Venezuela’s deteriorating oil quality riles major refiners

19 Oct 2017   Venezuela

Venezuela’s state-run oil firm, PDVSA, is increasingly delivering poor quality crude oil to major refiners in the United States, India and China, causing repeated complaints, canceled orders and demands for discounts, according to internal PDVSA documents and interviews with a dozen oil executives, workers, traders and inspectors. FILE PHOTO: The logo of the Venezuelan state oil company PDVSA is seen next to a mural depicting Venezuela’s late President Hugo Chavez at a gas station in Caracas, Venezuela March 2, 2017. REUTERS/Carlos Garcia Rawlins/File Photo The disputes involve cargoes soiled with high levels of water, salt or metals that can cause problems for refineries, according to the sources and internal PDVSA trade documents seen by Reuters. The quality issues stem from shortages of chemicals and equipment to properly treat and store the oil, resulting in shutdowns and slowdowns at PDVSA production facilities, along with hurried transporting to […]

Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes

17 Oct 2017   Venezuela

Venezuela’s President Nicolas Maduro claimed victory in a regional election on Sunday in a surprise win defying opinion polls, but the opposition refused to recognize the outcome, decrying fraud, in what could lead to another wave of sanctions against the regime and renewed unrest in the country sitting on the world’s biggest oil reserves. The pro-government electoral board said that Maduro’s allies and candidates had won 17 governorships, compared to the six governorships won by the opposition. The voter turnout was more than 61 percent. Maduro’s win was unexpected, as opinion polls before the vote had suggested that the opposition would easily win more than half of the state governorships. “Chavismo is alive in Venezuela”, Maduro said , hailing the socialist victory, while opposition leaders alleged fraud, demanding a full audit, and calling for street protests on Monday. “Neither Venezuelans nor the world will swallow this fiction,” Gerardo Blyde, […]

IMF crunches the numbers for possible Venezuela rescue

17 Oct 2017   Venezuela

The International Monetary Fund has begun preparations for a possible rescue of Venezuela that could require $30bn or more in international help annually and come alongside one of the world’s most complex bond restructurings and a big test of Fund rules.  The IMF has had no official relationship with Venezuela since Caracas cut off relations in 2007 and has not conducted an on-the-ground review in 13 years. Officials insist no rescue is imminent and publicly say they are simply conducting normal surveillance, stressing that they have had no meaningful contact with the government other than occasional low-level responses to requests for data.  But in recent months IMF staff have quietly crunched numbers for a potential bailout that, were it to happen, could be bigger financially and more politically complex than its much-criticised involvement in Greece.  “The market needs to be properly prepared for this,” said a senior IMF official. “This is going to be Argentina meets Greece in terms of complexity,” added Douglas Rediker, a former US representative at the IMF. Venezuela held elections for 23 state governorships on Sunday in which polls suggested the opposition would trounce the government amid a severe economic recession that has shrunk the economy by a third, and inflation that the IMF estimates at more than 1,000 per cent. Shortages of foreign currency have slashed imports by 80 per cent in five years, leaving the country teetering on the brink of default and suffering extreme shortages of food and medicine.

Venezuela Opposition Has Few Options After Vote Many Call Fraudulent

17 Oct 2017   Venezuela

Opponents of President Nicolás Maduro expressed skepticism on Monday over the results of regional elections that the governing party said it won decisively, leaving weary Venezuelans facing the grim prospects of a drawn-out battle to challenge the vote and more violent street clashes. The election set Venezuela on a new period of uncertainty after the pro-government National Electoral Council said Mr. Maduro’s allies won at least 17 of 23 gubernatorial races fought in a contest that a range of polls had showed the opposition would win handily. The government had barred observers from well-known international organizations. Opposition leaders had hoped sweeping victories would put pressure on Mr. Maduro to enter into negotiations that would lead to a presidential election in 2018, opening the way for his likely […]

