Oil &
Energy
Big investors shun Venezuela’s flagship oil industry
event
Venezuela’s biggest annual gathering of oil investors
used to be a memorable affair: The deal-making could run into the billions. This
year’s event was a far cry from previous years’ bashes, where hordes of
investors would clamor for a stake in the country with the world’s largest oil
reserves. Organizers said slightly more than 3,000 people visited the expo this
week, including hundreds of workers from state oil giant PDVSA. Among the notable absentees were many of
Venezuela’s foreign production partners. Of the more than 30 multinationals
that have minority stakes in projects here, only two were listed as sponsors of
the panel-discussion portion of the three-day convention, which also includes a
trade show. PDVSA’s president couldn’t make it either: he was in Russia and
India this week in search of fresh investment for the economically troubled
country. The lower turnout is reflective of the decay in the investment climate
in Venezuela’s vital oil industry. “I think there was a consensus among us not
to participate,” said one official at a production partner of PDVSA, who
left during the conference’s first day. (The Wall Street Journal, http://blogs.wsj.com/frontiers/2015/06/19/big-investors-shun-venezuelas-flagship-oil-industry-event/)
PDVSA, ROSNEFT plan natural gas joint venture
State oil company PDVSA says it has signed a raft of
investment agreements with top Russian oil producer Rosneft, including a plan
to create a joint venture to produce natural gas here. The venture would
include the fields of Mejillones, Patao and Rio Caribe - all part of the large
offshore Mariscal Sucre gas project. The "Strategic Plan for Investments" also includes development of
new infrastructure to improve the existing oil joint ventures of PetroMiranda
and PetroVictoria in the OPEC country's heavy crude Orinoco Belt, PDVSA said in
a statement. (Reuters, http://www.reuters.com/article/2015/06/21/pdvsa-rosneft-idUSL1N0Z70H020150621;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44375&idc=4)
Venezuela oil price slips for 2nd week
Venezuela's weekly oil basket price slipped slightly
for a second week as oil prices churned directionless in international markets
on economic worries in Europe over a possible Greek default, seemingly ample
supplies in the USA, and currency gyrations. According to figures released by
the Ministry of Energy and Petroleum, the average price of Venezuelan crude
sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending June 19 was US$
56.48, down 10 cents from the previous week's US$ 56.58. (Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2390719&CategoryId=10717)
Commodities
VENALUM technical closing feared
Last Wednesday, nine cells went out unexpectedly at
CVG Venalum which made workers fear that there could be a greater collapse that
leads to its technical closing. There are only 181 cells in service out of its
905 cell park. Workers have requested a meeting with State Venalum’s chief to
demand explanations on the operational situation. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44361&idc=3)
Production at Cervecería POLAR endangered due to lack
of raw material - and could halt as early as August, affecting
the 10,000 workers in the country’s four plants and the whole of the
distribution network. The company’s management, accompanied by representatives
from 15 of the 18 unions, demanded the government authorize the dollars to
recover the imported inventory and to continue production. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44371&idc=2)
Economy
& Finance
BOFA projects inflation here at 172.4% by the end of
2015, hyperinflation possible
The most recent report from Bank of America shows the
consumer price index here at 108.1% by the end of May, heating up to 9.6%
between April and May. "Average monthly inflation for the first 5 months
was 8.7% for an annual rate of 172.4%" and says this "is consistent with the typical dynamics that
go with the start of hyperinflation". More in Spanish: (El Nacional; http://www.el-nacional.com/)
SICAD FOREX rate weakens 6% from prior auction
Venezuela's SICAD foreign exchange rate, the middle
rate of the country's three-tiered currency control system, slipped 6&%
with respect to the prior auction held in October 2014. The SICAD system
auctioned US$ 350 million to importers of auto parts at a rate of 12.8 bolivars
per dollar, compared with 12 bolivars per dollar in the last auction. Venezuela
also sells dollars at a preferential rate of 6.3 bolivars for food and medicine
and at a "complementary" rate of almost 200 bolivars for less
important items. The black market exchange rate has depreciated close to 62% so
far this year to reach 467 bolivars per dollar as the OPEC country's currency
systems fail to satiate demand for dollars amid an economic crisis. (Reuters, http://www.reuters.com/article/2015/06/22/venezuela-forex-idUSL1N0Z81OE20150622)
Politics and
International Affairs
Maduro faces his biggest test in December 6 vote
Venezuela’s opposition is set to gain control of
congress for the first time in 16 years in a Dec. 6 vote seen as the biggest
test yet for the Socialist government of President Nicolas Maduro. Official
campaigning to choose all 167 members of the National Assembly will take place
from Nov. 13 to Dec. 3, the head of national electoral council Tibisay Lucena
said in a televised speech. Opposition candidates would get 56.2% of the vote,
compared to 29.8% for the ruling United Socialist Party of Venezuela currently
in charge of the Assembly, according to the latest DATANALISIS survey of 1,000
people. The May 18-30 poll had a 3 percentage-point margin of error. “We will be in a situation with an already
weak president weakened further by a defeat in the election,” says Barclays
analyst Alejandro Arreaza, “We cannot
discard a possibility of a non-constitutional exit” of Maduro, he said. A
victory in the Assembly may give the opposition the confidence to begin a
recall referendum next year to unseat Maduro, whose term runs out in 2019,
according to Bank of America Corp.’s senior Andean economist Francisco
Rodriguez. “This could very much be the
beginning of Maduro leaving office,” Rodriguez said. Lucena also announced
that Venezuela will ask UNASUR, the Union of South American Nations, to provide
an electoral mission "to accompany
us these months and the day of the election." (Bloomberg: http://www.bloomberg.com/news/articles/2015-06-22/venezuelans-to-elect-congress-december-6-amid-plunging-economy; Reuters, http://www.reuters.com/article/2015/06/22/us-venezuela-election-idUSKBN0P21ZH20150622;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390769&CategoryId=10717;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44373&idc=1;
El Universal, http://www.eluniversal.com/nacional-y-politica/150622/venezuelas-top-electoral-body-announces-date-of-parliament-vote)
Maduro threatens "if the right wins, I will be the first to take to the streets"
President Nicolás Maduro says he will be the first to
take to the streets if the opposition wins the December 6th parliamentary
elections. He said "if the right
takes over the National Assembly, very dire things will happen, the country
would destabilize amid confrontations in the streets", he threatened.
