Harold Hamm, chairman and CEO of Continental Resources and energy advisor during President Trump’s campaign, against U.S. refiners that import Venezuelan crude to process at their refineries. Hamm favors the approach of cutting off Venezuelan oil exports to the U.S., as well as stopping U.S. light sweet crude exports to Venezuela, which uses that type of crude […]

Is OPEC Counting Too Much On Venezuela Sanctions?

14 Aug 2017   OPEC, Venezuela

The Organization of Petroleum Exporting Countries (OPEC) released its monthly oil market report on Thursday, and the news was enough to send WTI below $50 after a brief week-long rally. The report indicated OPEC’s production reached a new height in July, as members pumped above and beyond the production cuts agreed to last November and extended this May. Within the group, however, there’s lots of potential for disruption, which could send prices up or down depending on circumstances. Total OPEC production reached its highest level all year, topping out at 32.9 million bpd in July, up 172,600 bpd from June. Saudi Arabia, the largest producer and de facto leader of OPEC, reported monthly production averaging 10.06 million bpd. The country exceeded its production quota largely due to higher seasonal demand, and will likely lower it again at the end of the summer. The oil producer has stated it intends […]

Venezuela’s PDVSA oil revenue tumbles amid lower prices, production

14 Aug 2017   Venezuela

Venezuelan state oil company PDVSA’s revenue from oil and fuel sales in 2016 dropped 34 percent from the previous year to $48.0 billion, the company said in its annual financial results published Friday night, hurt by lower production and oil prices. Net profit crashed nearly 90 percent to $828 million from $7.3 billion the previous year, the company added. Economists tend to focus on PDVSA’s PDVSA.UL revenue because of its multibillion-dollar contributions to anti-poverty campaigns, which make profit figures less relevant in assessing performance than for private firms. The OPEC nation, led by unpopular leftist President Nicolas Maduro, has the world’s largest crude reserves, at around 300 billion barrels. But production has been dropping due to a […]

Brazil’s Pre-Salt Extraction Costs Fall To $8 Per Barrel

14 Aug 2017   Brazil

Not too long ago Brazilian state oil company Petrobras was the most indebted oil & gas company in the world. The long-suffering company has faced dire mismanagement while being weighed down by allegations of involvement in Brazil’s widespread corruption. But that’s all changing. Despite being a subject of the massive Lava Jato investigation, in which executives are accused of accepting bribes in exchange for contracting construction firms at inflated rates, things are turning around for Petrobras. Now, thanks to new management and their recently-discovered pre-salt wells, Brazil is the comeback story of the year. Discovered only 10 years ago , Brazil’s pre-salt area has rapidly become the biggest oil-producing area in the country. Just this week Petrobras discovered commercial oil in a whole new pre-salt area known as the Marlim Sul Field in the Campos Basin, located about 71 miles off the shore of Rio de Janeiro. Because pre-salt […]

Little-Known Driller Dives Into Perilous Venezuelan Oil Market

14 Aug 2017   Venezuela

Two weeks before he held a vote to set up an assembly to re-write the constitution—further undermining democracy—Venezuelan President Nicolas Maduro hosted the signing of a contract with a small U.S. company for drilling of oil wells in the country that has the world’s largest proved crude oil reserves. Maduro welcomed Todd Swanson, the president of Purcell, Oklahoma-based Horizontal Well Drillers, to the presidential palace on July 15, and signed a memorandum of understanding (MoU) with the little-known U.S. company to explore opportunities and possibly create a joint venture to drill about 200 new wells in the Orinoco Oil Belt. Last September, PDVSA said that it had awarded US$3.2 billion worth of contracts to drill in the Orinoco Belt. The contracts, PDVSA said back then, would add 250,000 bpd within 30 months from about 480 wells to be drilled. Schlumberger, Horizontal Well Drillers, and Venezuela’s Y&V Group won contracts […]

Special Report: Vladimir’s Venezuela – Leveraging loans to Caracas, Moscow snaps up oil assets

