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.

Tuesday, February 27, 2018

February 27, 2018

Oil & Energy

PDVSA makes unusual offer of 4 cargoes of heavy crude for sale in Euros in March

Venezuela’s state-run oil company PDVSA has launched tenders to sell on the open market up to four cargoes of heavy crude for March delivery at its Jose and Puerto Miranda terminals, according to document seen by Reuters on Monday. The offers, which are unusual as PDVSA typically sells all its exports through long-term supply contracts, include two 600,000-barrel cargoes of Morichal 16 crude and two 200,000-barrel cargoes of Tia Juana Pesado (TJP) crude.  The Morichal 16 crude is for delivery March 1-23, and the TJP crude will be loaded on March 21-30. Payment must be made in euros three days before the loading window, according to the tender’s terms. The TJP crude must be exported to the U.S. West, East or Gulf Coasts, Northwest Europe or the Mediterranean. The Morichal crude can also be exported to Asia. Bids will be accepted through Feb. 27, indexed to Brent crude front month prices. PDVSA earlier this month offered to sell 2 million barrels of diluted crude oil (DCO), also for March delivery.  (Reuters:


U.S. ban on key oil material could further choke Venezuelan production

The outlook for declining oil production in Venezuela may get grimmer if the U.S. bans supply of a key commodity used to help Venezuelan crude flow from oilfields to the coast. Production in the Orinoco oil belt, which accounts for half of the country’s output, depends on heavy naphtha imported from the U.S. to reach global markets. Naphtha is used as a diluent to reduce the viscosity of Venezuela’s tar-like extra-heavy oil, and help it flow through 62 miles of pipelines to the nation’s coast, where it can be either upgraded or exported. The U.S. has already imposed sanctions on more than a dozen top Venezuelan officials and now may target oil trades. Venezuela imports about 2 million barrels of heavy naphtha per month, and all of it comes from U.S. Gulf refiners, according to data compiled by Bloomberg. Oil production in the Orinoco oil belt, responsible for half of Venezuela’s crude oil production of currently around 1.6 million bpd, depends on the imports of this heavy naphtha from the U.S., which is blended with the thick tar-like extra-heavy oil to allow it to flow through pipelines from Orinoco to Venezuela’s coasts for loading onto tankers. According to analysts, while a U.S. ban on Venezuelan oil imports could hurt U.S. refiners, restrictions on U.S. oil product exports to Venezuela could push Venezuela’s oil production off the cliff. In case of restrictions on U.S. exports to Venezuela, this country would have to either pay more for naphtha from other sources or see its oil production fall more steeply than predicted. (Bloomberg,; Oil Price:


The Venezuelan oil industry is on a cliff’s edge. Trump could tip it over.

The Trump administration is threatening to embargo Venezuelan oil, a potentially ruinous blow to the Saudi Arabia of South America. But here in the home of the world's largest crude reserves, Venezuela is killing its largest industry all on its own. Speculators once joked that all it took to strike oil on the vast plains of eastern Venezuela was a guy with a shovel. These days, the socialist government cannot seem to make the industry work. This vast extraction site near the eastern town of Punta de Mata, which once churned out 400,000 barrels of oil a day, is a tableau of hungry, idle workers and broken rigs. The site about 280 miles east of Caracas, the capital, has been partly paralyzed since last summer. Of its 30 drills, only six work, in large part because of a lack of maintenance and spare parts. With time on their hands, many oil workers are functioning as security guards. And with good reason. The crude-heavy countryside is a lawless, bandit-ridden land. Three hours south of this industrial town, a gang of thieves recently raided another drilling site run by PDVSA, the state-owned oil giant. They tied up work crews and stole their cellphones before swiping air conditioners and kitchen appliances from company trailers. In Venezuela, corruption, a lack of investment and a flight of expertise in the all-important oil sector have finally come to a head.  Last month, according to a report from the Organization of the Petroleum Exporting Countries, Venezuela's plummeting oil production hit a three-decade low of 1.6 million barrels a day, a 20% drop from January 2017 and less than half of what it was in the 1990s. The state oil company is run by Manuel Quevedo, a military general with no industry experience, after a purge last fall of executives seen as not wholly loyal to President Nicolás Maduro. Oil revenue accounts for 90% of the government's hard currency. About 40% of Venezuela's production goes to China and Russia to repay loans or is gifted to chief ally Cuba.  That has made Venezuela's nemesis — the United States — its single-largest cash buyer.  PDVSA is so broke that creditors have been seizing shipments of Venezuelan oil off the coast of Curacao and other Caribbean islands. Should the U.S. government cut off Venezuela, that action could bring the country closer to a large-scale debt default that could turn the nation into an economic pariah. With less to lose, experts say, Maduro could potentially kick out the Western oil companies that still do business here, seizing their assets. For now, PDVSA is on its knees. Guillermo Morillo, a former PDVSA manager who is working on a recovery plan for the company, said it would take as much as US$ 100 billion in investment to bring production back to 2009 levels. (The Washington Post:


Congressman says US investors aim to take control of CITGO from ROSNEFT

National Assembly opposition representative José Guerra says a group of US investors are seeking to take control over ROSNEFT’s 49% share in CITGO, to avoid Russia’s state-owned company from entering the US market in the event of a full default by PDVSA. He claims this is extremely serious to the interest of the Venezuelan oil industry. (NTN24:


Maduro claims Venezuela will recover 70% of oil output decline

President Nicolas Maduro has promised Venezuela will recover 70% of the country’s lost oil production in the first half of 2018. Venezuela’s oil production dropped by nearly 13% last year according to figures released by OPEC in January, hitting a 28-year low that suggested a deepening economic crisis and increased chances of a debt default.

