Oil & Energy
Venezuela's PDVSA to reopen damaged port dock by month's end
PDVSA expects to reopen the south dock of Venezuela’s main oil port Jose
by the end of September, easing strains on crude exports delayed due to a
tanker collision last month, according to internal trade documents from the
state-run oil firm seen by Reuters. Last week, PDVSA began diverting tankers to
Puerto la Cruz for loading, but the country’s crude exports have remained slow
in recent weeks as few customers have accepted the 500,000-barrel-per-cargo
maximum neighboring terminals can handle. Besides Puerto la Cruz, tankers
waiting to load a total 2.65 million barrels of Venezuelan upgraded and diluted
crudes also plan to be serviced this month by two monobuoys at Jose, including
cargoes scheduled for U.S.-based CHEVRON Corp and Russia’s ROSNEFT, the
documents showed. (Reuters, https://www.reuters.com/article/venezuela-oil-ports/update-1-venezuelas-pdvsa-to-reopen-damaged-port-dock-by-months-end-documents-idUSL2N1VY11K)
IEA warns of higher oil prices as Iran, Venezuela
losses deepen
The International Energy Agency warned that oil prices could break out
above US$ 80 a barrel unless other producers act to offset deepening supply
losses in Iran and Venezuela. Iranian crude exports have fallen significantly
before U.S. sanctions even take effect, the IEA said in a monthly report. The
Middle Eastern nation will face further pressure in coming months and the
economic crisis in Venezuela is pushing output there to the lowest in decades.
It’s uncertain whether Saudi Arabia and other producers will fill any
shortfall, or how far they’re able to, the agency said. Oil climbed to a
three-month high above US$ 80 a barrel in London on Wednesday as fears of a
supply crunch eclipsed concern about the risks to demand such as the U.S.-China
trade dispute. While the Organization of Petroleum Exporting Countries and
allies including Russia pledged to boost supply, the IEA said it remains to be
seen how much will be delivered. Venezuela, which is pumping at just half the
rate it managed in early 2016, could see its output slump another 19% to 1
million barrels a day this year as infrastructure deteriorates and workers
flee, the agency predicted. (Bloomberg: https://www.bloomberg.com/news/articles/2018-09-13/iea-warns-of-higher-oil-prices-as-iran-venezuela-losses-deepen)
Commodities
Venezuela: where a crisis and a “gold rush” are creating an environmental disaster
El Callao has been a mining town since it was founded in 1853, but today
its gold mines have become magnets that attract Venezuelans faced with economic
hardships and in search of income. The same is true throughout the so-called
“Mining Arc” of the Orinoco River basin. On 24 February 2016, continuing a
project initiated by his predecessor, the late Hugo Chávez, Nicolás Maduro
designated 12% of Venezuelan territory (111,843 km²) south of the Orinoco River
as a “national strategic development zone.”
In this subsoil, overflowing with gold as well as coltan, diamonds, bauxite and
other metals, the government sees an opportunity to compensate for the decline
of its oil production, the country’s primary source of wealth. In El Callao,
however, government investment is nowhere to be seen. The mines and plantas
(where the gold is extracted) belonging to national mining company MINERVEN are
for the most part abandoned. Some have been taken over by artisanal and
small-scale mining operations and are controlled by armed gangs. This is the
case at the planta in Peru, not far from El Callao, where infrastructure is
rusting, and buildings have fallen into ruins. The crisis and insecurity in the
country have discouraged many companies. Minister of Ecological Mining
Development Victor Cano tacitly admitted failure in March 2018, announcing that
only “three mixed enterprises” were
working in the Mining Arc, and that there would ultimately be only “70 strategic alliances.” The roughly 17
tons of gold that have been handed over to the Central Bank of Venezuela (BCV)
since 2016 are in fact the result of work by small-scale miners who work
independently and sell their output to the government via MINERVEN, which has
effectively become a purchasing center. Though the government is currently conducting
a census of the mining population, it is hard to quantify the scale of the rush
taking place in the region. But its effects are evident. At the edge of the
city of Guayana, 170 kilometers north of El Callao, roughly one hundred men
with miner’s pans on their backs and picks in their hands wait for a car to
take them to their destination. Many Venezuelans are flocking to the region to
take advantage of the economic windfall by setting up small businesses. The
influx of miners can be measured in terms of accelerated deforestation.
