June 30, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• 845 tons of auto parts, 41 of tires and 8 of spare parts from FORD USA for its local affiliate.
• 203 tons of auto parts and 201 of prefab construction from Postar Intertrade, for SAFONAPP.
• 27 tons of electronic products from Port Everglades for Suministros y Procura Aragua.
• 10 tons of ceramic and bathroom pieces from Port Everglades for ACCA
• 4 tons of truck parts from Port Everglades, for MACK
• 3 tons of furniture from DHL Curazao to DHL Global Forwarding Venezuela.

More in Spanish: (Notitarde, http://www.notitarde.com/La-Costa/Ford-Motor-recibio-piezas--de-automoviles-y-autopartes/2015/06/30/539476)

 

Powdered milk reported to have arrived

Sources in the milk industry say some 16,000 tons of powdered milk have arrived from Brazil, but add that the problem here is not milk production but price controls and lack of packing material. More in Spanish:  (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/afirman-que-llego-leche-en-polvo-a-los-puertos.aspx#ixzz3eXOZ7vKX)

 

293 Chinese buses arrived

Surface Transport and Public Works Minister Haiman El Troudi has announced that a lot of Chinese buses made up of 293 units for public transportation has arrived. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44447&idc=3)

 

 

Oil & Energy

 

Venezuela oil price slips for 3rd week

Venezuela's weekly oil basket price slipped slightly for a third week as oil prices churned in international markets on economic worries in Europe over a possible Greek default, and the U.S. market remained amply supplied.
According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending June 26 was US$ 56.15, down 33 cents from the previous week's US$ 56.48. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2391167&CategoryId=10717)

 

Haiti owes PDVSA almost US$ 2 billion

Haiti's long term debt with Venezuela for oil and derivates under the PETROCARIBE plan is up to almost US$ 2 billion, based on official figures. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Oil minister says Caribbean region could collapse without PETROCARIBE

Venezuela's Oil and Mining Minister Asdrúbal Chávez celebrated the 10th anniversary of PETROCARIBE by inaugurating their XVth Ministerial Council, and declared "without PETROCARIBE this region would collapse". More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/asdrubal-chavez-sin-petrocaribe-la-region-colapsar.aspx#ixzz3eXO84Ldv; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/chavez--sin-petrocaribe-la-region-colapsaria.aspx)

 

FORBES: Oil market impact of unrest here

Venezuela’s problems remain over the horizon for many oil traders, until the level of unrest increases to the point where oil production and exports appear to be threatened; and the global oil market should be relatively capable of absorbing any loss of Venezuelan production. A strike or other unrest that prevents Venezuela from exporting petroleum will mean a quick bump up in prices, but in the case of an extended production outage, the biggest uncertainty is whether Saudi Arabia will respond with a production increase, or wait to see how the situation develops. Given high oil inventories, Saudi Arabia would almost certainly wait and allow inventories to offset the loss. Since Venezuela is not that large an exporter, restraint should be a low risk approach. If traders respond by pushing prices up significantly, the Saudis would first try to talk down prices. So, while prices could jump $10 a barrel in response to Venezuelan unrest, even a major disruption of Venezuelan oil supply is unlikely to mean elevated prices would persist. (FORBES; http://www.forbes.com/sites/michaellynch/2015/06/29/desperate-venezuela-4-oil-market-impact-of-unrest/)

 

Good news from Venezuela's oil industry

Eulogio del Pino, who replaced Rafael Ramírez as head of PDVSA, seems to be making a great effort to manage the operations of the state-run oil company. He traveled to an OPEC meeting in Vienna, to Russia and India, seeking to strengthen the battered relations of PDVSA with the different international companies and countries, as he announced several agreements that seem to be pointing in the right direction: The first is an agreement with PBF Energy Inc. to sell the 189,000 barrel-per-day Chalmette refinery (Louisiana) for US$ 322 million. This refinery is a 50:50 joint venture between ExxonMobil and PDVSA, and is particularly fit for processing upgraded crude from PETROMONAGAS. The deal indicates that it will be able to maintain the customer, since it was especially reformed so it could process the upgraded crude of PETROMONAGAS in an efficient way. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2391155&CategoryId=10717)

 

 

Commodities

 

Basic industry is under 25% capacity

For the second time this year President Nicolás Maduro has announced reactivation of a worker controlled plan launched in 2009 by the late President Chavez for the Guayana region basic industries which are operating under 25% capacity. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

 

Economy & Finance

 

Venezuelan businessmen ask the regime to open dialogue without attacks, insults and accusations against the private sector. Last weekend, Nicolás Maduro invited them to a dialogue “without exclusions,” but he did so referring to some businessmen as “pelucones" (a Colombian/Ecuadorian insult to refer to someone with money). Venezuela’s private sector’s petitions remain the same: Dismounting price and FOREX controls and strengthening domestic production. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44448&idc=3)

 

 

Politics and International Affairs

 