Venezuela produced 2.072 million barrels per day (bpd) in 2017 compared with 2.373 million bpd the previous year, registering a near 300,000 bpd drop. (Reuters,


Economy & Finance

Reports show only 5 buyers for the “Petro”, while Maduro claims 171015 certified offers received

According to reports on the ETHERSCAN web page, only five buyers have acquired Venezuelan “Petros” as US$ 100 million in transactions took place since the new cryptocurrency was launched by the Maduro regime. ETHERSCAN shows only two users bought 99,9995% of the total amount. A third buyer bought 0,0005% in Petros, and the two remaining buyers bought minimal amounts.  Yet in a speech Monday, President Nicolás Maduro claimed the Petro has received 171015 certified purchase orders since it was launched on February 20th.  He says the offers came from 87284 users, including 3523 from companies around the world and the rest from individuals. More in Spanish: (AVN,; Venepress;


Venezuela may limit new crypto exchange launches

Venezuela's government may move to restrict the number of cryptocurrency exchanges that will be able to operate domestically. According to a ten-page manual published last week as part of a set of releases related to the country's newly-launched cryptocurrency, the Petro, as few as eight exchanges may be initially approved to operate in the market. The document, released on Feb. 20, details the requirements by which local crypto exchanges must operate. It suggests that the cap will exist at the outset, under the auspices of Venezuela's cryptocurrency superintendent, before going on to say that the government may modify the limit after the first 90 days of the exchanges' operations. Sources with knowledge of the ongoing process in Venezuela say that the cap may be more restrictive in practice. It remains to be seen how many exchanges launch in Venezuela within its newly minted regulatory framework. Likewise, it's not clear which exchanges are in active talks with the Maduro government. (Coindesk:


Venezuela and Russia may be collaborating on cryptocurrency

Venezuelan and Russian government officials met last week in Moscow to discuss the launch of Venezuela's new petro cryptocurrency. The terms of the meeting remain unclear, but it seems that Russian officials have taken an interest in Venezuela's state-backed digital currency. What are the implications for a potential collaboration? And what might that collaboration even look like? It remains unclear exactly what role, if any, Russia's government will play in the development or proliferation of the petro. A Russian company called Aerotrading has already been linked with the petro cryptocurrency projectWhether or not the international community accepts the petro remains to be seen. (Investopedia:


Poland refutes reports of its interest in Venezuela’s oil-backed cryptocurrency

Poland’s Ministry of Finance has refuted reports that it is interested in the petro, the Venezuelan ”oil-backed” currency. Earlier this month, Venezuela reportedly claimed that a handful of countries have expressed interest in receiving the petro for commerce with Venezuela such as Norway, Denmark, Brazil, Vietnam, Poland, and others. Polish publication Gazeta “asked the [Polish] Ministry of Finance if this was true and what value it would have to have [for] such a transaction and when it could be carried out,” the publication wrote. The finance ministry replied: “The Ministry of Finance did not receive any letter in this matter…Cryptocurrencies are not issued or guaranteed by the central bank or other state institutions. Therefore, they are not legal tender or currency, they cannot be used to pay tax liabilities and are not widely accepted at commercial and service outlets.” The Polish Ministry of Foreign Affairs also answered the news outlet’s questions about the country’s possible support of Venezuela’s cryptocurrency. “According to the knowledge of the Ministry of Foreign Affairs, Poland did not report interest in transactions with the use of petro cryptocurrency,” the foreign ministry clarified. The Venezuelan government claimed last week that it has raised more than $1 billion from the petro’s pre-sale in just two days, although some doubt that Venezuela has raised money at all with its new currency. (Bitcoin:


US Senator calls for crackdown on Venezuela’s Petro

Insisting that Venezuela's new oil-backed cryptocurrency is an extension of credit to the regime of President Nicolás Maduro, US Senator Robert Menéndez has urged Washington to take further action against the Petro. The Democrat brought up the subject during a Senate hearing held by the Committee on Banking, Housing and Urban Affairs. During that hearing, Commodity Futures Trading Commission chairman J. Christopher Giancarlo said his agency "would watch carefully" for signs that Venezuela may be using the Petro to circumvent sanctions against Maduro’s government. Menendez’ attack on the Petro came after its launch last Tuesday. In January, Democrat Menendez and his Republican colleague Marco Rubio wrote a letter to US Treasury Secretary Steven Mnuchin expressing their disapproval of the Petro. The two senators told Mnuchin: "We are concerned that a cryptocurrency could provide Maduro a mechanism by which to make payments to foreign lenders and bondholders in the United States, actions that would clearly thwart the intent of US imposed sanctions.” For its part, the Treasury Department has warned all investors and citizens in the US against investing in the Petro for otherwise they will face sanctions themselves. (Cryptovest:


OP-ED: The blockchain won't save Venezuela

The promise of cryptocurrency was supposed to be trustless decentralization: You trust the thing because of objective certainties embedded in its open-source code, not because some authority tells you to. Meanwhile the petro is just the opposite. For one thing, you can't trust the code; in fact Venezuela's government can't even get its story straight on what sort of code it is: Investors will have to overlook confusion about how the currency will operate. The white paper says the Petro is built on the Ethereum network, while the user guides the government published says it’s on the Nem network. Also, this cryptocurrency is supposed to "promote well-being, bringing power closer to the people" but you can't buy it with Venezuelan bolivars. The reasons for this are obvious: The petro is not a currency, crypto or otherwise, but a way to raise hard currency externally now that Venezuela is cut off by sanctions from accessing the international debt markets. So, the petro is just a way to hide new international debt behind a thin screen of blockchain. (Bloomberg,


Politics and International Affairs

White House debates new punishments for Venezuela as April elections approach

The White House has put a possible oil embargo against Venezuela back on the table as Trump administration insiders debate how to respond to Venezuela's planned April elections, already dubbed by Washington as “illegitimate.” The White House, National Security Council, State Department, and Treasury Department among other agencies are studying and talking with advisers about a range of options to help drive President Nicolas Maduro from office. That includes a full embargo, prohibiting any Venezuelan oil being sold in the United States, or blocking sale of oil related products to Venezuela, according to U.S. administration officials and advisers. The administration is also considering sanctions against Diosdado Cabello, who is seen as Venezuela's second most powerful leader and head of the ruling socialist party, noting that Canada has already sanctioned the former military chief for human rights violations. “The message is we will continue to ratchet up the pressure until the Maduro regime is removed and democracy is returned to Venezuela,” a senior administration official told McClatchy. Trump has an “escalatory road map” that aides have drawn up that outlines the available economic and individual sanctions meant to strangle Venezuela’s economy. But Trump, so far, has stopped short of applying the so-called “nuclear option” – oil sanctions – that could starve the oil-dependent Caracas government of desperately needed cash during a spiraling economic and humanitarian crisis. Trump has taken a personal interest in this crisis and is “understandably impatient” for greater progress in Venezuela. (McClatchy:; Latin American Herald Tribune,;


European Union threatens Maduro regime with added sanctions

The European Union has threatened the Maduro regime with additional sanctions if it does not guarantee transparent presidential elections on April 22nd. After meeting with the group’s foreign ministers, EU Foreign Affairs Commissioner Federica Mogherini said all political parties should be able to participate and have equal access to media, she also called for a reform of the pro-regime National Elections Council (CNE) that allows it to be recognized by all political parties. More in Spanish: (El Universal,


OAS calls on Venezuela to cancel snap presidential election

The Organization of American States (OAS) urged Venezuela to cancel the April 22 presidential election, citing a lack of transparency in the polls. In a resolution, a majority of OAS members pressed the Venezuelan government to carry out elections through a "fair, transparent, legitimate and credible" process, in which all political parties and candidates could participate. Samuel Moncada, Venezuela's ambassador to the OAS, rejected the resolution as soon as it was approved by the delegates. Moncada accused the OAS of trying to "strangle Venezuelan democracy," saying that the US had pressured members states to pass the resolution. The CNE opened up the process for candidate subscriptions on Saturday. So far, only a handful of potential candidates, mostly political outsiders, have announced campaigns against Maduro: businessman Luis Alejandro Ratti, the evangelical pastor Javier Bertucci and businessman Leocenis Garcia. Venezuela's main opposition alliance, the Democratic Unity Roundtable (MUD), announced earlier this week that it would boycott the election, although one of its high-profile members, Henri Falcon, has indicated his intention to run. (DW:


Venezuelan opposition allegedly makes renewed push to delay presidential vote

Venezuela’s opposition has renewed private talks with the government in a bid to push back the date of the country’s presidential elections as President Nicolas Maduro’s administration seeks some legitimacy for the vote, according to people familiar with the matter. Two-time presidential candidate Henrique Capriles, former Governor Henri Falcon and lawmakers from two of Venezuela’s largest opposition parties have participated in the talks that began in Caracas, after the Democratic Unity Roundtable, or MUD, announced it would shun snap elections to protest an electoral system that is rigged to favor the ruling socialist party. Information Minister Jorge Rodriguez and head of National Constituent Assembly Delcy Rodriguez are said to have been among representatives from the government, two of the people said. The latest discussions center on setting a date later than April 22 for presidential elections, changing the leadership of the country’s electoral authority and allowing the presence of international observers, according to three sources with knowledge of the discussions, who aren’t authorized to speak publicly about the private meetings. Earlier talks in the Dominican Republic failed to culminate in an accord which prompted the pro-government electoral council to set the general election date much earlier than the opposition had wanted. Retired Captain Diosdado Cabello, Vice-president of the regime’s United Socialist Party, has insisted that the elections will not be postponed, (Bloomberg:; and more in Spanish: (El Universal,;


Electoral Council won’t combine presidential, legislative elections

The president of Venezuela’s National Electoral Council (CNE), Tibisay Lucena, has dismissed the idea of holding legislative elections on the same day as the presidential election scheduled for April 22, as the ruling party has proposed.  The CNE will decide on a later date for the legislative and municipal elections. We’re not prepared at this time to hold joint elections,” Lucena said. She made that statement during a joint press conference together with the head of the ruling party’s National Constituent Assembly (ANC), Delcy Rodriguez. (Latin American Herald Tribune,


OP-ED: Venezuela's meaningless election

Venezuela will hold a presidential election on April 22. The winner has already been determined.