More in Spanish: (Infolatam, http://www.infolatam.com/2015/06/22/el-cne-fija-para-el-6-de-diciembre-los-comicios-parlamentarios-en-venezuela/)
Maduro to address the National Assembly on Essequibo
border dispute
President Nicolás Maduro has
announced he will go before the National Assembly this Thursday to speak about
defending the long standing Essequibo territorial dispute between Venezuela and
Guyana, and "seek support from the
entire nation against the provocation by EXXON MOBIL". Some observers
believe he intends to provoke a major crisis to regain popular support. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390718&CategoryId=10717;
and more in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-defendera-el-esequibo-este-jueves-en-la-an.aspx#ixzz3dsVknc2Q; AVN; http://www.avn.info.ve/contenido/presidente-maduro-expondr%C3%A1-este-jueves-defensa-del-diferendo-territorial-del-esequibo)
Capriles says the opposition is better placed than
ever to win, López to lift hunger strike
Miranda state governor and former Presidential
candidate Henrique Capriles Radonski says he opposition is better placed than
ever before to win the upcoming December 6th parliamentary elections. He says
that "to avoid any type of fraud"
a "massive turnout is required for a
decisive margin". He called on jailed leader Leopoldo López to end his
ongoing hunger strike, "because the
government is capable of letting you die". Venezuela’s Catholic Church also joined in asking López to put an
end in the hunger strike he has staged for 29 days now. This past week,
opposition leaders and his parents have unsuccessfully asked López to lift the
strike. His wife Lilian Tintori has said López was willing to lift the strike
if a date for the legislative elections is made public. Afer the call for
elections on December 6th was announced, López' father said his son would end
the hunger strike. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44364&idc=1;
http://www.veneconomy.com/site/index.asp?ids=44&idt=44374&idc=1;
and more in Spanish: Infolatam, http://www.infolatam.com/2015/06/20/capriles-la-oposicion-esta-en-mejores-condiciones-que-nunca-para-ganar/)
Court assigned to decide the case of Leopoldo López
Venezuela's Supreme Tribunal
has now decided the 28th Caracas Tribunal is competent to decide whether the
decision to keep opposition leader Leopoldo López is annulled. More in Spanish:
(Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/designan-tribunal-que-decidira-caso-leopoldo-lopez.aspx#ixzz3dsVSvbxS)
Opposition will present 12 demands for the elections
Opposition electoral experts are currently debating
the demands the political parties should present to the Venezuelan Electoral
Council (CNE) for fair elections. One of those demands will be qualified
international observation missions. Most of the demands are contemplated in
Venezuela’s legislation. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44365&idc=1)
OAS offers electoral observation on parliament vote in
Venezuela
Secretary General of the Organization of American
States (OAS), Luis Almagro, has expressed satisfaction with the announcement by
the National Electoral Council (CNE) of the date of the parliament vote in
Venezuela. He also offered electoral observation services next December 6.