Venezuela's struggling socialists hold primaries for parliamentary vote

Venezuela's ruling socialists held primaries on Sunday ahead of December's parliamentary election they are forecast to lose due to a biting recession and discontent with the late Hugo Chavez's uncharismatic successor. President Nicolas Maduro claimed the number of voters on Sunday had doubled as compared to previous PSUV primaries, without giving out the exact numbers of people who had turned up for the polls. "The revolution doesn't work like it used to. You don't feel that emotion anymore," said a teacher at a state-run school in a low-income part of Caracas, who is disappointed with President Nicolas Maduro, the former bus driver and union leader she helped elect in 2013. Captain Diosdado Cabello, Speaker of the National Assembly and first vice president of ruling United Socialist Party of Venezuela (PSUV), says it is "a mistake" by the leaders of the opposition to "continue to underestimate people." He says PSUV primaries are important for the country's democratic life. "We are doing our part to win the vote in peace." Although President Maduro publicly said the regime had ways of knowing who voted and who did not, National Elections Council member Socorro Hernández declared "there is no way one can do so". (Reuters, http://www.reuters.com/article/2015/06/29/us-venezuela-politics-idUSKCN0P80I920150629; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2391214&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/150629/cabello-we-are-doing-our-part-to-win-the-vote-in-peace; El Universal, http://www.eluniversal.com/nacional-y-politica/150629/cne-director-re-asserts-the-vote-is-secret)

 

Commonwealth expresses support for Guyana in border dispute

Commonwealth Secretary General Kamalesh Sharma has expressed assurances that the 53 nation group supports Guyana in its border dispute with Venezuela: "There have been recent developments in the claims by a neighboring country over Guyana's land and maritime areas, and the Commonwealth has quickly and appropriately acted in collective solidarity". More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Maduro once again postpones is National Assembly speech on Guyana

President Nicolás Maduro has for a third time postponed a speech - scheduled for today - to the Venezuela´s National Assembly on the border dispute with Guyana. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/difieren-intervencion-de-maduro-en-la-an-sobre-guy.aspx#ixzz3eXPuNVXO)

 

INFOLATAM: Maduro's ultra-nationalist decoy

The difficult situation the Maduro is going through may lead him to seek political shortcuts. Today, tensions with Guyana and Colombia have risen, and some analysts see this as a way to change the course of upcoming parliamentary elections on December 6th. Carlos Alberto Montaner says "chavistas know that the Essequibo issue is very popular in the entire population, chavistas and non-chavistas, particularly now that Exxon-Mobil has found an important amount of oil in the area's maritime zone...they think a military operation to "rescue" the Essequibo could last one week and awaken nationalist fervor in Venezuelans, revitalize Maduro's image, return prestige to the discredited armed forces and create a "war period" atmosphere that could justify scarcities and economic disaster".  On May 27, Maduro published a decree creating four Integrated Maritime and Insular Defense Zones, one of which includes disputed areas. Guyana has called the decree "aggressive and illegal" and "a flagrant violation of international law" and warns that "any attempt" to enforce it will be "met vigorously ". Venezuela has called Guyana's reply "a provocation against Bolivarian peace diplomacy". Colombia´s President Juan Manuel Santos, in turn, has demanded a quick formal reply "within hours" from Venezuela for unilaterally setting maritime boundaries between the two nations in disputed Caribbean areas. The new decree also includes areas in the Gulf of Venezuela which have been disputed for decades. Colombia's SEMANA magazine says Colombian politicians of all parties believe Maduro's decision is "a smoke screen" to overcome difficult domestic problems. Although it seems unlikely all this will degenerate into conflict what is happening is that the regime is using it with to mobilize votes and launch charges against the opposition. More in Spanish: (INFOLATAM, http://www.infolatam.com/2015/06/29/el-senuelo-ultranacionalista-de-nicolas-maduro/)

 

Regime tells UN it does not violate human rights, Committee members disagree

Prosecutor General Luisa Ortega Díaz denied to the UN Human Rights Committee that Venezuela is violating or tolerating violations of human rights. Members of the Committee dissented: Konstantine Vardzelasvili said: "The state cannot protect pro-government groups that attack demonstrators. Legal regulations are seldom enforced, particularly when those involved come from "colectivos"".  Olivier De Frouville added: "People were liberated after the 2014 trials under conditions that restrict their rights, very strict provisional conditions in exchange for freedom". In reference to the case of judge Afiuni, Yadh Ben Achour said "even if a judge proclaims hostility toward the state she must be treated with respect. When I see judges jailed and tortured I am speechless". Thirty Venezuelan NGOs have told the UN that the Venezuelan regime violates its citizens’ human and political rights. Ortega Díaz will also have to explain why the annual homicide rate in Venezuela soared from 4,500 in 1998 to over 24,000 in 2014. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44450&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/150629/ngos-denounce-political-and-civil-rights-violations-in-venezuela; http://www.eluniversal.com/nacional-y-politica/150629/venezuela-to-explain-rise-in-crime-and-repression-at-the-un; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/150630/autoridades-negaron-en-la-onu-que-violen-ddhh; El Nacional; http://www.el-nacional.com/)

 

National Assembly President Cabello: "I have no problem going to the US"

National Assembly President Captain Diosdado Cabello said meetings between the Venezuelan government and the US will continue in order to come to an understanding. He said that neither Senators in the US, nor media outlets' owners in Venezuela could stop meetings with Washington. As for the possibility of travelling to Washington to continue with rapprochement meetings, Cabello stressed that he had no problem to go to the United States, in reference to reports aired by international media about an alleged investigation against him over drug-trafficking crimes. (El Universal, http://www.eluniversal.com/nacional-y-politica/150629/congress-speaker-cabello-i-have-no-problem-to-go-to-the-us)

