Paralysis at PDVSA: Venezuela’s oil purge cripples company

16 Dec 2017   Venezuela

 Decisions at some joint ventures with foreign firms are delayed. A growing number of oil tankers sit idle because no one authorizes payments. Employees struggle to get approval for routine expenses, from taxis to training. An alleged crackdown on graft in Venezuela, seen by critics as an effort by President Nicolas Maduro to consolidate power, has sown panic across the country’s energy industry and all but paralyzed state-run Petroleos de Venezuela SA, or PDVSA, according to people at the company and across the sector. The ongoing purge, in which prosecutors have arrested at least 67 executives including two recently ousted oil ministers, now threatens to further harm operations for the OPEC country, which is already producing at near 30-year-lows and struggling to run PDVSA units including Citgo Petroleum, its U.S. refiner. Further trouble for the all-important industry could cause yet more economic chaos in the once-prosperous […]

Venezuela’s PDVSA Makes $539M Interest Payments On Bonds

16 Dec 2017   Venezuela

Venezuela’s cash-strapped state oil firm PDVSA said that it had initiated bank transfers on Thursday to pay US$539 million in interest on four separate bonds, just hours before grace periods on those payments expire between Friday and Sunday. In a series of tweets, the oil firm that is still trying to service its debts and invoking every possible 30-day grace period to defer the final deadlines as much as possible said that it started the process of paying the interest on its bonds maturing in 2024, 2026, 2021, and 2035. “PDVSA calls on all bondholders and investors to trust the logistical, productive and financial capacity of the company, which has honored all its commitments,” the state oil company said . And then, it also tweeted : “PDVSA confirms the solvency and soundness of its oil industry, in the midst of a struggle against the illegal imperial sanctions.” Venezuela’s President […]

Venezuelan creditors eyeing Citgo assets face uphill battle

15 Dec 2017   Venezuela

Citgo Petroleum may look like a tempting target for bondholders of its parent company, Venezuelan-owned oil driller PDVSA, but the refinery operator’s complex debt structure could make its assets difficult for creditors to seize, legal experts said. As Venezuela careens closer to a default, some holders of PDVSA bonds set to expire in 2020 and backed by a pledge of Citgo stock are preparing to go to U.S. courts to foreclose on Citgo shares, according to sources familiar with the situation. That may not be easy. Energy producer ConocoPhillips Co has gone to court alleging the pledge of 50.1 percent of Citgo stock is fraudulent, meaning the PDVSA bondholders will have a tough time getting their hands on the stock. “Lots and lots of claimants have been circling Venezuela and PDVSA, so there is plenty of competition for every scant asset crumb, which means we […]

Struggling Venezuela Launches Tender To Buy U.S. Crude

15 Dec 2017   Venezuela

Struggling Venezuelan state oil company PDVSA has launched tenders to purchase a total 4.2 million barrels of U.S. and Russian crude oil, which includes up to 3 million barrels of U.S. light sweet and 1.2 million barrels of Russian Urals, Reuters reports citing tender documents. One tender is for five cargoes, 600,000 barrels each, of WTI or DSW crude blends. According to the documents, the company would also consider taking it in alternate increments of two 1-million-barrel cargoes of U.S. crude, plus another 600,000-barrel shipment. The other tender is for two cargoes of 600,000 barrels of Urals crude each, both for January delivery. The crude will be processed at Venezuela’s Isla refinery, which has a capacity of 335,000 bpd, but Isla has been working at reduced utilization rates because of a shortage of light crude. If the tenders are successful—which is a questionable event indeed as Venezuela, already cash-strapped, […]

Venezuela’s Ruling Party Dominates Local Elections

11 Dec 2017   Venezuela

The ruling Socialist Party swept local elections in Venezuela after an opposition boycott and widespread allegations of pro-government bias, setting the stage for a presidential vote next year. President Nicolás Maduro said his party won more than 300 of the country’s 335 counties, tightening his grip on Venezuela as he seeks to keep his movement in power for a third decade despite hyperinflation and tumbling oil output. Electoral authorities said the ruling party won the vast majority of Venezuela’s major cities, including former opposition strongholds. In a further blow to the demoralized opposition, Mr. Maduro threatened to ban political parties who boycotted Sunday’s mayoral elections from fielding presidential candidates. More than nine million Venezuelans, or 47% of registered voters, cast ballots on Sunday, the lowest turnout in at least six years, […]

Venezuela opposition banned from election

11 Dec 2017   Venezuela

Opposition parties have accused President Nicolas Maduro of running a dictatorship Venezuela’s president, Nicolas Maduro, says the country’s main opposition parties are banned from taking part in next year’s presidential election. He said only parties which took part in Sunday’s mayoral polls would be able to contest the presidency. Leaders from the Justice First, Popular Will and Democratic Action parties boycotted the vote and said the electoral system is biased. President Maduro insists the Venezuelan system is entirely trustworthy. In October, the three main opposition parties announced they would be boycotting Sunday’s vote to elect mayors in more than 300 towns and cities. They said the vote serves what they call President Maduro’s dictatorship. President Maduro’s governing Socialist Party is expected to win the largest number of votes in the mayoral elections despite a worsening economic crisis. Maduro divides and conquers Analysis by Katy Watson, BBC News – Barquisimeto, […]

Venezuelan Crude Exports To U.S. Fall To 15-year Lows

9 Dec 2017   Venezuela

data . Sanctions and low production caused the decline in November. The last time levels were this low, an industry strike had shut down a large portion of the Latin American nation’s oil sector. State-run PDVSA sent a total of 475,165 barrels of oil the U.S. per day in November – a 36 percent drop from last year and a 12 percent drop from the previous month. The last four years have seen the country lose one million bpd of production, mostly due to inadequate funds to maintain oil facilities, according to the OPEC. Three years of low oil prices have made it difficult for state revenues to meet national budget demands. The output and revenue decline is causing Caracas to take oil from its joint ventures in the Orinoco Belt to keep the lights on. Hamaca crude from a joint venture with Chevron is increasingly being used for […]

