International Trade
Miranda Governor announces Venezuela exported
10 tons of avocadoes and mangoes to Spain
Miranda State
governor Hector Rodriguez has announced that Venezuela has exported 10 tons of
avocadoes and mangoes to Spain, as a part of his state’s export drive. He made
the announcement flanked by La Guaira Mayor José Alejandro Terán, and Hector
Silva, President of the Miranda State Export Corporation. More in Spanish:
(Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/economia/venezuela-exporto-10-toneladas-de-aguacates-y-mango-a-espana/)
Oil & Energy
S&P withdraws ratings on Venezuela state
oil company PDVSA
Standard and Poor’s
withdrew its ratings On Venezuela's state oil company Petroleos de Venezuela
S.A. after multiple events of default and the company repeatedly failed to
submit its audited financials since 2017. “S&P Global Ratings withdrew
its 'SD' issuer credit rating on Venezuela-based oil and gas company Petroleos
de Venezuela S.A. (PDVSA). At the same time, we withdrew our 'D' issue-level
rating on the company's debt.
The withdrawal of our ratings on PDVSA follows our repeated attempts to obtain timely information of satisfactory quality from the company in order to maintain our ratings in accordance with our criteria and policies. PDVSA has been unable to meet the coupon payments on its 2017, 2021, 2024, 2026, 2027, and 2037 notes since November 2017 (or we have been unable to obtain a confirmation that the bondholders had received the funds by that date). This constitutes an event of default under our methodology.” (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2479770&CategoryId=10717)
The withdrawal of our ratings on PDVSA follows our repeated attempts to obtain timely information of satisfactory quality from the company in order to maintain our ratings in accordance with our criteria and policies. PDVSA has been unable to meet the coupon payments on its 2017, 2021, 2024, 2026, 2027, and 2037 notes since November 2017 (or we have been unable to obtain a confirmation that the bondholders had received the funds by that date). This constitutes an event of default under our methodology.” (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2479770&CategoryId=10717)
Venezuela’s massive blackout sparks boom in
generator sales
As Venezuela's crisis
deepens, the sale of electric generators is one of the few growth industries in
the once-wealthy oil nation, whose residents struggle to get through each day
as public services crumble. Millions of poor live at the mercy of Venezuela's
unstable power grid, but middle- and upper-class residents able to scrape
together enough dollars are buying backup generators to regain a normal life.
Even this solution isn't foolproof. Gasoline shortages are creeping across the
country, imperiling access to fuel for newly bought generators. A catastrophic
power failure has led to a scramble for generators by residents and small
businesses fearing another big outage could hit without warning, plunging their
lives once again into chaos. Some have opted for small units costing a few
hundred dollars that can pump out enough power to run a few appliances at a
time, such as using the lights and water heater for a shower. A household
living with all the amenities requires a large generator that can cost upward
of US$ 1,000 — a small fortune in a country where the typical worker earns US$
6.50 a month. The situation is especially dire in Maracaibo, once known as
Venezuela's Saudi Arabia for being at the hub of the country's now-decaying oil
industry. Power plants put out a fraction of their potential, and the lights
have flickered on and off since late-2017, when a major transmission line
burned up. The nationwide blackout in March took the lights out for eight days
in Maracaibo and sparked massive looting that shuttered many businesses. Lines
to fill up a car with gasoline stretch a mile and often require a two-day wait.
(The Miami Herald: https://www.miamiherald.com/news/business/article231504798.html)
Shell stays course on Trinidad, Venezuela gas
Shell was asked by
Trinidad and Tobago to study development options for an offshore natural gas
field that straddles the maritime border with Venezuela, while it continues
work on Venezuelan offshore gas, the European major told Argus. The cross-border
Loran-Manatee field, estimated to hold about 10 trillion cf of gas, has long
been seen by Trinidad as a key source of feedstock for its extensive gas-based
industries, led by the 14.8mn t/yr Atlantic liquefaction complex. Trinidad's
domestic gas production has been recovering since late 2017, but demand still
outstrips supply, forcing costly curtailments. Loran-Manatee covers block 6 on
Trinidad's side of the border, and block 2 on Venezuela's side. Shell acquired
a 50% operating stake in Manatee, on Trinidad's side, from fellow major Chevron
in June 2017. Chevron still holds the remaining 50%. Trinidad needs the gas to
supply its industries, while Venezuela needs export revenue and has no
infrastructure to monetize the gas on its own. Shell, like Chevron, has been
careful to reiterate that its "activities relating to Venezuela are in
strict adherence to all applicable laws, regulations, trade controls and