 

US senator to travel to Venezuela to assess the country's situation

US Senator Robert Corker, chairman of the Senate Foreign Relations Committee, will travel to Venezuela in July to assess the country's economic and social decline and the serious accusations brought against high-ranking officials.
Additional reports said that several US parliamentarians would join Corker when he visits Venezuela. (El Universal, http://www.eluniversal.com/nacional-y-politica/150629/us-senator-to-travel-to-venezuela-to-assess-the-countrys-situation)

 

North Korea to open embassy in Venezuela

Diplomatic relations between Venezuela and North Korea are moving forward, as Caracas authorized Pyongyang to set an embassy in Venezuela. (El Universal, http://www.eluniversal.com/nacional-y-politica/150629/north-korea-to-open-embassy-in-venezuela)

 

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.

June 23, 2015

Oil & Energy

 

Big investors shun Venezuela’s flagship oil industry event

Venezuela’s biggest annual gathering of oil investors used to be a memorable affair: The deal-making could run into the billions. This year’s event was a far cry from previous years’ bashes, where hordes of investors would clamor for a stake in the country with the world’s largest oil reserves. Organizers said slightly more than 3,000 people visited the expo this week, including hundreds of workers from state oil giant PDVSA.  Among the notable absentees were many of Venezuela’s foreign production partners. Of the more than 30 multinationals that have minority stakes in projects here, only two were listed as sponsors of the panel-discussion portion of the three-day convention, which also includes a trade show. PDVSA’s president couldn’t make it either: he was in Russia and India this week in search of fresh investment for the economically troubled country. The lower turnout is reflective of the decay in the investment climate in Venezuela’s vital oil industry.  “I think there was a consensus among us not to participate,” said one official at a production partner of PDVSA, who left during the conference’s first day. (The Wall Street Journal, http://blogs.wsj.com/frontiers/2015/06/19/big-investors-shun-venezuelas-flagship-oil-industry-event/)

 

PDVSA, ROSNEFT plan natural gas joint venture

State oil company PDVSA says it has signed a raft of investment agreements with top Russian oil producer Rosneft, including a plan to create a joint venture to produce natural gas here. The venture would include the fields of Mejillones, Patao and Rio Caribe - all part of the large offshore Mariscal Sucre gas project. The "Strategic Plan for Investments" also includes development of new infrastructure to improve the existing oil joint ventures of PetroMiranda and PetroVictoria in the OPEC country's heavy crude Orinoco Belt, PDVSA said in a statement. (Reuters, http://www.reuters.com/article/2015/06/21/pdvsa-rosneft-idUSL1N0Z70H020150621; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44375&idc=4)

 

Venezuela oil price slips for 2nd week

Venezuela's weekly oil basket price slipped slightly for a second week as oil prices churned directionless in international markets on economic worries in Europe over a possible Greek default, seemingly ample supplies in the USA, and currency gyrations. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending June 19 was US$ 56.48, down 10 cents from the previous week's US$ 56.58. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390719&CategoryId=10717)

 

 

Commodities

 

VENALUM technical closing feared

Last Wednesday, nine cells went out unexpectedly at CVG Venalum which made workers fear that there could be a greater collapse that leads to its technical closing. There are only 181 cells in service out of its 905 cell park. Workers have requested a meeting with State Venalum’s chief to demand explanations on the operational situation. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44361&idc=3)

 

Production at Cervecería POLAR endangered due to lack of raw material - and could halt as early as August, affecting the 10,000 workers in the country’s four plants and the whole of the distribution network. The company’s management, accompanied by representatives from 15 of the 18 unions, demanded the government authorize the dollars to recover the imported inventory and to continue production. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44371&idc=2)

 

 

Economy & Finance

 

BOFA projects inflation here at 172.4% by the end of 2015, hyperinflation possible 

The most recent report from Bank of America shows the consumer price index here at 108.1% by the end of May, heating up to 9.6% between April and May. "Average monthly inflation for the first 5 months was 8.7% for an annual rate of 172.4%" and says this "is consistent with the typical dynamics that go with the start of hyperinflation". More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

SICAD FOREX rate weakens 6% from prior auction

Venezuela's SICAD foreign exchange rate, the middle rate of the country's three-tiered currency control system, slipped 6&% with respect to the prior auction held in October 2014. The SICAD system auctioned US$ 350 million to importers of auto parts at a rate of 12.8 bolivars per dollar, compared with 12 bolivars per dollar in the last auction. Venezuela also sells dollars at a preferential rate of 6.3 bolivars for food and medicine and at a "complementary" rate of almost 200 bolivars for less important items. The black market exchange rate has depreciated close to 62% so far this year to reach 467 bolivars per dollar as the OPEC country's currency systems fail to satiate demand for dollars amid an economic crisis. (Reuters, http://www.reuters.com/article/2015/06/22/venezuela-forex-idUSL1N0Z81OE20150622)

 

 

Politics and International Affairs

 

