Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Thursday, August 25, 2016

August 25, 2016

International Trade

MERCOSUR meets without Venezuela, Venezuela’s call to meet snubbed

MERCOSUR representatives from Argentina, Brazil, Paraguay and Uruguay met Tuesday to analyze ways out of the crisis within the organization after the major partners refused to acknowledge Venezuela’s President Nicolas Maduro as pro tempore chair for the next six months. The next day, Venezuela, acting as chair, called a formal meeting to discuss a work plan for the same period. It was ignored by all other MERCOSUR members, except Uruguay. (El Universal,; and more in Spanish: El Mundo,; El Universal,; Noticiero Venevisión,; El Universal,


Wheat and medicine arrive at La Guaira

Five tons of wheat and 59 containers bearing medicine arrived at La Guaira port, according to the port authority. More in Spanish: (El Universal;


Yellow corn offloaded in Maracaibo


Oil & Energy

Argentina shuts down controversial escrow account with PDVSA

The Argentine government is shutting down a controversial escrow account set up by Cristina Kirchner’s government amid growing suspicions over corruption involving hundreds of millions of dollars, according to official sources. Around US$ 2 billion went through the account, which will now be controlled by Argentine authorities only. More in Spanish: (El Nacional,



Defense Minister assigns one military general per commodity, to oversee marketing and distribution

Defense Minister Vladimir Padrino López, who is in charge of supplies nationally, has assigned one military general per commodity, to monitor distribution for 18 key staples. “There will be one general in command of rice, for example, who will show a plan for marketing and distributing this commodity”, he explained. More in Spanish:  (El Mundo,


Economy & Finance

Venezuela now bleeding cash

Venezuela’s cash position is deteriorating and that makes for a lack of clarity on the left wing government’s ability to pay its debts. Foreign exchange reserves held by the Central Bank are being depleted, with further depletion next year seen as the main risk to bond prices dated 2017, 2018 and 2019. Petrodollar inflows cannot cover the massive amounts of outflows due to a collapse in exports, a rise in imports, capital flight, and external debt payments. It will become increasing difficult for the country to manage its dollar denominated bills without pulling from the Central Bank and other assets. There are no obvious sources of financing now that China is standing down. If there were any other resources, officials would have already liquidated them in order to reduce the financing stress this year, says fixed income analyst Siobhan Morden, NOMURA Securities’ number one Venezuela “death watcher”.  For now, Venezuela’s Central Bank has a mere US$ 12.1 billion in reserves, including US$ 7.5 billion in gold, and just US$ 2.62 billion in cash. NOMURA says the country also has an US$ 820 million credit position with the International Monetary Fund and US$ 720 million in FOREX investments. Nevertheless, there has been a consistent decline in gold reserves as the primary source of financing with only small positions remaining for investment. Morden assumes there is less liquidity on the IMF net credit position and the investment position too, which then leaves primary funding from cash, gold and IMF currency known as Special Drawing Rights (SDR). The liquidity position shouldn’t be allowed to decline less than US$ 1 billion if the central bank is to provide the necessary operational liquidity it needs. “This leaves maybe less than US$ 500 million from the SDR position, another US$ 1.5 billion from the liquidity position and then US$ 7.5 billion gold reserves,” she says. There is high correlation between Venezuela’s external debt payments and the net reduction in FOREX reserves. This correlation likely reflects the tighter cash flow conditions. In other words, the central bank is using its rainy day fund to pay PDVSA’s and other Venezuelan debt. “If we simplistically assume that forex reserves finance the external debt service then the liquidity threshold reaches extreme stress in April 2017,” she predicts. It is unclear whether Maduro will be around by then. (Forbes:


Canadian miner RUSORO awarded over US$1 billion in Venezuela lawsuit

RUSORO Mining Ltd, a small Canadian gold miner says it was awarded more than US$ 1.2 billion in damages as a World Bank tribunal ruled that Venezuela had unlawfully seized the company's gold mine. The company, which had a market value of C$82.6 million (US$ 64 million) as of Monday's close, had in March 2013 filed a statement of claim against Venezuela and was seeking US$ 3.03 billion in compensation over the nationalization of its gold assets here. (Reuters,