sanctions." PDVSA has long neglected its abundant gas reserves in
favor of oil, despite enormous suppressed demand from domestic refineries,
power stations and petrochemical plants. Little is expected to change in the
near term. Venezuela's oil-based economy is nearly paralyzed against the
backdrop of a power struggle between the Maduro regime and the US-backed
opposition. Under a transition government that National Assembly leader Juan Guaidó
is campaigning to establish, legislative reforms would open the door for
foreign oil companies to quickly tap dormant Venezuelan hydrocarbon deposits. (ARGUS: https://www.argusmedia.com/en/news/1920237-shell-stays-course-on-trinidad-venezuela-gas)
Commodities
Gas shortages, sky-high food prices plague Venezuelans
amid economic crisis
Dozens of cars lined
up alongside a gas station just after dawn on a highway in the Venezuelan city
of Maracay, in the central state of Aragua. The drivers had been waiting for
hours to buy gas, partaking in an all too common ritual in the hopes that when
it was their turn, there would be enough gas left to fuel up. The wasted trips
used up what little was left in his gas tank, and last Tuesday three men had to
push his truck from the highway down a long hill to a pump, where he was
finally able to fuel up. Venezuelans described lost days of work, anxiety at
being unable to feed their families, and endless hours waiting in lines because
of a gas shortage that's hitting the country with the world’s largest
producible oil reserves. For Venezuelans who make it to a gas pump with fuel,
filling a tank is basically free. Drivers tip gas station workers a small
amount, but there is no real fixed price to fill your tank with the government
keeping gas prices low but with the shortages it's a major problem. Hours-long
lines for gas have become more and more common, especially in states within the
interior of Venezuela, but the shortages have increasingly crept closer to
Venezuela’s capital, hitting cities like Maracay. While Caracas has been
largely spared the long lines thus far, Venezuelans in other states are in such
desperate need of gas they'll sleep overnight outside gas stations. The gas
shortages also meant disruptions to the once-reliable public transportation
system in Caracas, lengthening commutes and exposing Venezuelans to more
dangerous situations. They are also delaying food traveling from different
states in the Venezuelan interior, leading to rising costs. Even when there is
food available, the problem for many families is being unable to afford it with
hyperinflation and low wages. Many Venezuelan families rely on government
subsidized food-aid program, known in Spanish by its initials, CLAP. (NBC News:
https://www.nbcnews.com/news/latino/gas-shortages-sky-high-food-prices-plague-venezuelans-amid-economic-n1016496)
Economy & Finance
Venezuela: hyperinflation leads to new
banknotes for second time in a year
Venezuela is
releasing new banknotes for the second time in less than a year, the central
bank said on Wednesday, after hyperinflation eroded the effects of an August
2018 monetary overhaul meant to improve availability of cash. The Maduro regime
last year cut five zeroes off the currency and prices. The move was supposed to
ease shortages of cash that pushed most of the economy toward debit and credit
card operations and put heavy strain on digital commerce platforms. Banknotes
of 10,000, 20,000 and 50,000 bolivar denominations will begin circulating on
Thursday to “make the payment system more efficient and facilitate
commercial transactions”, the central bank said in statement. The largest
of those bank notes, equivalent to about US$8, is more than the minimum wage of
40,000 bolivars a month. Following the 2018 overhaul, the highest denomination
notes were 500 bolivars, which now would not be enough to buy a piece of candy.
Inflation in May reached 815,000% after peaking earlier this year above 1.7m%,
according to the opposition-run congress. (The Guardian: https://www.theguardian.com/world/2019/jun/12/venezuela-releases-new-bank-notes-bolivars-hyperinflation; Reuters,
https://www.reuters.com/article/venezuela-economy/venezuela-adds-bigger-bank-notes-due-to-hyperinflation-idUSL2N23J167;
Bloomberg, https://www.bloomberg.com/news/articles/2019-06-12/hyperinflation-forces-venezuela-to-roll-out-three-new-bills)
3M to take about US$ 160 million charge as it
deconsolidates Venezuelan operations
3M Co said on Tuesday
it would incur a pretax charge of about US$ 160 million, or 27 cents per share,
in the second quarter, as the company suspended local operations in Venezuela. The
maker of Post-it notes, and Scotch tape said in a regulatory filing that
it deconsolidated its Venezuelan subsidiary as of May 31. (Reuters, https://www.reuters.com/article/us-3m-venezuela/3m-to-take-about-160-million-charge-as-it-deconsolidates-venezuelan-operations-idUSKCN1TC2AW)
Venezuela hit with default in Saint-Gobain's
US$42 million award row
A Delaware court
clerk entered a default against Venezuela and state-owned oil company Petróleos
De Venezuela SA considering their silence in the French plastics company’s
litigation aimed at registering and enforcing a 2017 arbitral award. (Law360: https://www.law360.com/articles/1168575/venezuela-hit-with-default-in-saint-gobain-s-42m-award-row)