Maduro faces his biggest test in December 6 vote

Venezuela’s opposition is set to gain control of congress for the first time in 16 years in a Dec. 6 vote seen as the biggest test yet for the Socialist government of President Nicolas Maduro. Official campaigning to choose all 167 members of the National Assembly will take place from Nov. 13 to Dec. 3, the head of national electoral council Tibisay Lucena said in a televised speech. Opposition candidates would get 56.2% of the vote, compared to 29.8% for the ruling United Socialist Party of Venezuela currently in charge of the Assembly, according to the latest DATANALISIS survey of 1,000 people. The May 18-30 poll had a 3 percentage-point margin of error. “We will be in a situation with an already weak president weakened further by a defeat in the election,” says Barclays analyst Alejandro Arreaza, “We cannot discard a possibility of a non-constitutional exit” of Maduro, he said. A victory in the Assembly may give the opposition the confidence to begin a recall referendum next year to unseat Maduro, whose term runs out in 2019, according to Bank of America Corp.’s senior Andean economist Francisco Rodriguez. “This could very much be the beginning of Maduro leaving office,” Rodriguez said. Lucena also announced that Venezuela will ask UNASUR, the Union of South American Nations, to provide an electoral mission "to accompany us these months and the day of the election." (Bloomberg: http://www.bloomberg.com/news/articles/2015-06-22/venezuelans-to-elect-congress-december-6-amid-plunging-economy; Reuters, http://www.reuters.com/article/2015/06/22/us-venezuela-election-idUSKBN0P21ZH20150622; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390769&CategoryId=10717; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44373&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/150622/venezuelas-top-electoral-body-announces-date-of-parliament-vote)

 

Maduro threatens "if the right wins, I will be the first to take to the streets"

President Nicolás Maduro says he will be the first to take to the streets if the opposition wins the December 6th parliamentary elections. He said "if the right takes over the National Assembly, very dire things will happen, the country would destabilize amid confrontations in the streets", he threatened. More in Spanish: (Infolatam, http://www.infolatam.com/2015/06/22/el-cne-fija-para-el-6-de-diciembre-los-comicios-parlamentarios-en-venezuela/)

 

Maduro to address the National Assembly on Essequibo border dispute

President Nicolás Maduro has announced he will go before the National Assembly this Thursday to speak about defending the long standing Essequibo territorial dispute between Venezuela and Guyana, and "seek support from the entire nation against the provocation by EXXON MOBIL". Some observers believe he intends to provoke a major crisis to regain popular support. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390718&CategoryId=10717; and more in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-defendera-el-esequibo-este-jueves-en-la-an.aspx#ixzz3dsVknc2Q; AVN; http://www.avn.info.ve/contenido/presidente-maduro-expondr%C3%A1-este-jueves-defensa-del-diferendo-territorial-del-esequibo)

 

Capriles says the opposition is better placed than ever to win, López to lift hunger strike

Miranda state governor and former Presidential candidate Henrique Capriles Radonski says he opposition is better placed than ever before to win the upcoming December 6th parliamentary elections. He says that "to avoid any type of fraud" a "massive turnout is required for a decisive margin". He called on jailed leader Leopoldo López to end his ongoing hunger strike, "because the government is capable of letting you die". Venezuela’s Catholic Church also joined in asking López to put an end in the hunger strike he has staged for 29 days now. This past week, opposition leaders and his parents have unsuccessfully asked López to lift the strike. His wife Lilian Tintori has said López was willing to lift the strike if a date for the legislative elections is made public. Afer the call for elections on December 6th was announced, López' father said his son would end the hunger strike. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44364&idc=1; http://www.veneconomy.com/site/index.asp?ids=44&idt=44374&idc=1; and more in Spanish: Infolatam, http://www.infolatam.com/2015/06/20/capriles-la-oposicion-esta-en-mejores-condiciones-que-nunca-para-ganar/)

 

Court assigned to decide the case of Leopoldo López

Venezuela's Supreme Tribunal has now decided the 28th Caracas Tribunal is competent to decide whether the decision to keep opposition leader Leopoldo López is annulled. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/designan-tribunal-que-decidira-caso-leopoldo-lopez.aspx#ixzz3dsVSvbxS)

 

Opposition will present 12 demands for the elections

Opposition electoral experts are currently debating the demands the political parties should present to the Venezuelan Electoral Council (CNE) for fair elections. One of those demands will be qualified international observation missions. Most of the demands are contemplated in Venezuela’s legislation. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44365&idc=1)

 

OAS offers electoral observation on parliament vote in Venezuela

Secretary General of the Organization of American States (OAS), Luis Almagro, has expressed satisfaction with the announcement by the National Electoral Council (CNE) of the date of the parliament vote in Venezuela. He also offered electoral observation services next December 6. Almagro has previously offered OAS cooperation to facilitate dialogue between the Venezuelan government and the opposition, the call of the election within the scheduled timeframe and stability after the polls. (El Universal, http://www.eluniversal.com/nacional-y-politica/150622/oas-offers-electoral-observation-on-parliament-vote-in-venezuela)

 

Cabello thanks Raúl and Fidel Castro for support

Captain Diosdado Cabello, President of Venezuela's National Assembly, visited Cuba last weekend and thanked Cuban President Raúl Castro for supporting the government of President Nicolás Maduro. During his stay in Havana, Cabello visited Cuban leader Fidel Castro. His visit was not reported in local media in Cuba. (El Universal, http://www.eluniversal.com/nacional-y-politica/150622/venezuelan-congress-speaker-thanks-raul-and-fidel-castros-support)

 

Venezuela says Brazil senators sought to destabilize the country, Rousseff calls their visit a "shame to Brazil"

