December 13, 2018

Oil & Energy

CRYSTALLEX again threatens Venezuela’s crown jewel CITGO

Venezuela is facing the possible unraveling of a pair of billion-dollar settlements aimed at protecting the cash-strapped country’s U.S.-based CITGO Petroleum Corp from seizure by creditors. Canadian miner CRYSTALLEX has accused Venezuela of breaching a US$ 1.4-billion settlement agreement as PDVSA continued to try and overturn a court order that allowed CRYSTALLEX to take control of the stock of CITGO’s parent company. This is the latest blow to Citgo, PDVSA’s precious downstream business in the U.S. that the company—and Caracas through it—has tried to keep at all costs. What’s more, CRYSTALLEX had already hired banks to organize a forced sale of CITGO stock in order to get its US$ 1.4 billion, a lawyer for the Canadian mining company said, but the process has been suspended because Venezuela wasted no time in disputing Crystallex’ accusation. The crux of the matter is the ownership of CITGO. While it is a unit of PDVSA, PDVSA is a state-owned company, according to a court ruling from earlier this year. The ruling by Chief Judge Leonard P. Stark was unique: government assets such as CITGO’s parent, PDVSA, are as a rule protected from lawsuits targeting a state. Yet in Stark’s ruling, the judge said that Venezuela had blurred the lines between the government and the state oil firm, with a military official at the helm of PDVSA. (Oil Price: https://oilprice.com/Latest-Energy-News/World-News/Crystallex-Threatens-Venezuelas-Crown-Jewel-Citgo-Again.html; Reuters, https://www.reuters.com/article/us-venezuela-pdvsa-crystallex/venezuelas-deals-to-shield-citgo-from-creditors-now-in-doubt-idUSKBN1OA2M9)

 

Venezuela oil price rises for first time in 2 months

The price Venezuela receives for its mix of medium and heavy oil rose for the first time since October. According to figures released by the Ministry of Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending December 7 rose to US$ 54.80, up US$ 1.20 from the previous week's US$ 53.60.  According to Venezuelan government figures, the average price in 2018 for Venezuela's mix of heavy and medium crude for 2018 which Caracas now prices in Chinese Yuan (426.36) is now US$ 61.96. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2471320&CategoryId=10717)

 

Jailed ex-Venezuela oil minister Nelson Martinez dies in prison

Nelson Martinez, a former Venezuelan oil minister imprisoned over corruption allegations, has died of health complications, according to the prosecutor's office. The chemist, who also served as president of state oil firm PDVSA and its United States subsidiary CITGO Petroleum, was arrested on November 30 last year as part of a sweeping fraud probe, four days after President Nicolas Maduro removed him from his position. Martinez had been transferred to a military hospital from prison because of kidney problems, two sources familiar with the matter told Reuters news agency earlier. He had a heart attack while receiving dialysis, they said. Rafael Ramirez, a former state oil firm chief and opponent of the country's president, had earlier announced Martinez's death and blamed Maduro. Prosecutors accused both Martinez and Eulogio del Pino, another former oil minister and PDVSA president, of being part of a corruption network in the country's oil sector, with Ramirez at the helm. Martinez was jailed after the country's top prosecutor said he allowed a poor refinancing deal for CITGO to go ahead without government approval. He had yet to appear before a judge at the time of his death, and the date for his preliminary hearing was pushed back several times, Reuters reported. His lawyers began asking authorities months ago for Martinez to be granted house arrest, citing his ill health, a source told the news agency. Martinez is the latest in a series of people to die in Venezuelan custody. (Al Jazeera: https://www.aljazeera.com/news/2018/12/jailed-venezuela-oil-minister-nelson-martinez-dies-181213022300514.html)

 

PDVSA procurement official guilty in Venezuela bribery scheme in Texas

A former procurement officer of Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A. (PDVSA), pleaded guilty Monday for his role in a scheme to obstruct an investigation relating to bribes paid by the owner of U.S.-based companies to Venezuelan government officials in exchange for securing additional business with PDVSA and payment priority on outstanding invoices. Alfonso Eliezer Gravina Munoz (Gravina), 56, of Katy, Texas, who previously worked for PDVSA in Houston, Texas, pleaded guilty before U.S. District Judge Kenneth M. Hoyt of the Southern District of Texas in Houston to one count of conspiracy to obstruct an official proceeding. Gravina is scheduled to be sentenced on Feb. 19, 2019 before Judge Gary H. Miller. He was charged by indictment on Nov. 15. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2471236&CategoryId=10717)

 

Commodities

Maduro regime says it will reopen GOODYEAR plant, probe bosses

Venezuela’s government said on Tuesday it would investigate GOODYEAR Tire & Rubber Co’s local management and re-start operations at its factory, which the U.S. company closed because of deteriorating economic conditions.

