Results 1 to 7 of 7

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

  1. #1
    Senior Member JohnDoe2's Avatar
    Join Date
    Aug 2008
    Location
    PARADISE (San Diego)
    Posts
    98,074

    Venezuela falls behind on oil-for-loan deals with China, Russia

    Venezuela falls behind on oil-for-loan deals with China, Russia




    By Marianna Parraga and Brian Ellsworth
    Reuters February 9, 2017
    34 Comments


    FILE PHOTO: Oil workers weld a pipeline at PDVSA's Jose Antonio Anzoategui industrial complex in the state of Anzoategui, Venezuela, April 15, 2015. REUTERS/Carlos Garcia Rawlins/File Photo More

    By Marianna Parraga and Brian Ellsworth


    HOUSTON/CARACAS (Reuters) - Venezuela's state-run oil company, PDVSA, has fallen months behind on shipments of crude and fuel under oil-for-loan deals with China and Russia, according to internal company documents reviewed by Reuters.


    The delayed shipments to such crucial political allies and trading partners - which together have extended Venezuela at least $55 billion (£43.9 billion) in credit - provide new insight into PDVSA's operational failures and their crippling impact on the country's unraveling socialist economy.


    Because oil accounts for almost all of Venezuela's export revenue, PDVSA's crisis extends to a citizenry suffering through triple-digit inflation and food shortages reminiscent of the waning days of the Soviet Union.


    The total worth of the late cargoes to state-run Chinese and Russian firms is about $750 million, according to a Reuters analysis of the PDVSA documents.


    At the end of January, PDVSA was late on nearly 10 million barrels of refined products that the company owes the firms - with shipments delayed by as much as 10 months, according to the documents. It also failed to make timely deliveries of another 3.2 million barrels of crude shipments to China's state-run China National Petroleum Corporation (CNPC).


    For a graphic detailing the delayed cargoes, see: http://tmsnrt.rs/2keq9Kr


    Shipments to China and Russia are critical for PDVSA's financial health because firms from the two countries purchase about a third of the PDVSA's total oil and fuel exports. The administration of Venezuela president Nicolas Maduro has for years relied on credit from the two nations, particularly China, to finance infrastructure and social investment in Venezuela.


    PDVSA did not respond to requests for comment. Venezuela's Petroleum Ministry declined to comment.

    During the decade-long oil boom that ended in 2014, Venezuela borrowed nearly $50 billion from China that it agreed to pay back in crude and fuel deliveries to state-run Chinese firms. Venezuela was the seventh largest crude supplier to China in 2016 and the largest in Latin America.

    Russia's state-run Rosneft lent at least $5 billion under similar arrangements, but the details of those deals have not been disclosed.


    Now, PDVSA is struggling to make good on those promises. A total of 45 cargoes bound for Russian and Chinese companies are late for a variety of reasons, according to internal operational reports about shipments of crude and refined products.

    The problems include operational mishaps, such as refining outages and delayed cleaning of tanker hulls, and financial disputes with service providers owed money by PDVSA.

    The backlog of delayed or canceled fuel cargoes represents about three months of the 88,000 barrels per day (bpd) of jet fuel and diesel that PDVSA must deliver under financing deals to Russia's Rosneft , China's PetroChina <601857.SS> and ChinaOil.


    Rosneft, the Kremlin and the Russian Energy Ministry declined to comment.


    PetroChina did not respond to requests for comment, and ChinaOil, a unit of PetroChina, declined to comment. The Chinese foreign and commerce ministries did not respond to requests for comment.


    OPERATIONAL, FINANCIAL STRUGGLES

    The delayed deliveries suggest that PDVSA will struggle this year to meet a planned increase in shipments to China and other countries, as laid out in a broad strategy document seen by Reuters. That document said PDVSA aims to boost crude deliveries to China by 55 percent in 2017, in part by reducing exports to India by 15 percent.

    Last year, the company produced about 2.5 million barrels a day, lowest in 23 years, and this year's production projections are virtually unchanged, according to the PDVSA strategy document.


    An internal PDVSA email exchange from Nov. 21, between PDVSA executives in charge of loading operations, details a myriad of operational and financial problems that are delaying the cargoes it owes Chinese and Russian customers.


