Category: Latin America

ENLARGE Even before oil prices dropped, Venezuela’s economy was troubled. Rigid currency controls and dollar shortages have brought the economy to a standstill. Above, an unfinished skyscraper in downtown Caracas that was abandoned in the 1990s and has been occupied for years by squatters. Anadolu Agency/Getty Images A slide in oil prices is hitting Venezuela hard, raising questions among investors about the South American country’s ability to pay its debts and heightening concerns about the health of developing economies around the world. Venezuelan debt was widely held by emerging-market investors until the summer. Many viewed the bonds as a safe bet because the country brought in ample revenue as a major oil exporter. But a nearly 50% drop in the price of crude since mid-June has left Venezuela’s finances in shambles. The price of credit-default swaps on Venezuela debt, a type of insurance, indicate a 61% chance of default […]

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While Pope Francis is applauded for helping broker this week’s U.S.-Cuba accord, a key motive for Cuba is Venezuela’s diminishing oil gifts to its biggest ally. Venezuela sent about 100,000 barrels a day to Cuba last year in exchange for medical personnel as part of a regional subsidy program to promote the government’s socialist message. While there’s no official data for shipments to Cuba this year, anecdotal evidence suggests volumes have already slumped to about 70,000 barrels a day, Moody’s wrote Dec. 16. The regional aid is set to be scaled back further as oil’s biggest rout in a decade undermines a socialist revolution that transformed Venezuela over the past 15 years under Hugo Chavez and Nicolas Maduro , according to Eurasia Group and EnergyNomics. The commitment by Cuba and the U.S. to normalize relations opens the door for the island nation to buy more oil on the open […]

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The Venezuelan bolivar currency is presented next to the U.S. dollar (JUAN BARRETO/AFP/Getty Images) Summary The Venezuelan economy continues its downward spiral as 2015 approaches. Faced with rising domestic expenses that it can no longer meet through dollar income from oil exports alone, Caracas has accelerated measures to increase its money supply since 2012. The central bank has also printed more bolivars to keep up with spending obligations. This expansion of the monetary supply has spurred inflation, which was already exacerbated by government foreign exchange mechanisms and smuggling to Colombia, making food and goods less available to consumers in Venezuela. The decline in global oil prices that began in September has compounded these troubles. Analysis Venezuela’s government has traditionally distributed foreign currency in its economy through the Sicad I and the Sicad II mechanisms. Before August, the Sicad I auctioned about $880 million per month and Sicad II disbursed […]

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Venezuelan President Nicolas Maduro raises his fist as he arrives to a rally congregating thousands of representatives of regional social movements in Santa Cruz, Bolivia on June 14, 2014, where the G77+China Summit will take place. Leaders of developing nations plus China meet here Saturday to draft a global anti-poverty agenda at a summit that also showcases Latin America’s burgeoning relationship with the Asian giant. AFP PHOTO/CRIS BOURONCLE (Photo credit should read CRIS BOURONCLE/AFP/Getty Images) The US Congress on Wednesday voted to restrict travel and freeze assets on some Venezuelan government officials it accuses of human rights abuses during a crackdown on protests against socialist President Nicolás Maduro earlier this year. More than 40 people have died during a wave of protests by students and members of the Venezuelan opposition against curbs on democratic liberties, rampant crime and a deteriorating economy in the embattled Caribbean nation . More On […]

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U.S. oil imports from Nicolas Maduro’s Venezuela up the same week the U.S. Senate passes legislation sanctioning officials in Caracas for human rights abuses. UPI Photo/Mohammad Kheirkhah The U.S. Energy Information Administration said in a status report the United States imported 896,000 barrels of Venezuelan crude oil per day for the week ending Dec. 5, up 66 percent from last week and 14.4 percent year-on-year. The increase in oil imports comes more than two months after the Venezuelan government shelved plans to sell Citgo , the U.S. subsidiary of state oil company Petroleos de Venezuela . A decline in global oil prices is hurting economies like Venezuela’s that rely heavily on oil exports for revenue. High inflation in the country is eroding consumer purchasing power by as much as 12 percent. In July, the government in Caracas said it could free up export volumes and to start directing oil […]