Politics and International Affairs

Process to recall Maduro heads to next stage

Venezuela’s electoral body officially set the next stage in the process to hold a referendum on President Nicolas Maduro’s rule for the last week of October. The National Electoral Council ordered an internal committee to develop by Sept. 13 a timeline and a proposal for locations where citizens can sign to support the recall, according to an e-mailed statement. The subsequent stage requires 20% of voters registered as of April 30, or about 19.6 million voters, to sign the petition for the process to advance. The decision comes after the CNE, as the electoral council is known, thwarted the opposition’s preferred choice of holding a referendum vote this year. Electoral council chief Tibisay Lucena this month announced a new 90-day verification period that would clearly push the referendum into the coming year. (Bloomberg,; and more in Spanish: Noticiero Venevisión,; Agencia Venezolana de Noticias;; El Universal,; El Mundo,; El Nacional,


Prosecutor General asks CNE for information on recall signature collection

The Prosecutor General’s office has asked the National Elections Council (CNE) for information on the collection of 1% voter signatures required to initiate recall referendum proceedings. The move comes after Caracas Mayor Jorge Rodríguez – who heads a committee appointed by President Nicolas Maduro to review signatures - initiated a number of legal actions seeking to block the process. The Prosecutor’s request was reported by pro-regime CNE member Tania de D’Amelio. (El Universal,; El Mundo,


Venezuela confirms plan to purge state workers who signed recall

Venezuela will remove state employees appointed to their positions by the government who signed a petition to recall President Nicolas Maduro as the opposition seeks to remove him amid an economic crisis. In the first confirmation by a cabinet member, Information Minister Luis Jose Marcano said the government is free to name as well as remove high-level bureaucrats it has appointed. “Whoever has a position that is freely appointed and removable, those referred to yesterday by the PSUV on President Maduro’s instructions, evidently cannot be allowed to attack the Bolivarian revolution,” Marcano said in an interview, referring to the ruling party. “A lot of these people end up sabotaging the revolution.” Socialist Party (PSUV) spokesman Jorge Rodriguez had previously announced that those in senior public positions who had signed the petition would have to leave their posts. "Today, by order of the [governing Socialist] party president Nicolas Maduro, five ministries ... cannot have people that are against the Revolution and the president in management positions". He said that Maduro has given the ministries of food, basic industries and finance among others a deadline of 48 hours to dismiss those in senior positions who had signed the petition. The announcement follows reports by pressure groups and opposition parties that public sector workers who had signed the petition were pressured and sometimes sacked. Pro government Ombudsman Tarek William Saab, however, says that there can be no dismissals for political reasons. (Bloomberg,; BBC News:; and more in Spanish: Noticiero Venevision:


Legislature formally denounces Supreme Tribunal for attempting to nullify its work

National Assembly President Henry Ramos Allup has filed a complaint with the nation’s Prosecutor General, denouncing the Supreme Tribunal, and particularly its Constitutional Chamber for issuing sentences that would nullify the legislature’s work in seven sessions. The formal charge denounces “new attempts by the Constitutional Chamber of the TSJ to initiate procedures that violate and misinterpret the Constitution as well as the functions of the National Assembly”. He described the ruling handed down by the TSJ as “meaningless” and repeated that the legislature with its opposition majority will not accept any order of the Supreme Tribunal because, in his opinion, it is not correctly constituted; and added that the National Assembly will not abide by “the sentence or decision of any body which disregards the Constitution and prevents the right to defense.” He asked the Prosecutor to launch an investigation against the Tribunal for “criminal actions”, and added that the Tribunal is not properly constituted since “six out of seven magistrates” do not fill the legal requirements for appointment, and one of them is being investigated for not even having a law degree. (Latin American Herald Tribune,; El Universal,; and more in Spanish:  El Universal,; Noticiero Venevision:


Venezuelan students “take over” public transport to back recall referendum

The Central University of Venezuela’s Federation of University Centers, or FCU-UCV, on Wednesday staged a “takeover of public transportation” in Caracas, marking the start of a series of activities leading to a Sept. 1 march to demand a recall referendum for President Nicolas Maduro. The takeover is a call being made by the student movement as part of a series of actions to be undertaken by students opposing Maduro’s government in every Venezuelan state. “Early this morning, we were at the Plaza Venezuela metro station in Caracas at rush hour ... We’re going to board different buses to talk with passengers and encourage the activities,” FCU-UCV president Hasler Iglesias told reporters. (Latin American Herald Tribune,


Head of European Parliament warns democracy is in danger in Venezuela

Germany’s Martin Schulz, President of the European Parliament, says he is convinced that democracy is in danger in Venezuela. During a press conference in Bogotá, Schultz said events in Venezuela are dramatic and worrying, and called on both Maduro’s government and the opposition to keep open the road towards a national dialogue. He added that a government’s options depend on its legitimacy. More in Spanish: (Noticiero Venevisión,