Convicted Venezuelan official’s Palm Beach
mansion goes for US$ 11 million in auction
For just US$ 11
million, a little piece of corrupt Venezuelan history was sold to the highest
bidder last month, courtesy of the United States government. On May 30, a Palm
Beach mansion forfeited by convicted money launderer and former national
treasurer of Venezuela Alejandro Andrade was quietly auctioned off by Customs
and Border Protection (CBP) agents. The 4,600 square-foot estate is a
5-bedroom, 4.5-bath beach getaway, complete with a spa and pool. Andrade bought
the property, located at 1290 N. Ocean Blvd., for $8 million in 2013 and
apparently let the place fall into disrepair. In 2016, neighbors complained
that renovations of the home were disruptive and had been drawn out for too
long. The home — the latest of Andrade's illegitimate riches to be auctioned
off — is markedly more luxurious than the ex-treasurer's current digs in
federal prison. In November, Andrade received a maximum ten-year sentence in a
West Palm Beach federal court after pleading guilty to accepting a stunning $1
billion in bribes as part of an illicit foreign currency scheme. Andrade began
his prison sentence in February. He is reportedly being kept in a low- to
medium-security prison in Loretto, Pennsylvania, about 80 miles outside of
Pittsburgh. (Miami New Times: https://www.miaminewtimes.com/news/government-auctions-off-palm-beach-mansion-owned-by-former-venezuelan-treasurer-alejandro-andrade-11195909)
Politics and International Affairs
Trump on disputed claim of Russian withdrawal
from Venezuela: 'Ultimately I'm always right'
President Trump on
Wednesday stood by his claim that Russia had withdrawn its forces from
Venezuela despite the Kremlin's denials, asserting that he would be proven
right in the end. Trump was asked during an Oval Office meeting with Polish
President Andrzej Duda what he knows about Russia's involvement in Venezuela
given the conflicting statements. "Well, let's just see who's right.
You know what you're going to do? You're going to see in the end who's right,"
Trump said. "You just watch it, OK?" he added. "And we'll see
who's right. Ultimately, I'm always right." Trump tweeted earlier this
month that Russia had informed the U.S. that it had removed "most of
their people from Venezuela." He offered no further information, and
officials did not elaborate on Trump's announcement. The next day, a Kremlin
spokesman told reporters that most of Russia's military specialists were still
working in Venezuela. Trump on Wednesday described the situation in Venezuela
as "in flux," and blamed the country's leaders for its descent
into a worsening economic and humanitarian crisis. "It's a very sad
thing," he said. "We're watching Venezuela very closely."
(The Hill: https://thehill.com/homenews/administration/448247-trump-on-disputed-claim-of-russian-withdrawal-from-venezuela)
Secretary Pompeo urges world leaders to find
solutions to Venezuela’s hunger crisis
Secretary of State
Mike Pompeo implored world leaders to continue to stand against Venezuela’s
Maduro’s regime amid the country’s ongoing economic and humanitarian crisis. At
a World Food Prize event Monday, Pompeo highlighted the need for progress in
agriculture to help hungry nations. He pointed to starvation in Venezuela as
evidence. “More than 60% of the country goes to bed hungry each and every
night, and many have resorted to rummaging through garbage bins to feed
themselves and their children,” he explained. “Malnourishment is so
widespread that Venezuelans refer to it as the Maduro diet.” Hunger in
Venezuela is such problems that soup kitchens have rapidly cut down on food
donations due to Maduro cutting off humanitarian aid. The Trump administration
has sent aid to neighboring Colombia to get food to Venezuelans after aid being
sent to Venezuela was blocked because Maduro claimed it was sent to embarrass
his regime. Pompeo believes the U.S. government alone can’t solve the issue. “We
all have an obligation to work each of these problems, it isn’t just a human
tragedy when we see hunger,” he stated. “When it takes hold of a
country, it can perpetuate a destructive cycle of crime and violence and
instability.” (OAN: https://www.oann.com/secretary-pompeo-urges-world-leaders-to-find-solutions-to-venezuelas-hunger-crisis/)
Moldova's parallel leader warns incumbent
against new Venezuela
Moldova’s newly
declared Prime Minister Maia Sandu said her decision to form a parallel
government in the former Soviet Republic is perilous and urged the former
ruling party still claiming power not to turn the country into a second
Venezuela. Speaking in a phone interview from Chisinau, the 47-year-old former
World Bank adviser insisted that her administration -- assuming it survives --
will be wholly pro-European even though it depends on the support of pro-Russia
Socialist Party. (Bloomberg, https://www.bloomberg.com/news/articles/2019-06-11/moldova-s-parallel-leader-warns-incumbent-against-new-venezuela)
The following brief
is a synthesis of the news as reported by a variety of media sources. As such,
the views and opinions expressed do not necessarily reflect those of Duarte
Vivas & Asociados and The Selinger Group.