Venezuela's foreign ministry has accused a group of Brazilian senators of seeking to destabilize the country during a brief visit on Thursday and denied their safety was under threat. Brazilian opposition senators said their minibus was stoned and blocked as they attempted to drive from the coastal airport to Caracas and then to visit opposition leader Leopoldo Lopez, who is being held in a military jail. It said the senators' complaints that the government tried to prevent landing permission for their plane, blocked the highway leading to Caracas and allowed demonstrators to threaten their physical safety were "three great lies". Brazil's Foreign Ministry condemned the incident and said it would go through diplomatic channels to seek an explanation. Brazilian President Dilma Rousseff, however, said "the senators intention of visiting jailed opponents placed the government in a trap and is a shame to Brazil, that is interfernce in Venezuela's internal affairs". (Business Insider: http://www.businessinsider.com/r-venezuela-says-brazil-senators-sought-to-destabilize-the-country-2015-6#ixzz3dqqMlkgY; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politica/rousseff--visita-de-senadores-a-venezuela-fue-una-.aspx#ixzz3dmkUocmQ)

 

Colombia to keep maritime boundary dispute with Venezuela on diplomatic level

Colombian Foreign Minister Maria Angela Holguin says her government will keep its dispute with Venezuela over a decree by Caracas asserting control over a section of Caribbean waters that Bogota also claims on the “bilateral” and “diplomatic” level, adding that it is expecting a quick response from the neighboring country. “We’re convinced that these differences with countries must remain bilateral. We’re going to keep (it on the) diplomatic level,” says Holguin. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390810&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=2390740&CategoryId=10717)

 

The Washington Post: Easing Venezuela’s crash

Why would Thomas Shannon, a senior counselor to Secretary of State John F. Kerry, have met and then posed for photographs on June 13 with Cabello, who according to numerous news reports has been targeted by prosecutors in New York and Miami for allegedly leading a cartel that has shipped hundreds of tons of cocaine to the United States? One version is that the meeting was part of what has become an increasingly urgent attempt by the administration to broker a soft landing for a collapsing state. Another is that the threat that Leopoldo López could soon die in prison that prompted the decision to have Shannon meet with Cabello. Sources say Shannon told Cabello the continuance of the dialogue between the two governments depended on López remaining alive and being convinced to end his hunger strike. The longer term U.S. aim is to persuade Maduro and Cabello to hold a fair legislative election, with monitoring by international observers. Since the opposition would be likely to win a fair vote that could provide a democratic way out of a crisis that otherwise could end in revolution or mass bloodshed. But the Obama administration has little leverage. The U.S. sanctions imposed on Venezuelan officials for involvement in human rights abuses as well as drug trafficking were mandated by congressional legislation and won’t be revoked without Capitol Hill’s support. The U.S. criminal investigation of Cabello, too, is unstoppable. (The Washington Post, http://www.washingtonpost.com/opinions/easing-venezuelas-crash/2015/06/21/e402b9bc-15dd-11e5-9518-f9e0a8959f32_story.html)

 

STRATFOR: In Venezuela, elections are the lesser of two evils

Venezuela has committed itself to holding elections, but political uncertainty will grow in the coming months as the country's long-running crisis progresses. As the Venezuelan political structures and order created during Hugo Chavez's 13-year rule begin to unravel under the stress of a major economic crisis, the institutions and individuals held together in that system are now trying to secure their stakes in the future Venezuela. National Assembly speaker Diosdado Cabello stands to lose immunity if the opposition sweeps the December elections and has joined Maduro in reaching out to the United States on the modest goal of appointing ambassadors, and will likely remain involved in this outreach to reduce his personal risk. Havana still has an interest in Caracas' continued energy assistance, and the Cuban links to Venezuela's armed forces and specific factions of the government likely will keep this energy relationship in place for now. Cabello´s recent visit to Cuba is likely a sign that even one of the most powerful men in Venezuela must still take Cuban interests into account when making foreign policy decisions. Maduro has overseen the most significant deterioration of Venezuela's economy in more than a generation. Staying in negotiations with the United States thus could help Maduro overcome resistance from within the ruling party against economic and political reforms because drug trafficking indictments may force Cabello and other Venezuelan officials into not openly opposing such policies. But Venezuela's economic unraveling is an unsolved problem, and nobody has a quick solution. Sharp economic change is almost a necessity at this point. Doing nothing only risks exacerbating the problems and will multiply the future threats to the government. Negotiations with the United States could intensify in the coming months and probably will involve concessions, possibly including the formation of a unity government with the Venezuelan opposition and financial assistance for Caracas. However, with government figures increasingly trying to secure their own stakes and segments of the political opposition trying to foment a political solution through street protests, Venezuela faces a difficult path to stability. (Stratfor, https://www.stratfor.com/sample/geopolitical-diary/venezuela-elections-are-lesser-two-evils)

 

 

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.

June 19, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• Over 36,000 tons in 2 containers bearing electric connections, from China
• 1,800 tons of autoparts from China for state agencies Empresa Mixta Social de Vehículos, Fontur and Vialidad y Construcciones Sucre.
• Chemical products and bicycles have also arrived.