12 Aug 2017   Russia, Venezuela

Venezuela’s unraveling socialist government is increasingly turning to ally Russia for the cash and credit it needs to survive – and offering prized state-owned oil assets in return, sources familiar with the negotiations told Reuters. As Caracas struggles to contain an economic meltdown and violent street protests, Moscow is using its position as Venezuela’s lender of last resort to gain more control over the OPEC nation’s crude reserves, the largest in the world. Venezuela’s state-owned oil firm, Petroleos de Venezuela (PDVSA), has been secretly negotiating since at least early this year with Russia’s biggest state-owned oil company, Rosneft ( ROSN.MM ) – offering ownership interests in up to nine of Venezuela’s most productive petroleum projects, according to a top Venezuelan government official and two industry sources familiar with the talks. Moscow has substantial leverage in the negotiations: Cash from Russia and Rosneft has been crucial in […]

Venezuela debt reaches flashpoint in political crisis

12 Aug 2017   Venezuela

At what point does a country’s political situation become intolerable for bond investors? That is the question facing holders of Venezuela’s debt as the nation’s descent into strife raises questions about investment ethics. This week, Credit Suisse circulated a memo outlining a ban on trading in two Venezuelan bonds, reflecting growing unease about the reputational risks of being associated with a country under the increasingly autocratic government of Nicolás Maduro. Venezuelan bond yields remain elevated and prices depressed after President Maduro staged a power grab last week, pressing ahead with the formation of a constituent assembly that will rewrite the country’s constitution after a widely discredited election. In response to Mr Maduro’s obduracy and the jailing of opposition politicians Leopoldo López and Antonio Ledezma the US has imposed fresh sanctions on several Venezuelan officials. For now Donald Trump has held off on taking action against the country’s oil sales, Venezuela’s main source of foreign currency. Caracas’ debt has emerged as a flashpoint in the crisis. The purchase of $2.8bn worth of Venezuelan bonds from the state oil company, PDVSA, by the asset management arm of Goldman Sachs earlier this year attracted heavy criticism from the country’s opposition arguing that they constituted “hunger bonds” that help support the autocratic government. Now Credit Suisse has banned trading in a sovereign issue due in 2036 and PDVSA’s bond maturing in 2022 — the issue purchased by GSAM. The bank said it would also prohibit trading in any bonds issued after June 1 from any Venezuelan entity.

Venezuela’s PDVSA oil revenue tumbles amid lower prices, production

12 Aug 2017   Venezuela

Venezuelan state oil company PDVSA’s revenue from oil and fuel sales in 2016 dropped 34 percent from the previous year to $48.0 billion, the company said in its annual financial results published Friday night, hurt by lower production and oil prices. Net profit crashed nearly 90 percent to $828 million from $7.3 billion the previous year, the company added. Economists tend to focus on PDVSA’s PDVSA.UL revenue because of its multibillion-dollar contributions to anti-poverty campaigns, which make profit figures less relevant in assessing performance than for private firms. The OPEC nation, led by unpopular leftist President Nicolas Maduro, has the world’s largest crude reserves, at around 300 billion barrels. But production has been dropping due to a […]

Venezuela’s neighbours try to put financial pressure on Maduro

10 Aug 2017   Venezuela

In a move that may have significant economic repercussions, a group of 12 countries from across the Americas refused on Tuesday to recognise Venezuela’s new constituent assembly or any laws that it passes governing future oil joint ventures or debt issues.  The declaration by Canadian and Latin American foreign ministers is the latest sign of Caracas’ growing international isolation. It came on the same day that the UN slammed the government of President Nicolás Maduro for human rights violations, including the death of at least 73 opposition protesters.  Mr Maduro convoked the constituent assembly in what he claims is an attempt to resolve the nation’s multiple crises, but critics insist it is a power grab. Since its installation on Friday, the assembly has taken over the opposition-dominated and democratically elected National Assembly, ousted the attorney-general, established a “truth commission”, and passed decrees pledging “support and solidarity” with the unpopular president.  “There are two points to stress,” Luis Videgaray, Mexico’s foreign minister, said from Lima, where the foreign ministers’ meeting was held. “The first is our full support for the National Assembly. The second is that we do not recognise rulings [by the constituent assembly] that the Venezuelan constitution requires the National Assembly to pass.”  Under the current constitution, National Assembly approval is required for all debt issues and energy joint ventures, including those that Caracas hopes to sign with Russian state-energy company Rosneft. The so-called Lima declaration, which “condemns the rupture of Venezuela’s democratic order”, was signed by Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Honduras, Mexico, Panama, Paraguay and Peru.