    In one of the emails, a company official said PDVSA was unable to deliver a 1.8 million-barrel cargo of fuel oil to PetroChina because Bahamas terminal Borco, where PDVSA rents storage space, has intermittently prevented the firm from using the tanks since 2016 due to lack of payment.


    Another 2 million-barrel cargo of fuel oil bound for China in November was postponed because of stained crude tankers, which cannot navigate international waters due to environmental regulations.

    The emails also discussed potential delays to a fuel oil cargo for Rosneft, also because of dirty tankers and unpaid bills.


    Separately, four cargoes of Venezuelan Boscan crude owed to China's CNPC have also been postponed this year.


    FALLING OIL PRICES MEAN HEAVIER DEBTS

    The fall in crude prices has made the oil-for-loan agreements more onerous. Because loan payments were negotiated when crude prices were higher, the agreements require PDVSA to ship more oil in order to continue servicing the debts at the same rate.

    That saps its ability to ship to other customers - such as India, or customers in the United States - who would pay in cash, which PDVSA desperately needs.


    "PDVSA is taking a legal risk by postponing cargoes to key customers and a financial risk if it also delays deliveries to customers who pay by cash," said Francisco Monaldi, fellow in Latin American energy policy at Baker Institute in Houston.


    The top buyer of Venezuelan crude in India is Reliance Industries , operator of the world's biggest refining complex. The company imported 353,000 bpd of Venezuelan crude in 2016, 5 percent less than a year ago. To replenish its heavy sour Venezuelan crude supplies, it has stepped up imports from Mexico, Iraq and Saudi Arabia.


    If PDVSA can't meet its obligations to Russia and China, Monaldi said, the countries could recover money through projects or assets outside the oil sector, he added.


    The Chinese and Russian financing schemes, however, offer Venezuela and PDVSA more repayment flexibility than they get from the holders of $50 billion in bonds they have sold to investors.

    Because of default concerns, yields on those bonds are currently among the world's highest, paying an average of 21 percentage points more than benchmark U.S. Treasury bonds.


    China and Russia, which have provided unwavering support for Venezuela in diplomatic forums, have stayed quiet about any misgivings with Caracas. The problem of delayed cargoes would most likely be discussed discreetly through diplomatic channels, analysts said.


    An escalation into a commercial dispute, with Chinese or Russian firms demanding prompt payments, could affect Venezuela by triggering default clauses on bonds, or lead PDVSA to lose control of U.S. subsidiary Citgo, almost half of which was pledged to Russia as collateral.


    While that scenario is unlikely, PDVSA clearly does not have enough oil or money to satisfy its many creditors, said a trader who works at a company that regularly buys Venezuelan oil.


    "At this point, everybody is trying to collect pending debts from PDVSA by receiving cargoes," said the trader, speaking on condition of anonymity. "But production is not enough."

    https://www.yahoo.com/news/venezuela...--finance.html
    Last edited by JohnDoe2; 05-06-2017 at 11:39 PM.
    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


    Sign in and post comments here.

    Please support our fight against illegal immigration by joining ALIPAC's email alerts here https://eepurl.com/cktGTn

  2. #2
    Senior Member Judy's Avatar
    Join Date
    Aug 2005
    Posts
    55,664
    Yeah, this is why the smart oil countries hire or partner with Americans to run them.
    A Nation Without Borders Is Not A Nation - Ronald Reagan
    Save America, Deport Congress! - Judy

    Support our FIGHT AGAINST illegal immigration & Amnesty by joining our E-mail Alerts at https://eepurl.com/cktGTn

  3. #3
    Senior Member JohnDoe2's Avatar
    Join Date
    Aug 2008
    Location
    PARADISE (San Diego)
    Posts
    98,074
    Venezuela's new $5 billion bond deal involves Citgo, Russia, and is raising eyebrows

    Dawn Kissi | @dawnkissi
    Saturday, 7 Jan 2017 | 4:00 PM ETCNBC.com
    462

    Carlos Garcia Rawlins | Reuters
    A worker walks past a mural with a PDVSA logo at its gas station in Caracas, Venezuela, August 29, 2014.