Top Venezuela refineries at 34 percent of capacity: union, documents

17 Oct 2017   Venezuela

Venezuela’s main refining complex, hobbled by a lack of oil and maintenance issues, is down to operating at about a third of its 955,000-barrel-per-day capacity, according to a union official and documents from the state-run oil company PDVSA. The Paraguana Refining Center, home to the Amuay and Cardon refineries along Venezuela’s western coast, has reduced output repeatedly in recent months, contributing to intermittent fuel shortages in the South American OPEC nation. PDVSA had planned for Paraguana to process 385,000 bpd this month, according to internal company documents seen by Reuters. But it is currently operating at 34 percent of capacity and output is likely to come in well below the October target. The complex had been operating at 42 percent of capacity in August. Low utilization rates at several refineries in Venezuela and Mexico could raise the prospects for higher U.S. fuel exports, according […]

Venezuela And Russia Team Up To Tackle The Petrodollar

6 Oct 2017   Russia, USA, Venezuela

Three weeks after the U.S. imposed financial sanctions on Venezuela in an effort to cripple its economy and choke the Maduro regime, which in turn prompted Caracas to announce it would no longer receive or send payments in dollars, Venezuela’s president Nicolas Maduro proposed to expand his own personal blockade of the U.S., by proposing that all oil producing countries discuss creating a currency basket for trading crude and refined products. One which is no longer reliant on the (petro)dollar. “ Developing a new mechanism of controlling the oil market is necessary ,” Maduro said on Wednesday at the Russian Energy Forum, being held in Moscow this week. Quoted by RT , Maduro also blamed trade in crude oil paper futures as having an adverse impact on the oil market, which has undermined attempts by OPEC to stabilize prices. To counteract such “speculation”, Maduro proposed an alternative currency basket, […]

Venezuela To Invite More Countries To Join Output Cuts

5 Oct 2017   OPEC, Venezuela

Up to 12 oil producing countries from South America and Africa have been invited to join the OPEC/non-OPEC production cut deal, Venezuela’s Oil Minister Eulogio del Pino said on the sidelines of an energy forum in Russia on Wednesday. At the event, Del Pino stressed on the importance that more countries join the output cut pact, Venezuela’s oil ministry said in a statement today. Currently, there are 24 countries in the deal, representing around 50 percent of the market; it would be a very positive message if we could include 12 more countries in the agreement, Del Pino said. OPEC ministers and ministers from other oil producing nations will discuss this week the progress of the production cut deal and a mechanism to monitor crude oil exports, on the sidelines of the Russian Energy Week between October 3 and 7, Russian Energy Minister Alexander Novak said on Tuesday. More […]

Venezuela plans new ways to sell oil if sanctions imposed: Maduro

5 Oct 2017   Venezuela

Venezuela has alternatives to allow it to sell oil if the US decides to imposes further sanctions on its oil sector, President Nicolas Maduro said Wednesday. “Big names are trying to negotiate at very high levels and avoid such decisions that are wrong and are quite unclear. Venezuela has its plan A, plan B and C, and other alternatives,” Maduro told delegates at the Russian Energy Week conference in Moscow. The Trump administration imposed new sanctions in late August, prohibiting trading new debt and equity issued by the Venezuelan government and state oil company PDVSA. These followed a widely criticized July 30 vote that allowed Maduro to replace the country’s National Assembly with a hand-picked Constituent Assembly expected to rewrite the constitution. Article continues below… Platts Price Assessment Methodology Explained Oct 10 or Dec 12, 2017 | 11 am – 1 pm CST | Houston, Texas Are you interested […]

Venezuela says invited 10-12 more countries to join OPEC-led oil cut

4 Oct 2017   Venezuela

An extra 10 to 12 oil-producing countries have been invited to join an OPEC-led output cut aimed at getting rid of a supply glut, Venezuela’s oil minister said on Wednesday. Eulogio del Pino, speaking on a visit to Moscow, said the invited countries were in South America and Africa. The OPEC-led supply cut at present covers 24 countries.