China’s Sinopec Sues Venezuela’s PDVSA Over Unpaid Debts

8 Dec 2017   China, Venezuela

One of China’s biggest state-held companies, Sinopec, is suing Venezuela’s debt-ridden oil firm PDVSA in a U.S. court over unpaid bills, in a sign that China may be losing patience with its Latin American ally and is changing tone and tactics. The U.S. unit of Sinopec filed the lawsuit at the Texas Southern District Court in Houston on November 27, and the nature of the suit is “other fraud”. The language of the complaint suggests that the Venezuela-China bromance may be over, the Financial Times reports, citing the court documents it has seen. In the lawsuit, Sinopec is suing PDVSA for $23.7 million plus punitive damages, alleging that PDVSA has only paid half of the bill in a contract from 2012 to purchase steel rebar—which is used in oil rigs—for $43.5 million from the Chinese firm. In the complaint, Sinopec accuses PDVSA of having used “an undercapitalised shell with […]

China’s Sinopec sues Venezuela in sign of fraying relations

7 Dec 2017   China, Venezuela

Sinopec USA, a subsidiary of the Chinese oil and gas conglomerate, has sued Venezuela’s state oil company PDVSA in a U.S. court, claiming it never received full payment for an order of steel rebar. The lawsuit asks for $23.7 million for breach of contract and conspiracy to defraud. The legal action signals a split with another of Venezuela’s biggest backers as the cash-strapped country seeks to restructure some $60 billion in debt in a landscape of low oil prices and production. Sponsored The complaint suggests “patience is getting really thin at this point,” said Mark Weidemaier, law professor at the University of North Carolina at Chapel Hill and an expert on international debt disputes. “This is a further sign of frostiness in the Chinese-Venezuelan […]

Sinopec sues as China loses patience with Venezuela

7 Dec 2017   China, Venezuela

One of China’s biggest state-owned oil companies is suing its Venezuelan counterpart in a US court, in a sign that Beijing’s patience over unpaid debts is running out as the Caribbean nation falls deeper into economic and social chaos. A US subsidiary of Sinopec is suing PDVSA, the Venezuelan state oil company, for $23.7m plus punitive damages over a May 2012 contract to supply steel rebar for $43.5m, half of which it says remains unpaid, according to court documents seen by the Financial Times.

The amount at dispute is small but it reveals a breakdown in relations of a far greater order. Sinopec agreed in September 2013 to invest $14bn in a Venezuelan oilfield, according to Rafael Ramírez, Venezuela’s oil minister at the time. It formed part of Chinese investments and loans that added up to more than $62bn in the oil-rich nation between 2007 and 2016, according to the China-Latin America Finance Database run by the Inter-American Dialogue, a think-tank.

But Caracas has struggled to repay its debts as the oil price has fallen from its 2014 peak and as production at PDVSA has dwindled. The language of Sinopec’s complaint, filed on November 27 at a US district court in Houston, Texas, reveals how badly relationships have soured. Sinopec accuses PDVSA of using “an undercapitalized shell with the sole purpose of preventing Sinopec from having a remedy” and says its conduct “constituted intentional misrepresentations, deceit, and concealment of material facts” involving “wilful deception” and a co-ordinated conspiracy among several units of PDVSA. “This is when we know that China is not going to bail these guys out,” said Russ Dallen of boutique investment bank Caracas Capital, who follows Venezuela closely and who first revealed the court documents to his clients.

Next foreign influence target of U.S. LNG is Venezuela

7 Dec 2017   LNG, USA, Venezuela

Liquefied natural gas is a way to extend influence over the horizon to Europe, though similar gains are possible for Latin America, a U.S. senator said. Polish Oil and Gas Co., known commonly as PGNiG, signed a five-year contract in November to secure LNG from the Sabine Pass terminal in Louisiana, the first mid-term contract of its kind. U.S. Sen. Bill Cassidy, R-La., a member of the Senate Committee on Energy and Natural Resources, said the agreement would reduce “Russian President Vladimir Putin’s ability to bully Europe.” European leaders have said LNG sourced from U.S. shale basins could present a source of diversity with the right infrastructure in place. Some countries in Eastern Europe like Poland rely almost exclusively on […]

Venezuela to Create a Cryptocurrency Amid Bolivar’s Free Fall

4 Dec 2017   Venezuela

Maduro says cryptocurrency to be known as the ‘petrocurrency’ To be backed by reserves in oil, natural gas, gold, diamonds Venezuela’s currency is in free fall. Cryptocurrencies such as bitcoin are going precisely the other direction. And there, President Nicolas Maduro sees a way out of his country’s economic ills. Nicolas Maduro Photographer: Wil Riera/Bloomberg On his Sunday television show, Maduro announced the nation would create its own “petrocurrency,” backed by reserves in oil, gas, gold and diamonds. It will enable Venezuela “to advance in monetary sovereignty, carry out its financial transactions to overcome the financial blockade,” Maduro said. “This will allow us to advance toward new forms of international financing for the country’s social and economic development,” he said. The black market rate for one dollar weakened to 103,000 bolivars on Friday compared with 10,000 at the end of July, according to , a website that tracks […]