Almagro: The recall vote is a constitutional right that must be observed

Luis Almagro, Secretary General of the Organization of American States (OAS), has again called on the Venezuelan government to allow the holding of a recall vote promoted by the opposition political forces. “People’s right to elect a president is as important as their right to remove him or her if they want to,” Almagro stressed in an interview. The OAS top representative also said he is willing to meet with President Nicolas Maduro over the crisis hitting the Caribbean nation, as long as the initiative does not mean “wasting time.” (El Universal,;


Losing the social media war, Maduro retreats online

President Nicolas Maduro took the unprecedented move of making his Instagram account private Tuesday, as the recall petition against him keeps on moving forward and his popularity deteriorates steadily. “This is a private account”, a message in Maduro’s Instagram page read. “Follow to view pictures and videos”. Maduro apparently objected to criticism of his administration over Instagram, according to all-news website SUMARIUM. In Instagram, Maduro has 100,000 followers. Venezuela has almost 3 million civil servants, with the government being the largest employer in the country. The President seems to be scaling down his social media presence. Maduro, who has been called a “petty dictator” by OAS Secretary General Luis Almagro, blocked main opposition figure and Miranda state governor Henrique Capriles in Twitter days ago. (Latin American Herald Tribune,


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.


Thursday, August 18, 2016

August 18, 2016

International Trade

Brazil and Uruguay in clash over Venezuela’s role in MERCOSUR
Brazil has called in Uruguay’s Ambassador in Brasilia to demand explanations over remarks made by Uruguayan Foreign Minister Rodolfo Nin Novoa during a Congressional hearing in his country. Nin told the House Foreign Affairs Committee of Uruguay’s Congress that "We did not much like that (Brazil’s) Foreign Minister José Serra came to Uruguay aiming to suspend the transfer (of MERCOSUR’s chair to Venezuela), and also that if it was suspended they would include us in their negotiations with other countries, as if trying to buy Uruguay’s vote”. He added that the Brazilian position “very much bothered” President Vázquez. Nin said further that Uruguay holds Venezuela as the “legitimate pro tempore chair” and will attend any meetings Maduro calls, even if the others don’t go, adding that other MERCOSUR members want to apply “bullying” over Venezuela’s chairmanship. He also said that Uruguay would for now oppose sanctioning Venezuela under MERCOSUR rules because “conditions aren’t there”. And said “the day they tell us they closed the National Assembly, for us that will be a rupture of democracy. As long as they don’t do so, it is not.” Uruguay called the matter a “misunderstanding” after Brazil expressed “deep dissatisfaction and surprise” over Nin’s statements. More in Spanish: (Infolatam:; Noticiero Venevision,; El Universal:

Maduro "declares battle" to “save" MERCOSUR
President Nicolas Maduro announced that Venezuela "declares battle" to save the Common Market of the South (MERCOSUR) from what he calls the "triple alliance" of Argentina, Brazil and Paraguay, and thanked Uruguay for the "moral strength" that country has shown. "Venezuela declares a battle to save MERCOSUR from the coup-mongering, far-right triple alliance that aims to destroy the bloc from within, and I thank President Tabaré Vázquez, the people of Uruguay (...) for all the moral force they have shown" said Maduro. He claimed that “the coup-mongering government of Brazil" has tried "unsuccessfully and illegally" to put pressure on Uruguay for Montevideo to join what he described as a "triple alliance" to remove Venezuela from the presidency of MERCOSUR. (El Universal,

Trade Minister says those who repatriate FOREX can keep 100% of export earnings
Foreign Trade and Investment Minister Jesús Faría has called on the private sector to repatriate FOREX and claims they can get back their investment. He says the “the private sector has US$ 500 billion abroad, whether companies or individuals”, and said those who are willing to repatriate their funds to Venezuela “as raw material”” for producing exports can keep 100% of their export earnings “until they get back their investment, when they perform, and this can repeat itself automatically”. He claimed those who use funds abroad to bring raw materials will not be held to the current 60-40% export earnings ratio. More in Spanish: (El Universal,


