May 01, 2018

Logistics & Transport

COPA Airlines reactivates flights to Venezuela

COPA Airlines announced the reactivation of these flights from Tuesday, May Day. According to a statement from the Panamanian airline, the resumption of operations will be step by step and will begin in the cities of Caracas and Valencia, from where it will connect Venezuela daily with the rest of the continent, as well as from Maracaibo. The note specified that passengers with tickets not used or in process of refunds, issued until April 5 and with a date of travel between that date and July 5, will be allowed to use the ticket for a new reservation on their original itinerary from or to Venezuela without charging a penalty. (Prensa Latina: http://plenglish.com/index.php?o=rn&id=27679&SEO=copa-airlines-will-reactivate-flights-to-venezuela)

 

Oil & Energy

PDVSA reportedly begins interest payments on 2020 bond

Venezuela’s state oil company PDVSA reportedly has begun making payments towards US$ 100 million it owes in interest on a bond maturing in 2020 to some holders. The government began quietly halting interest payments on some US$ 50 billion in publicly traded debt last year. At least one Venezuelan bondholder committee has hired a financial adviser, ahead of potential litigation in the face of continued breaches. The latest payments would have reached some holders through U.S. custody firm DTC, the sources said on Monday. PDVSA used Citgo Petroleum, its refining unit in the United States, as 51% collateral on the 2020 bond. Venezuela may be complying with the payment to avoid putting the valuable asset at risk in a potential legal battle. (Reuters, https://www.reuters.com/article/venezuela-debt/update-1-venezuela-pdvsa-begins-interest-payments-on-2020-bond-sources-idUSL1N1S713E)

 

Venezuela oil price up in final week of April

The price Venezuela receives for its mix of medium and heavy oil fell rose during the final week of April.
According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending April 27 rose to US$ 64.28, up 93 cents from the previous week's US$ 63.35. According to Venezuelan government figures, the average price in 2018 for Venezuela's mix of heavy and medium crude for 2018 is US$ 60.28 so far. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2455614&CategoryId=10717)

 

Venezuela's offer to India: Buy crude oil at 30% discount but through cryptocurrency

Venezuela has offered India a deal – 30% discount on crude oil only if India decides to buy it through digital currency. The 30% discount on crude oil, which recently touched a whole new high of US$ 75 a barrel, seems attractive, but India's disinterest in promoting as well as trading in cryptocurrency could pose a hurdle. Venezuela's blockchain-based digital Petro is the world's first state-backed virtual currency that recently tied up with a Delhi-based digital currency exchange COINSECURE. The bitcoin trading company will now sell oil-backed cryptocurrency Petro in India. Launched last year by the Venezuelan government, Petro is set to be formally recognized after the presidential elections in the country on May 20. Venezuela's blockchain department had sent a team of experts to India in March, after which the deal was struck with COINSECURE, reported Business Standard. The report suggests Venezuela is keen on promoting this in different countries due to the several economic crises in the country. The Venezuelan government is intending to make Petro an official currency by 2020, but sanctions by countries led by the US could hurt its ambitions. The currency, tied to oil, has been called as the safest digital currency to invest by many, for Venezuela has the world's largest oil reserves of over 300 billion barrels. However, many have raised objection over its authenticity, fearing that though it would be a blockchain-based digital currency, the government would have full control over it and thus it would not be decentralized like Bitcoin. Indian imports of oil from Venezuela have fallen to their lowest levels in over half a decade. India's oil imports from Venezuela averaged around 300,000 barrels per day (bpd) between November 2017 and February 2018, a drop of about 20% from the same period a year earlier and the lowest such level since 2012, according to data from shipping sources and industry. (Business Today: https://www.businesstoday.in/current/economy-politics/venezuela-offer-to-india-buy-crude-oil-at-30-pc-discount-but-through-cryptocurrency/story/275948.html)

 

Venezuela’s oil decline reaches new depths

When Major General Manuel Quevedo became head of Venezuela’s oil industry last November, the former housing minister and national guard chief promised to boost oil output by a million barrels a day via “a complete restructuring” that would root out corruption. Six months later, though, managers at state oil company PDVSA are quitting en masse, theft has increased, and workers shout in company cafeterias that Quevedo should go. Allies such as Russia and China agree. Meanwhile, western partners such as TOTAL and CHEVRON are worried, and oil output has fallen an astonishing 23%, or 450,000 bpd.

The decline in the prospects of the world’s largest oil reserves looks set to continue. Venezuelan oil production could fall by another 500,000 bpd this year, analysts believe, boosting global oil prices further. That is especially so if the US imposes sanctions on Caracas after the May 20 presidential election, and foreign joint venture partners continue to struggle or even pull out. Medley Global Advisors, a consultancy owned by the FT, estimates that Venezuelan oil output will drop to 1.1m bpd by the end of the year, from 1.5m currently. JPMorgan estimates that production will fall to 1.2m bpd by December from 1.5m now, although the risk of its falling below 1m bpd “is very high”. Chinese and Russian representatives are meanwhile pressing Maduro to replace Quevedo, and to deploy measures to quell widespread violence and looting affecting their local workers in Venezuelan oilfields and cities, according to Argus, the specialist energy service. (Financial Times: https://www.ft.com/content/f9cbaec8-4c96-11e8-8a8e-22951a2d8493)

 