Venezuela Is Losing Its Best Oil Buyer

2 Dec 2017   Venezuela

Venezuelan president Nicolas Maduro said this week that PdVSA is willing to retaliate against financial sanctions from the U.S. by suspending oil exports to the country, sending crude to Asia instead. This seems highly unlikely, given that the U.S. is one of its largest cash-paying customers. China is PdVSA’s largest customer in Asia, but it doesn’t receive payment for these shipments – it is using crude to pay off its vast debts instead. We can see in our ClipperData that U.S. imports of Venezuelan crude have been exceedingly steady in recent years, averaging 773,000 bpd in 2014, 792,000 bpd in 2015 and 754,000 bpd in 2016. Steady flows make sense – not only because of the presence of Citgo refineries on the US Gulf Coast, but because Gulf Coast refiners are geared towards refining the heavy crude that Venezuela produces. Proximity is also a key consideration. Exports this year, […]

Venezuela arrests ex-oil bosses for graft in widening purge

1 Dec 2017   Venezuela

Venezuelan authorities on Thursday arrested two once-powerful officials who had run the oil ministry and state energy company PDVSA as part of a deepening industry purge also seen as a power play by leftist President Nicolas Maduro.  In the highest-profile arrests to date, engineer Eulogio Del Pino and chemist Nelson Martinez were detained early on Thursday on accusations of graft and seeking to sabotage the nation’s ailing energy industry, prosecutor Tarek Saab said in a televised speech. He accused Del Pino of participating in a $500 million corruption and sabotage scheme at the Petrozamora joint venture with […]

Maduro: Venezuela Could Stop Crude Oil Sales To U.S.

30 Nov 2017   Venezuela

True to his ‘anti-imperialistic’ rhetoric, Venezuela’s embattled President Nicolas Maduro now says that his country could stop selling its crude oil to the United States. “The day that they don’t want us to sell them our oil, we are just picking up our stuff [and] we’ll sell all our oil in Asia. No big deal,” AFP quoted Maduro as saying on Tuesday, while he was formally installing General Manuel Quevedo to lead debt-stricken state oil producer PDVSA. According to OPEC’s secondary sources, Venezuela’s crude oil production was 1.863 million bpd in October, down by 43,600 bpd from September. While Venezuela has been desperately trying to stave off what most see as an inevitable default, its production has been progressively dropping every month this year. U.S. imports of crude oil from Venezuela have also been dropping in recent weeks, according to EIA data —in many weeks to below 500,000 bpd […]

Venezuelan crude imports into LOOP tripled on year: In The LOOP

28 Nov 2017   Venezuela

Imports of Venezuelan crude into the Louisiana Offshore Oil Port have totaled over 7 million barrels from January to November this year, almost three times the 2.5 million barrels in the same period of 2016, according to US Customs data. The dramatic climb came despite the Trump administration’s threats to ban Venezuelan crude imports into the US and the shutdown of US Gulf Coast refineries due to hurricanes Harvey and Nate. Market sources have said that the main reason behind the increasing number of Venezuelan crude barrels going to LOOP has been declining imports of Saudi Arabian crude due to the OPEC production cuts on heavy sour crudes this year. From January to November, imports of Saudi Arabian crudes into LOOP were 42 million barrels, a drop of 45% from 76 million barrels imported in the same period of 2016, according to Customs data. In 2016, Marathon and PBF […]

Maduro says taps military officer to ‘clean up’ oil company PDVSA

27 Nov 2017   Venezuela

Venezuelan President Nicolas Maduro on Sunday tapped a FILE PHOTO: The corporate logo of the state oil company National Guard major general to lead state oil company PDVSA [PDVSA.UL] and the oil ministry as the OPEC member labors under near 30-year lows in oil production. Major General Manuel Quevedo takes over from two industry veterans to become one of the most powerful players in the country, which is home to the world’s largest crude reserves. Sponsored A former housing minister with no known significant experience in the energy sector, he inherits corruption scandals and an attempted debt restructuring, all within the context of a deep recession and debilitating U.S. sanctions. It was unclear how Quevedo would increase oil production or what role he would have in Venezuela’s complex attempt […]

Venezuelan General With No Oil-Industry Experience to Lead State Sector

27 Nov 2017   Venezuela

President Nicolás Maduro named an active general to lead the state oil industry, the nation’s last major economic sector that had been outside the military’s control. National Guard Maj. Gen. Manuel Quevedo will be the new energy minister and president of state-run Petróleos de Venezuela SA, known as PdVSA, which accounts for almost all the country’s foreign-currency income. Gen. Quevedo, who has no oil-sector experience, takes the reins at PdVSA from Nelson Martinez, a U.S.-educated company veteran who was undermined by last week’s arrests of his associates at the firm’s U.S. arm, Citgo Petroleum Corp. Another U.S.-educated veteran oilman, Eulogio Del Pino, was fired as the oil minister. The appointment follows a four-month purge at PdVSA amid a deepening economic crisis and declining output. More than 50 company officials […]

Venezuela Could Lose A Lot More Oil Production

27 Nov 2017   Venezuela

PDVSA reportedly told employees that they needed to carry out an austerity campaign, looking for ways to cut costs by 50 percent. The internal memo said that savings needed to be found amid the “national economic emergency” while avoiding any hit to the company’s oil production. Profits at PDVSA fell by 90 percent in 2016 compared to the year before. But it is hard to see how the company can prevent a deeper slide in output after slashing spending to such a degree. Bloomberg reported that PDVSA is demanding financing plans from its joint venture partners, and that any projects will be halted if they do not receive financing. The memo included a long list of other cost saving measures: credit card use for employees will be limited, employees should use video conferencing instead of traveling; company vehicle use should be curtailed; and the use of electricity, water, cell […]