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By Ezequiel Minaya KINGSTON, Jamaica–Some Caribbean and Central American countries are bracing for cutbacks in shipments of cut-rate oil from Venezuela, as Caracas struggles with sliding crude prices and a spiraling economic crisis. For a decade, the 13 beneficiaries of Venezuela’s largess have depended deeply on the oil to finance social spending and infrastructure, and rewarded Caracas with diplomatic support on the international stage, regional diplomats said in interviews. Even as Venezuela pledges to continue the program, the country’s oil exports to the countries fell about 20% through October compared with the same period last year, says ClipperData LLC, a New York data tracker. And last year, Venezuela’s cut-rate oil exports declined 15% from 2012, the International Monetary Fund says. Several participants in the program, called Petrocaribe, are preparing for further declines, which diplomats said stand to upend spending plans and tip some economies into recession. "If Petrocaribe pulls […]

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When Angel Fernandez, a former production engineer with Venezuela ’s state-owned petroleum company, relocated to Canada’s oil-sands region, it wasn’t for the weather. The draw was a paycheck that he said can stretch as much as 100 times further. “It’s been very difficult adjusting to temperatures” that typically max out at -10 degrees Celsius (14 degrees Fahrenheit), Fernandez said in an interview. “But for the opportunity, it’s worth it.” Fernandez, 33, is part of a growing exodus of skilled oilfield workers from Venezuela, where real wages for engineers have fallen to the equivalent of less than $400 a month, about 9 percent of the global average. The world’s worst inflation , swelling crime rates and a plunging currency are prompting others to move abroad, dragging down oil production at a time when slumping crude prices threaten the country’s export revenue. While Venezuela’s foreign affairs ministry has declined to provide […]

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Italian energy company Eni reviewing global oil market conditions with its counterparts in Venezuela. (UPI/Shutterstock/num_skyman) CARACAS, Venezuela, Dec. 3 (UPI) — While providing few specifics, Italian energy company Eni said Wednesday it was reviewing current world oil market conditions with its Venezuelan counterparts. Eni Chief Executive Officer Claudio Descalzi met in Caracas with his counterpart at Petroleos de Venezuela , Eulogio Del Pino. Both sides, the Italian company said, discussed developments at the Junin-5 and Perla oil fields, two of the largest oil fields discovered in recent years. Junin-5, located in Venezuela’s offshore Orinoco oil belt, is expected to produce about 240,000 barrels of oil per day at its maximum. The Perla field holds an estimated 17 trillion cubic feet of natural gas. "The meeting was also an opportunity to analyze the global energy scenario especially in light of the recent events that have heavily affected the world oil […]

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As Venezuelan Foreign Minister Rafael Ramirez urged fellow OPEC members to cut oil production at one point during last week’s three-hour meeting in Vienna, the split in the group quickly became clear. Eight countries — including those from Angola and Nigeria, which are, like Venezuela, among the hardest hit by the five-month rout in crude prices — embraced a reduction, according to five people briefed on the meeting. Absent from that list, though, was the most important man in the room, Saudi Arabian Oil Minister Ali Al-Naimi , who led a group of four Persian Gulf nations in voicing dissent, the people said. And with that, the push for a cut, which would require unanimous backing, was shot down, leaving OPEC’s daily output target at 30 million barrels and triggering a 10 percent collapse in prices by the next day. The disagreement cements the formation of two camps that […]

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VLADIMIR PUTIN pointed out that the Russian currency’s recent loss of value had a silver lining. “ We earlier sold a product worth $1 and got 32 rubles for it,” he told the TASS news agency. “And now we get 45 rubles for the same product costing $1. Budget revenues have increased and not decreased.” That simple math works for big energy producers like Russia, where government revenues come mostly from sales of oil and gas for dollars. When world energy prices drop, a depreciating currency can allow a government to keep spending at home and cushion the shock. Not everyone gets it, however. Unfortunately for Venezuelans, Mr. Putin’s lesson is lost on their own leaders, who are continuing to preside over an accelerating — and dangerous — economic collapse in one of the world’s biggest petroleum powers. The price of Venezuela’s heavy oil dropped below $70 a barrel […]

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By Kejal Vyas CARACAS–Venezuelan President Nicolás Maduro announced plans on Friday to cut public spending, beginning with his own salary, as the price of oil continues its slump. The slide in crude prices of more than 30% since the summer has added a new layer of concern for Mr. Maduro, whose popularity, polls show, has dropped to a record low. The South American country is struggling with soaring inflation as well as a dollar crunch that has led to shortages of food and consumer goods. Venezuela’s basket of heavy crude and petroleum products tumbled 89 cents to end the week at $68.08 a barrel, the lowest in more than four years, the oil ministry reported. "I don’t take this blow from the drop in oil prices badly," Mr. Maduro said in a televised address to industry workers at the Miraflores presidential palace. "I take it as an opportunity to […]