Commodities

Venezuela stops paying US$ 1 billion debt to Canadian gold miner

Venezuela has stopped making payments on more than US$ 1 billion it owes to a Canadian mining company, highlighting the country’s extreme difficulties in paying off its overseas debt. Gold Reserve sued Venezuela under the World Bank’s dispute settlement system more than eight years ago over the expropriation of its gold mining operations. The company finally agreed to a US$1.03 billion settlement in September 2016, mostly to be paid in monthly instalments that began last July. In June 2017 Gold Reserve was paid a US$ 40 million start and basically was to receive US $29.5 million on the 10th of every month until the US$ 1 billion was paid off. Venezuela also offered Gold Reserve the opportunity to partner with them in reopening a mining operation in Bolivar state. But fourth-quarter financial statements published by Gold Reserve at the end of last week show that the payments ended in November. It follows an apparent cessation of payments to holders of Venezuela’s sovereign bonds in September last year. Venezuela’s dispute with Gold Reserve is one of several involving foreign mining companies that invested in the country as the government sought to exploit what are thought to be some of the world’s largest deposits of gold and other metals. But gold mining has become chaotic as foreign companies have been forced out and illegal miners have taken over, often overseen by the army. “It’s completely haphazard, no companies are doing it, only wildcatters,” said Russ Dallen of Caracas Capital, an investment bank, who revealed the cessation of payments to Gold Reserve in a note to his clients. Mr. Dallen said gold from unregulated mining channeled to the central bank by the army had contributed about US$ 100 million to Venezuela’s foreign reserves in February. But gold production, too, has fallen, from an average of nearly 11 tons a year in the five years to 2009, to just over 500kg a year since 2015, according to Bloomberg data from the World Bureau of Metal Statistics. (Financial Times: https://www.ft.com/content/3c6180da-4c76-11e8-97e4-13afc22d86d4; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2455452&CategoryId=10717)

 

Artisanal miners in Venezuela operate under illegal unions

Following an operation against illegal mining in the north-central Carabobo state, General Juan Carlos Du Boulay Perozo, Commander of the Carabobo Defense Operating Zone No. 45, said that illegal miners in Venezuela have created “unions” in charge of controlling gold trading activities. In the region under Du Boulay’s oversight, such illicit organizations operate in an area called Negra Matea, where food items are also sold illegally, and people can only pay by cash. In the past few years, illegal extraction of gold and other metals and their subsequent smuggling to foreign markets has started to be seen by many as a way to navigate the crisis. According to Du Boulay, in the areas where such activities take place, sex work, drug trafficking, extortion and targeted murders have become the new normal. The General also said that illegal operations are becoming more and more “industrialized,” as his team of 200 officials was able to corroborate during today’s operation. They found hoses and pumps that suggest that placer mining is happening in the area, as does the extensive damage they noticed on the topsoil. Authorities also noticed that the nearby El Torito river and its tributaries, which provide drinking water to different towns in the region, are getting polluted by such activities. (Mining: http://www.mining.com/artisanal-miners-venezuela-operate-illegal-unions/)

 

Economy & Finance

Venezuela faces heavy bill as grace period lapses on China loans

A grace period on Chinese loans to Venezuela has lapsed, potentially depriving the cash-strapped nation of billions of dollars in desperately needed oil revenue this year. China eased the payment terms two years ago on some US$ 19 billion in oil-for-loan deals, under which Venezuela sends shipments of crude oil and fuel to pay off debt, allowing Venezuela to make interest-only payments. But the grace period has lapsed without a renewal in recent weeks. That could deprive Venezuela of some US$ 7 billion in annual revenue, according to a Reuters’ estimate based on current oil prices, a crippling blow to a country already struggling to import basic goods like food and medicine. Venezuela continues to press for an extension but is responsible for making the full payments while the talks continue. The sharply increased payments would absorb roughly an additional 305,000 barrels per day (bpd) of Venezuela’s oil production, which has fallen to a 33-year low this year. “China maintains its position of not increasing its exposure to Venezuela and is adjusting conditions, given that the price of oil is now US$ 20 per barrel above its level when the (grace period) was created,” says an informed source. China’s Foreign Ministry, asked about the negotiations, said that cooperation was proceeding smoothly, and the loan contracts were in accord with international standards. Caracas could seek to preserve cash flow by sending those barrels to other clients who pay cash, defaulting on its obligations to China in the process and straining ties with a crucial political ally and its largest financier. Beijing would have little incentive to pursue an embarrassing commercial dispute with a government it supported for years and may simply turn a blind eye to a default. (Reuters, https://www.reuters.com/article/us-venezuela-china/exclusive-venezuela-faces-heavy-bill-as-grace-period-lapses-on-china-loans-sources-idUSKBN1HY2K0)

 

Venezuela minimum wage up 155%, down 13% in dollar terms

Venezuela raised its minimum wage to 1 million bolivars per month on Monday, the third increase this year that puts the figure at just US$ 1.61 at the black-market exchange rate. President Nicolas Maduro’s announcement of the 155% rise - or 13% fall, in dollar terms - came three weeks before a presidential election. It accompanies a monthly food ticket now worth just over 1.5 million bolivars. Speaking to AFP, Marcela Maspero of the UNETE, one of Venezuela's biggest unions, described the measure as a "delusion" because it undermines the basis for calculation of employee benefits. (Reuters, https://www.reuters.com/article/us-venezuela-economy/venezuela-minimum-wage-up-155-percent-down-13-percent-in-dollar-terms-idUSKBN1I11V9)

 