Venezuela’s PDVSA says making bond payments, urges trust

25 Nov 2017   Venezuela

Venezuelan state oil company PDVSA said on Friday it was making last-minute payments on two bonds close to default, including one backed by shares in U.S.-based refiner Citgo, and called for “trust” as it seeks to maintain debt service amid a deepening economic crisis. Failure to complete payment on PDVSA’s 2020 bond by Monday could allow bondholders to begin the process of seeking shares in Citgo – a PDVSA subsidiary that generates hard currency for the cash-strapped country. But that appears unlikely in the short-term because investors have broadly been tolerant of payment delays and even some default announcements as Venezuela insists it will continue servicing the hugely profitable bonds. “PDVSA calls on bondholders and investors to trust the logistical, productive and financial […]

Venezuela’s PDVSA To Cut Costs By 50%

25 Nov 2017   Venezuela

Venezuela’s state oil company PDVSA has launched a cost-cutting drive aimed at slashing expenses by half as the company continues to struggle with declining oil production and unpaid debts. The company sent to all its divisions and joint ventures a list of reforms, declaring a “national economic emergency”. The reforms, however, must not affect daily oil production in any negative way, the memo circulated in the company said. Some of the reforms involve suspending new projects that have not yet found financing and requiring joint venture partners to submit financing plans for the projects they develop. Videoconferencing will be encouraged, to replace costlier face-to-face staff meetings, and use of PDVSA airplanes and any other international transportation is to be reduced to a minimum. The state of PDVSA is the same as the state of Venezuela: last week, Bloomberg reported, Venezuelan ambassadors and other diplomats were asked to renegotiate the […]

Venezuela’s PDVSA in talks to supply gas to neighbors

23 Nov 2017   Venezuela

Venezuelan state-run oil company PDVSA  is in contract talks to export natural gas to neighbors Colombia, Trinidad and Tobago, and Aruba, a company official said on Wednesday. Gas sales could provide a welcome boost to energy revenues for a country suffering acute cash problems and in talks to restructure its debt. Venezuela, which is almost entirely dependent on crude exports, has seen income decline since oil prices crashed in 2014. Sponsored Colombia used to export gas to Venezuela through a pipeline. That flow would be reversed if an agreement with Colombia is reached on price, PDVSA’s vice president of gas, Cesar Triana, said during a gas conference in Santa Cruz, Bolivia. Price talks between PDVSA and Colombian state-run energy firm […]

Four U.S. Citizens Are Among Those Venezuela Detained for Alleged Graft at Citgo

23 Nov 2017   Venezuela

Venezuelan Attorney General Tarek Saab said Tuesday the acting president and five directors of Citgo Petroleum Corp. tried to defraud the nation. American citizens were among the executives at Citgo Petroleum Corp. that the Venezuelan intelligence agency arrested here on Tuesday, a development likely to exacerbate strains between Washington and Caracas. Venezuela arrested six top executives of the U.S. subsidiary of state-oil company Petróleos de Venezuela SA, including its acting president, as part of what officials called an anti-corruption purge. At least four of those arrested are naturalized U.S. citizens, a Citgo official said on Wednesday. A U.S. State Department spokesman declined to comment, citing privacy laws. Another U.S. official said the American government is monitoring the arrests, citing “significant congressional interest.” More In a statement, Houston-based Citgo said it was looking into the corruption allegations. A Citgo spokesman declined to comment further. Relations between Washington and Caracas […]

Exclusive: PDVSA in credit talks with Rosneft, Eni, Repsol, Statoil – exec

23 Nov 2017   Venezuela

Venezuela’s PDVSA is in talks with Russia’s Rosneft, Italy’s Eni, Spain’s Repsol, and Norway’s Statoil to get credit for oil and gas projects, a company executive said on Wednesday, in a bid to reverse a slump in output to an almost 30-year low.  Venezuela and state-run oil company Petróleos de Venezuela, S.A., or PDVSA  are seeking fresh funding as the country works to refinance $60 billion of debt in the face of U.S. sanctions against what the White House calls President Nicolas Maduro’s “dictatorship.” “We are speaking to our allies, with our strategic partners, which are Rosneft, Eni, Repsol, Statoil, and they are willing to continue working with us, to continue financing our projects to boost crude and gas […]

Citgo President And 5 VPs Arrested On Embezzlement Charges

22 Nov 2017   Venezuela

The U.S. subsidiary of PDVSA had suffered from unfavorable loans granted by the company’s detained senior officials, chief prosecutor Tarek William Saab said on Tuesday. The accusations are linked to a $4 billion deal that uses Citgo as a guarantee. The detainees also allegedly gave up confidential business information to a competitor. Venezuelan authorities are currently investigating the country’s oil sector and the mismanagement that has plagued it over the past few decades. In August, when the White House first announced sanctions against Venezuela, its state-owned company, and Citgo, a senior official from the administration told the AP that President Nicolas Maduro’s regime could be relieved of the sanctions if it halts its plans to rewrite the Venezuelan constitution, releases dozens of political prisoners, and negotiates fairly with its political opposition. After rating agencies declared Venezuela in selective default and after a meeting with creditors on debt […]

Bankrupt Venezuela Asks Partners For Free Oil

22 Nov 2017   Venezuela

Now that Venezuela, and its state-owned petroleum company PDVSA, were both officially declared in default on their debt by ISDA last Friday, analysts were closely watching what the insolvent Maduro government would do next, now that it is – at least on paper – isolated from most international capital markets (with the occasional loophole when it comes to Chinese and Russian funds). We didn’t have long to wait, and as Reuters reports , a cash-strapped, and bankrupt, PDVSA has resorted to siphoning oil from its cash-paying joint ventures with foreign firms to feed its domestic refineries. In one example, PDVSA asked its Petropiar joint venture with Chevron to turn over as much as 45 percent of the oil it planned to export in November without payment. While state-owned PDVSA predictably did not respond to a request for comment by Reuters , Chevron – which stands to lose far more […]

