International Trade
All border passes with Colombia now open again to cargo
transit
Colombia’s
tax and customs authority (DIAN) has announced that all seven border passes
with Venezuela are now open to cargo transit in all forms of transportation.
More in Spanish: (Notitarde, http://www.notitarde.com/Reabren-los-siete-pasos-fronterizos-con-Colombia/Economia/2016/10/09/1028717/)
Zulia governor says 880 tons of shrimp were exported
to Europe, Asia and the US
Zulia
state Governor Colonel Francisco Arias Cardenas has announced that 880 tons of
shrimp worth US$ 2.640 million were exported in 44 containers, to the European
Union, Asia and the United States, under the auspices of the Venezuelan
government. He also said shrimp feed worth US$ 60 million would be imported in
2016-17 in order to increase shrimp production by 25,000 tons. More in
Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/venezuela-exporta-880-toneladas-camarones-mercados-europa-asia-y-eeuu;
El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-exporta-880-toneladas-de-camarones-a-eur.aspx)
Minister announces 1.380 million aluminum containers
have been exported to Brazil
Basic
Industries Minister Juan Arias reports that 1.380 million aluminum containers
from state company ALENTUY were exported to Brazil this year. More in Spanish:
(El Mundo, http://www.elmundo.com.ve/noticias/economia/industrias/alentuy-exporta-a-brasil-un-millon-380-mil-envases.aspx#ixzz4Mg8TE0lW)
Logistics & Transport
Airlines want their money back from Venezuela
Airlines
have a question for U.S. regulators: Mind if we collude a bit? The
carriers have made an unusual request of the U.S. Department of
Transportation: They want antitrust immunity for one year so they can
collectively discuss ways to retrieve US$ 3.8 billion currently
held hostage by Venezuela’s deep economic slide. Since 2013,
Venezuelan officials have virtually halted the repatriation of past ticket
sales made in bolivars, the local currency. Inflation has soared and
foreign currency reserves have dwindled to under $ 12 billion, as the
government of President Nicolas Maduro imposed various currency exchange
rates and the economy fell into disarray and food shortages. As a
result, the flow of money homeward has slowed to a trickle for many
multinational corporations operating in Venezuela. (Bloomberg, http://www.bloomberg.com/news/articles/2016-10-07/airlines-ask-permission-to-break-antitrust-law-but-only-a-little)
Oil & Energy
US$ 60 oil not ‘unthinkable’
this year, Saudi Energy Minister says
Saudi
Arabia’s energy minister Khalid al-Falih said that he was optimistic major oil
producers could agree to cut production by November and that it wasn’t “unthinkable” that crude prices could
rise another 20% this year to US$ 60 a barrel. The minister’s words confirmed a
decisive shift in policy by the Organization of the Petroleum Exporting
Countries toward a return to market intervention—a role the oil cartel seemed
to abandon two years ago when it refused to step in to prop up sinking prices.
A production cut is meant to reorder the supply and demand landscape and push
prices up during a historic market slump. Falih is attending a conference in
Istanbul this week that has become a meeting point for major oil producers to
try to hammer out a tentative agreement to reduce output. It follows an
agreement in principle reached in Algiers last month. “I think a band would be able to make sure the ceiling can accommodate,”
Falih said, adding that because of demand uncertainties “OPEC needs to make sure we don’t kill too much and create a shock.”