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Autopartes-provenientes-de-China-arribaron-al-puerto-de-Puerto-Cabello-/2015/06/17/531521)

 

Beef Imports from Brazil dropped 49.18%, according to that country’s Foreign Trade Secretary’s latest report which confirms Brazil sold Venezuela 32,228 tons of beef between January and May this year. Venezuelan beef producers have reported the drop of imports have been significant this year, logically impacting supplies and local prices. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44330&idc=3)

 

 

Logistics & Transport

 

ALITALIA is ending service to Caracas

Italy's ALITALIA airline has again cancelled flights to Caracas due to pending government debt of US$ 250 million for FOREX operations. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/alitalia-suspende-sus-vuelos-a-caracas.aspx#ixzz3dJUDrq80; El Nacional; http://www.el-nacional.com/)

 

 

Oil & Energy

 

Tribunal denies Venezuela review request of US$ 1.6 billion EXXON award

A World Bank arbitration tribunal has rejected Venezuela's request to review an order to pay EXXON MOBIL Corp US$ 1.6 billion in compensation for nationalizations. "The Application for Revision is dismissed as inadmissible," the International Center for Settlement of Investment Disputes said on its web site in announcing its June 12 decision. "The stay of enforcement is hereby automatically terminated."  Venezuela had been arguing that a previous decision by the Paris-based International Chamber of Commerce awarding $908 million to Exxon should be deducted from the ICSID award. (Reuters, http://www.reuters.com/article/2015/06/18/us-venezuela-exxon-mobil-idUSKBN0OY1Y720150618; El Universal, http://www.eluniversal.com/economia/150618/icsid-denies-venezuela-review-of-exxon-award-urges-it-to-pay)

 

Venezuela and EXXON Sell Chalmette Refinery to PBF for US$ 322 million

PBF Energy will purchase 100% of Chalmette Refining, LLC, which is a joint venture between affiliates of Venezuela state oil company PDVSA and EXXONMOBIL. According to EXXONMOBIL, the agreement includes the Chalmette refinery and chemical production facilities near New Orleans, Louisiana and the company’s 100% interests in MOEM Pipeline, LLC and 80% interest in each of Collins Pipeline Company and T&M Terminal Company. EXXONMOBIL operates Chalmette Refining, LLC and MOBIL Pipeline Company, an EXXONMOBIL affiliate, operates the logistics infrastructure.

PBF Energy Inc. confirmed that its subsidiary had signed a definitive agreement to purchase Chalmette Refining, LLC, consisting of the 189,000 barrel per day Chalmette Refinery and related logistics assets, from EXXONMOBIL and PDV Chalmette, LLC. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390605&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/150618/pdvsa-resolves-joint-sale-of-chalmette-refinery)

 

PDVSA official says Venezuela to get US$ 5 billion in funding from China in next few months

Orlando Chacin, vice president of exploration and production at PDVSA, says Venezuela will receive a loan of US$ 5 billion from China in the coming months for crude oil projects. "It is being discussed right now and will come within a few months," he claims. (Reuters, http://www.reuters.com/article/2015/06/17/us-venezuela-china-loan-idUSKBN0OX01O20150617)

 

Russia's ROSNEFT reportedly negotiating US$ 5 billion loan to PDVSA

An unidentified source says PDVSA and ROSNEFT are negotiating a deal that could see the Russian oil major lend its local counterpart US$ 5 billion dollars. In return, the source says ROSNEFT wants to increase participation in the PETROMONAGAS joint venture, invest in and export gas instead of selling it at a major discount on the price-controlled local market, gain more control of operations and oil sales, and increase security at operations. (Reuters, http://www.reuters.com/article/2015/06/17/venezuela-pdvsa-rosneft-idUSL1N0V000H20150617)

 

Venezuela oil minister sees price rise by end of year

Venezuela's Oil Minister Asdrubal Chavez has predicted that crude prices will rise by the end of the year, and called for continued cooperation between OPEC and non-OPEC producers. "We think the market is going to balance towards the end of the year, and we will see a recovery of prices," Chavez told an oil conference in Maracaibo, without offering details. (Reuters, http://www.reuters.com/article/2015/06/16/us-venezuela-oil-idUSKBN0OW26720150616)

 

 

Commodities

 

Beer industry to run out of inventories in early August

Omaira Sayago, Executive Director of the Beer Manufacturers Chamber, reports the industry is at its most critical stage in 170 years. Debt to foreign suppliers is now US$ 217 million, which leads to no more credit, and inventories will run out in early August. There are 8 beer plants in Venezuela, 171 distribution centers, and the industry employs some 112,000 direct and indirect people to produce 2 billion liters of beer per year. More in Spanish: (El Universal, http://www.eluniversal.com/economia/150619/industria-cervecera-enfrenta-falta-de-insumos; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/industria-cervecera-solicita-reunion-con-el-ejecut.aspx; El Nacional; http://www.el-nacional.com/)

 

Industrias Diana is at the brink of stopping operations because of the lack of raw soy, the main ingredient in the making of different industrial and commercial use products. Also, there is palm oil, which once refined is supplied to detergent makers, for only eight more weeks. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44331&idc=3)

 

 

Economy & Finance

 

The sudden plunge in Venezuelan FOREX reserves alarms creditors

Bond investors in Venezuela are getting that sinking feeling again. The country’s notes have plummeted 13% percent in the past month as a collapse in the government’s foreign reserves rekindles concern that Venezuela is running out of money. In the past three months alone, the nation has burned through almost a quarter of its known cash hoard, leaving it at a 12-year low of US$ 16.4 billion. And while Bank of America Corp. and Goldman Sachs Group Inc. say Venezuela may have more money squirreled away in off-budget funds to avoid a default in the short term, many bond investors aren’t waiting to find out. “It’s pretty damn scary,” Edwin Gutierrez, the head of emerging-market sovereign debt at Aberdeen Asset Management Plc, said from London. “The writing is increasingly on the wall for these guys. They can muddle through this year but the challenges for 2016 will be just as great.” (Bloomberg, http://www.bloomberg.com/news/articles/2015-06-17/the-sudden-plunge-in-venezuela-dollar-reserves-alarms-creditors)

 

Venezuela at risk of a solvency surprise, Loomis’s Rolley says

Venezuela may see a forced restructuring of its domestic debt, potentially in the next year or so, says David Rolley, co-head of global fixed income at Loomis Sayles.  He adds that “I think that there is a non-trivial risk of a solvency surprise.” Historically when domestic inflation accelerates past 100 percent, it results in a forced domestic debt restructuring, after which external debt often is at risk too, Rolley said. At Bank of America, Alberto Ades, co-head of global economics research, said in April it could be close to 200%. Soaring inflation “suggests that the government is using the inflation tax to fund itself,” Rolley said. “If that’s the case, then you’re talking about structural budget problems that probably can’t be handled in a very simple way with modest tax hikes and spending cuts. That implies a real risk to debt service.” He also sees the Venezuelan bolivar as one of the main currency risks in the region. (Bloomberg, http://www.bloomberg.com/news/articles/2015-06-17/venezuela-at-risk-of-a-solvency-surprise-loomis-s-rolley-says)

 

Venezuela oil loans go awry for China

As Venezuela’s economy totters thanks to low oil prices and years of mismanagement, a Chinese government-owned bank is badly on the hook. China Development Bank has lent nearly US$ 37 billion to Venezuela since 2008, becoming one of the nation’s biggest creditors. CDB’s plan was simple. In return for its largess, Venezuela would send China millions of barrels of crude each year. The strategy has gone awry. In recent months, CDB has extended loan maturities and eased repayment terms, allowing the country to send it less oil than agreed and to pay bolivars instead of hard currency into a mutual-development fund intended to finance projects there. China has had to accept lower returns. CDB agreed last October to scrap the minimum daily oil delivery, so that Venezuela could sell more barrels for cash elsewhere. Despite its torrent of lending, China’s crude-oil imports from Venezuela dropped 11% in 2014 as a whole, remaining more or less flat year on year so far in 2015, according to Chinese customs data. China imported 296,000 barrels a day of oil from Venezuela in April. The Caracas government said in January that China pledged US$ 20 billion in new investment in housing and infrastructure, mainly via CDB. Neither the bank nor Chinese government officials have confirmed that transaction. CDB didn’t respond to requests for comment. (The Wall Street Journal, http://www.wsj.com/articles/venezuela-oil-loans-go-awry-for-china-1434656360)

 

Palma warns of inflation over 140% here, possible hyperinflation

Pedro Palma, former head of the National Academy of Economics, says Venezuela "has the highest inflation worldwide," with official figures showing inflation rates over 130%-140%. Moreover, due to distortions in Venezuelan economy, the expert forecasts that inflation could hit approximately 200%, which could result in a "hyperinflation process." (El Universal, http://www.eluniversal.com/economia/150617/economist-pedro-palma-warns-against-inflation-over-140-in-venezuela)

 

Gold reserves down US$ 2.02 billion in one year

Venezuela's international gold reserves were US$ 13.09 billion at the close of March 2015, a drop of US$ 2.02 billion in one year, according to the Central Bank. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Reservas-cayeron-millardos-dolares-ano_0_648535357.html)

 

Public payroll has grown 99.5% over 15 years

Venezuela's government payroll grew 99.5% during the "chavista" regime, between 1999 and 2014. It now stands at 2,527,771 workers, which is 49% of all formal employment in the nation. Productivity in the government sector, however, has only increased by 1.1%. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Venezuela fights enforcement of Gold Reserve's US$ 740 million award in USA

Gold Reserve Inc. has reported on collection efforts of the US$ 740 million award it won at the World Bank's International Center for the Settlement of Investment Disputes against Venezuela.

The Company has filed a Petition to confirm the Award with the US District Court for the District of Columbia; and on April 15, 2015, after various attempts to avoid service, Venezuela agreed to accept service and file a response by June 12, 2015. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390594&CategoryId=10717)

 

ICSID finds in favor of Venezuela over fertilizers case

The International Center for Settlement of Investment Disputes (ICSID) has rejected the claim trading company Gambrinus Corporation (Barbados) filed with that body against the Venezuelan government following the nationalization of a fertilizers company in which Venezuelan food giant Polar had a minor stake, state-run company.
The ICSID declared that it lacked jurisdiction to proceed in the case, opened in 2011. The company sought damages in the amount of US$ 150,404,359 plus interests, for the alleged expropriation of companies ordered on October 10, 2010. (El Universal, http://www.eluniversal.com/economia/150618/icsid-finds-in-favor-of-venezuela-over-fertilizers-case)

 

 

Politics and International Affairs

 