Venezuela arrests head of U.S. refiner Citgo in graft sweep

22 Nov 2017   Venezuela

Venezuelan authorities on Tuesday arrested the acting president of its U.S.-based refiner Citgo and five of the subsidiary’s top executives as part of a spiraling corruption purge in the OPEC country’s oil industry.  Military intelligence agents detained Jose Pereira during an event at state oil company PDVSA’s headquarters in Caracas, two sources told Reuters, in the latest of dozens of high-level arrests in the last few months. State Prosecutor Tarek Saab has declared a “crusade” against “organized crime” within PDVSA, and has now arrested around 50 oil managers since taking office in August. In the case of Texas-based Citgo, Saab told a news conference that his office had uncovered a roughly $4 billion planned deal with foreign firms, offering the refiner as guarantee in a detrimental deal for […]

Venezuela leans on foreign partners for oil to feed its refineries

22 Nov 2017   Venezuela

Venezuela’s state-run PDVSA is siphoning oil from its cash-paying joint ventures with foreign firms to feed its domestic refineries, two sources close to the matter told Reuters, at a time when late debt payments have triggered defaults. PDVSA asked its Petropiar joint venture with Chevron Corp to turn over as much as 45 percent of the oil it planned to export in November with no immediate reimbursement, one of the sources said this month. PDVSA did not respond to a request for comment. Chevron declined to comment. Sponsored The joint ventures export upgraded crude to buyers around the globe and the diversion cuts into the main source of the government’s revenue. One likely reason for the shift: […]

Venezuela Turns to Billionaire Debt Investor to Help With Bond Crisis

21 Nov 2017   Venezuela

Billionaire distressed debt investor David Martínez urged Venezuela’s struggling government to default on its bonds days before the country’s surprise announcement to restructure its obligations. Mr. Martínez, who made his fortune buying cheap defaulted debt and selling it after the restructuring, met in Caracas with the country’s Vice President Tareck El Aissami and other members of the economic cabinet in late October, according to Venezuelan officials with direct knowledge of the matter. The government sought Mr. Martínez’s advice as it was running out of money and overdue bond payments were piling up. Days after the meeting, President Nicolás Maduro went on state television to say he wanted to restructure the country’s debt. He appointed Mr. El Aissami, who the U.S. sanctioned for alleged drug trafficking,

Venezuela debt talks: Caracas plays its last cards

21 Nov 2017   Venezuela

Last week, at the invitation of President Nicolás Maduro, a group of international financiers flew to Caracas to begin what has been called the world’s most complicated debt restructuring, also one of its biggest, and certainly one of the strangest.  In a capital city blighted by the highest homicide rate in the world, investors filed into a white ice-cream cake of a building opposite the Presidential Palace. Heightening the unreality of a socialist economy underpinned by the world’s largest oil reserves, but mismanaged into near-collapse, the government rolled out a red carpet for its guests and laid on a ceremonial guard. Venezuela seeks a “win-win” solution for all, Tareck El Aissami, the vice-president, told the investors.

The country would continue to service its $150bn of foreign debt, the 43-year-old socialist militant stressed — although rating agencies issued a slew of default notices even as he spoke. The speech ended half an hour later. Participants left with gifts of coffee and fine chocolate, but none the wiser. The government, meanwhile, declared the meeting a success. “We’re all just trying to figure out if there is a method to the Venezuelan madness,” says Peter West of boutique advisory EM Funding. “If you are a little confused . . . don’t feel bad,” added Russ Dallen of Caracas Capital, a Venezuela debt specialist.

In part, the confusion stems from the complexity of Venezuela’s debts, which have been issued by various entities, with varied legal clauses, to multiple parties. It owes $64bn to bondholders, more than $20bn to allies China and Russia, $5bn to multilateral lenders such as the InterAmerican Development Bank, and tens of billions to the importers and service companies that keep the all-important oil industry pumping and the regime afloat.

As Venezuela pumps below OPEC target, oil rivals begin filling gap

20 Nov 2017   Venezuela

As Venezuela’s dilapidated energy sector struggles to pump enough crude oil to meet the country’s OPEC output target, rival producers within the exporters group have started to plug the gap, OPEC and industry sources said.  The South American country’s oil output hit a 28-year low in October as state-owned oil giant PDVSA [PDVSA.UL] struggled to find the funds to drill wells, maintain oilfields and keep pipelines and ports working. Sponsored Venezuela’s oil production, which has been falling by about 20,000 barrels per day (bpd) per month since last year, is on track to fall by at least 250,000 bpd in 2017 according to numbers reported to the Organization of the Petroleum Exporting Countries (OPEC), as U.S. sanctions and a lack […]

Venezuela opposition leader Ledezma flees to Spain

18 Nov 2017   Venezuela

Veteran Venezuelan opposition leader Antonio Ledezma, under house arrest since 2015 for alleged coup plotting, escaped across the border to Colombia on Friday and later flew to Spain. With a 2018 presidential election looming, an array of major Venezuelan opposition figures are now in exile, detention or are barred from holding office. They say Maduro has turned Venezuela into a dictatorship, while the government accuses them of joining forces with a U.S.-led global plot to topple him. Ledezma, the best-known detained opponent of leftist President Nicolas Maduro after Leopoldo Lopez, had spearheaded street protests against Maduro in 2014 that led to months of violence and 43 deaths. “In Spain today I feel free,” he said at Madrid’s Barajas airport, where he arrived in the early […]