In Venezuela, 5 years of severance pay now buys a coffee

When Yolanda Abreu got her check for severance pay after five years working as a cardiologist, she let out a laugh of sheer disbelief: it was barely enough for a cup of coffee. Like her, millions of Venezuelans have seen their salaries decimated by rampant hyperinflation that is expected to drive prices up by 13,000% this year, IMF figures show. Her story hit the headlines after she tweeted a photo of the check for 156,584.29 bolivars, which equates to about US$ 0.20 on the black market. If she had received the check when she resigned in January 2017, it would have been worth $45. But her severance pay was decimated by the country's chronic hyperinflation and the accelerated collapse of the bolivar. Within a week, her indignant outburst had been retweeted 11,000 times, and commented on more than 1,400 times, with many relating similar stories. On the eve of International Workers Day, Venezuela's embattled President Nicolas Maduro moved to double the monthly minimum wage, raising it by 95.4% to 2,555,500 bolivars — or US$ 37 (30 euros), according to the central bank's official DICOM rate. But access to such a favorable rate is very limited for Venezuelan citizens and companies, meaning they have to use the black market where the same sum is worth just US$ 3.20 — just about enough for two kilos (4.4 pounds) of chicken. (Daily Nation: https://www.nation.co.ke/news/world/In-Venezuela--five-years-of-severance-pay-now-buys-a-coffee/1068-4538706-2y0x9gz/index.html)

 

16 cryptocurrency exchanges approved to launch in Venezuela, list Petro – none has

President Nicolas Maduro has reportedly approved the ‎registration of 16 cryptocurrency exchanges in the country, months after ‎introducing regulations for ‎the emerging space. According to local publication Correo del Orinoco, the authorities granted ‎approval to for the exchanges to list Venezuela’s newly released ‎cryptocurrency, the Petro.‎ Although he hopes that these exchanges will start listing Petro soon, none of them did confirm the inclusion of the Venezuelan government backed cryptocurrency. Maduro is also claiming that the pre-sale of Petro has raked in US$ 3 ‎billion and a record number of verified purchases. However, some analysts argue the vast majority ‎of the frenzy ‎surrounding Petro is either a scam or far too ambitious for ‎‎its own good.‎ Instead, ‎Venezuelans’ Bitcoin trading volume has ‎jumped to the equivalent of US$ 1.009 ‎million in bolivars on April 17.‎ Just this weekend, Venezuelan authorities shut down two cryptocurrency exchanges, ordering them to suspend operations as part of a crackdown against the growing bolivar-to-bitcoin market. On the same day, the Prosecutor General seized 1,382 bank accounts with balances exceeding US$ 10.6 million. (Finance Magnates: https://www.financemagnates.com/cryptocurrency/news/16-cryptocurrency-exchanges-get-approval-launch-venezuela-list-petro/)

 

Politics and International Affairs

United States puts conditions on lifting Venezuela sanctions

US President Donald J. Trump’s administration will consider lifting sanctions on Venezuelan officials provided they take steps to ease the political, humanitarian, and economic crisis that is gripping their country, a US State Department official said at the Atlantic Council in Washington on April 30. Noting that most of the US sanctions are on individual members of the regime, Michael Fitzpatrick, deputy assistant secretary in the State Department’s Bureau of Western Hemisphere Affairs, said: “What we are trying to do is to ensure that… we are not complicit in the wholesale looting of the financial coffers of Venezuela.”  Describing the sanctions as a means to an end, Fitzpatrick said that the Trump administration would lift them provided the targeted individuals show a willingness to respect the constitution and the National Assembly and open a humanitarian corridor.  “Things have changed dramatically” in Venezuela, Fitzpatrick said. He referred to moves by Venezuelan President Nicolás Maduro’s government to constrict the democratic space in the country, hyperinflation, and a sharpening humanitarian crisis that is causing people to flee. He said that the Trump administration is ramping up both its support for countries that are taking in Venezuelan refugees as well as a diplomatic effort to end the crisis that has caused the outflow in the first place. The Trump administration, meanwhile, is looking at ways to support independent actors in Venezuela—whether members of the National Assembly freely elected in 2015 or journalists—to “ensure that what’s left of the social fabric is maintained intact,” said Fitzpatrick. (The Atlantic Council: http://www.atlanticcouncil.org/blogs/new-atlanticist/united-states-puts-conditions-on-lifting-venezuela-sanctions)

 

Venezuela, Panama restore envoys and resume airline service

Venezuela and Panama will restore ambassadors and allow for the resumption of airline service, turning the page on a diplomatic dispute between the two countries. Venezuela this month cut commercial ties with a group of Panamanian officials and companies, including regional airline COPA, for alleged involvement in money laundering, prompting both countries to recall ambassadors. The two governments said in a joint statement that they would send back their respective ambassadors, “reestablish air connectivity” and “maintain an open and respectful diplomatic dialogue.” (Reuters: https://www.reuters.com/article/us-venezuela-diplomacy/venezuela-panama-to-restore-envoys-and-resume-airline-service-idUSKBN1HX3IM)

 

Without water & electricity, Venezuelans protest on Maduro's doorstep

A nationwide crisis in water and electricity services brought demonstrators to the gate of the Miraflores Presidential palace last Thursday night, with the crisis intensifying Friday afternoon, when a water main broke and destroyed several houses in Caracas. Although he is in the first week of a controversial re-election campaign, embattled head of state Nicolas Maduro did not emerge to address the protest, even if it took place only meters away from "The People's Balcony", from which he -- as his mentor and predecessor, Hugo Chavez used to do -- regularly addresses the crowds. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2455613&CategoryId=10717)

 