Venezuelan biologist Gustavo Montes reports that between 2001 and 2015, an
average of 19,258 hectares of forestland per year disappeared in the state of
Bolivar where the Mining Arc is located. In 2016 alone, more than 34,000 hectares
were deforested. Satellite images taken by the University of Maryland show that
deforestation continued in 2017. Located in the Orinoco Mining Arc are
protected areas, which include most of the Imataca Forest Reserve and part of
the El Caura Forest Reserve. It also borders the Canaima National Park, a World
Heritage Site. Draughts are thus becoming increasingly common and can slow down
operations at the Guri dam, which supplies most of Venezuela’s electricity. The
region’s local population, particularly its indigenous peoples, see the mines
as a threat to their way of life. Deforestation and the massive amount of water
used have led to a proliferation of mosquitos that spread malaria, a disease
that, according to the capitán, affects “80%
of the community.” The subsoil and waterways have also been polluted by the
massive amounts of mercury used in the mills to extract gold from soil. But
since the government doesn’t have the means to enforce the law and continues to
buy gold with little concern, miners continue to use the process. After the
soil and rock are crushed, a toxic muddy liquid is released through a pipe into
a pond, which still has a gold content of over 60%. This mercury threatens the
country’s largest freshwater reserves, such as the Caroni Basin. According to a
study by the Central University of Venezuela (UCV) published in 2010, 74% of
schools inspected in El Callao had above-average levels of mercury. Since then,
the number of illegal mining operations and the amount of mercury used have continued
to increase. The government is not alone in seeking economic benefit from the
gold mined by artisanal miners: armed gangs also control vast territories.
Miners operating in their territories must pay them part of their output as “rent” in order to ensure their “protection.” These gangs engage in
violent turf wars, when not fighting the army itself. According to the watchdog
group Observatorio Venezolana de Violencia (OVV), El Callao holds the national
record for violent deaths with 816 victims for every 100,000 people in 2017.
(Equal Times: https://www.equaltimes.org/venezuela-where-a-crisis-and-a?lang=en#.W5nVOehKhPY)
The cocaine ties that bind Colombia and Venezuela
Colombia and Venezuela share the problem of the illicit drug trade, but
the ramifications of such trafficking could not be more different for the
next-door neighbors. From the United States' point of view, Colombian
criminality and Venezuelan authoritarianism are two looming foreign policy
problems that are linked by the cocaine trade and that require vastly different
solutions. In Colombia, a spike in rural violence is likely to occur in the
coming years as criminal groups contest areas abandoned by the Revolutionary
Armed Forces of Colombia (FARC) in its peace deal. Over the border in
Venezuela, government officials — some under investigation by U.S. authorities
in cocaine-trafficking and money-laundering cases — will band together in the face
of increasing internal threats to cling to power and preside over a political
and economic meltdown that will continue to induce mass migration. In the end,
Bogota might be well-placed to apply a steady hand to some of the problems
stemming from drug trafficking — in stark contrast to its ailing neighbor.