STRATFOR: Why U.S. Diplomats Are Reaching Out to Venezuela

Recent discussions between Venezuelan and U.S. officials suggest that tentative negotiations between the two countries are taking shape. U.S. State Department Counselor Thomas Shannon has met with Venezuelan officials on three occasions — twice with Venezuelan President Nicolas Maduro in Caracas and once with National Assembly Speaker Diosdado Cabello in Port au Prince, Haiti. The information available about the meetings suggests that both sides may still be feeling out potential concessions rather than making substantive decisions. Shannon's discussion in Haiti reportedly dealt with whether the United States would repeal an executive order imposing sanctions on seven Venezuelan officials allegedly involved in human rights violations. Dozens of Venezuelan officials, including Cabello, face criminal investigations in a U.S. federal district court for allegedly facilitating cocaine trafficking to the United States, a fact U.S. negotiators could leverage. In the meeting, Shannon also reportedly asked for Venezuela to set a date for legislative elections and reiterated long-standing U.S. demands to release political prisoners. Both Caracas and Washington have incentives to approach these negotiations seriously. Cabello likely wants to secure amnesty from a potential indictment for cocaine trafficking to the United States. Simultaneously, Venezuela's worsening economic crisis has motivated the United States to negotiate with Venezuelan officials to facilitate a smoother political and economic transition rather than to watch its disorganized economy collapse. But to enact the sweeping reforms Venezuela needs to mend its economic distortions, resistance from the military and other elite, such as Cabello, needs to be neutralized or negotiated away. Here the United States may exercise policies, whether in the form of further sanctions or continued criminal investigations, to induce Venezuelan officials to accept U.S. demands. (Stratfor, https://www.stratfor.com/sample/analysis/why-us-diplomats-are-reaching-out-venezuela)

 

Brazilian senators flee after "chavista" attack in Venezuela

A group of eight Brazilian senators on a visit to Venezuela to meet a jailed opposition leader had to flee after their bus was attacked. Former presidential candidate Aecio Neves was part of the delegation. The Brazilian opposition politicians were trying to meet Leopoldo Lopez, who is in jail accused of inciting violence during protests. The group's bus was stoned as it travelled from Caracas airport, a few hours after the senators landed in Caracas airport. One of the senators, Ronaldo Caiado, tweeted: "Our bus was under siege; they were beating and trying to break it. I filmed them throwing stones against the bus." Former presidential candidate Aecio Neves, said: "We are here to defend democracy and until now the Venezuelan government has shown little appreciation of it." The group returned to the airport, waiting to go back to Brazil. The Brazilian foreign ministry said hostile acts against its politicians were unacceptable and promised to seek an explanation from Venezuela. (BBC News, http://www.bbc.com/news/world-latin-america-33195332; Reuters, http://www.reuters.com/article/2015/06/18/us-venezuela-brazil-senators-idUSKBN0OY2SD20150618; Bloomberg, http://www.bloomberg.com/news/articles/2015-06-18/brazil-s-neves-slams-venezuelan-aggression-after-failed-visit; El Universal, http://www.eluniversal.com/nacional-y-politica/150618/brazilian-senators-delegation-attacked-and-blocked-in-caracas)

 

Spanish senior official to visit Venezuela, Venezuelan FM blasts visit as "rash"

Spain’s top diplomat for Latin America will travel next week to Venezuela amid tensions in the bilateral relationship, according to Spanish Foreign Minister Jose Manuel Garcia-Margallo. Jesus Gracia, secretary of state for International Cooperation and Ibero-America, “probably will be in Venezuela next week after the talks I have had on this tour and the ongoing conversations we’re having with other countries also having interests in the stabilization of Venezuela,” the minister said following a meeting with Brazilian counterpart Mauro Vieira. But Venezuela's Minister of Foreign Affairs Delcy Rodríguez retorted that her government was "taken by surprise" by the reported visit. According to her, the visit was not consulted. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390567&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/150618/garcia-margallo-spain-notified-of-gracias-stopover-in-caracas; http://www.eluniversal.com/nacional-y-politica/150618/venezuelan-fm-blasts-rash-visit-of-spanish-government-official)

 

Leopoldo López’ health critical after 25 days of his hunger strike

López would have begun showing vision trouble and his urine would be blood red, a possible indication his kidney has begun shutting down. However, López is determined to continue with his strike until his demands are met: Setting the date for the legislative elections and the release of all political prisoners. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44335&idc=1)

 

Sanctioned officials are now suing Capriles

Miranda state governor Henrique Capriles Radonski has been subpoenaed in a suit brought against him by high officials sanctions by the US, for having "re-twitted" messages related to charges against them. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/funcionarios-venezolanos-sanciondos-por-eeuu-deman.aspx#ixzz3dJULBkU9

 

DATANALISIS poll shows 68.8% of all Venezuelans disapprove of Maduro administration

Support for President Nicolás Maduro was down to 25.8% in May, according to a recent poll by DATANALISIS, which also shows 8 out of 10 Venezuelans say the situation is negative and 68.8% disapprove of Maduro's regime. Leopoldo López is the opposition leader with the highest support, at 40.1%, followed by former Presidential candidate Henrique Capriles with 37.5%. (Diario 2001, http://www.2001.com.ve/en-la-agenda/100859/datanalisis--el-68-8--de-los-venezolanos-desaprueba-la-gestion-de-maduro.html)

 

 

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.