Venezuela Officially In Default

18 Nov 2017   Venezuela

After rating agencies declared Venezuela in selective default and after a meeting with creditors on debt restructuring failed earlier this week, the International Swaps and Derivatives Association (ISDA)—a finance industry body—has voted that both Venezuela and its state oil firm PDVSA had defaulted on their debt payments. The vote by the New York-based industry group will trigger payouts on debt default insurance on its bonds, the so-called credit default swaps (CDS) that investors use to protect against defaults. In a unanimous 15-0 vote, the members of ISDA’s Americas Determinations Committee voted on Thursday that “a failure to pay credit event occurred with respect to Bolivarian Republic of Venezuela.” The members of the committee—which includes Goldman Sachs, JPMorgan, Deutsche Bank, Barclays, and Credit Suisse, among others—decided to meet again on Monday, November 20, to continue discussions on how to proceed and discuss an auction that is expected to determine the […]

Exodus the only answer for thousands of Venezuelans

18 Nov 2017   Venezuela

Diomira Becerra knew it was time to leave Venezuela when she took her four-year old daughter to the local park in Caracas and they saw a man shot dead in broad daylight in front of them.  “That was the last straw. I left the next day,” says the 34-year-old former school teacher.  Displaced by soaring crime and crushing recession, more and more Venezuelans make the same decision each day. Fleeing what was once Latin America’s richest country, former doctors and engineers, truckers and physiotherapists now work in supermarkets in London or as maids in Madrid, drive Ubers in Miami or paint houses in Bogotá, clear tables in Buenos Aires or wash windows in Barranquilla.  The exodus is the international humanitarian dimension of Venezuela’s multiple domestic crises and probable $150bn debt default. This week, after a partial bailout from Russia, President Nicolás Maduro’s socialist government claimed its debt restructuring strategy was working for “the continued wellbeing of the Venezuelan people.”  Numbers suggest otherwise. As many as 2m Venezuelans of a total 30m now live abroad and their numbers are rising fast as the country slides into hyperinflation, debt crisis and authoritarianism.  According to the UN, which says it has documented government policies that seek to “systematically repress . . . and instil fear,” almost 50,000 Venezuelans sought asylum in 2017, as many as in the past three years together.

Venezuelan Opposition Figure Flees House Arrest, Says He’ll Fight From Abroad

18 Nov 2017   Venezuela

Antonio Ledezma, a top opposition figure who led protests against President Nicolás Maduro’s government, fled house arrest in Caracas on Friday and crossed the border into neighboring Colombia, officials said. Mr. Ledezma said he planned to coordinate opposition to Mr. Maduro’s beleagured government from abroad, saying it was “killing Venezuela with hunger.” “We can’t lose hope,” Mr. Ledezma told Colombia’s Caracol Radio on Friday. “That’s the great virtue of the Venezuelan people.” Mr. Ledezma, a former mayor of greater Caracas once seen as a presidential candidate, spent more than 1,000 days in jail and under house arrest for allegedly instigating political violence and plotting against the government. He was never tried, and he always denied the charges, saying the accusations […]

Venezuela’s crude sales to the U.S. rose in October but remained low

18 Nov 2017   Venezuela

 Venezuela’s crude exports to the United States recovered in October from the previous month but were still the third lowest in 2017, according to Thomson Reuters trade flows data. The South American country sent 541,130 barrels per day (bpd) to customers in the United States in October, 11 percent more than September, as a result of greater volumes of diluted crude and upgraded oil from the country’s Orinoco Belt region. But the October number was 10 percent lower than the 601,065 bpd exported in the same month of 2016, according to the data. Venezuela’s overall crude output declined in October to its lowest since 1989, according to numbers reported by the country to OPEC. Sanctions […]

Venezuela chooses Dutch-based firm for Orinoco oil JV

17 Nov 2017   Venezuela

Venezuela has selected a little-known, Dutch-registered company for a new joint venture at the Junin 10 oil block in its Orinoco Belt region, according to a decree published on Thursday. Stichting Administratiekantoor Inversiones Petroleras Iberoamericanas will have a 40 percent participation in the project, the official government gazette said, without giving any financial details of the deal. Majority partner and state oil company PDVSA believes the block has the potential to produce 200,000 barrels per day. PDVSA in the past has rejected offers by Norway’s Statoil and France’s Total SA to partner at Junin 10. The Oil Ministry decree said President Nicolas Maduro’s council of ministers had approved the new partner and new joint venture, to be called Petrosur. Such deals would normally be tendered and formerly required approval by Venezuela’s National Assembly. But since the assembly has been in opposition hands after a December 2015 […]

Dan Yergin on why Venezuela could cause a ‘big shock’ to the markets

17 Nov 2017   Venezuela

If the global oil market suddenly loses Venezuela’s 2 million barrels of daily oil production, it would be “a big shock to the system,” according to Dan Yergin, vice chairman of IHS Markit. “It would certainly be a very tight market, because of course you already have production restraints by OPEC and non-OPEC,” Yergin told CNBC at the Abu Dhabi Petroleum Exhibition and Conference on Tuesday. Oil markets are increasingly worried over potential supply constraints as the economic turmoil in Venezuela deepens. Production in Venezuela has been falling and the economic difficulties have affected further investments in the sector. As the economic situation deteriorates, production might continue to fall from its maximum potential, thus limiting the availability in the market. Venezuela, an OPEC nation and one of the biggest oil producers in the world, has conducted debt renegotiations with foreign investors since Monday. However, it is unclear whether President […]