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In the aftermath of OPEC’s failure to cut oil production, Russia has been acting surprisingly sanguine, perhaps as a result of less leverage in its system as compared to America’s own high yield-funded shale complex – now that it is a race to who will default first and be forced to take production offline – with Putin today saying “Russia will cope with the rout in crude oil”,  and adding that “we are satisfied overall with the situation and do not see anything so extraordinary in what is happening. Winter is coming and I am sure that the market will come into balance again in the first quarter or toward the middle of next year.” Maybe it will, or maybe not, if indeed as those with a working frontal cortex suggest the plunge in crude prices is merely a function of a collapse in global demand now that the […]

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(Updates with arbitration details in fifth paragraph.) Nov. 26 (Bloomberg) –- ConocoPhillips (COP) Petrozuata BV asked a Texas judge to let it investigate claims Venezuela ’s state-owned oil company is secretly liquidating U.S. assets to avoid paying a potential multibillion-dollar arbitration award over the nationalization of ConocoPhillips’ assets in 2007. Petroleos de Venezuela ’s principal U.S. asset is Houston-based Citgo Petroleum Corp., which owns three refineries and a distribution network comprised of numerous pipelines and terminals. The Venezuelan government publicly said in September and October that it was no longer trying to sell Citgo, in deals with price tags estimated from $7 billion to $15 billion, according to court papers. “The available evidence indicates that PDVSA is liquidating its interests in Citgo to remove the proceeds from the United States to Venezuela or elsewhere with the specific intent to hinder, delay or defraud its creditors,” including the company’s “ability […]

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Venezuela is seeking help from nations outside of OPEC to halt a collapse in global crude prices, adding a new twist to oil-market diplomacy with nine days to go until the group’s next meeting. Nicolas Maduro, Venezuela’s president, told state television yesterday that he was coordinating with Russia to hold a meeting “very soon” with countries that aren’t members of the Organization of Petroleum Exporting Countries, as well as those within the group, to defend the price of oil. Venezuela and other Latin American countries have been among the hardest hit by plunging prices in part because the slump has been caused by surging supplies in North America. Combined output from the U.S. and Canada rose last year to the highest since at least 1965 as producers tapped stores locked in shale-rock formations and oil sands, according to BP Plc data. “I don’t see anyone in non-OPEC volunteering to […]

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Milagro Alvarez holds her 5-month-old daughter, Annabeth, as she waits in line inside a Farmatodo pharmacy in hopes of buying more disposable diapers in downtown Caracas, Venezuela. The store refused to sell her diapers because of a government rationing system that allows her to buy only two packages of 20 diapers per week. (Ariana Cubillos/AP) CARACAS, Venezuela — The sprawling street market that radiates outward from the metro station in Petare, Caracas’s largest slum, is the retail equivalent of an anti-Target. There’s no organization to it. Tube socks and school supplies are sold beside giant pyramids of pineapple and piled yucca. Leopard-print hot pants stretch over mannequin buttocks next to the stinky stalls of fishmongers. The bazaar was known until this month as one of the city’s biggest open-air black markets, the place to find all the scarce items that shoppers must queue up for hours to get in […]

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The price of oil is a “concern for everyone,” Venezuela ’s representative to OPEC said after a meeting with Saudi Arabia’s oil minister yesterday. Rafael Ramirez, who is also Venezuela’s foreign minister, told reporters at a climate-change conference on Margarita Island that Saudi Arabia’s participation at the event was part of a meeting between friends. The Middle East nation is the biggest producer in the Organization Of Petroleum Exporting Countries, a 12-member group responsible for about 40 percent of the world’s oil supply. Brent crude has collapsed to the lowest level in more than four years amid speculation that global supply is outpacing demand. OPEC’s leading producers are responding by cutting prices, resisting calls to reduce supply as they compete with the highest U.S. output in three decades. Ramirez greeted Saudi Arabia’s Ali Al-Naimi as he arrived at the event before they began a private meeting, stopping briefly for […]

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CARACAS—Venezuela has applied for a revision to the $1.6 billion award that an international arbitration panel earlier this monthordered it to pay Exxon Mobil Corp. for oil assets expropriated in 2007.  Enforcement Continue Reading

Venezuela shelved a planned sale of about $10 billion in U.S. refineries as surging North American crude output pushes down energy prices and profit margins. The country ruled out selling its U.S.-based refining subsidiary Citgo Petroleum Corp., Finance minister Rodolfo Marco Torres told Caracas-based El Universal in an interview published yesterday. The nation will keep investing in Citgo, he said, echoing comments made by President Nicolas Maduro last month. Citgo said in a July 29 filing that state-owned oil company Petroleos de Venezuela SA was looking for a buyer, threatening to undermine bondholders and other creditors by removing a sovereign asset that could be seized in the U.S. in the event of a default. Former oil minister Rafael Ramirez said in August that Citgo was worth at least $10 billion, while Barclays Plc said last month that the company’s equity value is between $7 billion and $9 billion. “Refining […]