Regional Governments Reject New Venezuela Assembly

9 Aug 2017   Venezuela

Governments from across Latin America on Tuesday agreed not to recognize Venezuela’s powerful new constituent assembly, saying that it represented a breakdown in the country’s democratic order. “What we have in Venezuela is a dictatorship,” Peru’s Foreign Relations Minister Ricardo Luna said while surrounded by his counterparts from Latin America’s biggest countries, including Brazil, Mexico, Chile and Colombia. “This is a…

The Latest: Venezuela assembly declares self top gov’t body

9 Aug 2017   Venezuela

The latest on Venezuela’s political crisis (all times local): 5:10 p.m. Venezuela’s new constitutional assembly has passed a decree declaring itself superior to all other branches of government. The order passed Tuesday bars the opposition-controlled National Assembly and other agencies from taking any action that would interfere with the laws passed by the pro-government super-body. Embattled President Nicolas Maduro convoked the constitutional assembly in what he says is an attempt to resolve the nation’s political standoff but opposition leaders contend it is a power grab. Opposition leaders and a growing list of foreign government have refused to recognize the new assembly. — 3:50 p.m. As Venezuela descends into political chaos, a prominent opposition leader is taking umbrage over soccer great Diego Maradona’s defense of President Nicolas Maduro’s embattled government. Former presidential candidate Henrique Capriles offers in an interview with Argentina’s Radio Mitre […]

Chevron, Total Pull Foreign Staff in Venezuela

9 Aug 2017   Venezuela

Repsol SA pulled all foreign workers from its oil fields in Venezuela amid a deepening political crisis, while Chevron Corp. and Total SA have removed a small number of employees, said people with knowledge of the companies. Norway’s Statoil ASA has withdrawn its expatriate staff.  Repsol field workers left the country in the past few weeks, two people said, asking not to be identified discussing a confidential matter. A skeleton staff remains in Caracas, one of the people said. Chevron has removed fewer than 10 foreign employees and retains a substantial expatriate workforce there, said people with knowledge who weren’t authorized to discuss the operations. Statoil withdrew its last three foreign workers before the July 30 election, Erik Haaland, a company spokesman said.  The departure of workers will be a concern to the government because oil output, which has tumbled over the past two years, accounts for 95 percent of Venezuela’s foreign-currency earnings. Repsol gets about 10 percent of its production from the country, where it owns a stake in the Carabobo heavy-oil field. The Spanish company also is a partner in the Perla project, Latin America’s largest offshore gas deposit, together with Eni SpA.

Six tankers waiting to discharge in Venezuela pending payment from PDVSA

9 Aug 2017   Venezuela

Six oil product tankers are docked at the Paraguana Refining Center (CRP) marine terminals in northwestern Venezuela awaiting payment from facility operator PDVSA before they discharge, according to a technical report Tuesday. In total 600,000 barrels of ULSD, 140,000 barrels of MTBE, 625,000 barrels of 1% sulfur vacuum gasoil, and 200,000 barrels of catalytic naphtha are waiting to unload at the CRP facility in northwestern Venezuela, which comprises the 645,000 b/d Amuay and 310,000 b/d Cardon refineries. Two of the tankers are at Cardon’s marine terminal and four are the Amuay terminal, according to the report. The Elka Elefsis arrived at the Cardon facility July 17 with 300,000 barrels of ULSD brought to Venezuela by Citizens, while the Mount Kibo arrived on July 10 with 140,000 barrels of MTBE from MS Internacional. At Amuay, the Atlantic Star arrived on July 9 with 300,000 barrels of ULSD brought by Citzens; […]

Venezuela Rebellion Could Send Oil To $80

9 Aug 2017   Venezuela

The economic, political and security situation in Venezuela has been frightening for quite a while, but things continue to grow worse. The new “constituent assembly,” put together to rewrite the constitution, is seen by most as an attempt to erode the nation’s democracy and consolidate power in the hands of the president. In an ominous sign, more than a dozen soldiers reportedly attacked a Venezuelan military base on Sunday, and although the assault was put down, it highlights the increasing fragility of the state. “The significance lies in whether this suggests that Maduro is losing his grip on the military and whether we can expect to see more mutinies to come, or if this is just an isolated incident,” said Stuart Culverhouse, Global Head of Macro & Fixed Income Research at Exotix Capital in London. “Details are sparse and it’s probably too early to say either way at this […]