Last week, a coalition of opposition parties in Venezuela announced that they wouldn’t field a candidate to run against President Nicolas Maduro. It’s awfully hard to win an election when you don’t run. Opposition leaders declined to participate in protest of what they call unfair election conditions. Key figures are either imprisoned or banned from running for public office. And Venezuela’s opposition alliance, the Democratic Unity coalition, has been barred from fielding a coalition candidate, although its 20 individual parties are still free to do so. A few candidates have expressed interest. Perhaps most importantly, Maduro’s socialist allies control the country’s election commission, giving him free rein to manipulate the results. Impartial international observers will not likely be permitted to monitor the vote.  In other words, opposition leaders are right that the election isn’t fair. Not even close. Over the past year, Maduro has consolidated control over both the Constitutional Court and the National Assembly, giving him power over all three branches of government. He is Latin America’s newest dictator. And he will remain in power unless viable candidates are allowed to challenge him in a fair election. Since that doesn’t appear to be a possibility for the April 22 contest, the United States and its allies in the Western Hemisphere must vocally oppose that fraudulent election. The results must not be considered valid. Until free elections are held, Mr. Maduro must not be considered the legitimate president of Venezuela. (The Post and Courier:


Uruguay’s Foreign Minister says there are no guarantees for Venezuelan elections

Uruguay’s Foreign Minister, Rodolfo Nin Novoa, says conditions are not adequate for holding presidential elections in Venezuela: “Would Uruguay enter elections with jailed political leaders and a judiciary that takes orders from the Executive branch? Would it go into elections with banned political parties? I don’t think so. And what we don’t want for ourselves we don’t want for others. This is a call, not a demand that rests in Venezuelan hands”, he said – and rejected any call for military intervention in Venezuela. More in Spanish: (Noticiero Venevisión,; El Universal,


US welcomes military role in improving situation in Venezuela

In a recent interview, Todd Robinson, US Charge d’affaires in Venezuela, responded to a question on whether Venezuela’s Armed Forces should take a position on the current crisis, saying: “I would say we cannot afford the luxury of disqualifying any sector from a negotiation for a better Venezuela. The military holds a lot of influence over the nation’s future and if they can help we are not going to say no.”  Earlier, US Secretary of State Rex Tillerson says the Venezuelan military could become “agents for change”. Robinson added “I believe the Secretary of State is saying that if they can play a positive role in opening up politics, to create a more trustworthy environment to improve conditions, they are welcome”. More in Spanish: (Noticiero Venevisión,


Arreaza tells UN there is no humanitarian crisis in Venezuela

Maduro’s Foreign Minister Jorge Arreaza has told the UN Human Rights Council in Geneva that there is no humanitarian crisis in Venezuela, saying: “They are trying to make the world believe there is a humanitarian crisis in Venezuela, an old trick of the United States. It is indispensable to the United States to revoke Venezuela’s democratic government to take over our mineral resources”, he said. More in Spanish: (Noticiero Venevisión,; AVN,


'Migrate or die': Venezuelans flood into Colombia despite crackdown

The desert wind whipping their faces, hundreds of Venezuelan migrants lugging heavy suitcases and overstuffed backpacks trudge along the road to the Colombian border town of Maicao beneath the blazing sun. The broken line snakes back 8 miles (13 km) to the border crossing at Paraguachon, where more than a hundred Venezuelans wait in the heat outside the migration office. Money changers sit at tables stacked with wads of Venezuelan currency, made nearly worthless by hyperinflation under President Nicolas Maduro’s socialist government. The remote outpost on the arid La Guajira peninsula on Colombia’s Caribbean coast marks a frontline in Latin America’s worst humanitarian crisis. The Venezuelans arrive hungry, thirsty and tired, often unsure where they will spend the night, but relieved to have escaped the calamitous situation in their homeland. (Reuters,


Venezuela’s middle class finds an open door in Peru

Structural reforms, fiscal discipline, rising commodity prices and an export-oriented mining sector have made Peru one of South America’s top performers over the last decade. The IMF projects 4% growth this year; the poverty rate is now less than half of what it was in 2005. A growing middle class has brought new consumers – and new opportunities for Venezuelan entrepreneurs with dwindling economic prospects at home. Peru’s open policy toward migration has also helped. In 2017, the government of Pedro Pablo Kuczynski, himself a descendant of immigrants, created the Permiso Temporal de Permanencia (PTP), a temporary residency permit that allows Venezuelans and others to look for jobs, apply for a tax number and receive some health and education services. Last year more than 26,000 Venezuelans applied for the program, and about 25,500 were accepted. So far, however, fewer than 500 of those have since sought work visas. On Jan. 30, the government rolled out a new residency category for Venezuelans whose PTP is about to expire and who have no police, criminal or judicial records. There are an additional 80,000 Venezuelans in Peru with tourist visas who could apply for the PTP, according to officials. (Americas Quarterly:


OP-ED: Venezuela's neighbors can't wait for Uncle Sam

Venezuela’s refugee crisis is metastasizing. According to the United Nations, 5,000 Venezuelans have fled to Curacao, 20,000 to Aruba, 30,000 to Brazil, 40,000 to Trinidad and Tobago, and more than 600,000 to Colombia. In times past, the U.S. has led in responding to exoduses sparked by political or humanitarian crises. Yet although the U.S. has put pressure on Venezuela to restore its democracy, the burden of coping with the implosion of what used to be Latin America’s richest nation has fallen most heavily on its immediate neighbors. They can’t afford to wait for a distracted and less benevolent U.S. to do the right thing. Instead, for their immediate and collective future, they must forge a regional response to what has become the hemisphere’s greatest humanitarian crisis. Top U.S. diplomats have called out Venezuela’s humanitarian plight and human rights abuses. But on his five-country trip to the region, Secretary of State Rex Tillerson focused more on building support for new sanctions than on addressing this more immediate catastrophe. The flood of people is already overwhelming border economies, schools, health systems and basic shelter in Colombia, Brazil and even Ecuador. Venezuela’s Caribbean neighbors, many with weak institutions and still recovering from last year’s hurricanes, are ill-equipped to meet such new challenges. Despite much cooperative rhetoric and nearly two dozen regional economic and diplomatic bodies, the countries and their foreign policy efforts remain quite solitary.  To galvanize a response, the region’s leaders should turn to the Inter-American Development Bank and World Bank to fast-track cheap loans for refugee-focused infrastructure. Latin America doesn’t need a new mechanism to pursue this more cohesive and comprehensive response — the recently created 14-country Lima group could suffice, and older diplomatic bodies desperate for a mission abound. Its nations need only to summon the will and leadership to pick up the regional humanitarian mantle. If they do so, it may then be the U.S.’s turn to follow. (Bloomberg:

Wednesday, February 14, 2018

February 14, 2018

Oil & Energy


Venezuela oil production is plummeting

Venezuela's main source of cash is dwindling at a breathtaking pace. The country's oil output in January fell to its lowest level in nearly 30 years, not including a brief oil strike in 2003, according to S&P Global Platts. A monthly OPEC report published Monday revealed Venezuela pumped 1.6 million barrels of oil per day last month. Production in January was down 20% from a year ago. The staggering decline is another sign of Venezuela's economic and political crisis. Venezuela has more crude oil than any other country in the world and it heavily depends on the commodity to power its economy. Crude oil makes up about 95% of Venezuela's exports. The country has no other source of foreign income. Yet the government-owned oil company, PDVSA, has pumped less and less oil for the last few years because of corruption, crumbling infrastructure and a massive debt crisis – and the United States could get tougher on Maduro very soon. Secretary of State Rex Tillerson said last week on his tour of Latin American countries that the administration is still considering a ban on Venezuelan crude oil exports to the United States. Experts say a complete oil ban would be a devastating blow to Venezuela's economy and Maduro's political fortunes. (CNN Money:; Oil Price:


Venezuela's oil output crash is costly for U.S. refiners

U.S. Gulf Coast refiners are paying the price for shrinking Venezuelan crude output. U.S. production is at an all-time high, while output from Venezuela, despite a modest increase in January, is in decline. As a result, U.S. crude’s typical premium to heavy Venezuelan oil shrank to as small as 31 cents a barrel Friday, the narrowest since October. Most U.S. Gulf Coast refiners profit when crude grades like those from Venezuela are at a large discount to WTI because these so-called heavy crudes comprise 40% to 60% of the oil they process, said Fernando Valle, oil and refining analyst at Bloomberg Intelligence. Venezuelan oil is getting more expensive relative to U.S. benchmark amid falling output. “The narrowing can be attributed to a rapidly changing fundamental picture in both markets,” Mara Roberts Duque, a New York-based analyst at BMI Research, said by email. “Rising U.S. production is keeping a lid on the WTI upside while continued declines in Venezuelan output are supporting the local benchmark.” (Bloomberg:


Official: US believes ex-Venezuela oil czar took bribes

U.S. prosecutors believe Venezuela's former oil czar received bribes as part of a major graft scheme that allegedly took place in this nation's oil industry, an American official familiar with the probe said. Rafael Ramirez, who was one of Venezuela's most powerful officials until he quit as the country's U.N. ambassador in December, was named as a bribe recipient although not charged in an indictment against five other former senior officials that was partially unsealed Monday. In the indictment, prosecutors in Houston allege two of the charged individuals told businessmen that proceeds from bribe payments they made in exchange for quick payments and contracts with Venezuela's state-run oil giant PDVSA would be shared with a senior Venezuelan official, identified in the unsealed portion as "Official B." That unidentified Venezuelan politician is Ramirez, a U.S. official told The Associated Press. The official agreed to talk about the case only on condition of anonymity because they were not authorized to discuss the matter. (Fox News:; Bloomberg:



Venezuela army clashes with illegal miners, 18 reported dead

Soldiers clashed with illegal miners in southern Venezuela on the weekend, killing 18 people in a region notorious for violence and gang rivalries, a lawmaker and local media said. Bolivar state Governor Major General Justo Noguera said a military unit had fought off an attack, but gave no more details. “An investigation is under way,” he told reporters. Local newspaper Correo del Caroni reported that 17 men and one woman died in the incident on Saturday morning in an area known for gold and diamond mining. (Reuters,


Economy & Finance

PDVSA bonds join Venezuela bonds in trading flat (defaulted)

Following consultations with major market participants, the Emerging Markets Trading Association (EMTA) is recommending that, for all trades entered into on or after February 12, 2018, all Bonds issued by PDVSA that are on a U.S. sanctions exceptions list (see the Annex to the General License No. 3 related to the Executive Order:  should, unless otherwise agreed, trade “flat”. The Executive Order, together with the General Licenses, can be found here:, but counterparties are urged to refer to the U.S. Treasury’s website for further updates. To the extent that bonds are added to this Venezuela General License No. 3 Annex, they will be subject to this Market Practice, and to the extent that bonds are deleted from this Annex, they will not be subject to this Market Practice. (Latin American Herald Tribune,


