Thursday, September 29, 2016

Spiralling oil demurrage costs challenge Venezuela’s PDVSA

Venezuela’s state-owned oil company PDVSA is facing cash flow problems as it struggles to pay for its imports of crude and oil products and its debt obligations balloon due to demurrage costs, Latin America traders and shipping sources said. “It is happening with everything, crude, gasoline, diesel, heavy naphtha, etc.,” a Latin America refined products trader said. The company is importing products as usual but as they near Venezuela’s ports, cargoes have to wait 10-14 days to discharge, incurring demurrage charges, according to a trading source. Demurrage is the cost paid by a company for keeping ships at sea after failing to load or discharge them within the time agreed. PDVSA’s costs of demurrage increased 50.8% in dollar terms in 2015 from 2014 as a consequence of the increased cost of daily freightage, said a source close to PDVSA. Most of the costs, 81.5%, came from crude oil ships and the rest from oil products. More…

Wednesday, September 28, 2016

Kerry meets Venezuela's Maduro amid vote tensions

U.S. Secretary of State John Kerry met Venezuelan President Nicolas Maduro on Monday, the first formal encounter between the two since Kerry became the top U.S. diplomat. The two sat down together after a ceremony in the Colombian city of Cartagena to mark the signing of a peace agreement to end that country's civil war. "(Kerry) spoke of our concern about the economic and political challenges that have affected millions of Venezuelans, and he urged President Maduro to work constructively with opposition leaders to address these challenges," said State Department Spokesman John Kirby. Kerry and Maduro also agreed to continue bilateral discussions that began in recent months, Kirby said. More…



Concern as Venezuela Refuses to Accept Aid


The photo suggested promise. On the sidelines of a peace ceremony in Colombia, President Nicolás Maduro of Venezuela and Secretary of State John Kerry met for the kind of brief exchange that, under normal circumstances, might have been the start of a thaw after years of icy relations. But these are not normal circumstances: Venezuela’s economic and political crises have left it more isolated than it has been in years — and not just from the United States. More…

Venezuela’s PDVSA Bonds Rally After New Swap Proposal


Petróleos de Venezuela SA bonds rallied after the struggling Venezuelan national oil company improved the terms of a debt exchange in a bid to attract more participation. PdVSA this month offered investors a new bond maturing in 2020 in exchange for $7.1 billion of debt maturing next year, a deal that was considered unattractive by bond investors and analysts. Late Monday, the company came out with a sweetened offer, in which it reduced the size of the swap and increased the exchange ratios. PdVSA also extended the early deadline for bondholders to respond to the offer to Oct. 6 from Thursday. More…

The Venezuelan Crisis’ Elephant in the Room: the Central Bank


Prices soar when a monetary authority (in this case, the Central Bank) prints more money without a backup (fiat money). If there were a million Venezuelan bolivars to buy certain goods, and five more millions of bolivars are suddenly put into circulation for the same items, prices would skyrocket. Well, that is what the Board of the Central Bank of Venezuela (BCV) has been doing, as statistics show. On September 2, 2016, liquidity was around VEN $6.142 billion and reserves were around US $11.9 billion. Three years ago, Nicolás Maduro’s newly installed adminstration “only” had VEN $911 billion in circulation, and US $23 billion in reserves. In other words, 85 out of every 100 bolivars in circulation today was not in existence in September 2013. Moreover, dollar reserves have declined by half in the last three years, while goods available shrinking by 20 percent. It is not surprising that with this monetary frenzy, prices increased by 180 percent last year, and almost 500 percent this year. More…

Opposition wife takes 25 boxes of medical supplies to Venezuelan hospital


Lilian Tintori, the wife of imprisoned Venezuelan opposition leader Leopoldo Lopez, on Tuesday delivered 25 boxes of medical items to the Jose Manuel de los Rios Children's Hospital in Caracas, all donated via the "Rescue Venezuela" humanitarian campaign, which she heads. "Rescue Venezuela came to J.M. de los Rios Hospital, which is in ruins. I feel a lot of indignation over what I saw and heard, about the condition it's in, abandoned rooms. There are no supplies, there are machines that don't work, there are no bathrooms in good condition, they don't have a dining room," Tintori told reporters.  More…

Venezuela PDVSA's profits down 63 percent in first quarter: bond prospectus

Venezuela state oil company PDVSA's profits were down 63 percent in the first three months of 2016, compared to the same period last year, according to data published in the company's bond swap prospectus this week. PDVSA [PDVSA.UL] made $2.087 billion in the year to March, compared to $5.677 billion in the same period last year, according to the document. Income through oil sales and other products fell 33 percent, according to the unaudited document. The country is undergoing a major economic crisis, with shortages of basic goods, many complaining of hunger and triple-digit inflation. More…