Washington Mulls Over Additional Sanctions Against Venezuela

9 Aug 2017   Venezuela

The Trump administration is considering additional sanctions on Venezuelan individuals close to the Maduro government, but will first try to enlist support from other countries. This is what unnamed sources close to the President told Bloomberg, adding that the new sanctions will target between 10 and 20 people and will consist of freezing their assets. On July 31, the U.S. administration froze the assets of Venezuela’s President Nicolas Maduro in response to a vote that called for a Constituent Assembly—a parliament that has the powers to amend the country’s constitution. There were expectations that the sanctions would target Venezuela’s oil industry as well, but these seem to remain under consideration for the time being. In addition to Maduro, U.S. sanctions are in place against 13 senior government officials, including a vice-president of state-owned oil company PDVSA. Media reports from before the July 30 Constituent Assembly vote cited sources from […]

Rosneft says lent Venezuela’s state oil firm a total of $6 billion

9 Aug 2017   Russia, Venezuela

 Russia’s largest oil producer Rosneft said on Tuesday it had made around $6 billion in pre-payments to Venezuelan state oil company PDVSA and had no immediate plans to make any further advance payments soon.  OPEC member Venezuela is struggling to pay back creditors as its economy endures triple-digit inflation and chronic shortages of food and medicine.  Last Friday, Venezuela inaugurated a new legislative superbody that is expected to rewrite the constitution and give vast powers to President Nicolas Maduro’s ruling Socialist Party, defying protests and worldwide condemnation that it undermines democratic freedoms.  Russia is a close political ally of Venezuela’s leaders. Rosneft Chief Executive Igor Sechin said earlier this year his company, the world’s top listed oil firm by output, would continue to work in Venezuela and would never leave the country.  As of Tuesday, Rosneft’s pre-payments to PDVSA have totaled around $6 billion, Rosneft said on a conference call with investors. This includes principal of $5.7 billion and interest of $245 million, it said.  “The repayment is proceeding according to schedule,” the company said. “To date, a total of $743 million on the principal has been repaid and another $489 million in interest.”  “We expect the final repayment to be made in oil and oil product deliveries, which are ongoing strictly according to a schedule which we cannot provide to you. We expect full repayment before the end of 2019. No new pre-payments are planned.”

In political storm, Venezuela state-run oil company PDVSA drifts further

9 Aug 2017   Venezuela

To survive months of street protests and an economy in tailspin, Venezuelan President Nicolas Maduro is trying to turn state oil company PDVSA into a bastion of support, further degrading an already vulnerable enterprise. Political appointees are gaining clout at the expense of veteran oil executives, while employees are under mounting pressure to attend government rallies and vote for the ruling Socialists. The increasing focus on politics over performance is contributing to a rapid deterioration of Venezuela’s oil industry, home to the world’s largest crude reserves, and to a brain drain at the once world-class company. Interviews with two dozen current and former employees, foreign oil executives, and contractors point to a PDVSA coming apart at the seams. “Everything is a disaster and yet we have to clap,” said a PDVSA employee, who asked to remain anonymous because she feared retaliation. After four months of deadly […]

Trump Might Start Trade War With Brazil Over Ethanol Imports

9 Aug 2017   Brazil

President Donald Trump’s America First rhetoric is doing no favors for US ethanol producers, who are hoping to avoid a trade fight with fuel buyers in Brazil. (Bloomberg) — President Donald Trump’s America First rhetoric is doing no favors for U.S. ethanol producers, who are hoping to avoid a trade fight with fuel buyers in Brazil. The administration has started making noise about rising imports of Brazilian biofuel made from sugar. That’s got the South American producer mulling tariffs or a quota on imports of U.S. fuel made from corn. A trade spat would be a much bigger problem up north because the U.S. ships more than four times as much to Brazil than it buys from the country. The brewing trade dispute is gearing up to pit the world’s two biggest ethanol producers against each other. As the rivalry heats up, hedge funds seem to be signaling that […]

Venezuela’s Demise Is A Geopolitical Litmus Test For The U.S.

7 Aug 2017   Venezuela

Is Venezuela’s 2017 transformation symptomatic of the growing global polarization? And does it show how the collapse of globalism is resulting in the re-emergence of a range of governmental forms which no longer even need to acknowledge “Western-style” democracy? Are we seeing the revival of a bloc of pre-Westphalian nation-states [1] with major power support? Some trends are emerging which show how different the 21st Century global strategic architecture will be from the 20th. The present Venezuelan Government has abandoned even a pretense of adherence to what the West calls democracy. For some states, a return to autocracy is seen as the only avenue to escape total loss of power by governing élites, even though history has demonstrated how fragile and vulnerable such power structures can quickly become. Venezuelan Pres. Nicolás Maduro’s stage-managed July 30, 2017, “election” of a new National Constituent Assembly may have set the paradigm for […]

Venezuela prosecutors open probe into vote manipulation

3 Aug 2017   Venezuela

The Venezuelan state prosecutor’s office said late on Wednesday it has opened an investigation into accusations that the country’s elections council manipulated turnout figures in Sunday’s controversial election for a legislative superbody. Voting technology firm Smartmatic, which provides the South American nation’s voting machines, said the turnout figure of 8.1 million had been inflated by at least 1 million votes. It did not describe its methodology in reaching that conclusion. President Nicolas Maduro and the elections council denied the accusation. The vote count was crucial for the ruling Socialist Party to legitimize the vote for the constituent assembly, which was boycotted by the opposition and broadly condemned by countries around the world as an assault on democratic freedoms. “We are in the face of a grave and unprecedented action that could constitute a crime,” Chief Prosecutor Luisa Ortega said in a statement by the prosecutor’s office, […]

Venezuela cuts oil supply to Citgo as Russia’s Rosneft gets more

3 Aug 2017   Venezuela

Venezuela’s state-run PDVSA has reduced crude sales to its U.S. refining unit Citgo Petroleum while increasing supply to Russia’s Rosneft ( ROSN.MM ), following a plan signed in May to catch up on overdue deliveries, according to PDVSA documents, sources from the company and its joint ventures. Venezuela’s oil output has declined since 2012 with the fall accelerating this year amid a lack of investment and payment delays to suppliers. Almost all of Petróleos de Venezuela’s customers are receiving reduced volumes. That includes the United States, which has received less Venezuelan crude oil this year. PDVSA agreed in the catch-up plan to compensate Rosneft for the delayed cargoes, since the oil is being sent in lieu of payment for loans. Venezuela’s Oil Minister Nelson Martinez at a forum in St Petersburg in June said Rosneft would receive some 70,000 barrels per day (bpd) as payment for […]

Venezuela’s ‘’Election’’ Creates Opportunity For Oil Investors

3 Aug 2017   Venezuela

The result of this election was hardly in doubt. Opposition political parties boycotted what can most generously be referred to as “massaged” voting results. But the main result may end up being an unanticipated change in global geopolitics… And a higher oil price. Here’s what I mean… Venezuela’s “Election” Guarantees U.S. Sanctions In many areas, more votes were apparently cast in favor of the government than there are total voters. As a result of this “election,” Venezuela’s President Nicolas Maduro has obtained a pliant new national legislature and a dramatic expansion of his presidential powers, all in the name of meeting a worsening national crisis. He also gained guaranteed additional sanctions from the U.S. Yesterday morning, Maduro’s political foes were already being arrested and draconian moves were being introduced to stem a rising tide of street unrest. The country is quickly cascading into a failed state, the term for […]

Venezuelan Officials Tampered With Election, Voting-Software Firm Says

3 Aug 2017   Venezuela

Venezuelan authorities tampered with votes during an election this week to elect a body to rewrite the country’s constitution, said the company that provides the government with the voting software. The Wednesday statement from Smartmatic, a London-based company that has worked with Venezuela’s electoral council since 2004, cast further doubt over the legitimacy of Sunday’s election of a powerful constituent assembly staffed with…

Europe mulling its options with Venezuela

3 Aug 2017   Venezuela

With oil so far spared from the target of sanctions, the European Commission said Wednesday it was discussing a range of potential options for Venezuela. The U.S. Treasury Department hit Carlos Erik Malpica Flores, the former vice president for finance at state oil company Petroleos de Venezuela , known also as PDVSA, with sanctions last week in response to a crackdown on the opposition in the country. After a national vote seen as consolidating his grip on power, sanctions were extended this week to Venezuelan President Nicolas Maduro . The White House was said to be considering sanctions on Venezuela’s oil, a cornerstone of its economy. Treasury Secretary Steven Mnuchin said the object was “not to do anything that hurts […]