On Monday, Goodyear said its Venezuelan tire plant had become “impossible” to maintain because of plummeting demand for consumer goods, the difficulty of importing raw materials, and U.S. sanctions restricting financial transactions. In a statement released by state television, President Nicolas Maduro’s administration said it would guarantee the jobs of the factory’s 1,160 workers and had started proceedings to re-start operations. (Reuters, https://www.reuters.com/article/goodyear-tire-venezuela/venezuelan-government-says-it-will-reopen-goodyear-plant-probe-bosses-idUSL8N1YG60I)

 

Economy & Finance

Maduro regime is forcibly converting pension balances to the Petro

Venezuela has reportedly begun converting pensioners’ monthly payments into its controversial cryptocurrency, the Petro. The government has recently been taking the bolivars (the country’s current fiat currency) paid to its elderly residents and automatically swapping them for Petros. Normally, a pensioner would receive their monthly sum in bolivars, shift the funds to a bank account, and withdraw the fiat from a local branch, the blog explained. However, the government apparently converted residents’ bolivars to Petros after sending the funds. Notably, this conversion happened after the government first sent the payments in fiat to residents’ web wallets, meaning the Venezuelan government sent pensioners their funds, withdrew them and replaced with an equivalent value of Petros. How pensioners would be able to use their unrequested Petros is unclear, as they are not generally accepted. However, it seems to be possible to convert them back to bolivars via a complex process, according to the post. To make matters worse, the value of the Petro relative to the bolivar is unstable, rising from 9,000 to more than 15,000 over the course of a few weeks. While the nation claims to have successfully raised hundreds of millions of dollars – potentially as much as US$ 5 billion –selling the token, it is unclear who has invested in it or how much has actually been raised. Residents are already required to purchase passports using the cryptocurrency, and the nation’s salary systems are also expected to begin using the Petro. More recently, Maduro said Venezuela will sell its oil for the Petro, rather than the U.S. dollar, to decrease the dollar’s importance in the oil market. (Coindesk; https://www.coindesk.com/report-venezuela-is-forcibly-converting-pension-balances-to-the-petro)

 

Politics and International Affairs

Russia to withdraw jets from Venezuela after diplomatic spat with U.S.

Two Russian bombers that flew to Venezuela on Monday as a gesture of support for socialist President Nicolás Maduro will leave on Friday and return to Russia, the White House said, following a diplomatic spat over the visit. White House spokeswoman Sarah Sanders said in a statement Wednesday the planned departure came after the Trump administration spoke with Russian officials. “We have spoken with representatives of Russia and have been informed that their military aircraft, which landed in Venezuela, will be leaving on [December 14] and going back to Russia,” White House press secretary Sarah Sanders told Reuters. (The Wall Street Journal: https://www.wsj.com/articles/russia-to-withdraw-jets-from-venezuela-after-diplomat-spat-with-u-s-11544646013; Reuters, https://www.reuters.com/article/us-venezuela-russia-airforce/russian-nuclear-capable-bomber-aircraft-fly-to-venezuela-angering-u-s-idUSKBN1OA23L; https://www.reuters.com/article/us-venezuela-russia-airforce-kremlin/kremlin-calls-u-s-criticism-of-russian-military-flights-to-venezuela-wrong-idUSKBN1OA0QK; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2471270&CategoryId=10717)

 

OAS expresses 'greatest concern' over arrival of Russian military planes in Venezuela