Venezuelan opposition nominees study having a single presidential candidate

Two of the five candidates for Venezuela’s presidential elections next May 20, studied the possibility of having a single candidate, the first of the nominees announced Saturday, an option which another of the candidates, Henri Falcon, has not rejected. Confirmation of the meeting between Luis Alejandro Ratti and Javier Bertucci supports the intentions shown in recent days by these three candidates to join forces against their powerful opponent, President Nicolas Maduro. Ratti said he hoped to have more such talks with Falcon and officials of the National Electoral Council (CNE). Bertucci said nothing about their meeting during a party rally in San Felix in the southeastern state of Bolivar, nor in his tweets. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2455560&CategoryId=10717)

 

OP-ED: Maduro set to abolish voting rights and other freedoms, Colombian president says

It’s hard to know what will happen next in Venezuela, but what Colombian President Juan Manuel Santos told me in an interview last week should raise alarm bells throughout the hemisphere. Santos said during a visit to Miami that Venezuelan President Nicolas Maduro’s hand-picked Constituent Assembly is drafting a new constitution that would be made public after Venezuela’s May 20 presidential elections. The new charter would officially turn Venezuela into a Cuban-style dictatorship, he said. Santos told me that Maduro’s Constituent Assembly is secretly drafting a new constitution of about 350 articles and 18 “transitory clauses” that would create a voting system like in Cuba, where government-controlled “mass organizations” elect local officials who in turn elect legislators, who ultimately pick the country’s top leaders. “The information I have is that among the proposed constitution’s articles is one that would abolish the universal right to vote and establish a system of corporative elections similar to that of Cuba,” Santos told me. “That amounts to the formalization of a Soviet-styled dictatorship.” Santos added, “I also understand that they will establish a series of changes in things such as the definition of treason to the fatherland.” The expanded definition of treason would allow the Maduro regime “to repress any criticism and to have more supposedly legal instruments to be able to further repress the population.” Asked where he got that information, Santos said it comes from “intelligence reports,” without elaborating. Maduro may radicalize his leftist revolution to prevent a popular rebellion as the country descends into near total chaos, Santos said. Venezuela is also creating neighborhood paramilitary cells to try to control any kind of dissent, Santos said. “At this very moment, they are creating about 13,000 cells throughout the country, with 40 militants per cell,” Santos told me. “Those are the people who, at the very moment there is an anti-government protest, go and repress it. Just like with Cuba’s neighborhood watch committees.” If Santos is right and Maduro goes ahead with these plans, we could soon see a Syrian-type refugee crisis in the Americas. By Andrés Oppenheimer.

 

Malaria outbreak in Venezuela spreading North into the Americas

The WHO’s 2017 annual malaria report shows some countries are beginning to see unfortunate reversals in the gains achieved over the past years. Venezuela is currently the leader in the Americas with 406,000 cases reported in 2017, which is the largest increase worldwide said the WHO. This data represents a 69% increase from 240,000 cases in 2016. "In the 1960s, when the WHO launched its first campaigns, Venezuela was the first country to have entire regions declared free of the (malaria) disease," Pedro L. Alonso, MD, Ph.D. said. "Today, however, it has the largest increase in the world," he said. Additionally, the WHO reports Venezuelan migrants are carrying the mosquito-borne disease into Brazil and other parts of Latin America. (Precision Vaccinations: https://www.precisionvaccinations.com/venezuela-reports-406000-malaria-cases-during-2017)

 

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.

October 24, 2016

International Trade

Imports are down 40% from last year

Despite reports by the Port Authority that in August-October 1,562,426 tons of food from Brazil, Mexico, Jamaica and Colombia have arrived here, Felix Jiménez, President of the Puerto Cabello Chamber of Commerce called this insufficient to supply demand because imports have dropped 40% as compared to 2015. He says high costs have also made products inaccessible to consumers. Eduardo Quintana, President of the La Guaira Chamber of Commerce says increased imports are an attempt to fill store shelves, but have failed “each day there are more people rummaging through garbage for food”, He adds that 90% of all imports go to state agencies, and only 10% to the private sector. Quintana added that “the private sector is importing food at the request of some governors. That is not the solution. The situation will not be solved unless there is production”. Bolipuertos has reported that in two months they have received: 465,010 tons of wheat; 362,074 tons of yellow corn; 293,637 tons of rice; 150,000 tons of white corn; 120,000 tons of sugar; 19,994 tons of soy flour; 16,300 tons of barley; 5,932 tons of white beans; 4,177 tons of powdered milk; 2,994 tons of black beans; 1,404 tons of coffee; 880 tons of frozen beef; 930 tons of processed pasta; 198 tons of pasta; 979 head of cattle. More in Spanish: (El Nacional: http://www.el-nacional.com/economia/Importaciones-disminuido-respecto-ano-pasado_0_943705890.html

 

Cargo that has arrived at Puerto Cabello:

• 30,000 tons of sugar for state agency CASA
• 2,948 tons of white beans
• 880 tons of black beans
• 418 tons of beef
• 222 tons of whole milk
• 220 tons of pasta
• 110 tons of medication
• 396 tons of sanitary napkins
• 308 tons of toilet paper, all consigned to state agency CASA

More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/descargan-30-mil-toneladas-az%C3%BAcar-puerto-cabello)

 

Over 830 tons of food and basic products arrived from Jamaica arrived at El Guamache port in Margarita Island, including pasta, sugar, milk, cooking oil, white rice, sanitary napkins, soap, cosmetics, and other personal care products. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34678; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/arribaron-m%C3%A1s-830-toneladas-alimentos-al-puerto-internacional-guamache)

 

Venezuelan economic aid to Nicaragua down 10.9% first half 2016

Venezuela’s oil loan-centered cooperation with its traditional ally Nicaragua fell by 10.9% during the first half of 2016 as compared to the same period last year, according to the Central Bank of Nicaragua (BCN). The drop followed a 43.8% decrease in 2015 from 2014, when Venezuelan cooperation hit US$ 661.9 million, according to official numbers. Venezuelan cooperation funds, which have added up to US$ 4.65 billion since Nicaraguan President Daniel Ortega took office in January 2007, are administered outside domestic budget laws, a move criticized by many here. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-economic-aid-nicaragua-down-109-first-half-2016_623573)

 

Logistics & Transport

AVIANCA has restored service to Venezuela after plane incident

AVIANCA has restored service to Venezuela It had suspended after its Boeing 787, which was flying from Madrid to Bogota with 248 passengers on board, was harassed by a Venezuelan military plane, nearly resulting in a mid-air collision. The crew of the Colombian airliner contacted Bogota to report the proximity of another aircraft, which was following it so close that the Traffic Collision Avoidance System was activated in the AVIANCA aircraft. Colombian Defense Minister Luis Carlos Villegas discussed the incident with Venezuelan counterpart Vladimir Padrino and Foreign Minister Delcy Rodríguez said President Maduro had ordered an investigation into the matter. Colombian President Juan Manuel Santos issued a statement calling for calm and said all was settled. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423735&CategoryId=10717; Bloomberg, http://www.bloomberg.com/news/articles/2016-10-22/avianca-jet-intercept-to-be-probed-by-venezuela-colombia-says; Reuters, http://www.reuters.com/article/venezuela-colombia-idUSL1N1CS0AI; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/internacionales/2016/octubre/23/173213=presidente-santos-hizo-llamado-a-la-calma-tras-incidente-entre-avianca-y-aeronave-militar-venezolana; http://www.noticierovenevision.net/economia/2016/octubre/23/173198=avianca-reanuda-vuelos-a-caracas-tras-aclarar-incidente-con-el-avion)

 

Low cost COPA airline to service Caracas

COPA Airlines will launch a low cost airline called WINGO that will include Caracas in its service route, along with Cancún (México), Havana, Aruba, Punta Cana (Dominican R.), Mexico City, San Andrés (Colombia), Panamá, Quito, and Cartagena. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/negocios/empresas/nueva-aerolinea-de-bajo-costo-de-copa-holdings-via.aspx#ixzz4NiQQAB3A)

 

Oil & Energy

PDVSA gets US$ 2.8 billion of US$ 7.1 billion in holders to extend

State oil company Petroleos de Venezuela, S.A. (PDVSA) today announced that the offers to exchange its 5.250% Senior Notes due 2017 and 8.50% Senior Notes due 2017 for new 8.50% Senior Secured Notes due 2020 secured by 50.1% of CITGO has closed. As total consideration to be paid for the validly tendered Existing Notes pursuant to the Exchange Offers, PDVSA will issue an aggregate principal amount of approximately US$ 3,367 million of New Notes on the Settlement Date, subject to rounding adjustments as set forth in the Offering Circular and as adjusted for any delays in processing tender instructions. Investors tendered approximately US$ 2,799 million of the US$ 7.1 billion of the 2017 bonds, which is approximately 39.43% of the aggregate principal amount outstanding.  "The Company intends to waive any conditions to the Exchange Offers," PDVSA said, meaning that they were accepting less than the 50% they were requiring. Last week, oil giant ConocoPhillips filed a lawsuit against PDVSA and CITGO trying to block the use of CITGO as collateral, calling it a "fraudulent transfer" to avoid their creditors. CRYSTALLEX -- owed US$ 1.4 billion -- has also alleged the same fraud in its suits against Venezuela, PDVSA and CITGO. Venezuela and PDVSA must pay US$ 1.8 billion this month and US$ 3 billion next month in debt interest and maturities. Half of the US$4 billion in PDVSA 8.5% of November 2, 2017, must be paid this November 2 unless the swap is successful in reducing that number. (Latin American Herald Tribune: http://laht.com/article.asp?CategoryId=10717&ArticleId=2423781)

 

Maduro on whirlwind Mid East tour to try to bolster oil prices

President Nicolas Maduro has so far visited Azerbaijan, Iran, Saudi Arabia and Qatar in a whirlwind tour aimed at bolstering international oil prices. He met with Azeri President Iham Aliev; and Iran’s President Hasan Rohani, who declared his nation will support any measure that aims for “stabilizing oil markets, fair price and equitable quotas for producers”. He then travelled on to Saudi Arabia where he held a meeting with Crown Prince Mohamed Bin Nayef, which Maduro called “positive” and said he was “more optimistic than ever, we are closer to an agreement than ever”. Maduro then moved on to Qatar, where he was met by Economics Minister Sheik Ahmed bin Jassim Al Thani. His travelling party includes his wife, Cilia Flores; Foreign Minister Delcy Rodríguez, Oil Minister Eulogio Del Pino; Information Minister Ernesto Villegas, and the Secretary of the Presidency, Admiral Carmen Melendez. Maduro says he will also attend the OPEC meeting scheduled to be held in Vienna on November 28-29^th to seek an agreement. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/presidente-maduro-contin%C3%BAa-catar-gira-para-promover-estabilidad-precios-del-crudo; Noticiero Venevision: http://www.noticierovenevision.net/economia/2016/octubre/22/173122=iran-afirma-que-apoya-toda-medida-que-se-tome-para-estabilizar-precio-del-crudo; http://www.noticierovenevision.net/economia/2016/octubre/23/173159=maduro-espera-lograr-acuerdo-con-paises-opep-y-no-opep-para-congelar-la-produccion-de-crudo)