Colombia's criminal groups and Venezuelan political officials are connected to
one another by the cocaine supply chain. Colombian groups produce coca and
refine it into cocaine, and some Venezuelan elites profit from its transit
through their country. Though government action has weakened Colombia's
insurgents and other drug traffickers, the cocaine trade remains a key, illicit
industry that will continue to affect both countries. Foreign business interests
are at greatest risk of violence in the oil-producing regions along the
Venezuelan border, as well as Meta. The Venezuelan crisis, which is indirectly
connected to Colombia's militancy by the cocaine trade, is a more pressing
issue for the region. Because of the common understanding among elites that
abandoning power could result in their imprisonment in Venezuela or the United
States, the government in Caracas has become increasingly obstinate about U.S.
pressure. President Nicolas Maduro faces an investigation by U.S. authorities
over alleged money laundering, while political ally Diosdado Cabello faces
investigation for alleged cocaine trafficking. But even if internal dissent
continues to rise amid the threat of far-heavier U.S. sanctions, the ruling
party is likely to remain united. (Stratfor: https://worldview.stratfor.com/article/cocaine-ties-bind-colombia-and-venezuela)
Economy & Finance
Maduro travels to China in search of fresh funds
President Nicolas Maduro is traveling to China to discuss economic
agreements, as the crisis-struck nation seeks to convince its key Asian
financier to disburse fresh loans. “I am
going with great expectations and we will see each other again in a few days
with big achievements,” the leftist leader said on Wednesday in a state
broadcast from the airport, without providing details. China’s Foreign
Ministry, in a brief statement carried by the official Xinhua news agency, said
Maduro would visit from Thursday until Saturday at the invitation of President
Xi Jinping. It gave no other details. The trip to China is Maduro's first
outside the country since he was allegedly targeted by exploding drones at a
military parade in Caracas Aug. 4. Vice President Delcy Rodriguez is currently
in China and on Wednesday met with Chinese Vice President Wang Qishan, the
Chinese Foreign Ministry said in a brief statement late Wednesday. The two
countries have long had friendly ties and cooperation has been “steadily progressing” in all fields, the
ministry cited Wang as telling Rodriguez. Venezuela’s Finance Ministry in July
said it would receive US$ 250 million from the China Development Bank to boost
oil production but offered no details. Venezuela previously accepted a US$ 5
billion loan from China for its oil sector but has yet to receive the entire
amount. Local consultant Asdrubal Oliveros, who tracks Chinese loans closely,
said on Wednesday Venezuela was close to clinching a fresh loan of US$ 5
billion to finance oil projects. Beijing was waiting for Maduro to announce a
series of economic measures, including a steep devaluation and more flexible
currency controls, before extending fresh funds, Oliveros said. Over a decade,
China plowed more than US$ 50 billion into Venezuela through oil-for-loan
agreements that helped Beijing secure energy supplies for its fast-growing
economy while bolstering an anti-Washington ally in Latin America. The flow of
cash halted nearly three years ago, however, when Venezuela asked for a change
of payment terms amid falling oil prices and declining crude output that pushed
its state-led economy into a hyperinflationary collapse. Venezuela’s elected
legislature has stated it will reject any new financing of the Maduro regime by
China as it has not been informed of the terms it would be granted and the use
of the funds. It said it would notify the Chinese embassy in Caracas of the
risk they would be taking by bypassing the National Assembly’s authority under
the Venezuelan Constitutional. Reuters: https://www.reuters.com/article/us-venezuela-china/venezuelas-maduro-travels-to-china-in-search-of-fresh-funds-idUSKCN1LS2UL; ABC News: https://news.abs-cbn.com/business/09/13/18/maduro-looks-to-china-to-bolster-venezuelas-collapsing-economy;
US News: https://www.usnews.com/news/world/articles/2018-09-12/venezuelas-maduro-travels-to-china-in-search-of-fresh-funds);
and more in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/alfonso-marquina-asegura-que-acuerdos-entre-china-y-venezuela-requieren-autorizacion-de-la-an)
Some Constituent Assembly members seek to woo private
oil investment
An overhaul of Venezuela's constitution being prepared by the
pro-government Constituent Assembly will likely include changes intended to
attract private investment in the country's oil fields, according to two
assembly members. The Constituent Assembly, whose powers supersede those of the
country's Congress, would reword some articles of the constitution to reduce
emphasis on state control of oil and ease the way for private investment, the
assembly members said. The 1999 constitution says oil industry activity is
"reserved" for the state, while the 2001 Hydrocarbons Law requires
that exploration and production be carried out by state-majority joint
ventures. The assembly members said the assembly would first make changes to
constitutional language. That would be followed by legal reforms to give joint
ventures more favorable operating conditions and encourage private investment
in services companies. They said they will submit their proposals within a
month to Constituent Assembly President Diosdado Cabello, a powerful Socialist
Party politician who will decide the reforms to be discussed. Maduro would have
to sign off on any changes. Foreign oil companies are continuing to be
skeptical even in the face of significant legal reforms. (Channel News Asia: https://www.channelnewsasia.com/news/world/venezuela-constituent-assembly-seeks-to-woo-private-oil-investment-10710034)
National Assembly reports a 50% drop in GDP since
Maduro became president
The opposition controlled National Assembly reports that the nation’s
economy has been halved since President Nicolas Maduro took power in 2013.