In Istanbul, Falih is joining an effort to get non-OPEC members to participate
in output cuts, including Russia, which produces more crude oil than any other
country. He confirmed he is meeting with Russia’s energy minister this week to
discuss cooperation and said non-OPEC producers should “absolutely” participate in efforts to balance the market. Falih
said the time to act seems to have arrived. “I think market forces have shifted significantly between 2014 and now,”
he said. (The Wall Street Journal: http://www.wsj.com/articles/saudi-energy-minister-optimistic-on-oil-production-deal-14760861599
… and President Maduro is now in Turkey for energy
conference
President
Nicolas Maduro is now in Istanbul to take part in the World Energy Congress,
and has met with the city’s governor Vasip Sahin. More in
Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/presidente-maduro-llega-estambul-para-participar-congreso-mundial-energ%C3%ADa;
El Universal, http://www.eluniversal.com/noticias/economia/maduro-turquia-estamos-luchando-por-estabilidad-del-mercado_621804;
El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/presidente-se-reunio-con-autoridades-turcas.aspx;
http://www.elmundo.com.ve/noticias/petroleo/industria/ochenta-paises-participaran-en-congreso-mundial-de.aspx)
PDVSA seeks to issue another US$ 4.7 billion in debt
to pay off suppliers
State
oil company PDVSA plans to issue up to US$ 4.7 billion in private debt in order
to pay off pending bills from suppliers. The move could overshadow its attempt
to roll over US$ 5.3 billion in bonds that mature during 2017 in order to
relieve its payment flows over the next few months. A presentation from PDVSA
to oil companies indicates that the company has been in touch with son 63
service providers and has offered to issue “promissory
notes” to compensate for unpaid bills. It is not clear that the companies
actually received the notes. In its latest financial report, PDVSA showed that
in May-September this year it provided US$ 1.1 billion in “promissory notes” to
10 companies that provide transportation, drilling and maintenance. The
companies include WEATHERFORD and HALLIBURTON, plus smaller local firms such as
PROAMBIENTE and ELECNOR. Most local companies have been willing to receive the
notes. More in Spanish: (Infolatam: http://www.infolatam.com/2016/10/06/pdvsa-planea-emitir-deuda-por-us4-700-milllones-para-pagar-facturas-vencidas/)
Venezuela oil price jumps above US$ 40 on OPEC output
cut
The
price Venezuela receives for its mix of medium and heavy continued rising
aggressively, closing above US$ 40 for the first time since August after OPEC
announced an agreement for an oil output cut. 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 October 7 was US$ 41.58, up US$ 2.77 from the previous week's US$ 38.81. According to Venezuelan government figures,
the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$
33.58 for the year to date. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422699&CategoryId=10717)
REPSOL extends line of credit for joint venture in
Venezuela
State
oil company PDVSA and REPSOL have signed an agreement that calls for the
Spanish energy company to provide a line of credit of up to US$ 1.2 billion to
expand oil production here. REPSOL CEO Josu Jon Imaz and PDVSA chief Eulogio
Del Pino put their signatures to the financing deal for the Petroquiriquire
joint venture during a ceremony at the presidential palace, Miraflores. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422675&CategoryId=10717;
Bloomberg, http://www.reuters.com/article/us-venezuela-pdvsa-repsol-idUSKCN127272;
http://www.reuters.com/article/venezuela-pdvsa-repsol-idUSL2N1CC1QG)
Expert says recovery of Venezuela's major dam is
insufficient
The
water level of Guri dam, Venezuela’s major electric power supplier, hit 263
meters above sea level last week. This figure is slightly above that recorded
in 2015, yet insufficient to overcome challenges of the national power grid, says
Jesús Rafael Pacheco, of Simón Bolívar University (USB). According to state power
corporation CORPOELEC, the dam’s water level stood at 261.28 meters above sea
level, a 1.72 meter raise on September 28th 2015. Pacheco adds that
the level “is eight meters below the
value the dam should have if thermoelectric plants were in good conditions.”
(El Universal, http://www.eluniversal.com/noticias/daily-news/expert-terms-insufficient-recovery-venezuelas-major-dam_620638)
PDVSA plans to reactivate 931 oil wells in Lake
Maracaibo
State-run
oil company Petroleos de Venezuela (PDVSA) and Chinese petroleum equipment
manufacturer Shandong KERUI Group Holding Co. signed a partnership agreement to
repair and connect 624 oil wells in Lake Maracaibo, north-western Zulia state,
with an initial investment of US$ 30 million by the Chinese
company. Production of crude oil and gas is expected to increase by 22,600
barrels per day (Mbbls/d) and 13 million cubic feet (MMCF), respectively. At the
same time, PDVSA and the Bulgarian-Venezuelan Consortium are currently in talks
to carry out activities similar to those agreed with KERUI and interconnect 307
wells in the country's largest lake. Should the talks be successful, the
Bulgarian investor group ALECO will finance over US$ 100 million. The wells are
distributed in nine production units, and with this addition, crude oil and gas
production is expected to raise by 28 Mbbls/d and 30 MMCFPD of gas,
respectively. (El
Universal, http://www.eluniversal.com/noticias/daily-news/pdvsa-plans-reactivate-931-oil-wells-lake-maracaibo_621564)
Venezuela promises to become Latin America´s largest
gas exporter
Eulogio
Del Pino, Minister of Petroleum and Mining, says that Venezuela will be the
largest exporter of gas in Latin America, able to produce 1,200 million cubic
feet MMSCFD and 28,000 barrels per day (Mbbls/d) of condensate gas. He says that
output will be reached under the Mariscal Sucre project, which encompasses four
giant deposits located in northern Paria Peninsula (east Venezuela): Dragón,
Patao, Mejillones and Río Caribe. "The
Cardón project, developed in the Gulf of Venezuela, is producing some 600
million cubic feet per day (MMCFPD) in less than a year. Dragon Field will
start producing 300 million MMCFPD and combined with the other deposits that
make up the Mariscal Sucre Project, they will reach more than 1,000 MMCFPD in the
coming years”, Del Pino explains. (El
Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-promises-become-latam-largest-gas-exporter_620943)
Commodities
The face of hunger and malnutrition in Venezuela
Venezuela
is in the midst of a severe economic crisis. The country, though one of
the richest in natural resources, has been called the worst economy of 2016 by
the International Monetary Fund, and its inflation rate could reach 700% by the
end of the year. Today, the biggest concern for Venezuelans is the food
shortage, together with rampant crime and the lack of medicine. Every day,
thousands of people reach supermarkets or shops, sometimes as early as dawn,
patiently waiting in long lines just to buy a few pieces of basic food items,
such as rice or flour, at a lower price set by the government. The alternative
to "colas" (food lines in Spanish) can be found in expensive
supermarkets, where only the wealthy can afford to shop. The others rely on
"bachaqueros", or food smugglers who re-sell on the street subsidized
goods at much higher prices. In the slums of Caracas, the situation is
difficult. Many families are unable to provide two to three meals a day for
their children. Lunch often consists of a banana or a piece of bread. As a
result of this climate of uncertainty and helplessness, crime is rising fast in
Venezuela, especially in Caracas, already ranked in 2015 as the most violent
city in the world. In the rest of the country, the food crisis is worse, and
health workers have noted increased cases of malnutrition within the poorest
segments of the population. (Aljazeera: http://www.aljazeera.com/indepth/inpictures/2016/10/face-hunger-malnutrition-venezuela-161007055723064.html)
Economy & Finance
Venezuela PDVSA's bonds tumble after low participation
in swap
State
oil producer PDVSA's bonds dropped sharply on Friday after the company extended
a deadline for its US$ 5.3 billion debt swap offer due to low bondholder
participation, signaling that investor reluctance could scuttle the operation. PDVSA
on Thursday moved the initial deadline from Oct. 6 to Oct. 12 and said that
considerably less than half of outstanding bonds had been tendered. The swap
requires more than 50% participation to go through.
The
company's 2017 bond maturing in April fell 4.025 points to a bid price of
80.600, while the 2017N bond sank 2.050 points to a bid price of 84.150. The
two bonds are a part of the swap operation. Venezuela's sovereign bonds were
also down across the board, with the 2018 bond declining 6.769 points to a
price of 78.306. (Bloomberg, http://www.reuters.com/article/venezuela-pdvsa-debt-idUSL2N1CD0RF,
http://www.bloomberg.com/news/articles/2016-10-07/pdvsa-extends-debt-swap-deadline-on-low-bondholder-participation)
Venezuela says US$ 7 billion bond swap to continue as
ConocoPhillips sues PDVSA for fraud,
State
oil company Petroleos de Venezuela (PDVSA) says it will carry on with an
ongoing US$ 7 billion bond swap, in spite of a legal action attempted before a
Delaware court Thursday by a former partner, US oil giant ConocoPhillips, which
objects to the use of U.S.-based refining company CITGO as collateral in the
negotiation. This is the first legal challenge against the swap in the U.S.,
coming just days after the opposition dominated National Assembly of Venezuela,
the country’s legislative arm, criticized the negotiation: The Assembly has
said it will not approve the deal, theoretically making it illegal. “In relation with the action presented
Thursday October 6th by ConocoPhillips in Delaware, in which it objects to a
financing operation by CITGO Holding as well as the current bond swap
operation, Petróleos de Venezuela, S.A. (PDVSA) informs that, firstly, the
financing operations object of that action are perfectly legal and legitimate
and, secondly, the new claims presented by ConocoPhillips lack any foundations
whatsoever,” the company here said in a press release. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422640&CategoryId=10717;
Bloomberg, http://www.reuters.com/article/us-venezuela-pdvsa-debt-conocophillips-idUSKCN127284;
http://www.reuters.com/article/venezuela-pdvsa-debt-response-idUSL2N1CD1ET)
…and Maduro orders PDVSA to sue US newspaper after
failure of $7 billion swap
President
Nicolas Maduro has ordered his Oil Minister, Eulogio Del Pino, who also serves
as president of the state oil company Petroleos de Venezuela SA (PDVSA), to sue
the owners of a Venezuelan newspaper "directed
from Miami" for "spreading
false information" about the oil company. "I have given the order for violating the constitution and forming part
of a campaign to destroy PDVSA's financial and development possibilities as
part of a dirty campaign against Venezuela," said Maduro during
a broadcast that must be carried by every radio and television channel in
the country. He did not name the newspaper he described as "garbage" and said that it had a
small issue of "just two thousand" copies, which is close to the
final print runs of the Latin
American Herald Tribune's predecessor The Daily Journal in Caracas. (Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2422720&CategoryId=10717)
Minister claims foreign investment here was US$ 12
billion in 2016
Foreign
Trade and Investment Minister Jesús Faría reports that foreign investments in
gas, oil and mining here is US$ 12 billion, from countries such as China,
Canada, South Africa and Russia. He also says he has met with around 70
businessmen from Germany, France and Portugal, to push forward on 5 projects in
the areas of pharmaceuticals, agribusiness, ports and infrastructure. More in
Spanish: (Notitarde, http://www.notitarde.com/-Inversion-foranea-suma-12000-millones-en-2016/Economia/2016/10/09/1028714/; El
Universal, http://www.eluniversal.com/noticias/economia/traeremos-300-millardos-fugados_621710;El
Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/faria--inversiones-extranjeras-suman--12-mil-millo.aspx)
An unlikely winner in Venezuela crisis: high-end real
estate
Building
luxury apartments or corporate office towers might seem like an odd investment
in an economy reeling from a deep recession, triple-digit inflation and chronic
product shortages. Unless it's Venezuela. The combination of soaring prices and
exchange controls that prevent businesses from buying dollars has made high-end
real estate an attractive way for companies to protect the value of revenue
earned in the increasingly worthless bolivar currency. Cranes clutter the
skyline of the Caracas municipality of Chacao, home to the capital's financial
district and most of its embassies, despite a backdrop of huge supermarket
lines that have become a symbol of the country's economic decay. Las Mercedes,
a neighborhood developed in the 1950s as an exclusive residential zone that is
now filled with garish restaurants and bars, is also awash in real estate
development. (Reuters, http://www.reuters.com/article/us-venezuela-construction-idUSKCN12715A)
Politics and International Affairs
National Assembly President predicts Supreme Tribunal
will quash recall process
National
Assembly President Henry Ramos Allup has charged that the Supreme Tribunal will
issue a ruling that strips legislators of parliamentary immunity, and also
seeks to quash a recall referendum against President Nicolas Maduro. Ramos said:
“Indeed, next Tuesday they will
perpetrate these two crimes against the Constitution: To eliminate immunity in
order to put critical legislators in jail should we criticize this shameful
regime that is killing Venezuela; and second, to kill, murder the recall
referendum…because the government knows that if that instrument is used, it
will have to leave office if rejected popularly”. More in Spanish:
(Noticiero Venevisión, http://www.noticierovenevision.net/politica/2016/octubre/6/171378=presidente-de-la-an-afirma-que-el-tsj-promovera-sentencia-para-eliminar-el-fuero-de-los-diputados-opositores)
Opposition leader Capriles vows to end Maduro rule
Henrique
Capriles told the BBC that 80% of the population wanted change and the
opposition would be able to collect 4 million signatures and force a recall
referendum. "We are having the worst
situation in our history," he said. Oil accounts for most of
Venezuela's export revenues but plummeting prices and economic mismanagement
have brought the country to economic collapse.