 

Hooded gunmen threatened Venezuela congressional committee investigating PDVSA US$11 billion missing

A half-dozen hooded gunmen tried to break into the offices of the comptroller committee at the National Assembly on Friday, according to the chairman of the opposition-led committee, who said the incident was likely politically motivated. The committee had issued a report accusing PDVSA of corruption, saying about US$ 11 billion in funds went missing from the state-run oil company while Rafael Ramirez was at the helm from 2004-14. "What a coincidence," said committee chairman Freddy Guevara in a statement. "Armed 'colectivos' arrived to threaten the personnel just two days after we denounced big corruption cases in PDVSA," added Guevara, in reference to pro-government militant grassroots groups denounced by opponents as thugs. (Reuters, http://www.reuters.com/article/us-venezuela-pdvsa-idUSKCN12M01E)

 

Venezuela oil price slips after 3 weeks of gains

The price Venezuela receives for its mix of medium and heavy oil slipped slightly after 3 straight weeks of gains as OPEC nations continue discussions over an oil output cut. According to figures released by the Ministry of Petroleum and Mining here, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending October 21 was US$ 43.03, down 6 cents from the previous week's US$ 43.09.
According to Venezuelan government figures, the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$ 33.81 for the year to date. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423742&CategoryId=10717)

 

Commodities

Coffee growers refuse to turn over 50% of their product to government CLAP system

An assembly of coffee growers held in Trujillo state have roundly rejected a government order that would force them to sell 50% of their products to government sponsored Local Supply and Production Committees (CLAP) at controlled prices. The local mayor asked the Maduro regime to reconsider. More in Spanish: (Ultima Hora Digital, http://ultimahoradigital.com/2016/10/caficultores-rechazan-entregar-el-50-de-su-produccion-a-los-clap/)

 

Economy & Finance

Supreme Tribunal here asked to rule if Venezuela and PDVSA can pay bonds in bolivars

A writ was introduced before Venezuela’s Supreme Justice Tribunal (TSJ), asking the court to rule on whether the Central Bank or troubled state oil company PDVSA can pay bondholders in the local currency, Bolivars, instead of in U.S. dollars The writ specifically mentions three issues of “bonos Bolivar-dollar” -- PDVSA 16, PDVSA 17 and PDVSA 17N -- bonds that were issued during the presidency of Hugo Chavez in the local Venezuelan bond market, priced and sold initially in Bolivars, but then resold in exchange for U.S. Dollars in the secondary markets. The Supreme Tribunal was also asked to decide on the debt of the Republic. All in all, Venezuela and PDVSA have US$ 70 billion in U.S. dollar bond debt, with US$ 3.3 billion due to be paid in the next week.  Between now and the end of 2017, Venezuela and PDVSA must pay US$ 15 billion in U.S. dollar bond interest and maturities. All PDVSA contracts with bondholders specifically say that they are signed under the laws of New York state and will be paid in US dollars. The writ was lodged by a corporation called XT46. Oil Minister and PDVSA President Eulogio Del Pino called the action “sabotage”. International analysts have two theories on the move: One is that PDVSA is behind the action in order to scare bondholders into a swap; and another believes some third party made the move in order to lower the price of the bonds. Bond conditions specify that the only way such bond payments can be made in another currency is through the consent of 100% of all bondholders. (Latin American Herald Tribune: http://laht.com/article.asp?ArticleId=2423544&CategoryId=10717); and more in Spanish: (El Nacional: http://www.el-nacional.com/economia/Contratos-Pdvsa-tenedores-prohibe-bolivares_0_943105957.html)

 

Politics and International Affairs

National Assembly accuses Maduro of staging a coup, opens proceedings to depose him, replace Elections Council

Venezuela’s opposition-led Congress, consistently undermined by the executive and judicial branches since taking control about 10 months ago, upped the ante on Sunday. The legislature approved a series of actions in response to last week’s decision by the National Elections Council (CNE) to halt an opposition signature drive after four provincial courts called it fraudulent and issued rulings putting a halt to the effort. Four ruling party governors, alleging fraud but presenting no public evidence, had requested injunctions from the courts earlier Thursday. The country’s powerful ruling party vice president, Lieutenant Diosdado Cabello, went even further, saying that opposition leaders should be jailed. In response, the legislature voted to:

• Charge the Maduro regime with perpetrating a coup d'etat and declare that the constitutional order has broken down
• Ask international organizations for help in defending the Venezuelan people
• Call on the Venezuelan armed forces to disobey any order which is unconstitutional or goes against human rights
• Bring formal charges at the International Criminal Court and all other relevant organizations against judges and members of the National Elections Board responsible for suspending the recall referendum process, along with officials responsible for politically persecuting the Venezuelan people
• Start immediate proceedings to name new Supreme Court judges and members of the National Electoral Council
• Urged Venezuelans to stand up in defense of the constitution.
• Convene again on Tuesday, October 25th, to begin proceedings that will determine the status of the Presidency of Venezuela within the Constitution.

Julio Borges, leader of the opposition majority bloc, also said that the opposition would bring a political trial against President Maduro "to get to the bottom of his role in the break with democracy and human rights here". Hector Rodríguez, pro-regime minority leader in the Assembly, says the opposition has made “mistakes in contempt” of established powers, and said that the halt in recall procedures were just what his side expected. The session was tense and angry, with both government and opposition lawmakers giving fiery speeches. Analysts say the resolutions passed on Sunday are largely symbolic and unlikely to have much effect as the government and the Supreme Tribunal have so far sabotaged any attempts by the opposition to push through bills which President Maduro opposes. The opposition will likely look abroad for help in laying pressure on the government, in particular to the regional body Organization of American States (OAS). OAS head Luis Almagro has previously threatened to invoke the Inter-American Democratic Charter, which could lead to sanctions being imposed on Venezuela. (BBC News: http://www.bbc.com/news/world-latin-america-37747849; Bloomberg, http://www.bloomberg.com/news/articles/2016-10-23/venezuela-s-congress-moves-to-challenge-president-supreme-court; El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelas-maduro-high-court-allegedly-perform-congress-functions_623574; The Wall Street Journal: http://www.wsj.com/articles/venezuela-electoral-officials-suspend-presidential-recall-referendum-process-1477010629; and more in Spanish: El Nacional, http://www.el-nacional.com/politica/Parlamento-llamo-rebelion-popular_0_944905617.html; Noticiero Venevisión, http://www.noticierovenevision.net/politica/2016/octubre/23/173218=julio-borges-declaro-en-rebelion-a-la-an-tras-ruptura-del-hilo-constitucional-; El Universal, http://www.eluniversal.com/noticias/politica/rodriguez-dice-que-parlamento-comete-errores-desconocer-los-poderes_623855)

 

Pro-Maduro mob attacks National Assembly in session for debate over Maduro’s removal

The four-hour extraordinary session of the National Assembly in Caracas, was interrupted for about 30 minutes after government supporters breached security and threatened lawmakers on the National Assembly floor, A mob of dozens of pro-Maduro armed supporters dressed in red and screaming pro-regime slogans burst into the National Assembly while legislators were debating ways to depose President Nicolas Maduro from office. They met no resistance from the National Guard in charge of security at the Congress. Once inside the Chamber, they scuffled with legislative security personnel as some pro-regime legislators tried to calm them down. Downtown Caracas mayor Jorge Rodríguez suddenly appeared on site and ordered them to back off. The session was suspended for half an hour while they withdrew and the session reconvened under National Assembly President Henry Ramos Allup. At least two people were wounded. The interruption was described in very different ways by the two rival sides. Opposition lawmaker Julio Borges posted a video of the protests and called it "an attack on Venezuela's parliament". Government lawmaker Diosdado Cabello on the other hand defended those who had interrupted the session, saying they had only been protecting the legitimate government and would do so another 1,000 times. He also accused the National Assembly of carrying out its own coup d'etat. (BBC News: http://www.bbc.com/news/world-latin-america-37747849; and more in Spanish: Infolatam: http://www.infolatam.com/2016/10/23/chavistas-irrumpen-en-la-camara-en-debate-por-posible-destitucion-de-maduro/; El Nacional: http://www.el-nacional.com/politica/asalto-Parlamento-obligo-chavismo-violenta_0_944905598.html)

 

Opposition calls for nationwide protests after recall bid halted

Venezuela’s MUD opposition alliance has called for nationwide demonstrations on Oct. 26 to protest the electoral authorities’ decision to suspend a presidential recall referendum campaign. “That day will be the start of a nationwide mobilization. We’d already warned (this would happen). On Wednesday, we’ll take Venezuela from end to end, every corner of the country. I hope to see the people mobilized to restore the constitutional order,” former presidential candidate Henrique Capriles said at a press conference along with the MUD’s other top leaders.
Capriles, who spearheaded the campaign to oust socialist President Nicolas Maduro, said Wednesday’s “Takeover of Venezuela” would not be like the Sept. 1 mass demonstration in Caracas when hundreds of thousands of anti-government marchers withdrew at 1:00 p.m., but instead would be carried out in all 23 states as well as the nation’s capital. Capriles has said they could take protests right up to the Miraflores Presidential Palace. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423700&CategoryId=10718; Bloomberg, http://www.bloomberg.com/news/articles/2016-10-21/venezuela-elections-body-suspends-recall-vote-against-maduro; Reuters, http://www.reuters.com/article/venezuela-politics-idUSL1N1CR0D1)

 

Maduro calls for peace and dialogue after recall process halted, says the right is trying to take over power

In a broadcast from Azerbaijan, President Nicolas Maduro called on Venezuelans, and particularly his opponents, to preserve peace and dialogue following a decision by the National Elections Council to suspend a scheduled voter signature drive aimed at triggering a recall referendum against him. He said that “no one should go crazy”. He later sent a video message from Saudi Arabia, where he was discussing global oil prices. In it he said, "The revolution will continue to win despite the constant pretentions of the right which is trying to take over power by unconstitutional means." (BBC News: http://www.bbc.com/news/world-latin-america-37747849); and more in Spanish: (Infolatam: http://www.infolatam.com/2016/10/23/maduro-llama-a-la-paz-y-al-dialogo-tras-suspension-proceso-para-revocatorio/)

 

Women march after Venezuela referendum halted

Led by women dressed in white, several thousand Venezuelans marched through Caracas on Saturday in the first of what the opposition hopes will be growing protests against the quashing of a referendum to remove President Nicolas Maduro. The opposition coalition, seeking to end 17 years of socialism here, says this week's suspension of its drive for a plebiscite against the unpopular leader shows Venezuela has abandoned democracy. They called on the Armed Forces to restore constitutional rights. (Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN12M0SY)