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This week’s plummeting world oil prices are throwing into doubt financial stability in Venezuela, which relies on the commodity for most of its income.  Oil exporters from Russia to Iran Continue Reading

CARACAS, Oct. 16 (Xinhua) — Venezuelan President Nicolas Maduro on Thursday blamed Washington for the slump in global oil prices. Washington is "flooding" the market with cheaper shale oil to bring down prices and ultimately impact Russia and other oil-producing nations, Maduro said at a televised Cabinet meeting. "The U.S. and its allies want to affect oil prices to harm Russia, which produces around 10 million barrels per day, and that is the vital income of their economy," said Maduro. Market analysts say a 20-percent dip in oil prices since June is driven by lower economic growth and weak demand for crude in Europe, along with signs that the core Gulf members of the Organization of Petroleum Exporting Countries are in no hurry to cut production. Maduro called for an extraordinary meeting of the group to explore ways to stabilize international oil prices.

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MARGARITA, Venezuela, Oct 15 (Reuters) – The recent slide in global oil prices puts projects under heavy pressure, executives at two major production companies told an industry conference in Venezuela on Wednesday. A four-month rout, which stemmed from signs of lower growth and oil demand in Europe coupled with expectations that OPEC’s core Gulf members are in no hurry to cut production, has left Brent crude below $85. "This scenario puts projects … in Venezuela under big pressure," Chevron Latin America Managing Director Kelly Hartshorn said at the Margarita Island gathering. U.S.-based Chevron and state oil company PDVSA operate the Petroboscan heavy crude joint venture in western Venezuela. Chevron also has a share in the Petropiar oil upgrader in the Orinoco belt. Separately, Statoil Venezuela official Luisa Cipollitti said at the conference that "mega-projects" globally were under threat from the price fall. "Prices … have fallen and we don’t […]

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Caracas claims win in court case involving seizure of Exxon assets. UPI/Maryam Rahmanian WASHINGTON, Oct. 10 (UPI) — The government of Venezuela declared victory following a ruling by an international court regarding Exxon Mobil claims on the country’s offshore oil. The International Center for Settlement of Investment Disputes, which receives funding from the World Bank, ruled Venezuela must pay Exxon Mobil $1.6 billion for taking over assets in 2007. That’s far less than the $16.6 billion Exxon wanted, giving the government in Caracas a claim to victory. "Once again, Venezuela, its government, institutions and workers have confronted and [have] been able to defeat the aggressions of the powerful transnational interests," a statement published Thursday read. The court, in its 138-page ruling , said the compensation is owed "for the expropriation of [Exxon Mobil’s] investments in the Cerro Negro project [in the Orinoco belt]." Former Venezuelan President Hugo Chavez moved […]

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was awarded a $1.6 billion settlement by an international arbitration panel for assets seized by Venezuela ’s government in 2007, a fraction of what the crude producer had sought. The World Bank’s International Centre for Settlement of Investment Disputes, or ICSID, awarded the sum to Irving, Texas-based Exxon as compensation for investments in the Cerro Negro project and other losses, according to a on the ICSID website today. The world’s most valuable had originally sought as much as $14.7 billion for assets nationalized after it refused to accept terms of a partnership with Petroleos de Venezuela SA. “Our goal with the arbitration was to seek compensation for the fair market value of assets that were expropriated,” Exxon said in an e-mailed statement. “Exxon Mobil’s affiliate engaged in extensive discussions with PDVSA and government officials but was unable to reach agreement on fair compensation.” President Hugo Chavez ’s handpicked successor, […]

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Caracas (Platts)–3Oct2014/509 pm EDT/2109 GMT The average price of Venezuela’s oil basket fell 76 cents/barrel to $85.89/b for the week of September 29-October 3, the country’s Oil and Mining Ministry said Friday. The prices of the country’s main crude grades continued to fall, affected mainly by signals of a slowdown in the global economy and abundant supply of crude oil in the market, the ministry said. The monthly average for September was $89.27/b, compared with $103.75/b in September 2013. The monthly average for October is $85.89 /b, compared with $97.31/b in October 2013, the ministry said. The year-to-date average fell to $95.29/b in the most recent week from $96.23/b a week earlier. The basket price is an average of 70% crude oil (light, medium and heavy) and 30% refined products. The crude oil includes the Bachaquero, Boscan, Laguna, Merey, Mesa 30, Santa Barbara and Leona 24 grades. The refined […]