Last month pro- and anti-government demonstrations attracted hundreds of
thousands of people. Opposition supporters blame President Nicolas Maduro for
Venezuela's economic crisis and accuse the electoral commission of delaying a
referendum that could shorten his stay in power. But Capriles said he believed
the opposition can force a referendum to take place. "We have to collect signatures," he said. "It's four million people and that is going
to be so important that it is going to open the door for the referendum and the
people are going to vote and we are going to have a new government in our
country. It looks very difficult to have
it, but so important that it is going to be very difficult for Maduro to avoid
the referendum." (BBC News: http://www.bbc.com/news/world-latin-america-37582569)
Cabello says regime will seek to charge Leopoldo Lopez
with homicide
Lieutenant
Diosdado Cabello, First Vice President of the ruling United Socialist Party
(PSUV) says that relatives of 43 people killed during protests called by
opposition leader Leopoldo Lopez in early 2014 are moving to charge him with
murder at local courts. Cabello called Lopez a “murderer”. A peaceful demonstration called by Lopez on 12 February
2014 ended in violence, and set off a wave of protests through the following
months, in which 43 died. Venezuela’s opposition terms Lopez’ arrest “political”, while Cabello is insisting
that “Leopoldo Lopez must remain in
prison. He has to pay for those 43 dead.” More in Spanish: (Infolatam: http://www.infolatam.com/2016/10/06/cabello-dice-que-solicitaran-que-el-opositor-lopez-sea-acusado-de-homicidio/)
Opposition will demand that Elections Council fix
imbalance in voting machine distribution
Juan
Carlos Caldera, who represents the Democratic Unity (MUD) opposition at the
National Elections Council says that Maduro’s opponents are drawing up a list
of polling places in order to protest with the Council about imbalances in the
distribution of polling machines that must be installed for the planned 20%
voter signature drive to call for the President’s recall. More in Spanish: (El
Universal, http://www.eluniversal.com/noticias/politica/mud-reclamara-cne-desequilibrio-maquinas-centros-votacion_621442)
Argentina's FM advises President Maduro "to be careful with his words"
Argentine
Foreign Minister Susana Malcorra told Venezuela’s President Nicolas Maduro that
“it is necessary to be careful with the
use of words, especially as a leader,” after Maduro called his Argentine
counterpart Mauricio Macri as a “political hitman” and “imperial puppet.” Malcorra
said Maduro’s aggressive speech stems from the “intrinsic tensions” Venezuela is going through, and added that both
Heads of State “view the reality from
different angles, yet that is not a reason to disrespect another president.”
“There are people who get angry and believe that we can intervene with a magic
wand and solve those problems. When the democratic charter is invoked as in the
case of Mercosur (Common Market of the South) or OAS (Organization of American
States), consensus from all Member States is needed. Achieving it is not that
simple; the alternative is assisting Venezuelans in finding a solution,” she
added. (El
Universal, http://www.eluniversal.com/noticias/daily-news/argentinas-advises-president-maduro-careful-with-his-words_621593)
OAS Almagro, Brazil's Temer agree on "need" for recall vote in Venezuela
Luis Almagro,
Secretary General of the Organization of American States (OAS), has visited Brazilian
President Michel Temer, and both of them talked about the “need” for a recall vote in Venezuela this year, as sought
by the
opposition political sector, yet put off for 2017 by the country’s electoral
authorities. (El
Universal, http://www.eluniversal.com/noticias/daily-news/almagro-brazils-temer-agree-necessity-recall-vote-venezuela_621536)
Brazilian Foreign Minister charges Venezuela increases
cocaine exports
Brazil’s
Foreign Minister José Serra says “Venezuela’s
situation is increasingly worrying”, and adds that this country is “increasing cocaine exports”. He said the
fact that the Vatican has joined the search for talks between the Maduro regime
and its opposition has created hope, but added “it will be complicated to arrive at a formula for a transition”;
and said “a way out can be found, but it
will not be simple”. More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/canciller-brasileno-venezuela-exporta-cada-vez-mas-cocaina_621462)
Venezuela to rebuild housing in Cuba in the wake of
hurricane Matthew.
A
Venezuelan navy vessel has left port here with 375 tons of construction
equipment and material to help rebuild housing in Cuba following the path of
hurricane Matthew. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/venezuela-envia-maquinas-para-reconstruir-viviendas-cuba_621747)
Pope names new Venezuelan cardinal
Pope
Francis I named an additional Venezuelan cardinal, he is Baltasar Porras,
Archbishop of Mérida, who said the appointment “shows the affection the Pope has for us, and understanding that we are
undergoing a difficult situation”. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/baltazar-porras--anuncio-del-papa-expresa-su-amor-.aspx#ixzz4Mg8fl9uC)
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.