The Organization of American States (OAS) has expressed the “greatest concern” about the arrival of nuclear-capable Russian aircraft in Venezuela. In a statement released on December 12, the OAS General Secretariat said it “takes note with the greatest concern of the news coming from Venezuela about the possibility that aircraft capable of using nuclear weapons from Russia are in its territory.” It said the presence of the foreign military mission violates the Venezuelan Constitution “because it has not been authorized by the National Assembly, as required [by the constitution].” “Therefore, we consider such an act harmful to Venezuelan sovereignty,” added the OAS, which consists of all 35 independent nations of the Americas, including the United States. (Radio Free Europe: https://www.rferl.org/a/russia-bombers-venezuela-oas-united-states-pompeo/29653402.html)

 

Russia eyes Venezuela base for aircraft - Nezavisimaya Gazeta

Russia wants to deploy strategic aircraft at a Venezuelan airbase in the Caribbean Sea south-east of the United States, the Nezavisimaya daily newspaper cited unnamed sources as saying on Wednesday. The same sources allegedly said wanted to deploy strategic aircraft to a military airfield on the island of La Orchila off the coast of Venezuela. Venezuela’s laws do not allow it to host foreign military bases, but it can temporarily host foreign military planes, the newspaper wrote. (Reuters, https://www.reuters.com/article/media-russia-eyes-venezuela-base-for-air/media-russia-eyes-venezuela-base-for-aircraft-nezavisimaya-gazeta-idUSL8N1YH1KC)

 

Maduro regime calls US Criticism of military cooperation with Russia “cynical”

Venezuelan Foreign Minister Jorge Arreaza said US criticism of his country’s military cooperation with Moscow was cynical. Arreaza was responding to a post on Twitter by US Secretary of State Mike Pompeo in which he called the Russian-Venezuelan cooperation that of “two corrupt governments.” In response, Arreaza said that it was unusual for the US to question Venezuela’s right to cooperate on defense and security with other countries, above all after US President Donald Trump publicly threatened to intervene militarily in Venezuela. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2471307&CategoryId=10717; AVN, http://www.avn.info.ve/contenido/venezuela-qualifies-cynical-pompeo039s-declarations-about-combined-military-exercises)

 

Senators urge Trump to recognize National Assembly as the only legitimate institution here

U.S. Senators Marco Rubio (R-FL) and Bob Menendez (D-NJ) today urged President Trump to once again denounce Nicolás Maduro as the illegitimate President of Venezuela and to recognize the National Assembly as the country’s only remaining democratic institution. Under Article 231 of the Venezuelan constitution, "The candidate elected will take possession of the role of President of the Republic on the 10th of January of the first year of its constitutional period, by oath to the National Assembly." Given the undemocratic and fraudulent elections of May 20, 2018, organized by the illegitimate National Constituent Assembly, starting on January 10, 2019 Venezuela’s democratically elected Congress will assume the leadership of the nation. “The regime of Nicolás Maduro, however, has turned Venezuela away from the path of democracy and down the path of dictatorship.  We therefore request that you condemn the Maduro regime’s rule as illegitimate, and formally recognize the Venezuelan National Assembly as the only legitimate democratic institution remaining in the country’s national government.” (US Senate: https://www.rubio.senate.gov/public/index.cfm?p=Press-Releases&id=DA9DE421-1B74-4AF1-9A54-9C5D4DB28ED7)

 

Maduro claims: “John Bolton was ordered to kill me”; slams incoming Brazilian government

President Nicolas Maduro has claimed the U.S. is scheming to kill him and depose his populist left-wing government, accusing National Security Advisor John Bolton of being the plot’s point man. Speaking to journalists at the presidential palace in the capital Caracas, the 56-year-old claimed the U.S. intends to send American troops into Venezuela as part of its plan to install a more amenable government, the BBC reported. Maduro provided no evidence for his assertion. “John Bolton has been assigned with the job organizing my assassination, deploying foreign troops and imposing a transitional government in Venezuela,” Maduro declared. He warned that Venezuelans were loyal to their leaders and said they are prepared to fight back with the help of “friendly countries.” Maduro also lashed out at Brazil’s incoming president, Jair Bolsonaro, and his vice-president, Hamilton Mourão, who he claimed was obsessed with the idea of invading Venezuela. “[This guy] has the face of a madman,” Maduro said of Mourão. “Saying a Brazilian military force is going to enter Venezuela is crazy talk.” (NEWSWEEK: https://www.newsweek.com/john-bolton-kill-nicolas-maduro-venezuela-assassination-donald-trump-russia-1257180; The Guardian: https://www.theguardian.com/world/2018/dec/12/venezuela-nicolas-maduro-assassination-attempt-white-house-ultra-right-locos; Reuters: https://www.reuters.com/article/us-venezuela-politics/venezuelas-maduro-accuses-u-s-of-plotting-to-assassinate-him-idUSKBN1OB29Y)