    For crisis-hit Venezuela, the new year appears to look a lot like the old, with civil strife, food and medicine shortages, and a brutal recession battering the oil-rich economy.

    However, there's one development that adds a new wrinkle to Venezuela's rapidly deteriorating situation. In a surprise move this week, the cash-strapped country issued sovereign bonds for the first time in five years, to the tune of $5 billion.


    The deal dovetailed with a separate decision by the government to pledge a nearly 50 percent stake in Citgo, its U.S. refinery subsidiary, as collateral for a loan from Rosneft, Russia's state-controlled energy company. The Citgo collateral deal is already being challenged in court by U.S. multinationals, The Wall Street Journal reported this week,


    To some, it may seem like another last-ditch effort to keep lights on in Caracas, but market watchers say the arrangement is one to watch for several reasons.

    Russia's contentious relationship with the U.S., combined with Venezuela's own long-standing antipathy toward the world's largest economy, could mean trouble if Venezuela fails to make good on its debts. Citgo — owned by Venezuela state oil company Petroleos de Venezuela SA (PDVSA) — is also a major U.S. oil refiner, and in theory could find its assets seized by Russia.


    "If anything goes off the rails, the Russians will call the tune and pick up the pieces," Steve Hanke, a Johns Hopkins economics professor and director of the Troubled Currencies Project at the Cato Institute, told CNBC.


    "The Russians are very smart and know how to structure air-tight deals in cases like this," he added.


    'A big stretch'

    Eddie Seal | Bloomberg | Getty Images
    An oil tanker passes storage tanks at the Citgo Refinery in Corpus Christi, Texas.

    Then again, 2017 could also be a year of upside surprise from Venezuela. Markets are watching President-elect Donald Trump's ascension with bated breath, and his policies will likely reverberate through Latin American capitals. Mexico, for example, has had to bolster its peso in markets, amid whiplash stemming from Trump's tough talk on trade and immigration.

    In the midst of Venezuela's turmoil, President Nicolas Maduro's ruling United Socialist Party (PSUV) has found itself isolated and deprived of political support—something investors say is a good thing on balance.


    "Venezuela is in better shape financially because recent opinion polls show that PSUV is no longer the most popular political party in the country," said Jan Dehn, head of research at Ashmore Group, an emerging market specialist investment firm.


    "Since Venezuela needs a new government the decline in PSUV's approval rating brings regime change closer," he added.


    While the Citgo tie-up may put investors and market analysts on notice, investors mainly invest in dollar-denominated bonds issued by the sovereign and PDVSA, minimizing the fallout. Also, the prospect of tighter U.S. monetary policy may not sting as much as some might expect.


    "The main external risk is oil prices," Dehn said, with benchmark prices hovering above $50 per barrel. "U.S. interest rates do not matter much at this point, because the Venezuelan bond [already] trades at extremely wide spreads."


    Carlos Garcia Rawlins | Reuters
    Opposition supporters take part in a rally against Venezuela's President Nicolas Maduro's government in Caracas, Venezuela, October 26, 2016.

    Yet the U.S., despite being where Citgo's pipelines sit, is not too much at risk should the agreement go awry, market watchers say.

    "It is a big stretch" to argue that Citgo cannot engage in any financial transactions if Venezuela ends up in hock to Russia, Dehn said.


    With Venezuela still appearing willing to pay its bills to avoid a potentially crippling Argentina-style default, "I think deals involving Citgo as collateral will not fall through," Dehn added.


    Venezuela is also very likely to continue to have the support of China, which views the country as a long-term investment.


    Most investors are likely focusing on Venezuela's ability to finance its external liabilities, while dealing with extreme pressure on its citizens.


    Simon Quijano-Evans, emerging markets strategist at Legal & General Investment Management, told CNBC that even with higher oil prices "all this is ultimately a function of how long the country's foreign exchange reserves can finance the domestic and external shortfalls, or how much Venezuela is able to secure in new bilateral loans."


    Still, Venezuela could run into other roadblocks this year, with Maduro fending off intense political pressure to step aside and its financing options dwindling.


