Russia hands Venezuela a $6 billion lifeline

Russia hands Venezuela a $6 billion lifeline

Jim WyssMiami Herald
December 6, 2018

BOGOTA, Colombia As Washington tries to build an economic wall around Venezuela, President Nicolas Maduro keeps digging tunnels.

On Thursday, Maduro said that Russia had agreed to invest more than $5 billion in boosting Venezuelan oil production and an additional $1 billion in mining principally for gold.

After meeting with President Vladimir Putin this week, Maduro said the Russian government and private sector would also invest in Venezuela's diamond sector, bring in new satellite technology and provide some 600 tons of wheat in 2019. In addition, Russia will continue to supply and maintain Venezuela's military arsenal.

Venezuela has the world's largest oil reserves and is thought to have one of the world's largest gold reserves, but it has been mired in an economic crisis that has led to food and medicine shortages, and the migration of more than three million people in recent years.

Washington has been using a combination of targeted and systemic sanctions to hamstring Venezuela's economy. Last month, the White House prohibited U.S. residents and citizens from dealing in Venezuela's "corrupt" gold industry a move that was seen as a way to disrupt trade between Venezuela and Turkey.

Speaking in Moscow, Maduro called the sanctions "illegal from the point of view of international law and criminal from the point of view of humanity."

He also suggested that Washington's stance was forcing Venezuela and other nations to forge a new path and build a "new world."

As part of that new world, Maduro said Venezuela would continue to lessen its dependence on the dollar. In particular, Maduro said that, starting next year, Venezuela would gradually only accept the digital currency, Petro, as a means of payment. The Petro is government backed and its value, in theory, is tied to Venezuela's oil and mineral reserves, but it has struggled to become relevant.

On Thursday, as Turkish President Recep Tayyip Erdogan visited Venezuela, the two nations agreed to unspecified agreements in gold mining and energy production.

The Russian commitments, if they come through, are a big boost for Maduro who is due to begin a new six year term on Jan. 10.

More than three dozen nations, including the United States, have said they will not recognize Maduro as a legitimate president in his new term. They say the May election was flawed and mired by fraud. But analysts say the international condemnation is unlikely to move the needle, particularly if Venezuela continues to have the financial support of allies like Russia, China and Turkey.

"This visit put has us in an advantageous situation for the battle for stability, development and prosperity in the years to come," Maduro said.


(c)2018 Miami Herald


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As expected, Russia attempting to undermine the United States.

It's a smart move, it will be good for Russia and Venezuela. Doesn't have anything to do with the US.

Send all their illegal aliens home!

No reason to stay here...business will be booming!

Exactly.

Venezuela is in default, and you may own its debt - Business - CNN.com
https://money.cnn.com/2017/11/14/inv...01k/index.html
Nov 14, 2017 - Dozens of U.S. mutual funds and big banks, which invest on behalf of millions of Americans, own portions of the debt.Venezuela was declared in default late Monday by S&P Global Ratings after a 30-day grace period expired for a payment that was due in October. ... Venezuela owes over $60 billion to bondholders.

Venezuela faces heavy bill as grace period lapses on China loans
https://www.reuters.com/...venezuela...bill-as-grace-...

Apr 27, 2018 - Without the grace period, the amount applied to debt service rises to 375,000 bpd, the sources said. Venezuela and PDVSA are in default on nearly $50 billion in international bonds because they have failed to make more than $2 billion in interest payments.

Venezuela is blaming Trump for missed debt payments

by Patrick Gillespie @CNNMoney
October 16, 2017: 12:24 PM ET

Venezuela didn't pay its bills last week. It also owes a lot more money very soon as it spirals further into chaos.

The country's government and its state-run oil company missed five small debt payments last week totaling $349 million, according to three experts who closely follow the debt.

Delayed payments are becoming increasingly common for the country's bondholders. But a new excuse is surfacing: President Donald Trump and the financial sanctions his administration imposed on Venezuela in August.

The government hasn't commented on why it didn't pay this time but in late September, Venezuela Vice President Tareck El Aissami -- who the Trump administration labeled a drug trafficker -- blamed Trump for a separate delayed payment.

"We're starting an era where the dictatorship of the 'dollar boss' won't be imposed, and we're ridding ourselves of this supposed threat of Trump," El Aissami said on September 22, according to state-run television VTV.

This latest delay comes on the heels of gubernatorial elections in Venezuela on Sunday that many in the international community derided as fraudulent.

President Nicolas Maduro's party won a majority of the states despite private polls that show widespread unpopularity. Several nations, including the U.S., have labeled Maduro a dictator after he essentially kicked his political opponents out of office.

Related: Venezuela starts 'Plan Rabbit' to solve food shortages

In late August, the Trump administration barred banks operating in the United States from any transactions involving new Venezuelan debt and some existing bonds. Experts say banks are now hesitant to do any type of business with the regime.

To be clear, Venezuela President Nicolas Maduro has blamed the U.S. for years for his country's problems. His administration is just tweaking its criticism now.

Although Venezuela missed the deadline last week, it hasn't entirely defaulted on its debt -- a major problem if or when it happens. The government still has a 30-day grace period to make the payments.

Bondholders have seen these delays before and they expect the small payment will eventually be made. Some aren't convinced Venezuela is truly running out of money despite its widespread economic and humanitarian problems.

"Nobody knows how, but they continue paying and they continue [to stay] in power, and it's a sad story," says Diego Ferro, co-chief investment officer at Greylock Capital, a firm that owns Venezuelan debt. "The market is getting used to this sloppiness of handling payments."

Related: Venezuela's dreams are dying

Experts surmise there are a few more reasons behind the delay than just the U.S. sanctions. They include: no cash, no organization or that Venezuelan leaders may be waiting for a loan to come through.

The radio silence from the regime regarding its financial crisis is getting worse, experts add. For example, the National Public Credit Office often tweets when it makes a debt payment. The state-run oil company, PDVSA, also boasts about paying its bills on social media.

Neither has tweeted about the money due last week.

"They're trying to hide the fact that they're under financial distress," says Russ Dallen, managing partner at Caracas Capital, a Miami-based firm that does not own Venezuelan debt. Blaming U.S. sanctions is "a dog ate my homework excuse, they have other ways around the situation."

Related: Trump bars banks from buying new Venezuelan debt

Venezuelan leaders need to find those other ways soon: Between October 27 and November 2, its entities owe over $2 billion to bondholders. The central bank, which has drained its reserves to make payments, only has $9.9 billion left.

The country's "ability to pay will more seriously be called into question," on those dates, says Edward Glossop, an economist at Capital Economics who covers Latin America.

What's worse: Venezuela's only source of income -- oil -- is drying up. Literally. There were only 44 oil rigs in operation in Venezuela as of September. That's down from 81 rigs four years ago, according to Baker Hughes, an oil service provider.

https://money.cnn.com/2017/10/16/new...ons/index.html

U.S. OIL COMPANY COULD FALL TO RUSSIA AS VENEZUELA STRUGGLES TO PAY ITS BILLS

BY DAMIEN SHARKOV ON 4/11/17 AT 12:23 PM

https://s.newsweek.com/sites/www.new...4/11/pdvsa.jpgA general view of the Amuay refinery complex which belongs to the Venezuelan state oil company PDVSA in Punto Fijo, Venezuela November 17, 2016.CARLOS GARCIA RAWLINS/REUTERS[COLOR=rgba(12, 11, 11, 0.8)]SHARE

WORLDU.S.RUSSIAVENEZUELA

Russia’s state oil company could soon control an energy giant based in Houston, Texas, and U.S. lawmakers are not happy about it.

“We cannot give [Russian President Vladimir] Putin any opening to affect the flow of oil or toy with Americans’ prices at the pump,” Democratic Sen. Bob Menendez said Monday. “And we cannot play Russian roulette with America’s energy infrastructure. The risk to our national security and our economy is not one I’m willing to take.”

Menendez spoke during a press conference he held to warn of the possibility that Russia could gain control of Citgo, which has 48 petroleum product terminals in 20 states. Venezuela's state-run oil company owns Citgo and used a 49.9 percent stake as collateral on a loan last year from Russia’s state-run Rosneft.

Menendez as well as at least two U.S. representatives wrote letters this week to Treasury Secretary Steven Mnuchin warning of how a default would hand Russia the Citgo shares. The oil company controls about 800,000 barrels of the nearly 20 million barrels of petroleum the U.S. uses every day to help fuel its economy, CNN Money reported.



https://pbs.twimg.com/ext_tw_video_t...jpg&name=small

https://pbs.twimg.com/profile_images...RH9_normal.jpgSenator Bob Menendez
✔@SenatorMenendez


Russian oil giant's potential ownership of CITGO, which runs pipelines&refineries across US, raises https://abs.twimg.com/emoji/v2/72x72/1f6a9.pngred flagshttps://abs.twimg.com/emoji/v2/72x72/1f6a9.png 4 national & energy security

114
4:31 PM - Apr 10, 2017

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Venezuela is in dire economic straits at the moment, with its foreign reserves currently worth $10.5 billion, almost a third of what they were worth in 2011. Venezuela’s state-run Petroleos de Venezuela, which has owned Citgo since the 1980s, put up just shy of a 50 percent stake in the company as collateral for a Rosneft loan in December. All Rosneft would need for a majority share would be to buy a few more bonds, thus clearing the threshold.

“Given Russia’s interference in the U.S. election and ongoing meddling in European elections, not to mention its habit of invading and bullying its neighbors, the last thing the United States should be doing is handing the Kremlin a significant ownership share in a major U.S. energy supplier,” Menendez added.

https://www.newsweek.com/russia-may-...company-582423

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Quote:

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Originally Posted by Judy

It's a smart move, it will be good for Russia and Venezuela. Doesn't have anything to do with the US.

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Not true.

Yes it is true. We don't care who owns the parent government-owned company of Venezuela that owns CITGO. If the Venezuelans shut it down, for their own reasons, or because Russia wants them to, that's their business. We don't care. The less Venezuelan oil sold in the US, the more US oil sold in the US that benefits our own oil companies. Who else is Russia going to sell it to? El Salvador? Columbia? Guatemala? LOL!! Good luck with that.

Venezuelan oil must not fall under Russia's tutelage

BY PETER HUESSY, OPINION CONTRIBUTOR — 05/27/18 03:00 PM EDT 134

https://thehill.com/sites/default/fi...?itok=hqj49VpE
© Getty Images

Larry Kudlow, the president’s chief economic adviser, wrote years ago that upward oil-price spikes lead to recessions. He is right. According to Robert Zubrin, oil-price hikes over the past four decades were followed shortly afterward by a sharp rise in American unemployment.

But there is something else. The world’s oil economy, unfortunately, provides billions to official state sponsors of terrorism, like Iran, and other countries that arguably should be on the list, like Russia and Venezuela.

Now, all of this is connected. Venezuela’s economy is near collapse, and its oil meltdown is getting worse.

The end of the nuclear deal with Iran could take upwards of another 1 million barrels of oil off the market each day. Add to that the ongoing recurring turmoil in the Nigerian delta and the civil war in Yemen, sitting astride two key oil trade routes on the Red Sea and Persian Gulf, and a future dramatic spike in oil prices is a high probability.Working to produce more energy independence in America, the administration has strongly supported fracking, secured approval of both the Keystone pipeline and opening up the ANWR oil reserves, as well as ending the EPA’s war on coal. All told administration policy has helped boost American oil and natural gas production in 2014 to the highest level of any country in the world to more than 11 million barrels a day from a low of under 4 million barrels a day in 2008.

Unfortunately, there are additional monkey wrenches that could affect oil production and gasoline availability in the United States. A great fear arises from Venezuela borrowing billions from Russia and China and giving these two U.S. adversaries the leverage to possibly cause economic trouble in the U.S. economy.

Venezuela's state-run oil company, Petroleos de Venezuela (PDVSA), owns the U.S. company and Houston-based Citgo. In December 2016, Venezuela's oil company put up a large stake (49.9 percent) in Citgo as collateral in exchange for a loan from Rosneft.

Why is that? Because Russia, in this case Rosneft, Russia’s largest petroleum company, could theoretically seize Citgo refineries and gas stations in the United States that it holds as collateral in case Citgo defaults on its loans.

In 2016, China extended a grace period to Venezuela for its own loans to the country but can demand, under the terms of the deal, that nearly a quarter of all Venezuelan oil exports go to China, further shaking Venezuela’s economy. Such an action may also cut oil available to the U.S. economy at a time when economic recovery here and around the world is pushing economic growth upward and with it the consumption of oil.

There is, however, a possible solution to at least this part of this oil equation. A group of investors have asked the Treasury Department to approve their purchase of the Russian-held debt from Citgo and PDVSA.

If Treasury Secretary Mnuchin approves the transaction, the U.S. would deny Russia any leverage they might have.

In April 2017, six senators, warned Treasury of the national security implications of Russia acquiring a large ownership share of a U.S. energy supplier. In June 2017, another group of six Senators again urged the Treasury Secretary to take swift action to protect America’s energy infrastructure from a possible Russian seizure.

In September last year, Sens. Bob Menendez (D-N.J.) and Marco Rubio (R-Fla.) sent a letter to the Treasury that highlights the threat to national security should Rosneft foreclose on Venezuela’s oil properties located in the United States. According to a joint press release the next day, Menendez and Rubio, members of the Senate Foreign Relations Committee, complained that sufficient action had not been taken by the administration even though the administration had previously told the senators they would intervene in a default situation. The letter was deeply concerned that the further deterioration of economic conditions in Venezuela might trigger actions by Russia and others that could seriously affect the security of America’s energy supply, and that the issue was urgent.

There is a possible solution to the problem which The Committee on Foreign Investment in the United States (CFIUS) can quickly approve. In February, Reuters reported:

“Energy and commodities trading firm Mercuria is leading a group of investors seeking U.S. government approval to buy the nearly 50 percent of collateral in refiner Citgo held by Russia’s Rosneft.”

If their license for the sale is approved, and even if Citgo goes into bankruptcy, the new investors would sustain operations, avoid fuel interruptions and continue to employ Americans working for Citgo in the United States. Approval by CFIUS gives everyone a win-win result.

Since Rosneft is now under U.S. sanctions, CFIUS should act expeditiouslyto approve the new financing being proposed by this deal.

The United States must ultimately deny Russia potential energy economic and political leverage against the United States and lessen chances that an interruption in supply will spike oil prices and throw the U.S. economy into a recession.

Right now, action by the U.S. Treasury cannot happen too quickly.

Peter Huessy is the director of Strategic Deterrent Studies at the Mitchell Institute for Aerospace Studies of the Air Force Association. He has been a guest professor on Nuclear Policy and Congressional Relations at the U.S. Naval Academy since 2011.

Previously, Huessy was a senior defense fellow at American Foreign Policy Council.

https://thehill.com/opinion/national...ssias-tutelage

Quote:

---

Originally Posted by Judy

Yes it is true. We don't care who owns the parent government-owned company of Venezuela that owns CITGO. If the Venezuelans shut it down, for their own reasons, or because Russia wants them to, that's their business. We don't care. The less Venezuelan oil sold in the US, the more US oil sold in the US that benefits our own oil companies. Who else is Russia going to sell it to? El Salvador? Columbia? Guatemala? LOL!! Good luck with that.

---

You're speaking for yourself, not we! The United States government, which includes those folks we elected to represent us, do care. So I'm not exactly sure who this "we" you're speaking of is.

Venezuela is in default,
and you may own its debt

- Business - CNN.com
https://money.cnn.com/2017/11/14/inv...01k/index.html
Nov 14, 2017 - Dozens of U.S. mutual funds and big banks, which invest on behalf of millions of Americans, own portions of the debt.Venezuela was declared in defaultlate Monday by S&P Global Ratings after a 30-day grace period expired for a payment that was due in October. ... Venezuela owes over $60 billion to bondholders...

Quote:

---

Originally Posted by MW

You're speaking for yourself, not we! The United States government, which includes those folks we elected to represent us, do care. So I'm not exactly sure who this "we" you're speaking of is.

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Oh, sorry, I should have known you wouldn't know who "we" is and identified us differently. "We" are the US taxpayers who don't want to use our money, credit or debt to bail out Venezuela or take in their refugees.

Putin says Trump should blame himself for high oil prices

• Russian President Vladimir Putin has said President Donald Trump is "right" to complain that global oil prices are too high — but added that the U.S. administration is partly to blame for higher prices.
• "President Trump has said he thinks the oil price is too high. Well, probably to some extend he's right ... But let's be frank, such oil prices are to some extent the result of the U.S. administration," Putin said.

Holly Ellyatt | @HollyEllyatt
Published 7:44 AM ET Wed, 3 Oct 2018 Updated 7:13 PM ET Wed, 3 Oct 2018 CNBC.com

https://fm.cnbc.com/applications/cnb...g?v=1536340219Alexei Druzhinin | Sputnik | Kremlin | Reuters
Russian President Vladimir Putin addresses the nation on pension reforms in Moscow, Russia August 29, 2018.

Russian President Vladimir Putin has said President Donald Trump is "right" to complain that global oil prices are too high — but added Trump is to blame for higher prices.

"President Trump has said he thinks the oil price is too high. Well, probably to some extend he's right, but we are absolutely OK with it at $65 to $75 per barrel to ensure the efficient operation of oil companies and ensure investment,"

Putin said Wednesday during an address to delegates at the Russia Energy Week forum in Moscow.

"But let's be frank, such oil prices are to some extent the result of the U.S. administration. I'm talking about sanctions against Iran, about political problems in Venezuela and just looking at what's happening in Libya."

https://fm.cnbc.com/applications/cnb...g?v=1537901286Could be significant hole in market without Iranian oil, says RBC's Helima Croft 3:01 PM ET Tue, 25 Sept 2018 | 01:18


Putin added: "If we touched upon the topic we are discussing now with him (Trump), I would say, if you want to find the culprit of who's guilty that prices are growing then you should just have a look in the mirror."

Putin's comments come after Trump criticized Russia and OPEC for a 2016 deal in which they agreed to curb oil output in a bid to support prices that had slumped in mid-2014 due to a glut in global supply.

The deal has worked and oil prices rose. The deal, and subsequent price rise, has drawn criticism from Trump, who said OPEC, Saudi Arabia and Russia are keeping prices high and called on them to increase production and thereby bring down oil prices.

Trump's criticism of the major oil producers ignores the fact that his own decision to implement sanctions on OPEC members Iran and Venezuela has also put pressure on oil prices, with markets fearing a shortfall in global supply.

Saudi Arabia and Russia have said they could fill any shortfall created by Iran when sanctions go into effect on November 4. The group of OPEC and non-OPEC producers already agreed back in June to ease production limits, in order to take some pressure off prices.

Putin defended the deal with OPEC, saying the aim was to balance markets.

"As for the reduction of production and keeping it quite low, this is just a tool, this is not our goal. Our goal is to balance the market, when we along with our colleagues from OPEC agreed to cut production this is what we talked about, cutting excessive stocks… This is not about the income of oil companies," he said.

"If the market is not balanced, there is a situation which leads to reduced investment and finally this will create a deficit on the market and prices will leap."

https://www.cnbc.com/2018/10/03/puti...-to-blame.html

Putin is partially right about that, but at the same time, sanctions on Iran are essential from a foreign policy standpoint to stop nuclear proliferation, a key goal of the United States and I thought the world at large.

Comments like this are tit for tat in response to our bad treatment of Russia, thanks to the Mueller Russian Collusion Hoax. We need another Summit with Putin and need it right away. A lot is at stake and this divide between the two countries all this time when we had all the ingredients for a new improved relationship with Russia out the gate is just one of the great tragedies of the Mueller Witch Hunt.

https://static-21.sinclairstoryline....?1544475237463
NATION & WORLD
Russia sends 2 nuclear-capable bombers to Venezuela

44 minutes ago

Wow. Russia is sending a strong message. Such a shame. We were all set to be new friends, do business, do a trade deal, reset nuclear arms reduction, cooperate on so many things beneficial to our two countries. Such a waste of opportunity for real peace and new positive alliances. It's sad.

• Russia’s state-controlled Rosneft oil company says it is ceasing operations and selling its assets in Venezuela
• 
  2 hours ago