Venezuela Expects Refinery Output Capacity To Drop To 44%

3 Aug 2017   Venezuela

Venezuelan state energy giant PDVSA expects its refineries to run at 44 percent capacity in August due to crude supply issues, Reuters reported on Tuesday. At maximum output, the refinery network can process up to 1.64 million barrels per day, but crude supply issues last month caused the facilities to run at just 45 percent of their maximum level, the report said. The biggest declines in crude processing will stem from scale-backs in the Puerto la Cruz, Amaya and Cardon refineries. Of the twelve distillation units present at those three facilities, seven are inactive due to overdue repairs and limited supply of essential crude grades. If planned maintenance work at Cardon is completed successfully, another distillation unit could restart next month. Low oil output since 2012 has stunted the production of the nation’s refineries. The Puerto La Cruz refinery, which processes 187,000 barrels per day of crude regularly, now […]

Venezuela seizes opposition leaders Lopez, Ledezma from homes

2 Aug 2017   Venezuela

Venezuelan security officials seized opposition leaders Leopoldo Lopez and Antonio Ledezma from their homes during nighttime raids on Tuesday, in what critics of President Nicolas Maduro said was a growing crackdown by his dictatorial regime. Their apprehension comes a day after the United States slapped sanctions on unpopular leftist Maduro for a new legislative superbody, the constituent assembly, which was elected on Sunday in a vote boycotted by the opposition. The pro-government Supreme Court said in a Facebook statement the measures were taken because the men had been planning to flee. The opposition countered it was a further sign Maduro was seeking to stamp out four months of massive street protests against him. “Maduro’s dictatorship is on the attack,” said opposition lawmaker Yajaira Forero. Lopez, a 46-year-old hardliner, and Ledezma, a 62 year-old veteran politician, were both under house arrest, the former for his role in […]

U.S. insists all options are on the table with Venezuela

2 Aug 2017   Venezuela

All options remain on the table for U.S. sanctions on Venezuela, including oil, though industry reports were mixed on the potential impact. Crude oil prices edged higher late last week and into Monday on expectations that the U.S. government would respond to weekend elections in Venezuela with sanctions on its oil sector, a cornerstone of its economy. The election was seen as a move by Venezuelan President Nicolas Maduro to silence his critics and the U.S. State Department said after the vote “it would “take strong and swift actions against the architects of authoritarianism in Venezuela.” On Monday, the U.S. government sanctioned Maduro himself, but left oil restrictions off the table. When asked […]

Ways the US can hit Venezuela oil with sanctions

2 Aug 2017   Venezuela

Venezuela’s oil sector is at risk of US sanctions following President Nicolás Maduro’s decision to push ahead with an election for an all-powerful political assembly, which critics fear will snub out the last vestiges of democracy in the Opec member. Steven Mnuchin, US Treasury secretary, said this week the government would “continue to review all of our options” when asked whether oil sanctions were coming. Here are the two most likely paths the US could pursue should it follow through on its threat to take “strong and swift” economic action against Venezuela. 1. Blocking imports of Venezuelan crude Seen as one of the most aggressive potential sanctions, blocking imports of Venezuelan crude to the US is likely to have the biggest immediate effect on the wider market. Refineries in the US are the largest buyers of Venezuela’s heavy crude supplies, and if those are shut off, they will need to quickly find alternatives. While imports are led by Citgo, the refiner owned by Venezuela’s state-backed oil company PDVSA, other refineries in the US are also big buyers, with seven companies taking more than 1m barrels of crude from the country in April. In May, independent refiner Valero bought even more Venezuelan crude than Citgo, according to the US Energy Information Administration, importing almost 200,000 barrels a day.

Against All Odds: The Return Of An Oil Giant

2 Aug 2017   Brazil

Only a year ago, the Brazilian state company Petrobras seemed a complete basket case, an exemplary case of how not to lead a company that is rich in both resources and know-how. Today, however, the Brazilian state giant has demonstrated unhoped-for prowess in its quest of ridding itself of the disagreeable label of being the most indebted oil & gas company in the world. Brazil is still susceptible to sporadic political earthquakes, emerging from revelations of which the Operation Car Wash has still not exhausted itself – like the sudden death of Supreme Court Justice Teori Zavascki in a plane crash this January – and it will take Petrobras, having played a major role in previously existing kickback schemes, write-downs and money laundering, a good deal of time to clean itself of the acquired bad optics. Still, Petrobras, it seems, has bent to task. The new management of Petrobras […]

