Category Archives: Venezuela

PDVSA issued at least $310 million in debt to pay off suppliers

Venezuelan state oil firm PDVSA has issued at least $310 million in debt to companies including General Electric Co as it negotiates private issuances to pay off its suppliers, industry sources told Reuters, stretching the finances of a company that bondholders already worry is on its way to default.

An oil tank reads "Fatherland, socialism or death" in Ameriven company, part of the Complex Jose in Anzoategui state, 200 miles East from Caracas, Venezuela. The complex, that make refined crude from the heavy oil of the Orinoco Belt, is a joint venture between Venezuelan state owned PDVSA and the foreign companies Chevron, British Petrolum, Total and Statoil. May 1st 2007 Venezuelan President Hugo Chavez changed the stock holding of the complex to make PDVSA ,with 60 percent of the stocks , control the participating companies. Photographer Diego Giudice/Bloomberg News
An oil tank reads “Fatherland, socialism or death” in Ameriven company, part of the Complex Jose in Anzoategui state, 200 miles East from Caracas, Venezuela. The complex, that make refined crude from the heavy oil of the Orinoco Belt, is a joint venture between Venezuelan state owned PDVSA and the foreign companies Chevron, British Petrolum, Total and Statoil. May 1st 2007 Venezuelan President Hugo Chavez changed the stock holding of the complex to make PDVSA ,with 60 percent of the stocks , control the participating companies.
Photographer Diego Giudice/Bloomberg News

 

The securities are not bonds but offer rights similar to those enjoyed by bondholders, and at least one issue offers dispute resolution via the Paris-based International Chamber of Commerce, according to one of the three sources, who cited a term sheet.

This means that if PDVSA defaults, investors holding their bonds may find that there are more creditors competing for compensation than they had originally anticipated.

The overall negotiations on private debt issuance, which were confirmed by seven sources, come as weak oil markets and an unraveling socialist economy have fanned concerns PDVSA will be unable to make nearly $5 billion in bond payments between now and the end of the year. PDVSA and Venezuelan President Nicolas Maduro insist they will meet all debt obligations and dismiss default rumors as a right-wing conspiracy.

In addition to the $310 million, a package of $1.5 billion in such securities maturing in three to five years is being discussed as a way of settling debts with small and medium-sized oil services firms, according to one of the sources, who was briefed on that proposal.

PDVSA is struggling to prevent oil services providers from stopping work in Venezuela in protest over billions of dollars in unpaid bills.

The company has worked with banks including Deutsche Bank AG to structure fixed-income securities such as promissory notes that can be sold to investors, according to one of the sources, a local trader who saw documents outlining the proposal.

“PDVSA has been offering promissory notes as well as other types of notes and financial instruments to settle debts with providers,” said another of the seven sources, who was also involved in one such operation.

Read the full story at Petroleum World.

Venezuela oil minister says U.S. ruined deal in Doha

Intense pressure from the United States was one of the reason why OPEC and non-OPEC producers failed to reached a deal on freezing oil output in Doha on Sunday, Venezuelan Oil Minister Eulogio Del Pino told reporters.

“The United States was behind the pressure. They have a problem with Venezuela, Russia… They are doing this for political reasons and are ignoring their own people suffering. Ask any oil company in the U.S. — they are all very sad because of what happened yesterday,” he said

Full article here on Reuters.

Schlumberger to limit Venezuela operations on payment problems

Oilfield services provider Schlumberger Ltd said it would reduce its operations in Venezuela due to payment problems, a further sign of the cash crunch facing the OPEC nation because of weak oil markets.

Venezuelan state oil company PDVSA, the exclusive operator of the country’s oilfields, has built up billions of dollars in unpaid bills to service providers as a result of cash-flow problems.

“Schlumberger appreciates the efforts of its main customer in the country to find alternative payment solutions and remains fully committed to supporting the Venezuelan exploration and production industry,” the company said in a statement.

“However, Schlumberger is unable to increase its accounts receivable balances beyond their current level.”

The company said the reduction will take place through this month, allowing for a safe wind-down of operations.

Read the full story on Reuters.

Venezuela’s gives Fridays off to ease power consumption

Venezuela’s first lady Cilia Flores, left, speaks to her husband, President Nicolas Maduro during a demonstration, at Miraflores Presidential Palace in Caracas, Venezuela, Thursday, April 7, 2016. (Photo: Ariana Cubillos, AP)

Embattled President Nicolas Maduro gave the country’s 1-million-plus public administration employees Fridays off for the next two months in a bid to reduce electricity use in the oil-rich country and avert a collapse of the power grid.

Maduro also called on his citizens yesterday to reduce their power consumption, the highest in Latin America, in a bid to cope with the burgeoning crisis that has disrupted life for weeks. If all of the government’s proposals are implemented, power consumption could fall by up to 20%, Maduro said.

“I want to avoid painful rationing,” Maduro said during a nationwide
televised address.

Venezuela, which derives 70% of its electricity from hydroelectric plants, is facing an electrical crisis, partially caused by El Niño weather phenomenon. The resulting drought has reduced water levels at the country’s hydroelectric plants, in turn slashing generator output.

Read the full article in USA Today.

Bello: The return of an old enemy

An inflation test for Latin America’s central banks

OLDER Latin Americans still have vivid memories of hyperinflation. Bello recalls changing money in dark doorways in the mid-1980s in Bolivia and being handed a truncheon of greasy banknotes secured by rubber bands. Peru went through a futile currency reform in which the sol lost three zeros and was briefly renamed the inti, which promptly racked up more zeroes.

Hyperinflation destroys businesses, undermines political systems and hits the poor especially hard. Latin America should have learned this painful lesson. So when in Caracas recently Bello was given a large shoebox packed tightly with banknotes in return for a few hundred dollars, he received it with an eerie sense of déjà vu and dismay. Official statistics put the rise in the consumer-price index in Venezuela last year at 181%, the world’s highest; the IMF forecasts 720% this year. Venezuela is extreme in its economic mismanagement. But while the rest of the world worries about deflation, across Latin America prices are rising. In Argentina, inflation is forecast to spike from 27% to 33% at an annual rate; in Brazil it stands at around 10.5%; in Uruguay, it is only one point lower, and in Colombia it has climbed to 7.6%. In Chile, Peru and Mexico it has also ticked up.

Read the full article on The Economist.

Latin America: US Trade Declines

Trade with Venezuela plummets by 42 percent.

After several years of setting new records, US trade with Latin America fell 8 percent last year after growing by 2.5 percent in 2014, according to a Latinvex analysis of data from the US Census Bureau.

Trade fell with all but two countries, with Venezuela, Brazil and Colombia particularly pulling down the region’s total trade with the United States.

Venezuela lost a whopping $17.7 billion in trade with the US last year, while Brazil lost $13.7 billion, and Colombia nearly $8 billion.

As a result, Colombia replaced Venezuela as the third-largest US trade partner in Latin America after Mexico and Brazil.

US trade with Latin America reached $776 billion last year.

Read the full article on LatinVex