Wall Street Sees ‘Existential Crisis’ as Venezuela Payday Nears

3 Oct 2017   Venezuela

Traders fear payment delay as upcoming debt lacks grace period Default on bonds backed by Citgo would put refiner in play Venezuelan investors are getting ready for a wild ride over the next five weeks as the government stares down $3.5 billion in debt payments. While all the country’s due dates in the past year have elicited serious hand-wringing, the next few are on a whole new level. That’s because unlike recent transactions in which a 30-day grace period allowed Venezuela to avoid default, the upcoming deadlines have no leniency. Further complicating matters, some of the bonds are backed by a majority stake in Citgo Holding Inc. , potentially putting one of the biggest U.S. refiners in play. “There’s no ‘Oops, I did it again,”’ said Ray Zucaro, the chief investment officer at Miami-based RVX Asset Management, which holds PDVSA bonds, but not the ones with principal payments in […]

Oil Analysts Baffled As Venezuela Ditches Petrodollar

28 Sep 2017   Venezuela

At the end of August, the U.S. stepped up sanctions on Venezuela, prohibiting dealings in new debt or equity issued by state oil firm Petroleos de Venezuela SA (PDVSA) or the government. A couple of weeks later Venezuela responded to what it called an “economic blockade” by suspending trade in U.S. dollars and publishing Venezuelan oil basket prices in Chinese yuan. Analysts believe that although it has close strategic ties to China, Venezuela would mostly just harm itself with the move to “free the nation from the oppression of the dollar,” as Nicolas Maduro put it. Venezuela told oil traders it will no longer accept or offer U.S. dollars in payment for crude oil and fuels, the Wall Street Journal reported earlier this month, citing sources familiar with the developments. As a result, traders have started converting dollars into euros, and PDVSA’s foreign partners operating in the country may […]

Exclusive: Brazil’s Braskem terminates supply contract with Venezuela’s PDVSA

22 Sep 2017   Brazil, Venezuela

Brazil’s Braskem has terminated a contract to buy light virgin naphtha and natural gasoline from Venezuela’s state-run oil company PDVSA that would expire this month, the petrochemical company said on Thursday. The Sao Paulo-based company declined to comment on the reason for ending the long-term supply agreement, but said the contract represented less than 0.1 percent of its annual naphtha consumption. “Braskem continues regular purchases of raw materials, keeping up its industrial operations in Brazil,” it said in a statement to Reuters. Petróleos de Venezuela, S.A., commonly known as PDVSA, did not reply to a request for comment. The Venezuelan energy company has been struggling to maintain its commercial relationships amid difficulties paying providers and because of sanctions imposed […]

Will The White House Prevent Rosneft From Buying Citgo?

21 Sep 2017   Russia, USA, Venezuela

Senators have pressed the Trump Administration to review the chances of Russia’s Rosneft acquiring Venezuela’s PDVSA and its U.S. business, Citgo. Marco Rubio and Bob Menendez believe a change in the ownership of Citgo’s assets would constitute a security risk, Reuters reported . In a letter to Treasury Secretary Steven Mnuchin, the Republican and Democratic senators wrote that “ Given Venezuela’s increasingly dire economic and humanitarian situation, we are seriously concerned with a possible acquisition by Rosneft of PDVSA and Citgo .” Mnuchin is the chair of the Committee on Foreign Investment in the United States. The CFIUS is responsible for studying the national security implications of potential foreign acquisitions in the country. The possibility of Russia’s biggest oil company taking over Citgo first surfaced early this year, as PDVSA’s troubles with falling production and lower oil revenues deepened, bringing it closer to a default on pending debts. Rosneft […]