    "2017 is more of a decisive year for Venezuela than previous years, as reserves" are running low, and barely cover external debt payments for the year, Quijano-Evans told CNBC.

    http://freebeacon.com/national-secur...n-afghanistan/

    Last edited by JohnDoe2; 02-12-2017 at 07:09 PM.
    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


    Sign in and post comments here.

    Please support our fight against illegal immigration by joining ALIPAC's email alerts here https://eepurl.com/cktGTn

  4. #4
    Senior Member JohnDoe2's Avatar
    Join Date
    Aug 2008
    Location
    PARADISE (San Diego)
    Posts
    98,074
    How Bad Off Is Oil-Rich Venezuela? It's Buying U.S. Oil - The New ...

    https://www.nytimes.com/2016/09/21/world/americas/venezuela-oil-economy.html
    Sep 20, 2016 - Early this year, the United States began shipping more than 50,000 barrels a day of the light crude that Venezuela needs to prepare its own oil ...
    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


    Sign in and post comments here.

    Please support our fight against illegal immigration by joining ALIPAC's email alerts here https://eepurl.com/cktGTn

  5. #5
    Senior Member JohnDoe2's Avatar
    Join Date
    Aug 2008
    Location
    PARADISE (San Diego)
    Posts
    98,074
    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


    Sign in and post comments here.

    Please support our fight against illegal immigration by joining ALIPAC's email alerts here https://eepurl.com/cktGTn

  6. #6
    Senior Member JohnDoe2's Avatar
    Join Date
    Aug 2008
    Location
    PARADISE (San Diego)
    Posts
    98,074
    CITGO is owned by the Venezuelan oil company PDVSA

    Citgo
    Fuel industry company

    citgo.com

    Citgo Petroleum Corporation is an American refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. Wikipedia

    Headquarters: Houston, TX

    CEO: Nelson Martinez (May 23, 2013–)

    Founder: Henry Latham Doherty

    Founded: 1910, Bartlesville, OK

    Number of employees: 4,000



    Parent organization: PDVSA

    ======================

    PDVSA
    Company

    Petróleos de Venezuela, S.A. is the Venezuelan state-owned oil and natural gas company. It has activities in exploration, production, refining and exporting oil, as well as exploration and production of natural gas. Wikipedia

    Revenue: 128.4 billion USD (2014)

    Headquarters: Caracas, Venezuela

    Owner: Government of Venezuela

    Founded: January 1, 1976

    Total assets: 231.1 billion USD (2013)

    Subsidiaries: Citgo, Petrocaribe, PDVAL, Electricidad de Caracas
    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


    Sign in and post comments here.

    Please support our fight against illegal immigration by joining ALIPAC's email alerts here https://eepurl.com/cktGTn

  7. #7
    Senior Member JohnDoe2's Avatar
    Join Date
    Aug 2008
    Location
    PARADISE (San Diego)
    Posts
    98,074
    More info on the Russians and Venezuelans involved in the oil deals @

    "Before Donald Trump attacked foreigners, he helped sell them condos"

    @ Miami ‘Condo King’

    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


    Sign in and post comments here.

    Please support our fight against illegal immigration by joining ALIPAC's email alerts here https://eepurl.com/cktGTn

Similar Threads

  1. Cuba, Venezuela, Russia and China now more free than America in notable ways
    By AirborneSapper7 in forum Other Topics News and Issues
    Replies: 0
    Last Post: 11-26-2012, 02:02 PM
  2. China Agrees to Loan Venezuela $4 Billion
    By JohnDoe2 in forum Other Topics News and Issues
    Replies: 0
    Last Post: 11-23-2011, 09:56 PM
  3. Russia and China economic deals as G20 sink from frauds
    By AirborneSapper7 in forum Other Topics News and Issues
    Replies: 0
    Last Post: 10-14-2011, 09:49 PM
  4. A New Alliance: Venezuela, Russia, and China
    By AirborneSapper7 in forum Other Topics News and Issues
    Replies: 0
    Last Post: 08-30-2009, 12:05 PM
  5. PM Putin suggests Russia, China ditch dollar in trade deals
    By AirborneSapper7 in forum Other Topics News and Issues
    Replies: 2
    Last Post: 10-29-2008, 01:11 AM

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •