International Trade
Passport maker De La Rue flies in turnaround
specialist
De La Rue has
appointed turnaround specialist Clive Vacher as chief executive as the banknote
and passport maker contends with a series of setbacks. Vacher takes over
immediately from Martin Sutherland, whose departure was announced after a May
profit warning, but faces significant challenges alongside new chairman Kevin
Loosemore. De La Rue’s share price has more than halved since the profit
warning, with the company also taking a one-off hit for non-payment from
Venezuela and an investigation led by Britain’s Serious Fraud Office. Vacher
was previously CEO at semiconductor business Dynex Power and has held senior
positions with industrials Pratt & Whitney, Rolls-Royce and General
Dynamics. De La Rue is emphasizing Vacher’s credentials in business
transformation and operational turnarounds, which may prick up the ears of all
shareholders, said Russ Mould of investment broker AJ Bell, referring to
activist investor Crystal Amber Fund. (Reuters, https://www.reuters.com/article/us-de-la-rue-ceo/passport-maker-de-la-rue-flies-in-turnaround-specialist-idUSKBN1WM0EG)
Oil & Energy
EXXON MOBIL bars use of oil tankers linked to
Venezuela: sources
EXXON MOBIL Corp this
week banned the use of vessels linked to oil flows from Venezuela in the last
year, putting new pressure on the U.S. sanctioned country and on global crude
freight rates. The decision by world’s largest publicly traded oil producer to
ban the Venezuela-linked tankers should affect about 250 vessels. (Reuters, https://www.reuters.com/article/us-exxon-mobil-shipping-venezuela/exxon-mobil-bars-use-of-oil-tankers-linked-to-venezuela-sources-idUSKBN1WJ20E)
PDVSA flooding Cuba with stranded oil
At least three
Venezuelan fuel tankers are heading towards Cuba, part of a flotilla meant to
free up domestic storage space while defying a US campaign to cut off
Venezuela's oil supply to its political ally. Up to 3mn bl of refined products
and heavy crude that Venezuelan state-owned PDVSA is dispatching to Cuba in the
first half of October should help partially alleviate a critical storage
deficit that has forced down Venezuelan production toward 500,000 b/d. The
storage shortage is a domino effect of US sanctions that are scaring away most
buyers, with a few exceptions such as Russia's state controlled ROSNEFT and
Spain's REPSOL that takes supply in exchange for its domestic production. Although Venezuela has long supplied Cuba
with oil under preferential terms, the wave of new shipments — equivalent to
200,000 b/d in the first half October — quadruple the volume that PDVSA had
been delivering in recent months. Cuba has about 160,000 b/d of oil demand,
with roughly 50,000 b/d covered by domestic production. The shipments should
help the Cuban government to ease oil shortages that are crippling the island's
transportation and electricity generation. But some are also likely to be
resold, a PDVSA official said. (Argus: https://www.argusmedia.com/en/news/1989349-pdv-flooding-cuba-with-stranded-oil)
Brimming storage and no buyers: Venezuela’s oil
production tanks
Venezuela’s oil
production took another hit in recent days, as the country struggles with
brimming storage tanks and no buyers. PDVSA slashed output in the Orinoco Belt
to just 200,000 bpd, according to Bloomberg, after averaging roughly double
that for much of this year. The lack of space in storage forced production
cuts, including at joint venture projects, where output has been more stable.
Sources told Bloomberg that the SINOVENSA blending facility would be idled for
at least a week. Output had held up in recent months. While monthly totals
bounce around from month to month, Venezuela’s production was stable at 750,000
bpd from April on. However, after months of relatively stable output,
production began to slide again in August, falling to 712,000 bpd, according to
OPEC’s secondary sources. Venezuela may now be on the verge of another decline.
According to Bloomberg, the country only exported 495,000 bpd in September, and
in the last week production fell to 510,000 bpd following the temporary
shutdown of upstream heavy oil operations. Worse, the industry is in disrepair.
Widespread pillaging, a worker exodus, lack of equipment, and a lack of capital
plague oil operations. Luis Pacheco, who sits on the PDVSA board appointed by
Guaidó, estimates that the industry needs US$ 120 billion in order to turn
things around. There is almost no chance of even a faction of that without a
change in the political context. (Oil Price: https://oilprice.com/Energy/Crude-Oil/Brimming-Storage-And-No-Buyers-Venezuelas-Oil-Production-Tanks.html)
Venezuela detains local head of oil joint
venture with China: sources
Venezuelan
authorities have arrested the president and two other officials in a corruption
investigation at state oil company PDVSA’s SINOVENSA joint venture with China
National Petroleum Corp (CNPC), oil sector and intelligence sources said on
Saturday. The three detainees, in the latest round-up in the struggling and
graft-plagued oil sector, are Venezuelan. The detention of SINOVENSA President
Alberto Bockh in eastern Anzoátegui state on Thursday was confirmed to Reuters
by five PDVSA sources, an intelligence source and another person in the local
oil sector familiar with the case. It was unclear what the precise accusations
were against him and the other two detained SINOVENSA employees. (Reuters, https://www.reuters.com/article/us-venezuela-oil/venezuela-detains-local-head-of-oil-joint-venture-with-china-sources-idUSKCN1WK0F5)
Oil-rich Venezuela and Russia come to aid of
ally Cuba, but its energy woes persist
A flotilla of
shipments from Venezuela gave Cuba some respite this week from crippling fuel
shortages in the wake of tougher U.S. sanctions, while Russia’s prime minister
pledged during a visit to the island on Friday to help develop its energy
sector. But support from two of its closest allies looks unlikely to resolve
Cuba’s energy problems and the government has extended many of the
energy-saving measures it had introduced over the past month. Havana warned on
Sept. 11 it had not secured enough shipments of refined fuels, such as gasoline
and diesel, for the rest of the month due to sanctions imposed by the
administration of U.S. President Donald Trump in retaliation for its support
for Nicolas Maduro. In response to the shortages, Cuba swiftly deepened
austerity measures it had introduced since an economic meltdown in Venezuela,
its principal supplier, choked off its energy imports. (Reuters, https://www.reuters.com/article/us-cuba-economy-analysis/oil-rich-venezuela-and-russia-come-to-aid-of-ally-cuba-but-its-energy-woes-persist-idUSKBN1WJ2GS)
Inside Look at Venezuela’s Oil Belt
Five decades ago,
Venezuela pumped 3.7 million barrels of oil a day. Now, it’s only producing a
little over 700,000 barrels a day. Bloomberg’s Jessica Summers and Lucia Kassai
discuss the collapse of the nation’s oil industry, the theft that goes on at
Orinoco field, the lack of security and what it will take for a recovery.
(Bloomberg, https://www.bloomberg.com/news/audio/2019-10-04/this-week-in-commodities-inside-look-at-venezuela-s-oil-belt)
Economy & Finance
ADOBE Is cutting off users in Venezuela due to
US sanctions
ADOBE is shutting
down service for users in Venezuela in order to comply with a US executive
order issued in August that prohibits trade with the country. The company sent
out an email to customers in Venezuela today to let them know their accounts
would be deactivated and posted a support document further explaining the
decision. In the document, Adobe explains: “The U.S. Government issued
Executive Order 13884, the practical effect of which is to prohibit almost all
transactions and services between U.S. companies, entities, and individuals in
Venezuela. To remain compliant with this order, ADOBE is deactivating all accounts
in Venezuela.” Users will have until October 28th to download any content
stored in their accounts and will lose access the next day. To make matters
worse, customers won’t be able to receive refunds for any purchases or
outstanding subscriptions, as ADOBE says that the executive order calls for “the
cessation of all activity with the entities including no sales, service,
support, refunds, credits, etc.” The news is not only disastrous to
designers and freelancers who rely on the company’s software like PHOTOSHOP and
ILLUSTRATOR, but to NGOs and media outlets that will no longer be able to use
software like INDESIGN, ACROBAT, and READER. The ban will also affect all free
services like BEHANCE, ADOBE’s portfolio site, which requires a Creative Cloud
account. It’s an unfortunate situation that highlights a downside of ADOBE’s
subscription-based model — users lose access to the company’s products
immediately as soon as the option to pay for them is removed, no matter how
long they’ve been a customer. ADOBE says it’ll continue to monitor the US
sanctions for more developments, but until then, accounts will remain
deactivated. (Financial Times: https://www.ft.com/content/0c6ddd44-e95d-11e9-a240-3b065ef5fc55: The
Verge: https://www.theverge.com/2019/10/7/20904030/adobe-venezuela-photoshop-behance-us-sanctions)
Maduro’s top envoy to Japan blasts freeze of
bank accounts
The Maduro regime's
ambassador to Japan rebuked a Japanese bank for effectively freezing his and
other diplomats' accounts out of concerns that their use ran afoul of U.S.
economic sanctions recently imposed on the country. The accounts, frozen since
September, concern five with SMBC Trust Bank belonging to the ambassador, his
wife and other diplomats. Ishikawa said that the accounts could not be used for
Internet banking as well as withdrawing and transferring money via ATMs. In
response to his inquiry, a bank official told Ishikawa that the accounts were
frozen as a result of economic sanctions by the Trump administration against Nicolas
Maduro’s regime. A senior official with the bank's Hiroo branch later visited
the embassy and explained that their dollar accounts were frozen because of
concerns that certain transactions ran against President Donald Trump's
executive order signed Aug. 5. Ishikawa is a second-generation Japanese
Venezuelan born to Japanese parents. His wife is Japanese, and they have four
children with Japanese nationality. A bank official notified Ishikawa on Oct. 3
that his yen account would be reactivated, but not his U.S. dollar account.
(The Asahi Shimbum: http://www.asahi.com/ajw/articles/AJ201910070027.html)
Politics and International Affairs
Russia boosts military ties with Maduro
Russia’s deputy prime
minister Yuri Borisov met with Venezuela’s embattled incumbent Nicolas Maduro
in Caracas on Saturday as the two countries boosted their military ties in
Moscow’s apparent sign of continued support for the embattled dictator who is
resisting an intense Western pressure to quit. The meeting between Borisov and
Maduro was held in the framework of the high-level intergovernmental commission
(CIAN) between Caracas and Moscow, Russia’s official news agency reported.
Maduro thanked Russia for the military cooperation between the two countries,
saying his nation had a solid defense grid to resist any outside aggression. He
said that the two sides also renewed their agreements on the military-technical
area during the meeting between the leaders. He also indicated that the two
countries have made progress in advancing agreements on the exploration of oil
and gas. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2484158&CategoryId=10717;
Reuters, https://www.reuters.com/article/us-russia-venezuela/russian-deputy-prime-minister-in-venezuela-to-support-maduro-idUSKCN1WK0CF;
https://www.reuters.com/article/russia-venezuela/russian-deputy-pm-to-meet-venezuelas-maduro-interfax-idUSL5N26Q0D8)
Venezuelans Find Medical Refuge in Colombia
The Arauca pier is
already busy before sunrise. Hundreds of people arrive in boats from Venezuela
to get medical attention, and to be sure they do, they must be among the
earliest to stand in the long lines that quickly begin to form. One of the
first buildings they come across in the city, which is the capital of Arauca
province and is only separated from Venezuela by the swiftly flowing Arauca
River, is that of the Colombian Red Cross. From 4:00 am, when the humidity and
heat of the area are not yet so fierce, dozens of people, many with babies in
their arms, line up outside the medical center waiting for the doors to open at
7:00 am with hopes of being among the 120 to be assigned their turn. Some have
cardiac problems, others suffer respiratory illnesses and there are also
pregnant women who, despite their pain, know that this is the only way to get
good medical care. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2484150&CategoryId=10717)
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.