Venezuela’s Crisis Deepens As Hurricane Approaches |

20 Sep 2017   Venezuela

Oil traders have started to divert fuel shipments from their original destination in Venezuela as Hurricane Maria approaches the Caribbean, Reuters vessel tracking data has shown. Yet the hurricane, which moves at speeds of up to 125 mph, is not the only reason Venezuela’s waters are quickly emptying of tankers. The state oil firm, PDVSA, cannot pay for the cargoes that have already been delivered.  But sitting potentially indefinitely in tumultuous waters is now no longer an option, and in a bid to place these before the hurricane reaches the Venezuelan coast, traders are rerouting the tankers towards other Latin American and Caribbean ports, to sell the fuel to paying clients. Since September 3, six vessels with a combined load of 1.8 million barrels of diesel and other oil derivatives have been moved from the Venezuelan coast. One of these had been floating in Venezuelan waters since early July and has now been directed to Trinidad. Another, loaded with fuel from Europe, set sail back to the continent, Reuters said.  Hurricane season has been most unkind this year. After Harvey, oil terminals in the Caribbean have been operating intermittently, as more hurricanes followed, notably Irma and Jose. The affected region, according to Reuters, imports some 2.5 million bpd of oil products, the bulk coming from the U.S. Gulf Coast. These imports will likely be disrupted further as Maria approaches.

Oil cargoes shift away Venezuela as hurricanes extend disruptions

19 Sep 2017   Venezuela

Hurricane Maria is shown in the Atlantic Ocean about 85 miles east of Martinique in this September 17, 2017 NASA handout satellite photo. NASA/Handout via REUTERS (Reuters) – Shippers are sending oil cargoes originally bound for Venezuela to other spots in Latin America and the Caribbean, in advance of coming hurricanes that threaten to further disrupt oil flows in the region, according to traders and Reuters data. After Hurricanes Harvey and Irma caused massive flooding and damage in Texas and Florida, fuel tankers floating off Venezuela’s coast have been shifted elsewhere, largely because the cash-strapped state firm PDVSA [PDVSA.UL] cannot pay for the cargoes. The latest threat for the Caribbean is Maria, now a Category 3 hurricane, which currently boasts wind speeds of 125 miles per hour (200 km per hour). The storm is expected to get stronger as it moves through the Leeward Islands later on Monday. Shippers […]

Venezuela publishes oil prices in Chinese currency to shun U.S. dollar

16 Sep 2017   Venezuela

Venezuela published the price of its oil and fuel in Chinese currency on Friday in what it called an effort to free the socialist-run country from the “tyranny of the dollar,” echoing a plan recently announced by President Nicolas Maduro. Maduro last week said his government would shun the dollar after the United States announced sanctions that blocked certain financial dealings with Venezuela on accusations that the ruling Socialist Party is undermining democracy. The global oil industry overwhelmingly uses the dollar for pricing of products. A weekly Oil Ministry bulletin published on Friday listed September prices in yuan, while including prices from previous weeks and months in dollars. “This format is the result of the announcement made on Sept 7 by the president … that Venezuela will implement new strategies to free the country from the tyranny of the dollar,” the ministry wrote in a statement […]

Citgo Petroleum says credit profile ‘strong’ as U.S. sanctions bite PDVSA

16 Sep 2017   Venezuela

Venezuelan state-oil firm PDVSA’s refining unit in the United States, Citgo Petroleum [PDVSAC.UL], on Friday said its credit profile remains “strong and stable,” with over $1 billion in excess open credit. Sanctions imposed on its parent company and one of its top executives by U.S. President Donald Trump’s administration this summer have created difficulties for PDVSA and its units to get the letters of credit they need to buy some oil cargoes, Reuters reported this week, citing bankers and traders. Some producers are now using intermediaries to shield themselves from credit risks from what is seen as a the rising chance of debt default and to avoid triggering sanctions, the sources said. Citgo said it continues to obtain all the crude required for its 749,000-barrel-per-day refining network in the United States using more than 30 suppliers. “The vast majority of these purchases are made through long […]