US Treasury publishes 2 new Venezuela & PDVSA debt restriction explanations

The U.S. Department of the Treasury’s Office of Foreign Assets Control has published two new Venezuela-related frequently asked questions (FAQs).  The FAQs provide additional guidance on the debt-related prohibitions in Executive Order (E.O.) 13808, including the meaning of “new debt” for the purposes of E.O. 13808 and the receipt of certain late payments from the Government of Venezuela, including Petroleos de Venezuela, S.A. (PDVSA). OFAC does not consider debt that was created prior to August 25, 2017 to be “new debt” for purposes of E.O. 13808 so long as the terms of the debt instrument (including, for example, the length of the repayment period or any interest rate applied) agreed to by the parties do not change on or after August 25, 2017. For debt created on or after August 25, 2017, U.S. persons are not permitted to accept payment from PDVSA or other segments of the Government of Venezuela, absent a specific license or other authorization from OFAC, if payment for a debt is not received within the applicable period specified in E.O. 13808 (90 days for PDVSA, 30 days for other segments of the Government of Venezuela)? Because receiving payments outside of these specified maturity periods generally constitutes a prohibited dealing in debt, U.S. persons should ensure that payment terms accord with the applicable debt prohibition. In circumstances where PDVSA or another segment of the Government of Venezuela fails to pay a debt in full within 90 or 30 days, as applicable, U.S. persons must obtain a specific license from OFAC before accepting payment after the expiration of the applicable period. License applications involving circumstances that do not meet these criteria will be reviewed on a case-by-case basis with a presumption of denial, with the exception of activity that is in U.S. national security or foreign policy interests, including humanitarian-related transactions, legal services, or personal communication-related services. (US Treasury Department:


Colombia wants to build Venezuela financial rescue plan

Colombia has contacted international lending agencies about devising a financial rescue plan worth up to US$ 60 billion for neighboring Venezuela if President Nicholas Maduro leaves power, Colombia’s finance minister said in an interview on Friday. Hyperinflation and severe recession in oil-rich Venezuela are prompting Venezuelans to flee over the border to Colombia, now about 2,000 a day, Colombian Finance Minister Mauricio Cardenas said. Officials the International Monetary Fund, Inter-American Development Bank and World Bank are just beginning to understand the impact of the exodus, he said. “What happens when Maduro falls? We should not improvise. There should be a plan because Venezuela will require financial support,” Cardenas said (Reuters,


Venezuela's 20-Cent bonds are one hedge fund's emerging-market pick

Peter Kisler says one of the best bets in emerging-market debt is a country racked by quadruple-digit inflation, a plunging currency, punishing sanctions and months of overdue payments. (Bloomberg,


The Economy Is Full of Crypto (And Collective Delusion)

We have talked a few times around here about a socialist republic that has been hit hard by sanctions imposed by the U.S. government and that, in response, is planning to issue its own cryptocurrency to raise money. I mean Venezuela. Venezuela's government is the one that is planning to issue a cryptocurrency to replace money that it has lost due to the policies of the U.S. federal government. (Bloomberg,


Venezuela’s economy is so bad, parents are leaving their children at orphanages

Poverty and hunger rates are soaring as Venezuela’s economic crisis leaves store shelves empty of food, medicine, diapers and baby formula. Some parents can no longer bear it. They are doing the unthinkable. Giving up their children. There are no official statistics on how many children are abandoned or sent to orphanages and care homes by their parents for economic reasons. But interviews with officials at FUNDANA and nine other private and public organizations that manage children in crisis suggest that the cases number in the hundreds — or more — nationwide. FUNDANA received about 144 requests to place children at its facility last year, up from about 24 in 2016, with the majority of the requests related to economic difficulties. A study by the Catholic charity CARITAS in poorer areas of four states found the percentage of children under 5 lacking adequate nutrition had jumped to 71% in December from 54% seven months earlier. For years, Venezuela had a network of public institutions for vulnerable children — traditionally way stations for those needing temporary or long-term protection. But child-welfare workers say the institutions are collapsing, with some at risk of closing because of a shortage of funds and others critically lacking in resources. So, increasingly, parents are leaving their children in the streets. In the gritty Sucre district of Caracas, for instance, eight children were abandoned at hospitals and public spaces last year, up from four in 2016. In addition, officials there say they logged nine cases of voluntary abandonment for economic reasons at a child protective services center in the district in 2017, compared with none the previous year. A child-welfare official in El Libertador — one of the capital’s poorest areas — called the situation at public orphanages and temporary-care centers “catastrophic.” One of Venezuela’s main adoption agencies, PROADOPCION, said that in 2017, his organization received 10 to 15 requests monthly from pregnant women seeking to give up their babies, compared with one or two requests per month in 2016. Overwhelmed, the organization had to turn down most of the women. It accepted 50 children in 2017 — up from 30 in 2016. (The Washington Post:


Politics and International Affairs

Lima Group countries slam Venezuela election plans, Maduro unwelcome at Americas Summit

The "Lima Group" of Latin American nations plus Canada on Tuesday criticized Venezuelan President Nicolas Maduro's decision to hold a presidential election on April 22 and urged him to reconsider the date. In a statement, the countries said there could not be free and fair elections in Venezuela as long as there were political prisoners. Peru's foreign minister also told a news conference that Maduro would not be welcome at the Summit of the Americas to be held in Lima in April. (The Daily Mail:


US says new sanctions can be applied it Maduro holds illegitimate elections

In a review of US Secretary of State Rex Tillerson’s trip to Latin America and the Caribbean, Francisco Palmieri, Principal Deputy Assistant Secretary of State for Western Hemisphere Affairs, again condemned the Maduro regime’s call for a snap election in which the main opposition candidates are barred from running: “We are working together with the countries of the region to ensure that Venezuelan elections are free, fair, and internationally verifiable. There must be international election observation for successful, legitimate elections to take place, and we will not accept elections that do not allow for the full participation of all political actors in Venezuela. It’s clear that the path that the Maduro regime is moving down at this time will result in an illegitimate election… If the Maduro regime holds an illegitimate election in April, the United States will continue to use all our political, diplomatic, and economic tools to help restore true democratic order in Venezuela. It’s hard to imagine an election, a snap election held in less than 60 days, meeting the international standards for a free, fair, and transparent election, particularly given the unwillingness of the Venezuelan regime to allow meaningful participation by the opposition parties or to address the conditions on the ground that resulted in multiple illegitimate elections last year… Secretary Tillerson has been very clear that what we want in Venezuela is a peaceful transition and the restoration of constitutional democratic order. The best way to solve the multiple crises inside Venezuela is for the Venezuelan people to be able to exercise their democratic rights and select the leaders, the real leaders, who can solve the multiple problems that the Maduro regime is inflicting on the country.” He said the Secretary advocated for increased regional attention to the crisis in Venezuela during every discussion. “It was clear the region shares our concerns in this regard. We must continue to work to fulfill the requirements of the Inter-American Democratic Charter. As Secretary Tillerson said in Argentina, we simply cannot allow and stand idly by to see a total destruction of democracy in Venezuela. With our regional partners we continue to pressure the corrupt Maduro regime to return to a democratic constitutional order… We would like to see an orderly, peaceful transition to democratic order in Venezuela.” Palmieri declined to elaborate on possible new sanctions: “I don’t think at this time I have anything to announce with regard to what kind of sanctions would be put in place with regard to oil, but the Secretary was clear: the United States will continue to consider the use of every political, diplomatic, and economic tool we have to help restore democracy in Venezuela to the benefit of the Venezuelan people… I think we will use all the tools available to us at any moment, at any time, and in any place, to help the Venezuelan people restore their democratic system of governance.” Regarding the possibility that President Maduro will attend the Summit of the Americas meeting in Lima next April, Palmieri said: “Should President Maduro decide to attend that summit, he would certainly have a lot to answer for in terms of democratic governance and corruption. And any Venezuelan participation would have to address those issues.” (US Department of State:


Venezuela fears ‘invasion’ after U.S. military chief visits Colombia

Venezuela on Monday accused neighboring Colombia of planning a bombing campaign or a “military invasion” amid heightened tensions in the region and a mass exodus fueled by Venezuela’s collapsing economy. “In Colombia, they are planning to revive eras that had ended in human history, like military bombing, a military invasion or the occupation, through blood and gunfire, of a peaceful country like Venezuela,” said Venezuela’s chief prosecutor, Tarek William Saab, according to the state-run AVN news agency. “We will not allow it.” Saab didn’t provide proof of his allegations, but other regional allies pointed to the weekend visit to Colombia by Admiral Kurt Tidd, head of U.S. Southern Command. Tidd and Colombian Vice President Óscar Naranjo met in the troubled coastal city of Tumaco on Saturday. According to the vice president’s office, they met to review bilateral efforts to stem the flow of drugs from Colombia’s Pacific coast. Bolivian President Evo Morales, a staunch Caracas ally, however, called Tidd’s presence “suspicious.” On Monday, the commander of Colombia’s armed forces, Gen. Alberto Mejía, suggested he had his hands too full with domestic issues to worry about Venezuela’s accusations. The statements also come as Venezuelan neighbors, including Colombia, Brazil and Guyana, have been tightening border controls in recent weeks to try to contain the flow of hundreds of thousands of Venezuelan migrants. (The Miami Herald:


The International Criminal Court opens preliminary examinations into Venezuela

The Prosecutor of the International Criminal Court (ICC), Fatou Bensouda, has announced they will open preliminary examinations into the situation in Venezuela. The ICC Prosecutor announced she would examine crimes allegedly committed in Venezuela since at least April 2017 in the context of demonstrations and related political unrest. She noted that the continued demonstrations led to excessive use of force to disperse demonstrators and arrested and detained thousands of people and that many of those detained have been allegedly subjected to serious abuse and ill-treatment. It was also reported that some groups of protestors resorted to violent means, resulting in some members of security forces being injured or killed. According to the Office of the High Commissioner for Human Rights, 124 people have been killed in the framework of the protests: 46 killings were allegedly have been committed by the security forces and 27 by the pro-government armed groups. The International Federation for Human Rights hailed the move and urged Venezuela “to conduct thorough, impartial, and independent investigations into those allegedly responsible for international crimes committed on their soil and to cooperate with the Court during these preliminary examinations.” Venezuela’s Foreign Ministry promptly rejected the decision and claimed not to have received any formal notice thereof. (FIDH:; and more in Spanish: (Noticiero Venevisión,