Oil & Energy

Venezuela oil exports seen falling as economic woes worsen
The long decline in Venezuela’s oil production is becoming a supply risk for international markets, according to a report by Columbia University’s Center on Global Energy Policy. Venezuela, traditionally a prominent oil exporter, will make a sharply smaller contribution to the global oil market in 2017 as an acute political and economic crisis affects its crude production. Exports from the holder of the world’s largest crude reserves fell more than 300,000 barrels a day in June, compared with the 2015 average, according to the report written by Luisa Palacios, a senior managing director at Medley Global Advisors LLC and fellow at Columbia's University Center on Global Energy Policy. While Venezuela’s output has been declining all year, the impact is only now being felt on international markets because previous losses were offset by slumping domestic oil demand amid an unprecedented economic recession. “Venezuela will represent a growing supply risk for oil markets in 2017,” the report said. “While on average crude oil exports in the first half do not yet show an important decline from the same period a year ago, the latest data point to a deteriorating trend.” (Bloomberg,; Reuters,



Maduro claims Venezuela signed US$ 4.5 billion in deals that include Canadian and U.S. miners

President Nicolas Maduro has claimed that Venezuela struck US$ 4.5 billion in mining deals with foreign and domestic companies, part of plan to lift this nation's economy out of a deep recession causing food shortages and social unrest. Maduro said the deals were with Canadian, South African, U.S. and Venezuelan companies, but did not specify whether contracts had been signed or just initial agreements. He added that he expects US$ 20 billion in mining investment contracts to be signed in coming days and that 60% of the income Venezuela received would be spent on social projects. (Reuters,


Economy & Finance

GDP reportedly dropped 11.8% in Q2 2016

According to unofficial data from the Central Bank, Venezuela’s economy shrank 11.8% during the second quarter this year, compared to 2015. This comes along with an 8% drop in consumption during this same quarter, the worst in the past 30 years. More in Spanish: (El Nacional,


Central Bank gold value down 25% over past six months

According to Venezuela’s Central Bank (BCV) June 30th financial statements, the value of its gold reserves dropped 25% in the past six months and now stands at US$ 7.5 billion. As of December 31, 2015, the value of Venezuela’s gold reserves was registered at US$ 10.04 billion, at US$ 1140.43 per troy ounce. The June statement shows the price of gold at US$ 1181.01 per troy ounce, but the amount of gold held by the BCV has shrunk. Bank officials admitted earlier this year that they were trading in gold bullion for cash. More in Spanish: (El Nacional,


Bank of America follows Barclays in canceling Venezuela trip

Bank of America Corp. canceled an investor trip to Venezuela planned for next month because of security reasons, making it the second bank to do so in a span of weeks amid rising social tensions in the nation. The bank notified clients last week the trip was off. Its sales staff then told clients in a separate e-mail “the situation has deteriorated in Venezuela in the last few weeks as the economic and political crisis has deepened,” according to people who received the update. “As a result, the perceived safety risks have increased significantly beyond what we are willing to tolerate at the moment.” The decision comes after Barclays Plc scrapped its own Caracas travel plans in July because its security team deemed the trip “unwise” unless the bank took “significantly enhanced” safety measures. Bloomberg reported the Barclays cancellation on Aug. 11. (Reuters,


Venezuela seeks annulment of award over Vestey cattle ranch expropriation

Venezuela has requested the annulment of a decision by the World Bank’s arbitral center compelling this nation to pay around US$ 100 million to Britain’s Vestey Group for the nationalization of a number of cattle ranches here. Early in April, the International Center for Settlement of Investment Disputes (ICSID) announced that Venezuela should pay US$ 98 million plus interest for having seized Vestey ranches here in 2005. (El Universal,


POLAR has denounced Maduro regime at ILO

Guillermo Bolinaga, director of Legal and Regulatory Affairs forf Venezuela’s major food producer Empresas POLAR, has denounced the Maduro regime at the International Labor Organization (ILO) in Geneva, Switzerland, for harassment and discrimination. Bolinaga lodged a complaint showing all the attacks against the company and employees in recent months by several representatives of the national government. (El Universal,


Minister Faría: Economy and politics are different things

Venezuela’s Foreign Trade and International Investment Minister Jesús Faría attributed consumer shortages to the lack of FOREX needed supply the domestic market, adding that the regime will continue to work with businesspersons who “understand that economy is one thing and politics is another thing.” He says an economic strategy is under way in order to recover foreign currency and resume exports. (El Universal,


As Venezuela hikes wages without increasing revenue or production, 800% inflation likely to surge

