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HenryTo
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 Posted: Mon Sep 03, 2007 4:11 am Post subject: Venezuela |
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Look for Hugo Chavez to continue to make headlines with regards to the crude markets in the coming weeks, as he essentially has no choice:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aTbIhOtky4CI&refer=home
| Quote: | | ``For the macroeconomic house of cards not to come crashing down, the price of oil has to go up at double digit growth rates,'' Hausmann said. ``If oil stays at $70, they're going to hit the wall.'' |
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HenryTo
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HenryTo
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HenryTo
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| Posted: Wed Jan 25, 2012 9:34 am Post subject: |
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Courtesy of Stratfor.
| Quote: | Venezuela Prepares as Chavez's Health Deteriorates
January 25, 2012
According to a report published by Spanish newspaper ABC on Monday and Tuesday, Venezuelan President Hugo Chavez may only have 9-12 months to live as a result of his decision to prioritize presidential duties over personal health. Chavez's prostate cancer was reportedly discovered in January of 2011, at which point his prognosis was five years. Since that initial diagnosis, Chavez has repeatedly postponed treatments or skipped them altogether in the interests of concealing his illness and protecting his political position.
The leaked report, which ABC says was given to the paper by "intelligence services" (much like a November leak to The Wall Street Journal), is dated Jan. 12 and reviews a medical examination Chavez underwent Dec. 30. According to the report, the South American president needs to undergo a painful, debilitating treatment that, while preventing him from working for more than a month, could extend his lifespan. If he defers the treatment, he will likely to die within the year. According to ABC, when presented with a similar conundrum in November, Chavez chose to stay in Caracas rather than travel to Russia for treatment -- out of fear that the political situation in Venezuela was not secure. We have no way to be completely certain that the report accurately represents Chavez's medical condition, but the tenor of the report matches a series of accounts given to Stratfor and other open sources.
Competition within the Chavista inner circle dominated 2011, as each of Chavez's closest associates sought to take best advantage of the turmoil that ensued when Chavez's bout of illness became public in June. The upcoming October elections have added urgency to this struggle. There is no clear successor to Chavez among the Chavista elite. However, Chavez in recent weeks appointed Diosdado Cabello as first vice president of the Venezuelan United Socialist Party and later named him President of the National Assembly. Clearly, a single faction has taken the lead. Cabello represents the pragmatic, militaristic wing of the Chavista elite. However, although powerful, Cabello is not particularly popular, and he is not likely to be a suitable replacement for Chavez in October.
The most believable political alternative to Chavez may actually come from the Venezuelan opposition. After years of disunity and infighting, the opposition is presenting its most credible challenge to Chavez since he came to office in 1999. Miranda Governor Henrique Capriles Radonski appears most likely to secure the backing of the opposition parties in the Feb. 12 primaries. Capriles has positioned himself as a man of the people, claiming he is the natural heir to Chavismo, but with a pro-business twist.
The most important thing to remember amid all this uncertainty is that the underlying processes driving Venezuela are not as dependent on Chavez as they might appear. The kind of change that truly shifts the nature of a country comes slowly. The attributes of Chavez's regime that are so criticized by opponents -- the networks of corruption, economic inefficiencies and low levels of international investment – are merely contemporary expressions of Venezuela's timeless patterns of patronage and influence.
Even if a prudent leader takes power in Chavez's wake, he will not likely make immediate changes to the system because the risk of destabilization is high. Capriles has made clear that he would make few major changes -- even saying he would maintain the controversial oil shipments to Cuba.
Assuming Chavez is as ill as this week's reports suggest, the next six months will likely be tumultuous. Nonetheless, there remains a good deal of room for compromise among Venezuela's power players, and a power transition over the next year will not necessarily translate to a severe destabilization of the country. |
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HenryTo
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| Posted: Thu Sep 01, 2011 10:40 pm Post subject: |
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Stratfor's insights on the latest rumblings from the Venezuelan government:
| Quote: | Portfolio: Venezuela's Search for Economic Security
The Venezuelan government has announced four key policy moves designed to enhance the country’s economic security. The first is the transfer of $6.3 billion in currency reserves to banks in Russia, China and Brazil. In the second move, Venezuela announced that it would transfer $11 billion worth of gold, mostly held abroad in Swiss banks, back home to the Venezuelan Central Bank. Third, was the nationalization of Venezuela’s gold sector, and fourth, was the creation of joint ventures between Venezuelan state firm PDVSA [Petroleos de Venezuela] and state mining firms.