Congressman Ángel Alvaro, who heads the legislature’s Finance Committee,
reports Venezuela’s GDP has dropped by 50.61% since 2013, a tremendous fall
which is “reflected in the quality of life of all Venezuelans”. He added that
in the first half of 2910 the nation’s economy dropped 25% from the year
before. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/economia-venezolana-cae-50-desde-que-maduro-es-presidente-dice-parlamento;
El Universal, http://www.eluniversal.com/economia/20421/an-actividad-economica-cae-25-en-primer-semestre)
40% of all shops nationwide have shut down
María Carolina Uzcátegui, President of Venezuela’s National Trade
Federation, reports that “not only have 40% of all shops shut down, but 25% have
paralyzed purchasing due to a lack of cash flow”. She reports many shops have
been shuttered and others are clearing all stock in order to close down
permanently after the Maduro regime’s most recent economic measures. She says
she believes the end is not yet in sight and small and medium business will
continue to collapse due to the current situation. More in Spanish: (El
Universal, http://www.eluniversal.com/economia/20420/uzcategui-cerraron-40-de-los-comercios-en-el-pais)
Politics and International Affairs
Venezuela: is a US-backed 'military option' to oust
Maduro gaining favor?
When Donald Trump first floated the idea of a “military option” in Venezuela last year, he was widely rebuffed by
regional leaders and policy experts. Even the US president’s closest aides were
reportedly stunned by the suggestion of an invasion – which for many in Latin
America evoked bitter memories of previous US forays in the region. Direct US
intervention remains a fringe idea, but a small section of the Venezuelan
opposition appears to be receptive to the possibility of a military coup to
remove the country’s increasingly authoritarian president Nicolás Maduro. And
while most prominent opposition politicians have avoided explicit calls for a
coup, some now appear to believe that Maduro will not be removed at the ballot
box. “There’s no democratic way out of
this crisis,” said Julio Borges, an opposition politician now living in
Colombia. “The army have a new enemy and
it is Nicolas Maduro – they know he is taking the country down the worst path.”
Florida senator Marco Rubio – who has reportedly helped frame much of Trump’s
Latin America policy – wrote an op-ed in the Miami Herald in February calling
for an uprising in Venezuela. Revelations about a new plot are red meat for the
embattled president, said Omar Lares, a former opposition mayor who fled to
Colombia a year ago. “The way I see it
was that these reports [about a US conspiracy] are a huge, stupid favor to
Maduro,” he said. (The Guardian: https://www.theguardian.com/world/2018/sep/12/venezuela-trump-nicolas-maduro-military-option)
Pro-regime supporters march in support of Maduro
Hundreds of Venezuelan government supporters took to the streets on
Monday protesting what they describe as US imperialism. Demonstrators made
their way downtown, where they listened to speeches by several leaders of the
movement launched by the late Hugo Chavez, Maduro’s predecessor and political
mentor. PSUV’s Pedro Carreño told reporters, referring to the United States. “We are telling the empire, the enemies of
the motherland and the domestic and international reactionary right, that the
people are not willing to be the victim of more threats and persecution.” The
speaker of the PSUV-controlled National Constituent Assembly, Diosdado Cabello,
encouraged the public to “prepare to
defend the motherland” from a possible armed attack. (Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2464972&CategoryId=10717)
Colombia calls for help to face Venezuela migrant
surge
Colombia lacks the capacity to face by itself a deluge of Venezuelan
migrants fleeing their crisis-afflicted country, says Bogota’s top diplomat.