Venezuela’s inflation rate, already expected by the IMF and others to break records this year, is now expected to go even higher after President Nicolas Maduro hiked the minimum wage Monday, analysts say. Inflation is so bad here, that the Central Bank stopped publishing its consumer price index for more than a year. They only resumed regular publication months ago. And when it resumed, it was bad news. Under Maduro, inflation has gone from 20% in 2012 to 181% in 2015 and everybody says it will get worse, pointing to a tenfold increase in liquidity over the same period, a trend that has continued to this day. With the latest increase, announced over the weekend but published Monday, the minimum wage has been hiked 3 separate times for 134% this year alone, in a sinister game of catch-up with inflation, which is expected to top 700%. (Latin American Herald Tribune,


Politics and International Affairs

Brazil pressures ‘authoritarian’ Venezuela to hold referendum before the year ends

Brazil’s government is putting pressure on Venezuela to hold a recall referendum on President Nicolas Maduro, who is imposing an "authoritarian" regime on his country, according to Foreign Affairs Minister Jose Serra. "Democratic countries throughout the world should advocate for the referendum," Serra told reporters in the Brazilian capital on Wednesday. Serra’s comments come after Venezuela’s electoral authorities appeared to frustrate the opposition’s push to hold a recall this year that could result in new presidential elections. If the referendum occurs in 2017 and Venezuelans vote to oust the president, his political ally and second in command, Aristobulo Isturiz, would take over the top job until regularly-scheduled elections occur in 2019. Serra said that holding a recall referendum any later than this year, 2016, would be “a complete farce” (Reuters,; More in Spanish: Infolatam,


France voices concern over Leopoldo Lopez's conviction

France’s Foreign Ministry says it is “closely” monitoring the ongoing situation in Venezuela, and voiced concern after a Venezuelan court last Friday confirmed a prison sentence against opposition leader Leopoldo Lopez. “We call for observance of the rule of law and government-opposition talks,” said and spokesperson, who noted that this nation is going through “strong tensions since several months ago,” Efe quoted. (El Universal,


Sources claim Elections Council is considering calling the recall vote in March 2017

An allegedly proposed timetable - reportedly leaked by National Elections Council (CNE) sources – shows that the CNE is considering scheduling the presidential recall referendum on March 12, 2017, and delaying regional elections to June next year. The report says the timetable has not yet been approved by the CNE board. (El Nacional,

Ten Venezuelans sentenced for drug trafficking in Air France flight

Ten people were sentenced to 22 years and six months imprisonment for smuggling 1,382 kilograms of cocaine, confiscated on September 20, 2013, in Paris, after the landing of an Air France flight from Venezuela. Three of the involved individuals were agents of the Bolivarian National Guard (GNB). The Prosecutor General’s Office revealed that other seventeen people previously acquitted by the Fourth Criminal Trial Court of Vargas state would remain in custody until the relevant Court of Appeals renders a sentence in connection with an appeal filed by public prosecutors. (El Universal,


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.


Tuesday, August 16, 2016

August 16, 2016

International Trade

Cargo arrivals:

The Puerto Cabello Port authority reports:

  • 90,000 tons of white corn on three ships: “Atlantic Yucatán” “Coresky Ol” and “Orchard Búnker
  • 63,000 tons of baking wheat on the “Strategic Sinergy” and the “Fatih
  • 32,000 tons of yellow corn on the “Western London
  • 35.347 tons of yellow corn and soy cakes on the “Dolor Vita
  • 30,000 tons of raw sugar on the “Miss Simona
  • 29,658 tons of general cargo on the “Dodo” and
  • 29,910 tons of general cargo on the “Clipper Brilliance
  • 48,000 tons of wheat, unspecified.

It also reports that seven more ships are at bay bearing 213,000,000 tons of staples, including sugar, white and yellow corn, durum wheat and baking wheat.


Partial and gradual border opening underway with Colombia

President Nicolas Maduro and his Colombian counterpart Juan Manuel Santos have met and agreed to gradually reopen the bilateral border, shut down by a Maduro decree one year ago. During a first stage – underway - the border will be open to daytime pedestrian crossing at five designated points. They announced that they had agreed to the sale of Venezuelan fuel in Colombian service stations, and said a bilateral group will seek payment forms for trade between both nations. Vehicle transportation is to be reopened gradually. During this past weekend over 90,000 Venezuelans crossed on foot into Colombia seeking basic supplies, and purchases have been limited to small amounts for personal consumption only. Around 6,000 military personnel were deployed to guard the border crossing, and Colombia has implemented a border crossing permit. Tires and automotive spare parts have been banned until formal trade channels are established; and talks will continue to determine with goods are to be considered basic for Venezuelans. (Latin American Herald Tribune,; and more in Spanish: (Noticiero Venevision:;;; Notitarde,