Venezuela Suspends Trade In U.S. Dollars

15 Sep 2017   Venezuela

Venezuela has told oil traders it will no longer accept or offer U.S. dollars in payment for crude oil and fuels, the Wall Street Journal reports , citing sources familiar with the developments. As a result, traders have started converting dollars into euros, and PDVSA’s foreign partners operating in the country may have to switch to euros as well. At the same time, Reuters reports , Venezuela yesterday suspended the sale of U.S. currency through its Dicom auction system that President Nicolas Maduro said the government will use to switch from dollars to a basket of other currencies. The decision comes on the heels of fresh U.S. sanctions that effectively aim to tie Caracas’ hands with the issue and sale of new debt, which increases the danger of it defaulting on existing loans. As a counter move, Caracas is moving to a combination of yuans, Russian rubles, and euros […]

Sources Say Trump’s Citgo Sanctions Are Working

15 Sep 2017   Venezuela

Trading sources say President Donald Trump’s new sanctions against Venezuela’s American refining unit, Citgo, have succeeded in making it difficult for the PDVSA subsidiary to order crude for its facilities, a new Reuters report says. Oil distributors now require Citgo to provide prepayment letters or bank letters of credit, instead of allowing the company to employ the standard practice of ordering raw supplies on open credit. Citgo’s refineries produce 750,000 barrels per day of oil, sources said. The company owns three facilities: one in Illinois, one in Texas, and one in Louisiana. Together, they represent 4 percent of American fuel capacity. A pair of Canadian suppliers explained that their companies could not trade with Citgo directly anymore, resorting to third-party sales to avoid a credit risk. Another banker familiar with the matter put it this way: “This is not a credit issue, nobody thinks Citgo is unwilling to pay. […]

Venezuela’s crude supply to the United States was flat in August

14 Sep 2017   USA, Venezuela

Venezuelan crude sales to the United States in August were largely unchanged at 638,935 barrels per day (bpd) compared with the prior month, but continued to fall far short of year-earlier levels, according to Thomson Reuters Trade Flows data. State-run oil company PDVSA has sought to increase exports of diluted crude oil (DCO), a blend of imported naphtha and extra heavy oil from the Orinoco Belt, Venezuela’s largest producing region. But declining output of other grades and problems obtaining short-term financing due to a growing risk of default and sanctions imposed by the United States have affected PDVSA’s shipments to the United States in recent months. The closure of several Texas oil ports and refineries at the end of August ahead of Hurricane Harvey also affected the imported volumes. PDVSA and its joint ventures sent a total of 38 crude cargoes to the United States in […]

How Will Venezuela Deal With A PDVSA Default?

14 Sep 2017   Venezuela

While debt servicing has been a government priority, declining external liquidity and a deteriorating domestic situation (three-digit hyperinflation, shortages, and a political crisis between the government and the National Assembly) make it a daunting task. By 2020, the country must repay 30 percent of the external debt due to expire in the next 23 years. Venezuela can get access to liquidity via three main ways. The first option is to borrow directly on the financial market which implies that the country must pay an increasingly prohibitive risk premium due to investors’ fear of sovereign default. The second option, used intensively in recent years, is to borrow from allies, and especially China. Since 2009, Venezuela has borrowed at least $60 billion from China (through the Venezuelan-China fund) in exchange for selling oil at a discounted price. Loans were used to pay foreign manufacturers and repay external debt, such as in […]

Venezuela’s ‘Plan Rabbit’ encounters ‘cultural problem’

14 Sep 2017   Venezuela

Venezuelans tend to keep rabbits as pets and do not view them as a source of meat Venezuelan President Nicolás Maduro has devised a “rabbit plan” to counter the economic war he says is being waged against his government by “imperialist forces”. The president urged crisis-hit Venezuelans to breed rabbits and eat them as a source of animal protein. Venezuela is facing record levels of child malnutrition amid persistent food shortages. An opposition politician said the plan was “a bad joke”. President Maduro revealed the idea on state television, saying that “for animal protein, which is such an important issue, a ‘rabbit plan’ has been approved because rabbits also breed like rabbits”. The leader did say that the “rabbit plan” had not got off to a good start and the minister of urban agriculture, Freddy Bernal, said there had been a “cultural problem”. ‘People put bows on them’ President […]