 

Local court bans opposition leaders from leaving the country

A local court in Valencia has banned Henrique Capriles Radonski and seven other opposition leaders from leaving the country, the former presidential candidate. The ban also applies to Secretary-General of the Democratic Unity Roundtable (MUD), Jesus Torrealba. The order is addressed to the chief of the country’s immigration agency, SAIME, Juan Carlos Dugarte. Besides Capriles and Torrealba, the other opposition leaders included in the order are Ramon Jose Medina, Jose Luis Cartaya, Oscar Antonio Barreto, Ricardo Francisco Sucre, Luis Ernesto Aparicio and Arnoldo Gabaldon. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423639&CategoryId=10717)

 

Lopez rejects dialogue overture by Panama’s Torrijos after recall suspension

Imprisoned Voluntad Popular leader Leopoldo Lopez received former Panamanian president Martín Torrijos in his cell to discuss a dialogue between the regime and its opposition here. He later tweeted that dialogue “is not possible after the recall referendum was suspended, robbing the people of the right to express themselves”. He called on all Venezuelans to take part in the takeover of the entire nation called up by the opposition Democratic Unity coalition (MUD) this coming Wednesday. Torrijos is again in Venezuela, along with Spain’s former President José Luis Rodríguez Zapatero, on behalf of the Union of South American Nations (UNASUR) and at the invitation of the Maduro regime, to try to set up talks between both sides here. A representative of Pope Francis I is expected to join the efforts. Lieutenant Diosdado Cabello, Vice President of the ruling PSUV party and considered the number two man within the Maduro regime, says that they “are expecting the arrival of a Papal representative” to join the efforts. He added that the Maduro regime would not accept any preconditions to sit down to talks, and that the visitors would not operate as intermediaries but simply as facilitators. The opposition insists it will not sit down to talks unless the Constitutional right to a recall referendum is guaranteed. More in Spanish: (Infolatam: http://www.infolatam.com/2016/10/23/zapatero-y-torrijos-vuelven-a-venezuela-para-impulsar-el-dialogo-politico/; El Universal, http://www.eluniversal.com/noticias/politica/leopoldo-lopez-recibio-visita-expresidente-panameno-torrijos-prision_623859)

 

OAS Secretary General says Maduro is no longer legitimate, calls for "concrete actions" on Venezuela

The Secretary General of the Organization of American States (OAS), Luis Almagro, says “only dictatorships strip citizens of their rights, ignore the legislature and hold political prisoners”, and adds that President Nicolas Maduro has “lost all of his original legitimacy after depriving the Venezuelan people without electoral rights”.  He called on nations in the region to act within Article 20 of the Inter American Democratic Charter, and “take specific steps to defend democracy in Venezuela”. Almagro made his statements after the National Electoral Council (CNE) here suspended the process of the collection of signatures to convene a recall referendum, an action he regarded a breakdown of the democratic system. (Latin American Herald Tribune: http://www.laht.com/article.asp?ArticleId=2423701&CategoryId=10717); and more in Spanish: (El Nacional: http://www.el-nacional.com/politica/Solo-dictaduras-despojan-ciudadanos-derechos_0_944305665.html)

 

Twelve major OAS member nations express concern over halting of recall process; Bolivia slams Almagro.

Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Honduras, Guatemala, México, Peru, the United States and Uruguay have issued a joint statement expressing deep concern over a decision by the National Elections Council here to “postpone the 20% voter signature drive required to call a recall referendum” against President Nicolas Maduro. They asked that the issue soon be resolved in a “peaceful way”, and said the move to stop the recall “hurts the chances of starting a dialogue” to find a peaceful way out and find lasting solutions that promote democracy, social stability, full respect for human rights, separation of powers, and stronger institutions. For his part, Bolivian President Evo Morales criticized OAS Secretary General Luis Almagro for his “interventionist conduct”, called him an “imperial puppet”, and said his nation would “continue defending the Venezuelan people”. More in Spanish: (Infolatam: http://www.infolatam.com/2016/10/23/doce-paises-oea-muestran-preocupacion-por-suspension-de-revocatorio-de-maduro/; and more in Spanish: Noticiero Venevisión, http://www.noticierovenevision.net/internacionales/2016/octubre/23/173191=morales-condena-la-)

 

Chairman of Roman Catholic Bishops Conference calls on Venezuelans to avoid violence

Monsignor Diego Padron, Chairman of Venezuela’s Roman Catholic Bishops Conference (CEV) says that the people of Venezuela have “suffered a hard blow”, but calls on a halt to any action that leads to violence, “because we know that the result of violence is more violence”. He said the CEV had not yet met to consider the recent move by the National Elections Council, but “is convinced the nation can move forward under any circumstance”.  He added that “the people must remain united in the knowledge that these evils can be overcome”. More in Spanish: (Infolatam: http://www.infolatam.com/2016/10/23/presidente-de-conferencia-episcopal-venezolana-pide-evitar-la-violencia/)

 

Uribe says Venezuela should not be involved in Colombian peace process

Colombia’s former President Álvaro Uribe called Venezuela an “incorrigible dictatorship” which should be suspended from the OAS and UNASUR and all international organizations, and should no longer continue involved as a facilitator in Colombia’s peace talks with the FARC guerrilla. He called on the Venezuelan military, police and judges to defend democracy. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/internacionales/2016/octubre/23/173209=uribe-expreso-que-venezuela-no-deberia-ser-garante-del-proceso-de-paz-en-colombia)

 

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.