Venezuelan oil supply to Phillips 66 falls amid quality issues

2 Aug 2017   Venezuela

Venezuela’s supply of heavy crude to U.S. independent refiner Phillips 66 has dropped by more than two-thirds this year in part due to quality problems, and the company has cancelled at least one cargo in recent months, according to sources from state-run oil company PDVSA. Phillips 66 ( PSX.N ) has also asked for price discounts for other shipments of Venezuelan crude, according to the sources. Venezuela’s heavy crude supply to Phillips 66’s Sweeny refinery in Texas fell to 33,500 barrels per day (bpd) in June from 105,000 bpd in January, according to Thomson Reuters Trade Flows data. The contract between Phillips and Venezuela’s PDVSA allows a maximum supply of some 170,000 bpd. The Merey crude Phillips 66 typically receives from Venezuela has to be processed before shipping to remove its high content of salt and metals. But operational problems at Venezuela’s Orinoco Belt have changed […]

Is Russia Poised To Own A Stake In U.S. Oil?

2 Aug 2017   Russia, USA, Venezuela

As the country’s economy continues to tank, Venezuela’s national oil company PDVSA is approaching the deadline for a $1.1bn note issue due in November, and there’s a pretty good chance they’re not going to be able to make the payment. With a dire need for more cash and credit and soaring inflation rates at an all-time high of 886 percent, Venezuela is in desperate need of allies with deep pockets. In their search for funding Venezuela has turned to Russian oil giant Rosneft. In 2016 PDVSA signed onto a loan from Rosneft offering 49.9 percent of its shares in Citgo, a U.S.-based, Venezuelan-owned refining company, as collateral. Thanks to this deal, Rosneft has a lien on all of PDVSA’s Citgo refineries in the US, meaning that if and when Venezuela defaults on the bond, Russia will seize their assets and own a number of refineries on U.S. soil. This […]

U.S. targets Venezuelan President Maduro for sanctions

1 Aug 2017   Venezuela

 The U.S. government will designate Venezuelan President Nicolas Maduro on Monday for sanctions for undermining democracy, in response to Sunday’s election of a legislative superbody that Washington denounced as a “sham” vote, several sources said. No oil-related sanctions will be included in the announcement, but such measures remain under consideration, according to congressional sources and a person familiar with the matter.

Oil markets brace for possible U.S. sanctions on Venezuela

1 Aug 2017   Venezuela

U.S. oil markets were readying for fallout from potential U.S. sanctions on Venezuela’s vital oil sector on Monday after Sunday’s election in the struggling country was deemed a “sham” by Washington. Venezuelan President Nicolas Maduro on Monday celebrated the election of a new legislative superbody that will have the power to dissolve state institutions such as the opposition-run Congress. Countries around the world denounced the vote. (GRAPHIC: Dark days in Venezuela here ) U.S. crude futures CLc1 jumped above $50 a barrel for the first time in two months early in the session before retreating, after U.S. officials said sanctions could be announced as early as Monday. Refined product prices were higher, but most of that was due to a fire at Europe’s biggest refinery over the weekend. It was still unclear what form sanctions might take but the measures were not expected to include […]

Oil markets brace for possible U.S. sanctions on Venezuela

1 Aug 2017   Venezuela

U.S. oil markets were readying for fallout from potential U.S. sanctions on Venezuela’s vital oil sector on Monday after Sunday’s election in the struggling country was deemed a “sham” by Washington. Venezuelan President Nicolas Maduro on Monday celebrated the election of a new legislative superbody that will have the power to dissolve state institutions such as the opposition-run Congress. Countries around the world denounced the vote. (GRAPHIC: Dark days in Venezuela here ) U.S. crude futures CLc1 jumped above $50 a barrel for the first time in two months early in the session before retreating, after U.S. officials said sanctions could be announced as early as Monday. Refined product prices were higher, but most of that was due to a fire at Europe’s biggest refinery over the weekend. It was still unclear what form sanctions might take but the measures were not expected to include […]

U.S. Freezes Assets of Venezuelan President Nicolás Maduro

1 Aug 2017   Venezuela

The U.S. imposed sanctions against Venezuelan President Nicolás Maduro on Monday, saying his government abused human rights and organized an illegitimate vote designed to advance an authoritarian regime, as the leader threatened his domestic opponents with imprisonment. The U.S. Treasury Department’s move freezes any assets Mr. Maduro has within American jurisdiction, putting him in a small club of leaders it targets including North…