 

Venezuela ratified commitment to deepen cooperation with Unicef

President Nicolás Maduro has confirmed Venezuela's commitment to deepen cooperation ties with the United Nations International Children's Emergency Fund (UNICEF), “to guarantee our children and adolescents a prosperous future," he said in a social network. (AVN, http://www.avn.info.ve/contenido/venezuela-ratified-commitment-deepen-cooperation-unicef)

 

Arreaza claims Colombia magnifies Venezuelan migration to obtain resources

The Maduro regime has claimed that the government of Colombia uses and magnifies the migration of Venezuelans to that country, to continue obtaining financial resources. Through his Twitter account, Foreign Minister Jorge Arreaza criticized that the foreign policy of the Colombian government is to obtain resources from international organizations to address a supposed Venezuelan migration crisis.  (AVN, http://www.avn.info.ve/contenido/venezuela-condemns-colombia-magnifies-venezuelan-migration-obtain-resources)

 

German journalist Billy Six 'charged with espionage' in Venezuela

German reporter Billy Six, 32, is being held in Venezuela, the German foreign ministry has confirmed. Venezuelan rights group Espacio Público says Mr. Six, who writes for right-wing newspaper Junge Freiheit, has been charged with espionage and rebellion. Relatives say he was arrested more than three weeks ago while reporting on Venezuela's economic crisis and the mass migration it has triggered. Diplomatic officials have reportedly not been allowed to see him. Rights groups say he is being held in the infamous Helicoide prison in the capital, Caracas, which has seen a number of prison riots this year. Mr. Six was in Venezuela "investigating drug trafficking activities, smuggling of fuel and strategic goods, human trafficking and even the exodus of Venezuelans" Gerardo Morón of Venezuelan rights group Espacio Público said. His father, Edward Six, said he had been arrested in his hotel room on 17 November. According to Edward Six, the Venezuelan authorities are using a photo his son took of President Nicolás Maduro at a rally in Caracas as evidence that he "violated a security zone". The journalist's father says the photo was taken from behind a security perimeter. (BBC News: https://www.bbc.com/news/world-latin-america-46553284)

 

PODEMOS chief grilled in Spain’s Senate over Venezuela financing links

The leader of the anti-austerity party PODEMOS, Pablo Iglesias, appeared on Thursday before a Senate committee investigating party financing. The session, which was convened by the conservative Popular Party (PP), was aimed at shedding light on alleged financial links between the leftist political group and Venezuela. “If the question is whether financing for PODEMOS came from the Venezuelan government, then the answer is no,” Iglesias stated during a testy question-and-answer session, which was being directed by Luis Aznar, a PP senator and spokesperson in Spain’s upper house of parliament. The PP senator tried to bolster his accusations against Podemos by showing videos from a Venezuelan TV channel during which the founder members of the Spanish party are mentioned, as well as in which Iglesias is seen praising former Venezuelan President Hugo Chávez. “These are personal opinions,” he said of the recordings. “I don’t agree with some of the things I said in the past. The current political and economic situation of Venezuela right now is dire. To rectify in politics is a good thing.” The tensest exchange came when Aznar alluded to “evidence that is in the hands of INTERPOL”, in relation to Venezuelan financing that PODEMOS is alleged to have received via the CEPS foundation (Center of Political and Social Studies). The senator was referring to funds of more than €7 million received by the foundation – at which PODEMOS leaders, including Iglesias, worked – between 2003 and 2011. While CEPS was indeed engaged in consultancy work for the Venezuelan government, Iglesias has always denied that any funds it received were used to set up PODEMOS. (El País: https://elpais.com/elpais/2018/12/13/inenglish/1544711332_269112.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.