Foreign Minister Carlos Holmes Trujillo called instead for an international
response. More than 1.6 million Venezuelans have left their homeland since 2015
— most of them for Colombia — when economic troubles worsened, according to the
United Nations. Colombia “cannot deal
with this situation alone,” Holmes said. “We have made important efforts lately and they are going to continue
but the extent of the crisis is such that we do not have sufficient capacity to
respond” to the migrant flow without support, Trujillo told Caracol Radio.
Among the measures which Colombia’s government seeks are: creation of a
multilateral emergency fund and naming of a high-level United Nations official
to coordinate the actions of Latin American countries. (Malay Mail: https://www.malaymail.com/s/1671664/colombia-calls-for-help-to-face-venezuela-migrant-surge)
Almagro meets with Colombia’s President Iván Duque about Venezuelan
migrant crisis
OAS Secretary General Luis Almagro has arrived in Colombia along with a
technical mission, to visit states bordering with Venezuela and analyze the
migrant crisis, to later present a report and propose means for cooperation. He
will first meet in Cartagena with President Iván Duque and Foreign Minister
Carlos Holmes; and later visit Cúcuta, on the Venezuelan border. More in Soanish (El Universal, http://www.eluniversal.com/internacional/20437/almagro-se-reune-este-jueves-con-ivan-duque-para-analizar-ola-migratoria-venezolana#; El Nacional, http://www.el-nacional.com/noticias/latinoamerica/colombia-pide-onu-funcionario-para-atender-exodo-venezolanos_251534)
Venezuela will request compensation for past assistance to Colombian
migrants
President Nicolás Maduro has
announced that Colombia will be sued to compensate the nation for the attention
given to the more than five million Colombians who fled the armed conflict and
the drug trafficking suffered by the nation of Nueva Granada for more than 50
years. "There is an idea that I have
approved of placing an international demand to request compensation from the
Colombian government for the 5,600,000 Colombians who are here. The
compensation for each Colombian” he said. "We will use all international legal channels to compensate Venezuela
for all Colombians who have received care, work, health, education”. (AVN, http://www.avn.info.ve/contenido/venezuela-will-request-compensation-assistance-colombian-migrants)
Venezuela´s legislature calls on Bachelet to visit and witness the
humanitarian crisis here
José Trujillo, Chairman of the Social Development Committee in
Venezuela’s opposition dominated National Assembly, has on behalf of the
legislature invited Michelle Bachelet, the new UN High Commissioner for Human
Rights, to visit Venezuela and witness the humanitarian crisis here. More in Spanish:
(El Universal, http://www.eluniversal.com/politica/20417/an-invita-a-bachelet-constatar-crisis-humanitaria-en-venezuela)
Brazilian Defense Minister says his Venezuelan counterpart requested
humanitarian aid
Joaquim Silva e Luna, Brazil’s Defense Minister, reports that during his
recent meeting in Puerto Ordaz (Bolivar state) with his Venezuelan counterpart,
General Vladimir Padrino López, he received assurances that Venezuela will not
cut energy supply to the neighboring Brazilian state of Roraima, as well as a
request for humanitarian aid due to the crisis here in Venezuela. The meeting
-held at the request of Brazilian President Michal Temer, was over alleged
Venezuelan threats of cutting energy supply to Roraima over a substantial debt
by Brazilian state energy company ELETROBRAS. Roraima is the only Brazilian state
not connected to the national grid. More in Spanish: (El Nacional; http://www.el-nacional.com/noticias/latinoamerica/ministro-brasileno-padrino-lopez-admite-que-venezolanos-emigran-por-hambre_251561; El Universal, http://www.eluniversal.com/politica/20415/venezuela-mantendra-suministro-electrico-a-brasil)
Pope confirms ‘closeness’ to Venezuela amid political,
economic meltdown
As Venezuela continues to struggle with a deep political crisis, Pope
Francis met the country’s bishops Tuesday for a wide-ranging conversation that
also touched on immigration, vocations and the environment, although details of
the private exchange were not released.