Almagro has previously offered OAS cooperation to facilitate dialogue between
the Venezuelan government and the opposition, the call of the election within
the scheduled timeframe and stability after the polls. (El
Universal, http://www.eluniversal.com/nacional-y-politica/150622/oas-offers-electoral-observation-on-parliament-vote-in-venezuela)
Cabello thanks Raúl and Fidel Castro for support
Captain Diosdado Cabello, President of Venezuela's
National Assembly, visited Cuba last weekend and thanked Cuban President Raúl
Castro for supporting the government of President Nicolás Maduro. During his
stay in Havana, Cabello visited Cuban leader Fidel Castro. His visit was not
reported in local media in Cuba. (El Universal, http://www.eluniversal.com/nacional-y-politica/150622/venezuelan-congress-speaker-thanks-raul-and-fidel-castros-support)
Venezuela says Brazil senators sought to destabilize
the country, Rousseff calls their visit a "shame to Brazil"
Venezuela's foreign ministry has accused a group of
Brazilian senators of seeking to destabilize the country during a brief visit
on Thursday and denied their safety was under threat. Brazilian opposition
senators said their minibus was stoned and blocked as they attempted to drive
from the coastal airport to Caracas and then to visit opposition leader
Leopoldo Lopez, who is being held in a military jail. It said the senators'
complaints that the government tried to prevent landing permission for their
plane, blocked the highway leading to Caracas and allowed demonstrators to
threaten their physical safety were "three great lies". Brazil's
Foreign Ministry condemned the incident and said it would go through diplomatic
channels to seek an explanation. Brazilian President Dilma Rousseff, however,
said "the senators intention of
visiting jailed opponents placed the government in a trap and is a shame to
Brazil, that is interfernce in Venezuela's internal affairs". (Business
Insider: http://www.businessinsider.com/r-venezuela-says-brazil-senators-sought-to-destabilize-the-country-2015-6#ixzz3dqqMlkgY;
and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politica/rousseff--visita-de-senadores-a-venezuela-fue-una-.aspx#ixzz3dmkUocmQ)
Colombia to keep maritime boundary dispute with
Venezuela on diplomatic level
Colombian Foreign Minister Maria Angela Holguin says
her government will keep its dispute with Venezuela over a decree by Caracas
asserting control over a section of Caribbean waters that Bogota also claims on
the “bilateral” and “diplomatic” level, adding that it is
expecting a quick response from the neighboring country. “We’re convinced that these differences with countries must remain
bilateral. We’re going to keep (it on the) diplomatic level,” says Holguin.
(Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2390810&CategoryId=10717;
http://www.laht.com/article.asp?ArticleId=2390740&CategoryId=10717)
The Washington Post: Easing Venezuela’s crash
Why would Thomas Shannon, a senior counselor to
Secretary of State John F. Kerry, have met and then posed for photographs on
June 13 with Cabello, who according to numerous news reports has been targeted
by prosecutors in New York and Miami for allegedly leading a cartel that has
shipped hundreds of tons of cocaine to the United States? One version is that
the meeting was part of what has become an increasingly urgent attempt by the
administration to broker a soft landing for a collapsing state. Another is that
the threat that Leopoldo López could soon die in prison that prompted the
decision to have Shannon meet with Cabello. Sources say Shannon told Cabello
the continuance of the dialogue between the two governments depended on López
remaining alive and being convinced to end his hunger strike. The longer term
U.S. aim is to persuade Maduro and Cabello to hold a fair legislative election,
with monitoring by international observers. Since the opposition would be
likely to win a fair vote that could provide a democratic way out of a crisis
that otherwise could end in revolution or mass bloodshed. But the Obama
administration has little leverage. The U.S. sanctions imposed on Venezuelan
officials for involvement in human rights abuses as well as drug trafficking
were mandated by congressional legislation and won’t be revoked without Capitol
Hill’s support. The U.S. criminal investigation of Cabello, too, is
unstoppable. (The Washington Post, http://www.washingtonpost.com/opinions/easing-venezuelas-crash/2015/06/21/e402b9bc-15dd-11e5-9518-f9e0a8959f32_story.html)
STRATFOR: In Venezuela, elections are the lesser of
two evils
Venezuela has committed itself to holding elections,
but political uncertainty will grow in the coming months as the country's
long-running crisis progresses. As the Venezuelan political structures and
order created during Hugo Chavez's 13-year rule begin to unravel under the
stress of a major economic crisis, the institutions and individuals held
together in that system are now trying to secure their stakes in the future
Venezuela. National Assembly speaker Diosdado Cabello stands to lose immunity
if the opposition sweeps the December elections and has joined Maduro in
reaching out to the United States on the modest goal of appointing ambassadors,
and will likely remain involved in this outreach to reduce his personal risk.
Havana still has an interest in Caracas' continued energy assistance, and the
Cuban links to Venezuela's armed forces and specific factions of the government
likely will keep this energy relationship in place for now. Cabello´s recent
visit to Cuba is likely a sign that even one of the most powerful men in
Venezuela must still take Cuban interests into account when making foreign
policy decisions. Maduro has overseen the most significant deterioration of
Venezuela's economy in more than a generation. Staying in negotiations with the
United States thus could help Maduro overcome resistance from within the ruling
party against economic and political reforms because drug trafficking
indictments may force Cabello and other Venezuelan officials into not openly
opposing such policies. But Venezuela's economic unraveling is an unsolved
problem, and nobody has a quick solution. Sharp economic change is almost a
necessity at this point. Doing nothing only risks exacerbating the problems and
will multiply the future threats to the government. Negotiations with the
United States could intensify in the coming months and probably will involve
concessions, possibly including the formation of a unity government with the
Venezuelan opposition and financial assistance for Caracas. However, with
government figures increasingly trying to secure their own stakes and segments
of the political opposition trying to foment a political solution through
street protests, Venezuela faces a difficult path to stability. (Stratfor, https://www.stratfor.com/sample/geopolitical-diary/venezuela-elections-are-lesser-two-evils)
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.