Venezuela ruled in default by trade group after bond payment delays

17 Nov 2017   Venezuela

Venezuela’s cash-strapped leftist government has defaulted on sovereign debt and bonds issued by state oil firm PDVSA after failing to make timely payments, a New York-based derivatives group ruled on Thursday. The International Swaps and Derivatives Association (ISDA) committee’s unanimous decision that the delays constitute a “credit event” triggers limited payouts on credit default swaps (CDS). But investors said they did not expect a significant market reaction from the ISDA decision, given that Venezuela is making efforts to pay, and that holders of some of the world’s highest yielding debt have so far been tolerant of the delays. Sponsored They also noted that the values of the CDS – the derivative contracts investors use to protect themselves against a default – were not […]

Russia Offers Venezuela Debt Relief

16 Nov 2017   Venezuela

Wilmar Castro, Venezuela’s vice president for the economy, and Finance Minister Simon Zerpa, right, attend a briefing in Moscow at the signing of a deal between Russia and Venezuela on its debt restructuring. MOSCOW—Russia threw a lifeline to Venezuela on Wednesday, restructuring the more than $3 billion it is owed by its economically and politically troubled South American ally. The Russian Finance Ministry said the debt of $3.15 billion would now be repaid over 10 years, with minimal repayments during the first six years. “Reducing the debt burden to the republic from the restructuring of liabilities will allow the funds that have been freed up to be allocated to the country’s economic development, to improve the liquidity of the debtor, and to increase the chances of all creditors to recoup credits provided to Venezuela,” the Russian finance ministry said in a statement. The agreement comes just as Venezuela’s cash-strapped […]

Russia and Venezuela agree $3bn debt restructuring

16 Nov 2017   Russia, Venezuela

Russia has come to the aid of Venezuela with a deal to restructure $3.15bn of sovereign debt, allowing Caracas to meet obligations to other creditors and underlining Moscow’s role as the crisis-hit country’s main foreign backer. Rating agencies this week declared Venezuela in default on several of its international bonds, worth more than $60bn in total. The country has said it will have to restructure the debt as part of what is set to be one of the largest sovereign defaults in history.

“Venezuela is advancing towards the recomposition of its external debt, to the benefit of its people,” Simon Zerpa, Venezuela’s economy minister, said from Moscow. The intervention by Moscow allowed Venezuela to sidestep major western creditors, and analysts said the country was emerging as a “test case” for sovereign defaults, which are normally handled through a group of postwar institutions like the International Monetary Fund and the Paris Club.

Both Russia, which is a member of the Paris Club of international creditors, and China, which is not, are emerging as alternate venues for embattled countries seeking to avoid debt restructuring managed by traditional economic powers like the US and Western Europe. “There is now the possibility of a lot of bilateral sovereign and quasi-sovereign [credit] exposure that is not being transparently reported”, said Douglas Rediker, a former US representative on the IMF board. “No longer do you have the certainty that the Paris Club is going to reflect [the positions of] the vast majority of creditors”.

Venezuela Signs $3.15B Debt Restructuring Deal With Russia

16 Nov 2017   Russia, Venezuela

Russia is throwing a life-line to defaulting Venezuela after the two countries signed on Wednesday a deal to restructure US$3.15 billion worth of Venezuelan debt owed to Moscow. Under the terms of the deal that Russia’s Finance Ministry announced today, Venezuela will be repaying the debt over the next ten years, of which the first six years include “minimal payments”. “The debt relief provided to the republic from the restructuring of its liabilities will allow funds to be allocated for the country’s economic development, to improve the debtor’s solvency and increase the chances of all creditors to recoup loans granted earlier to Venezuela,” the Russian ministry said. However, the deal doesn’t include funds that Venezuelan companies—including state oil firm PDVSA—have borrowed from Russia, Venezuelan Economy and Finance Minister Simon Zerpa said, as quoted by Reuters . According to Venezuela’s vice president for economics, Wilmar Castro Soteldo, the terms of […]

Russia Offers Venezuela Debt Relief

16 Nov 2017   Venezuela

Wilmar Castro, Venezuela’s vice president for the economy, and Finance Minister Simon Zerpa, right, attend a briefing in Moscow at the signing of a deal between Russia and Venezuela on its debt restructuring. MOSCOW—Russia threw a lifeline to Venezuela on Wednesday, restructuring the more than $3 billion it is owed by its economically and politically troubled South American ally. The Russian Finance Ministry said the debt of $3.15 billion would now be repaid over 10 years, with minimal repayments during the first six years. “Reducing the debt burden to the republic from the restructuring of liabilities will allow the funds that have been freed up to be allocated to the country’s economic development, to improve the liquidity of the debtor, and to increase the chances of all creditors to recoup credits provided to Venezuela,” the Russian finance ministry said in a statement. The agreement comes just as Venezuela’s cash-strapped […]

Venezuela wins Russia and China backing as it says it is honoring debt

16 Nov 2017   Russia, Venezuela

Venezuela won easier debt terms from Russia and got a vote of confidence from China on Wednesday, as the oil-rich country said it had starting making interest payments on bonds after a delay that had threatened to trigger a default. A debt restructuring deal with Russia that allows Caracas to make “minimal” payments to Moscow in the next six years, together with a separate statement from the Chinese Foreign Ministry that Venezuela was capable of handing the debt issue “appropriately,” underlined the reserve of support its socialist government enjoys from both countries. Venezuela has borrowed billions of dollars from Russia and China over the years, primarily through oil-for-loan deals that have crimped the country’s hard currency revenue by requiring oil shipments to be used to service those loans. If backed by more debt forgiveness like that offered by Russia on Wednesday, the two countries could provide […]