Uruguay claims MERCOSUR presidency faces "legal vacuum", while Brazil analyzes Venezuela’s membership

Uruguayan Foreign Minister Rodolfo Nin Novoa said that no joint leadership of the Common Market of the South (Mercosur) is provided for under any regulation, adding that Venezuela would not accept such move. “(A joint leadership) is not provided for, and if so, we need consensus anyway,” he said, stressing that “there is no pre-requisite to take over (the bloc’s presidency). There is a legal vacuum.” Earlier, his Brazilian counterpart José Serra suggested that Mercosur be led by an “informal council of ambassadors” which would be effective until December, when Argentina must hold the presidency, in order to stop the crisis over the rotating presidency transfer. At the same time, Brazil’s Foreign Minister José Serra says MERCOSUR will now decide which “legal steps” can be applied to Venezuela for unilaterally failing to comply with community entry requisites. Venezuela’s Foreign Ministry issued a statement saying charges of non-compliance are a contrivance to exclude this nation from MERCOSUR, and claiming that Venezuela has complied more fully than other nations. (El Universal,; and more in Spanish: (El Mundo,; Notitarde,; Noticiero Venevision:


Trade Minister claims over 500 companies have been driven to foreign markets

Foreign Trade and Investment Minister Jesús Faría says the Venezuelan government has guided 500 companies from different production sectors towards foreign markets. He said his ministry has been able to cut 60% of red tape for exports, and announced that the mattress manufacturer LATINFLEX expects to carry out its first export to Curacao and later to Aruba, Ecuador and Cuba. (El Universal,



Oil & Energy

Lack of investment, payment delays hamper Venezuela oil output

Venezuela is on track to suffer its steepest annual oil output drop in 14 years as it suffers the effects of an economic crisis and years of under investment and mismanagement. The state-run oil company, Petroleos de Venezuela (PDVSA), is struggling to stem a production decline that has accelerated this year as a result of payment delays to suppliers, lack of investment in equipment, and poor planning in the country's vast oil fields. In the 12 months to June, Venezuela's crude output fell 9% to 2.36 million barrels per day (bpd), while the Organization of Petroleum Exploration Countries (OPEC) has boosted its output by 4%, according to the group's official figures. Venezuela's oil minister and PDVSA president, Eulogio Del Pino, last month confirmed a 220,000-barrel-per-day production decline -- around 8% -- so far this year compared with 2015. PDVSA's crude exports, which account for 94% of the country's hard currency income, fell to 1.19 million bpd in July, excluding independent sales made by its joint ventures. An increase in equipment theft, maintenance delays, low salaries, and what they called a sense of "abandonment" of some oilfields are continuing to hit production. Del Pino told local media last month that power outages and limited upgrading capacity to convert Venezuela's extra heavy oil into exportable crude has hampered production. It has forced PDVSA to import some 95,000 bpd of heavy naphtha and light crude to dilute its oil. These problems, occurring while oil services providers reduce operations in Venezuela, have analysts forecasting that production will not recover in the second half of the year, falling instead to its lowest level since a strike that brought output down to an average of 2.56 million bpd in 2003. Venezuela's active rig count fell to 49 in July according to Baker Hughes, the lowest since the end of 2011. U.S.-based oil servicing giant Schlumberger noted a "significant reduction of operations" in Venezuela in its most recent earning release and Halliburton said it is operating on fewer active rigs in Latin America, including Venezuela. PDVSA has said there are ongoing talks to solve payment issues with many companies, including those. PDVSA has faced problems maintaining output levels at areas that need secondary recovery techniques such as water, gas and vapor injections into reservoirs. "PDVSA, who has no money leftover at all, now needs even more investment in exploration and production than in the previous decade to see its output to revive. At this price level, that is not going to happen," said a former PDVSA executive. (Reuters,


Venezuela oil price rises for first time in 7 weeks

The price Venezuela receives for its mix of medium and heavy oil rose for the first time in 7 weeks as falling WTI prices bounced off a US$ 40 base.  According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending August 12 was US$ 35.54, up US$ 2.18 from the previous week's US$ 33.56.  According to Venezuelan government figures, the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$ 32.18 for the year to date. (Latin American Herald Tribune,; El Universal,




Pharmaceutical guild warns of country facing dwindling medication inventories

Freddy Ceballos, President of Venezuela’s Pharmaceutical Federation, warns that unavailability of drugs in Venezuela spurs a breeding ground for the sale of illicit pharmaceutical products. He said the sale of illicit pharmaceutical products in Zulia state has been endorsed by state governor Francisco Arias-Cardenas. (El Universal,