Forty-six Venezuelan bishops met the pope for their “ad limina” visit to the Vatican, a trip
made by prelates around the world every five years to meet the pope and get to
know the various Vatican departments. While no mention was made at the press
conference about Francis’s thoughts on the Venezuelan political situation, the
pontiff has made clear his closeness to its impoverished people. The
Argentinian pope recently appointed Archbishop Edgar Peña Parra from Venezuela
to the powerful position of sostituto, or “substitute”,
at the Vatican’s Secretariat of State, making him effectively the pope’s Chief
of Staff. This move, along with the fact that the current Secretary of State,
Italian Cardinal Pietro Parolin, also served as papal envoy to Venezuela from
2009 to 2013, reflects the Vatican’s keen interest in the troubled nation.
(Crux Now: https://cruxnow.com/church-in-the-americas/2018/09/12/pope-confirms-closeness-to-venezuela-amid-political-economic-meltdown/)
Venezuela is the only South American country where
hunger is increasing
Venezuela is the only country in South America, and one of only two in
Latin America, where hunger is increasing, a new report from the United Nations
has revealed. While fewer people go hungry throughout most of South America and
the vast majority of Latin America, the impact of Venezuela’s ongoing crisis
has had such a severe impact that it has brought a notable increase to the
region's overall percentage of severe food insecurity, El Pais reported. About
3.7 million Venezuelans were undernourished in 2017, approximately 12% of the
population. The problem is particularly dire in Venezuela, where an estimated
2.3 million people have fled the country as of June, largely due to food
insecurity, the U.N said according to Reuters. Additionally, lack of access to
quality foods and economic woes has brought other dietary issues, such as
obesity. With limited options, impoverished Venezuelans may often consume
cheaper, energy-dense processed foods that are high in fat, salt and sugar.
(Newsweek: https://www.newsweek.com/venezuela-only-south-american-country-hunger-increasing-1117995)
Venezuela’s crisis is so bad that people are
abandoning their beloved pets
If life in Venezuela has become
hard for humans, it has become even harder for many pets. With inflation
soaring toward 1 million percent, dog food and veterinary care have spiraled
out of reach for millions of people. One kilo — or 2.2 pounds — of dog food,
for instance, now costs nearly the equivalent of three weeks’ salary for a
minimum-wage worker. The result, animal specialists say, has been an exploding
population of abandoned dogs on the streets and rising numbers in underfunded
shelters. Although there are no reliable national figures on the phenomenon,
officials from eight shelters in the capital, Caracas, said they had seen a
roughly 50% rise in the number of pets left at their facilities this year. At
the same time, pet adoptions have a dropped by as much as a third, they
said. At the same time, donations to
shelters have fallen drastically. For pets as well as people, the crisis here
is likely to get worse. Some shelters are considering closing once they’re able
to place all their dogs. “It’s a critical
situation because we have to spend three times as much as we used to, to
maintain each animal,” said Mariant Lameda, owner of the Network of Canine
Support, which has 270 dogs. Only one has been adopted this year, compared to
13 last year, and more than 200 in 2015. (The Washington Post: https://www.washingtonpost.com/world/the_americas/venezuelas-crisis-is-so-bad-that-people-are-abandoning-their-beloved-pets/2018/09/12/e7479252-abd3-11e8-9a7d-cd30504ff902_story.html)