As Maduro takes Venezuela into uncharted waters, the opposition has few options

1 Aug 2017   Venezuela

The Trump administration on Monday imposed sanctions on President Nicolás Maduro, after an election that critics called a tipping point toward dictatorship. But even with international pressure building and Venezuela’s economy collapsing, beleaguered opposition activists here were facing a stark new challenge. How could they confront a socialist machine that now controls all branches of government? Citing Maduro’s “outrageous seizure of absolute power,” the U.S. government froze any American assets he may have and banned Americans from doing business with him. The move came after Maduro heralded the Sunday vote creating a new super-congress made up entirely of government backers. The newly cast legislators included his wife and son. The body will have sweeping powers to rewrite the constitution and redraw Venezuela’s governing system. “Maduro is not just a bad […]

Sanctions On Venezuela Could Push Oil Into The Mid-$50s

1 Aug 2017   Venezuela

In response to Venezuela’s controversial vote on Sunday, a move which could dramatically increase the power of President Nicolas Maduro and grant his government the ability to re-write the constitution, the United States is seriously considering placing sanctions on the Venezuelan oil industry, according to officials within the Trump Administration. The Venezuelan president won the vote , with 8 million voting in the special election according to government sources, though third-parties estimate that fewer than 4 million Venezuelans participated. For months violence and instability has rocked the country, which was hit hard by falling oil prices in 2015 and 2016. The vote granting Maduro’s government greater powers is expected to generate more dissent and opposition from groups within the country’s capital, and may do little to allay the shortages of food, medicine and other items plaguing the country. The vote, which was roundly condemned by the international community before […]

U.S. considering oil-related sanctions on Venezuela: sources

31 Jul 2017   Venezuela

The Trump administration is considering imposing some U.S. sanctions on Venezuela’s vital oil sector in response to Sunday’s election of a constitutional super-body that Washington has already denounced as a “sham” vote, U.S. officials said. The measures, which could be announced as early as Monday, are not expected to include a ban on Venezuelan oil shipments to the United States — one of the harshest options — but could block sale of lighter U.S. crude that Venezuela mixes with its heavy crude and then exports, the officials told Reuters. While no final decisions have been made, the officials, who spoke on condition of anonymity, said the United States could also sanction further senior Venezuelan officials. But the timing of such an announcement remained uncertain, the sources said.

U.S. Weighs Sanctions Against Venezuela’s Oil Industry

31 Jul 2017   Venezuela

U.S. government officials are considering stepping up sanctions against Venezuela by targeting its vital oil industry, although an embargo against Venezuelan crude oil imports into the U.S. is off the table for now, people familiar with the deliberations say. The measures could be announced as early as Monday, the people say, after a vote Sunday pushed by embattled Venezuelan President Nicolás Maduro to elect a special assembly that…

Defying international calls, Venezuela holds contentious election

31 Jul 2017   Venezuela

CARACAS, Venezuela — President Nicolás Maduro defiantly followed through Sunday with his pledge to hold an internationally condemned election, creating a critical new stage in a long-simmering crisis that could mint the Western Hemisphere’s newest dictatorship. In a South American nation known for election turnouts topping 70 percent, Venezuelans appeared to vote with their feet — staying away from the unpopular ballot in droves. Stinging tear gas filled the capital and beyond on a deadly day in which the Maduro government showed zero tolerance toward pro-democracy protests and stormed squares with shock troops. Those citizens who did vote came under the watchful gaze of 326,000 national guards and police. The election, decried as illegitimate by a growing number of nations, will create what critics call a puppet congress with vast powers to rewrite the constitution and supplant the opposition-controlled National Assembly, leaving all branches of government under firm socialist […]

U.S. oil sale ban to Venezuela’s PDVSA would hit refining, blending

31 Jul 2017   Venezuela

HOUSTON (Reuters) – Potential U.S. sanctions on sales of light crude to Venezuela’s oil company PDVSA would hamper its already weak refining network while leaving at least one tanker in limbo, according to a source from the state-run firm and Thomson Reuters data. U.S. officials said the Trump administration is expected to announce new sanctions on Venezuela’s oil sector in response to Sunday’s election of a constitutional super-body that Washington has condemned. Even though the White House has said that “all options are on the table,” the most likely action, banning Venezuela from importing U.S. oil, could come as early as Monday. PDVSA has this year imported 87,000 barrels per day (bpd) of U.S. refined products to compensate for its ailing refining network, which has this year operated at less than half its capacity due to lack of crude, frequent outages and lack of spare parts. About a half […]