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Petroleos de Venezuela SA hired a public relations agency founded by Margaret Thatcher ’s press adviser, two people familiar with the matter said, as Venezuela sells U.S. refineries and responds to World Bank court rulings. PDVSA, as the state-owned oil producer is known, contracted Tim Bell’s Bell Pottinger Private in May to improve its image abroad, said the people, who asked not to be identified because it hasn’t been made public. It’s the first time the company has hired an international PR firm since late-President Hugo Chavez began his so-called Bolivarian revolution in 1999. PDVSA, which accounts for 97 percent of Venezuela’s dollar earnings, is struggling to fund record social spending and subsidies, leading to shortages of everything from razors to flour in a country with the largest oil reserves. President Nicolas Maduro , Chavez’s handpicked replacement, is facing the world’s fastest inflation and foreign reserves near 11-year lows. […]

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President Nicolas Maduro ’s removal of his main economic and oil policy maker improves Venezuela’s chances of tapping more of the world’s largest crude reserves, according to Barclays Plc and Medley Global Advisors LLC. While Rafael Ramirez ’s exit from the posts of vice president for economy and energy minister dims hopes for economic reform, it may give his successor at Petroleos de Venezuela SA the opportunity to focus more on the job of pumping oil. Besides running PDVSA, Ramirez oversaw the exchange system and housing programs among other non-oil duties. His deputy on the PDVSA board, Eulogio Del Pino, will take over as part of a series of government changes unveiled by Maduro on Sept. 2. With a master’s degree in exploration from Stanford University , Del Pino oversaw the company’s operations and coordinated agreements with international oil firms as head of Corporacion Venezolana del Petroleo, or CVP. […]

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Venezuela’s President Nicolás Maduro speaks during a news conference at Miraflores Palace in Caracas on Tuesday night. He disappointed investors with a cabinet shake-up. Reuters CARACAS, Venezuela—In recent weeks, the government here hinted it was considering controversial steps to ease a deepening economic crisis, including raising the price of gasoline. But on Tuesday night, in a widely anticipated address, President Nicolás Maduro didn’t unveil any major economic adjustments. Instead, the president announced a cabinet shake-up that removed Rafael Ramírez, the powerful oil minister, who was seen as a proponent of modest changes. Investors didn’t take long to deliver their verdict. The price of Venezuela’s benchmark bond on Wednesday fell hard for the second consecutive day to levels last seen in April, while yields on some bonds from Petróleos de Venezuela climbed to nearly 15%, among the highest in emerging markets. "All of those promises have fallen flat because he […]

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Residents of a neighborhood in Ciudad Guayana, Venezuela, block traffic with burning tires to protest a broken sewer main. (Nick Miroff/The Washington Post) Long before Hugo Chávez launched his socialist revolution, government planners came here to Venezuela’s eastern frontier, where the mighty Orinoco and Caroni rivers converge, and envisioned an industrial workers’ paradise. President Rómulo Betancourt, a key partner in John F. Kennedy’s “Alliance for Progress,” founded the city in 1961, inviting his countrymen to turn Ciudad Guayana into a tropical Pittsburgh. More than a city, “it felt like you were building a country,” said Alfredo Rivas, who arrived as a young engineer and went on to become president of the huge steelworks here. A half-century later and 15 years after Chávez came to power, Ciudad Guayana’s factories are crippled, starved for investment and roiled by labor disputes. So faint is Betancourt’s vision that his own monument is coated […]

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Venezuela’s President Nicolás Maduro speaks at a news conference in Caracas on Tuesday. Reuters CARACAS—Rafael Ramírez, who has overseen Venezuela’s oil industry for more than a decade, was removed from that role late Tuesday in a cabinet shake-up announced by President Nicolás Maduro. As part of the shake-up, Mr. Ramírez was appointed foreign minister. Venezuela’s then-energy minister, Rafael Ramírez, attends an OPEC meeting in December 2011 in Vienna. Agence France-Presse/Getty Images Mr. Ramírez had served as Mr. Maduro’s top economic adviser and was scheduled to lead an investor roadshow this month in New York in search of financing for the cash-strapped government. He was one of the most vocal proponents of economic overhauls such as slashing domestic gasoline subsidies and simplifying a cumbersome foreign-exchange system, two areas where the government has been bleeding money. The cabinet changes come as Mr. Maduro’s approval rating has tumbled to 35.4% as he […]

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