Venezuela invites investors to discuss foreign debt

9 Sep 2017   Venezuela

Venezuela has invited international bondholders to negotiations over its foreign debt as the government in Caracas seeks to mitigate the impact of US sanctions and survive a deepening economic crisis. “In the next two weeks all holders of Venezuelan public debt that have been negatively affected by the decisions of Donald Trump and [head of the Venezuelan Parliament Julio Borges . . . are invited to several rounds of negotiations,” Nicolás Maduro, the country’s president, said. Almost three-quarters of the bondholders were from the US and Canada, Mr Maduro told the government-controlled constituent assembly on Thursday. Russia, a critical lender to the South American country, confirmed that it had been asked to help with a restructuring. Moscow has extended state loans as well as financial assistance from Rosneft, the Kremlin-controlled oil producer, to Venezuela’s state-owned PDVSA. “There was a request from our colleagues in Venezuela to carry out a restructuring,” Russian finance minister Anton Siluanov said. “There are difficulties in fulfilling the debt.” Mr Siluanov said discussions were taking place within the Paris Club of creditors and “on the other hand, we are directly engaged in bilateral contacts in order to work out a mechanism for restructuring the debt.” The Russian state is owed around $2.8bn by Venezuela. “I am confident that we will find acceptable solutions with Venezuela,” the minister told reporters.

In Venezuela, Cooking With Firewood as Currency Collapses

4 Sep 2017   Venezuela

Food shortages were already common in Venezuela, so Tabata Soler knew painfully well how to navigate the country’s black market stalls to get basics like eggs and sugar. But then came a shortage she couldn’t fix: Suddenly, there was no propane gas for sale to do the cooking. And so for several nights this summer, Ms. Soler prepared dinner above a makeshift fire of broken wooden crates set ablaze with kerosene to feed her extended family of 12. “There was no other option,” said Ms. Soler, a 37-year-old nurse, while scouting again for gas for her stove. “We went back to the past where we cooked soup with firewood.” Five months of political turmoil in Venezuela have brought waves of protesters into the streets, left more than 120 people dead and a […]

Exclusive: Latin America looks to Venezuelan fuel cargoes as Harvey swamps U.S.

1 Sep 2017   Venezuela

After Hurricane Harvey roared into Texas, flooding oil refineries and crippling ports along U.S. Gulf Coast, Latin American countries scouring the globe for other sources of fuel are zeroing in on a flotilla waiting to unload off the coast of Venezuela. Almost no fuel tankers have sailed from Texas for Latin America in six days, according to Thomson Reuters vessel tracking data. Terminals and refineries shut by the storm are unlikely to fully recover for weeks. The United States is the world’s largest net exporter of refined petroleum products, shipping around 5.05 million barrels of fuel per day. Latin America received almost half of that, or 2.5 million barrels per day (bpd). Most of it loads from the U.S. Gulf Coast. Latin America’s top recipients of U.S. fuel shipments are Mexico, Brazil and Venezuela, which is an OPEC member sitting on the world’s largest crude oil […]

‘Hope Is Gone’ as Venezuelan Protesters Vanish From Streets

1 Sep 2017   Venezuela

Wuilly Arteaga became a symbol of Venezuela’s protest movement as he played patriotic hymns from his violin in the face of tear gas and rubber bullets. Then he was arrested and beaten. When the 23-year-old was released after three weeks, he was stunned to find the protest movement had died and President Nicolás Maduro in greater control than ever. “It looks like hope is gone,” said Mr. Arteaga this week, bruises visible on his left cheek. “I feel like everything is so dark, I don’t see an exit.” Five months of violent antigovernment demonstrations have dissipated and the epicenter in Caracas, Plaza Altamira, sits eerily quiet. The barricades that opponents once set up to slow government armored vehicles are gone. Rumors of a military uprising are gone. And life has returned to normal, with people struggling to find enough to eat in a country stricken by shortages. Despite […]

Trump To Block Russian Ownership Of Venezuelan Subsidiary In US

1 Sep 2017   USA, Venezuela

Trump’s White House will block attempts by the Kremlin to acquire large portions of Venezuela’s Citgo, a U.S. subsidiary of the state-owned PDVSA. Rosneft agreed to acquire half of Citgo’s shares in exchange for a $1.5 billion loan in 2016. Cash-hungry PDVSA approved the deal, leaving American lawmakers concerned that a Russian firm would control roughly five percent of U.S. refining capacity via the buyouts. Citgo controls three refineries which process 750,000 barrels of oil per day. It also owns 48 storage facilities for refined petroleum products across the country and shares ownership in nine pipelines. The White House approved new sanctions against President Nicolas Maduro’s regime last week, making it harder for Venezuela’s embattled government to secure funds as Caracas spirals towards a default. U.S. President Donald Trump signed the executive order, which prevents American financial institutions from offering new funds to Venezuela or to its state oil […]

Is Trump Holding Back On Venezuela Sanctions?

30 Aug 2017   Venezuela

A few days ago, the White House authorized new sanctions against Venezuela – a country struggling under the burden of running a socialist government while the value of its main asset, oil, continues to hover around $50 a barrel. “This order demonstrates more clearly than ever that the United States will not allow an illegitimate dictatorship to take hold in the Western Hemisphere at the expense of its people,” National Security Adviser H.R. McMaster said Friday as President Donald Trump rolled out the fourth round of sanctions against Caracas this year. The measures go to new lengths to prevent Venezuela from using its assets in the United States to fund itself. The PDVSA, the South American country’s state oil company, owns an American subsidiary, Citgo, which will no longer be allowed to repatriate its profits to its parent company. U.S. financial institutions will be barred from issuing new debt […]

Venezuela’s Oil Minister To Discuss OPEC Deal With Saudis, Russians

29 Aug 2017   Venezuela

Venezuela’s Oil Minister Eulogio del Pino, who was appointed again as minister last week, plans to visit Saudi Arabia and Russia ahead of the September 22 meeting of the joint OPEC/non-OPEC panel set up to monitor the cuts, Russia’s TASS news agency reported on Monday, quoting Del Pino as saying. Del Pino had served as Venezuela’s oil minister until January this year, when he was replaced by Nelson Martinez. Last week, Venezuelan President Nicolas Maduro reshuffled again the government and the top management of embattled state-held oil firm PDVSA, replacing Martinez with Del Pino, and appointing Martinez to run the close-to-default state oil company. Del Pino now plans to embark on a 10-day tour ahead of the next meeting of the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) in Vienna, and plans to visit Moscow and Riyadh. The Venezuelan minister will discuss the implementation of the production cut deal with […]

Venezuela’s PDVSA negotiating Curacao refinery lease, open to China partners

26 Aug 2017   China, Curacao, Venezuela

Venezuelan state oil company PDVSA on Thursday said on Friday it was negotiating the continuation of its lease of Curacao’s Isla refinery but was open to Chinese partners following a preliminary deal between the island and China’s Guangdong Zhenrong Energy to operate the complex. PDVSA has for decades operated the refinery, which opened in 1918, under a lease agreement. But the cash-poor company has been reluctant to invest some $1.5 billion that Curacao authorities requested several years back to modernize the 335,000 barrels-per-day facility. China’s Guangdong Zhenrong Energy Co, a commodity trader with strong backing from Beijing, signed a binding framework pact with Curacao’s government in November. If the deal goes ahead, the Chinese firm would replace PDVSA […]

Trump administration imposes sweeping sanctions on Venezuela

26 Aug 2017   Venezuela

AP Photo/Ricardo Mazalan CARACAS, Venezuela (AP) — The Trump administration slapped sweeping financial sanctions on Venezuela on Friday, dramatically ratcheting up tensions between the two countries and making it harder for embattled President Nicolas Maduro to raise badly needed cash to prevent a debt default. The sanctions, which Trump signed by executive order, prohibit American financial institutions from providing new money to the government or the state oil company, PDVSA. They also restrict the Venezuelan oil giant’s U.S. subsidiary, Citgo, from sending dividends back to Venezuela and ban trading in two bonds the government recently issued to circumvent its increasing isolation from Western financial markets. “Maduro may no longer take advantage of the American financial system to facilitate the wholesale looting of the Venezuelan economy at the expense of the Venezuelan people,” Treasury Secretary Steven Mnuchin said at the White House. “These measures will undermine Maduro’s ability to pay […]

U.S. Toughens Penalties on Venezuela by Curbing Its Access to Funds

26 Aug 2017   Venezuela

The U.S. on Friday restricted the ability of Venezuela to tap American debt markets for funding, marking a significant escalation in Washington’s economic crackdown against Venezuelan President Nicolás Maduro’s cash-strapped government. President Donald Trump’s executive order prohibits institutions in the U.S. from trading new bonds with Mr. Maduro’s government, including through the state-owned oil company, Petróleos de Venezuela SA. It doesn’t curb trading of existing Venezuelan bonds in secondary markets and allows short-term trade finance to facilitate oil transactions between Venezuela and the U.S. The actions are aimed at limiting the government’s ability to finance itself, […]

Trump prohibits dealings in new Venezuelan government, PDVSA debt

26 Aug 2017   Venezuela

U.S. President Donald Trump signed an executive order prohibiting dealings in certain Venezuelan public sector debt on to pressure the government of President Nicolas Maduro to halt its “tyranny,” the White House the White house said on Friday. The order prohibits dealings in new debt and equity issued by the Venezuelan government and by its state oil company, PDVSA. But the White House said the order allows Treasury to provide licenses for other commercial and humanitarian transaction, including financing for commercial trade, petroleum exports and imports and transactions that only involve PDVSA’s U.S. unit, Citgo.

Venezuela’s “Oil Fire Sale” To Benefit Russia, China

25 Aug 2017   Venezuela

The focus is the company’s ability to pay bond interest due in two months. Doing so is crucial. But as of this morning, that prospect is dwindling. Along with it goes the ability of the central government to administer an entire population and avoid the country descending into outright civil war. And PDVSA is at the center of it all. Now, there’s talk of U.S. sanctions on PDVSA in particular. Here’s how that may play right into Russia’s and China’s hands… This is Venezuela’s Oil Supermarket PDVSA is the vehicle for about 90 percent of Venezuela’s trade revenue and has served as a primary outside purchaser of all manner of staple commodities essential for the literal survival of a domestic economy rapidly sliding into oblivion. While charismatic Hugo Chávez was in power, PDVSA was required to spend foreign hard currency export proceeds held outside the country to acquire food […]

Venezuelan Bonds Fall as U.S. Trading Sanctions Loom

24 Aug 2017   Venezuela

Clashes between opposition protesters and the Bolivarian National Guard in Barquisimeto, Venezuela last month. Venezuelan bond prices tumbled Wednesday as traders grappled with the prospect that U.S. sanctions could restrict trading in the troubled South American nation’s securities. The Trump administration is considering banning trading by U.S. banks of new debt issued by Venezuela or its state-owned entities, and possibly some existing debt, The Wall Street Journal reported on Wednesday. The move is aimed at weakening a government that Washington says has moved toward dictatorship, according to a senior administration official. The U.S. Treasury has targeted foreign financial markets before. In 2014, it barred U.S. financial institutions from participating in new bond sales by Russia meant to raise money for the government, a move that had the effect of reducing the availability of dollar funding for the country. But some moves under consideration are seen as extremely rare and […]

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 […]

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 […]

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 […]