Economy & Finance

Maduro hikes minimum wage by 50% as inflation soars, small business endangered

President Nicolas Maduro has announced a 50% minimum wage hike that takes effect on Sept. 1, amid triple-digit inflation that has severely weakened spending power here. Monthly minimum wage will rise to 22,577 bolivars, around US$ 35 at the weaker of two official exchange rates but about US$ 23 at the black market rate. Including a 200% hike in meal tickets, it will rise to 65,056 bolivars, around US$ 101.17. "This is the third (minimum wage) hike this year," Maduro said during a televised broadcast. Critics say repeated salary increases are woefully insufficient to offset inflation, which reached 181 percent in 2015 according to official figures. The central bank has not published more up-to-date inflation figures, which opposition leaders say is meant to hide embarrassing economic data. The total full minimum wage, including meal tickets, has now risen 396.7% since January this year. Francisco Martínez, head of FEDECÁMARAS, Venezuela’s largest business federation, says the decree will have a negative impact and lead to closing many small and medium enterprises and the loss of jobs.  (Reuters,; and more in Spanish: (Infolatam:; Notitarde:; El Universal,


How Venezuela’s repressive government controls the nation through hunger

The Venezuelan government has created unspeakable hardships for the populace and, at the same time, is taking advantage of those hardships to introduce new forms of political control. One would think that the proliferation of food lines would prompt riots. And some rioting is occurring. But food lines have paradoxically given the government new mechanisms for keeping protests at bay. Lines and rationing give the government the chance to extend Orwellian supervision. Retailers are being required to keep tabs on who buys what and how much. The government has installed fingerprint scanners in grocery and drug stores. Lines and scarcity give the government the chance to engage in new forms of favoritism. Only the government knows which stores will have which products, which controls food distribution, and it often discloses information only to those who are pro-government. Another form of favoritism has been the creation of government-run “committees” (CLAPs) that distribute groceries mostly to loyal groups. But the most important consequence of lines and rationing has been the increase in military control. Military personnel have been deployed to monitor food lines and supermarkets. They are there with the pretext of protecting citizens from crime, but what they are most successful in doing is repressing any protest that might emerge. (Huffington Post:



Politics and International Affairs

15 OAS states urge Venezuela to act on recall 'without delay'

A group of 15 countries called on Venezuela Thursday to act "without delay" to clear the way for an election over whether to recall President Nicolas Maduro from office as a way out of a worsening crisis. The countries, all members of the Organization of American States, issued the joint statement after the head of Venezuela's election authority laid out a schedule this week that appears likely to push any recall election into 2017. The timeline is crucial because if the unpopular Maduro is voted out in a recall election after January 10, he would simply yield power to his handpicked vice president. If the recall is held this year and Maduro loses, the constitution calls for new elections here. The opposition has been pressing for a recall this year, but the National Electoral Council has slow-rolled a complex petition process that involves gathering and validating millions of signatures before the elections can go ahead. "We call on the Venezuelan authorities to guarantee the exercise of the constitutional rights of the Venezuelan people and that the remaining steps for the realization of the presidential recall referendum be pursued clearly, concretely and without delay, and thus contribute to the quick and effective resolution of the current political, economic and social difficulties in the country," the joint statement said. Venezuelan Ambassador Bernardo Alvarez said he was surprised to learn of the joint statement, saying his counterparts were working "behind Venezuela's back" in what he called an "undiplomatic" act. The OAS members signing Thursday's statement urged the government and the opposition "to hold as soon as possible a frank and effective dialogue, directly or with the support of facilitators" to identify long-lasting solutions to the crisis. (AFP:; Latin American Herald Tribune,


Only a presidential referendum can save Venezuela from its humanitarian crisis

Even as economic conditions continue their death spiral, street crime and violence are soaring, the last, best hope for a peaceful, institutional change of direction in Venezuela is an article in the constitution that allows for a recall referendum of the president. Over the past several months, the opposition has been collecting the signatures in a complex process to trigger such a referendum. Unsurprisingly, with polls showing that upward of 68% of Venezuelans would vote to remove Maduro, the electoral council he controls has been moving at a snail’s pace to process the opposition’s paperwork. That’s because, according to the constitution, if the government can delay the referendum until 2017, a No vote on Maduro would mean that his acolyte vice president would assume power for the rest of his term, rather than holding a new election, which would be required if the referendum was held this year. It is a race against time, but at least the international community is rousing to its importance. The secretary general of the Organization of American States, Luis Almagro of Uruguay, has led the charge, calling it the “only solution” to Venezuela’s crisis. The Obama administration is finally waking up to the fact that a major crisis is brewing in Venezuela, and that platitudes about “dialogue” no longer suffice. (National Review:


A looming clash in Venezuela, Peru’s Kuczynski points to recall referendum

Venezuela is on a dangerous — and avoidable — collision course. Despair and hunger in Venezuela have deepened in recent weeks as food shortages have worsened and international efforts to bridge the political divide have failed. Far from acknowledging the need for dramatic change, or even that his citizens are suffering, Maduro has continued to blame the nation’s unraveling on a conspiracy between the United States and the opposition. Avoiding a confrontation between the Venezuelan government and those seeking to oust Maduro, which could well turn violent, will require international backing for the ordinary citizens who are fighting to oust a despotic leader. “If there is a social implosion in Venezuela, that will reverberate through the entire region,” the opposition leader, Henrique Capriles, warned during a trip last week to Peru, during which he sought to enlist the help of Peru’s new president, Pedro Pablo Kuczynski. Capriles called on Latin American leaders to support the bid to hold a referendum this year. In his reply, Kuczynski emphasized that Venezuela’s constitution defines the recall process, which he called “a very important matter now”. (The New York Times:; and more in Spanish: El Universal,; El Nacional,


Argentina calls on Pope Frances to help dialogue in Venezuela

Argentina’s Foreign Minister Susana Malcorra says there could be a diplomatic initiative seeking a dialogue in Venezuela, including Pope Francis. Malcorra said “we are close to setting up a mechanism that can include an umbrella that will include the Vatican in a dialogue for Venezuela”, and said she met with the Pope last June and discussed this matter. She said the Pope “reiterated that he was willing to take part in a mechanism for mediation” to reach a dialogue between the Maduro regime and the opposition here. More in Spanish: (Noticiero Venevision:


Caracas appeals court rejects Lopez appeal, draws international condemnation

A Caracas court of appeals has rejected a motion by defense attorneys for imprisoned political leader Leopoldo Lopez, seeking to overturn his almost 14-year jail sentence in a military prison on charges of inciting violence. Lopez’s lawyer, Juan Carlos Gutierrez, says two more levels of appeal remain: within Venezuela´s Supreme Tribunal. Gutierrez said 14 forceful arguments were presented against the “illegal sentence” issued against him and three students last September 15, 2015. US Assistant Secretary of State for Latin America, Mari Carmen Aponte, said she was very worried over this action and asked the Venezuelan government to protect democracy and justice, The United States has insisted on liberating Lopez, which it considers a political prisoner. Luis Almagro, Secretary General of the Organization of American States (OAS) called the decision “a lost opportunity for reconciliation in Venezuela”; and Spain’s Foreign Minister José Manuel García Margallo said the decision “casts serious doubts on the workings of the rule of law in Venezuela”. He added that the Maduro regime “seems determined to dynamite all bridges for an understanding tithe the democratic opposition and block any possibility for a peaceful solution to a conflict that is devastating the country and causing enormous pain to Venezuelan citizens”. He said he would contact the European Union’s High Representative, Federica Mogherini, on this matter and ask Europe’s Foreign Affairs Council to reopen deliberation on Venezuela’s situation. (El Universal,; and more in Spanish: Noticiero Venevision:;;


Hard times in Venezuela breed malaria as desperate flock to mines

This country’s economic turmoil has brought malaria back, sweeping the disease out of the remote jungle areas where it quietly persisted and spreading it around the nation at levels not seen in Venezuela for 75 years. It all starts with the mines. With the economy in tatters, at least 70,000 people from all walks of life have been streaming into this mining region over the past year. As they hunt for gold in watery pits, the perfect breeding ground for the mosquitoes that spread the disease, they are catching malaria by the tens of thousands. Then, with the disease in their blood, they return home to Venezuela’s cities. But because of the economic collapse, there is often no medicine and little fumigation to prevent mosquitoes there from biting them and passing malaria to others, sickening tens of thousands more people and leaving entire towns desperate for help. Officially, the spread of malaria in Venezuela has become a state secret. The government has not published epidemiological reports on the disease in the past year, and it says there is no crisis. But the most recent internal figures, obtained from Venezuelan doctors involved in compiling it, confirm a surge is underway. In the first six months of the year, malaria cases rose 72%, to a total of 125,000, according to the figures. (The New York Times:



The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.