Trump denounces Cuban, Venezuelan repression

President Donald Trump has once again denounced the “repressive regimes” of Cuba, Venezuela, Iran and North Korea and said that his administration is on the side of all those people around the world suffering “persecution” because of their religious faith. Trump delivered his remarks at the annual National Prayer Breakfast in Washington, an event that traditionally blends politics and religion. The most recent State Department report on religious freedom, released last August, said that the religious environment in Cuba had improved in recent years, and in the case of Venezuela, the report only expressed concern over alleged “anti-Semitic” commentary in the state-run media. (Latin American Herald Tribune,


Rubio says world would support Venezuelan military ‘removing a dictator’

Marco Rubio took to Twitter on Friday morning to suggest that the world would support Venezuela’s military if it decided to “restore democracy by removing a dictator” as the country’s President Nicolas Maduro prepares for an April election some are already predicting to be rigged. (Bloomberg,


European Parliament calls for further sanctions on Maduro regime

The European Parliament has called for more sanctions on high officials of the Maduro regime and raise the possibility of taking economic steps against the state oil company (PDVSA) here. The EU legislature also demanded that political rights be restored to opposition politicians so they can take part in the announced presidential election. The vote in the European Parliament was 480 in favor, 51 against and 70 abstentions. More in Spanish: (Noticiero Venevisión,


Venezuela loses right to vote at United Nations

Venezuela has lost its right to vote in the United Nations General Assembly because of the non-payment of its contributions, according to the organization. The country was in the same situation last year until regained the right to vote in that body after paying part of its debt. The UN rules establish the loss of the right to vote in the General Assembly for Member States that have outstanding payments to the organization's budget for an amount equal to or greater than the contributions that corresponded to them during the previous two years. Stéphane Dujarric, spokesman for the United Nations, said today that, as of January 29, these eight countries were in that situation: Venezuela, the Central African Republic, Dominica, Equatorial Guinea, Grenada, Libya, Suriname and Yemen. (Latin American Herald Tribune:


Venezuela’s misery fuels migration on epic scale

Hundreds of thousands of Venezuelans are fleeing their country’s misery and pouring across borders into nearby countries, particularly Colombia, creating a sharpening challenge for the region. As the collapse of Venezuela’s economy deepens, the number of those fleeing is accelerating. Nearly 3 million Venezuelans—a 10th of the population—have left the country over the past two decades of leftist rule. Almost half that number—some 1.2 million people—have gone in the past two years, according to Tomás Páez, a Venezuelan immigration expert at Venezuela’s Central University. Some 550,000 Venezuelans were in Colombia at the end of 2017, a 62% increase from a year before, according to the Colombian government, with another 50,000 entering so far this year. (The Wall Street Journal:


Colombia, Brazil tighten borders as Venezuelan crisis deepens

Colombia and Brazil tightened border controls with Venezuela on Thursday as both nations grapple with a mounting influx of hundreds of thousands of desperate migrants fleeing a worsening economic crisis. In a visit to the border region, Colombian President Juan Manuel Santos said he would impose stricter migratory controls, suspend new daily entry cards for Venezuelans and deploy 3,000 new security personnel along the frontier, including 2,120 more soldiers. Brazil's Defense Minister Raul Jungmann, speaking in the northern border town of Boa Vista, said the government would also deploy more troops and start relocating tens of thousands of Venezuelan refugees who have crossed the open frontier to seek food, work and shelter. Both countries said they would take measures to count the number of Venezuelan migrants who have entered their territory: Brazil through a census and Colombia through a registry. The moves to tighten border security could threaten a key social safety valve for desperate Venezuelans as hyperinflation and a severe recession grip their country. The steps also signaled a mounting regional frustration with Venezuela's unpopular President Nicolas Maduro, who will seek re-election on April 22 amid conditions that the United States and other countries say are stacked against a divided opposition. "I want to repeat to President Maduro - this is the result of your policies, it is not the fault of Colombians and it's the result of your refusal to receive humanitarian aid which has been offered in every way, not just from Colombia but from the international community," Santos said. While Venezuelan professionals such as doctors and engineers have found work in Colombia's big cities or its oil industry, the bulk of the poor have settled in border towns. (NASDAQ:


Desperate Venezuelans pouring into Brazil

Officials in northern Brazil are demanding federal aid to help manage the influx of people seeking food and shelter. Brazilian President Michel Temer interrupted his Carnival vacation to fly to Roraima on Monday and promised to provide whatever aid is necessary to the country's northern state, which has been overwhelmed by tens of thousands of desperate Venezuelans fleeing their country's collapsing economy and political turmoil. Some 40,000 Venezuelans have poured into the Roraima capital, Boa Vista, overwhelming local government agencies and infrastructure in the city of 400,000. Many of the displaced Venezuelans are living in the streets. The president suggested that some migrants could be moved to other states but insisted that Brazil would not turn its back on the people fleeing misery. Defense minister Raul Jungmann later said that the army would set up a field hospital along the border and work with local officials to build triage centers, the G1 news portal reported. There are growing fears among residents that the Venezuelans will take jobs away from Brazilians, who are concerned about their own country's lackluster economy. Two residences housing Venezuelans were set alight last week — five people were injured. A local man has been arrested in connection with the attack. The Roraima government gave federal officials a list of demands last week, including equipment, vehicles and its own security forces. Temer's government has so far agreed to double the number of federal security forces at the border to 200. After his meeting with local officials Temer reaffirmed that the government will not block Venezuelans from entering but it may try to organize the flow. (DW:


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.