Venezuelan Bonds Fall Further After Default Determination

15 Nov 2017   Venezuela

Venezuela’s Vice President Tareck El Aissami, center, speaking on Monday in Caracas during a meeting with bondholders and their representatives. Venezuelan bonds, already trading at distressed levels, fell further on Tuesday after credit-rating firms declared the nation in default on missed interest payments. The development sets up a conundrum: Bondholders can now push for a wave of payments, but some said they would rather get their money late than take their chances on what could be one of the biggest, most complicated defaults in history. Venezuela’s bonds due 2028 dropped to 24.94 cents Tuesday from 27.15 cents Monday, according to data provider IHS Markit . Bonds for state oil firm Petróleos de Venezuela SA due in 2035 dropped to 26.625 cents from 29.375, according to IHS Markit. Typically as a bond nears maturity, its price rises toward 100 cents on the dollar if investors expect to be repaid. Despite […]

Venezuela slips deeper into crisis after default

15 Nov 2017   Venezuela

Venezuela has suffered what is expected to be the first in a cascade of defaults on more than $60bn of international bonds after missing several interest payments. The country on Monday evening missed a deadline to make $200m in interest payments on two of its government bonds, spurring S&P to formally declare the first of what are expected to be many defaults. Caracas is already overdue on another $420m of interest payments on other sovereign bonds, which will also soon be in default, as will payments on debt from PDVSA, the state oil company.

The oil-rich nation managed to service its debts for much longer than many investors had expected after the 2014 energy price collapse. But Nicolás Maduro, the president, finally admitted defeat two weeks ago, announcing the country would have to “refinance and restructure” all its foreign debts. Including bilateral and other loans, these total more than $150bn, so a sovereign default would be one of the biggest in history. In 2012, Greece restructured more than €200bn, which remains the largest default on record.

Venezuelan bond prices had begun to recover from the fright of the default announcement on Tuesday but fell back to trade at cents on the dollar. A $2.5bn bond due in October next year — one of the bonds now in default — lost almost a fifth of its value to trade at 25.7 cents on the dollar. Pressure is growing on the socialist government after investors left a Caracas meeting on Monday none the wiser about how it will surmount the financial challenges and the EU-imposed sanctions on Venezuela for human rights abuses.

Despite calls by some in Latin America for escalating sanctions to include travel bans and asset freezes, as well as an embargo on oil exports, Caracas has shown little concern over the international opprobrium. Mr Maduro called the EU sanctions “stupid”. Tareck El Aissami, the vice-president, who is already under US sanctions for alleged drug trafficking and was the only government official to speak at Monday’s bondholder meeting, offered no concrete proposals for debt restructuring.

BP CEO Sees Venezuela As Oil’s Wildcard

14 Nov 2017   Venezuela

Venezuela—not the Middle East—is the wild card when it comes to the near future of the oil industry, BP’s chief executive Bob Dudley told CNBC on the sidelines of the Abu Dhabi Petroleum Exhibition & Conference. “I think Venezuela is just defying economic gravity and I think that’s a real wild card,” Dudley said, referring to the combination of falling oil production, severe recession, political instability, and sanctions that the South American nation has endured in the last four years. Venezuela has the largest crude oil reserves in the world, according to BP estimates, but it has found it increasingly difficult to exploit these, especially amid falling international prices and resource mismanagement by state-owned PDVSA. Added to this is growing international concern that the government of Nicolas Maduro is stifling democracy in a brutal manner, which most recently led to the European Union this week slamming Caracas with a […]

Venezuela Declared in Default by S&P After Missing Bond Payments

14 Nov 2017   Venezuela

Grace period expired on $200 million of interest payments State oil company had already defaulted, Moody’s and Fitch say Venezuela, one of the world’s riskiest credits, was declared in default by S&P Global Ratings after missing two interest payments on its debt. The nation, home to the world’s largest oil reserves, owed investors about $200 million and failed to make those payments by the end of a 30-day grace period that expired over the weekend, S&P said in a statement in which it lowered the country’s rating to SD. Plagued with payment delays and running low on cash, it’s the first time in recent years the government has exceeded the buffer period on its bonds. State oil producer Petroleos de Venezuela SA had already been said to default by Fitch Ratings and Moody’s Investors Service. Venezuela has struggled with payment delays in recent months as U.S. sanctions imposed against […]

S&P Rules Venezuela in Default on Interest Payment

14 Nov 2017   Venezuela

Venezuela was ruled in default on a missed interest payment by S&P Global Ratings, pushing the cash-strapped South American country and its creditors one step closer to a reckoning of its $150 billion debt load. The decision by S&P, one of the two main U.S. rating companies along with Moody’s Investors Service, capped off a day in which Venezuela promised to keep paying its debts at a conference in Caracas that was attended by few of the Western bondholders that are likely to be hit by a default. S&P downgraded Venezuela’s long-term debt rating to selective default late Monday after it said the government failed to make two bond coupon payments. The rating firm’s action could have far-reaching consequences for the country and its bondholders. It represents a potential new dilemma for the Venezuelan government, which […]

Venezuelan Officials Offer Few Details During Debt Restructuring Talks

14 Nov 2017   Venezuela

Scores of international creditors flew into this crime-ridden capital for a meeting on Monday with Venezuela’s government to discuss how the country might avoid a messy default on more than $60 billion in bonds. They walked away with precious few details and a box of chocolates. Several investors who attended the hastily arranged meeting at the Presidential Palace in Caracas said they were treated to a half-hour monologue expounding the country’s valiant efforts to keep paying from Venezuela’s Vice President Tareck El Aissami, who is blacklisted by the U.S. for alleged drug trafficking. Mr. El Aissami’s speech over, investors were given boxes of Venezuelan chocolates and escorted out of the building, according to two participants in the meeting. “They didn’t even allow questions,” said one […]