The Venezuelan Central Bank lists its currency reserves at $6.5 billion and its gold reserves at $18 billion. A whopping 60 percent of Venezuela’s reserves are thus distributed in gold, while the rest are distributed in bonds and cash. Many in the investor world have written off these moves as irrational moves by Chavez’s economic team that will only enhance investors’ skittishness in Venezuela. In our view, the moves make good political sense for the Chavez regime but are also extremely revealing of the government’s growing vulnerabilities.
We pointed out at the beginning of the year that the rising level of economic decay, runaway corruption and growing political uncertainty in Venezuela would make the Venezuelan regime more reliant on its allies, particularly China and Russia. But both Russia and China have become increasingly skittish over the rising level of political uncertainty in Venezuela. Both of these countries have deep insight into the state of PDVSA’s financial disarray, and they both can see very clearly that there is no clear successor to Chavez who would be able to manage the regime as tightly as he has. For that reason, every time Venezuelan delegations go to Beijing and Moscow asking for larger installments on these loans, the Chinese and the Russians are coming back asking for greater collateral. And this likely explains Venezuela’s decision to transfer its currency reserves to Russian and Chinese banks. This allows Venezuela to draw larger amounts from these loans, but it also gives Russia and China the option, theoretically, to block Venezuelan reserves down the line should they feel the need to insulate themselves against a potential Venezuelan default.
Now, Chavez has had a lot of reasons for trying to insulate his country’s reserves. More recently, Chavez has likely been unnerved by the West’s freezing of assets of his close friend and ally, Moammar Gadhafi. There is also a very active sanctions lobby in Washington D.C. that has been spending a lot of time highlighting the links between PDVSA and IRGC-linked companies in Iran that is putting Venezuela on the sanctions radar. Another likely reason behind this move has to do with pending arbitration disputes on Venezuela’s nationalization decrees. Venezuela has a number of lawsuits now exceeding up to $30 billion with Conoco Phillips, Exxon Mobil, among other major firms.
Now, the Venezuelan move to transfer the majority of its gold assets back home and nationalize the gold sector likely have a lot to do with PDVSA’s increasing cash flow problems. In trying to address this problem of improving PDVSA’s efficiency as well as the efficiency of key mining companies, the Venezuelan government has announced a policy to create joint ventures between PDVSA and mining firms in the country. Theoretically, this type of consolidation could lead to greater efficiency, but if you look at the history of PDVSA’s nationalizations, the company’s expanded portfolio has led to greater inefficiency and not less.
Given the rising political uncertainties of the day especially given that Chavez is his sick with cancer, the Chavez government cannot afford to see its social development projects held back by PDVSA’s cash flow problems. Those projects are crucial to the regime’s political support and with elections slated for 2012 and the potential for those elections to be moved up sooner depending on Chavez’s health, you can see why the government is so eager to have reserves at home, and that is the gold assets back home, so it can draw on its reserves more easily and thus have the cash flow to support these politically crucial development projects. And the Chavez government made the nationalization move at a time when gold prices are at an all-time high. Nationalizing the gold industry allows Venezuela to add more gold to its existing reserves while reducing its exposure to the dollar while relying on local resources. In other words, Venezuela can sell oil abroad in dollars and then transfer its currency reserves to gold, which will now be much more accessible at home. Venezuela can then issue bonds at much lower rates, offering its gold as collateral, thus getting the cash it needs to support these politically crucial social development programs. |
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rffrydr
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| Posted: Fri Jul 01, 2011 8:46 am Post subject: |
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Crude negative; economy positive. 
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HenryTo
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| Posted: Thu Jun 30, 2011 6:38 pm Post subject: |
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More details on Chavez's health would be apparent by tomorrow evening:
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Venezuela's Chavez to address the nation
Venezuelan President Hugo Chavez was due to give a televised speech to the nation on Thursday for the first time since an operation in Cuba that triggered speculation he might be seriously ill.
State media gave few details but said the speech would be broadcast at 9 p.m. (9:30 p.m. EST).
The 56-year-old socialist leader's near-silence since he had surgery on June 10 in Havana has convulsed politics in the already turbulent South American nation he has led since 1999.
"The whole of Venezuela will be paralyzed at 9 p.m. today!" one supporter wrote on Twitter.
Fans and critics alike have been poring over the latest video of Chavez for clues to his health after the scrapping of a regional summit he had been due to host kept the guessing game going.
Analysts say his prolonged absence is fueling tensions between factions in his ruling Socialist Party, although it is unclear whether his opponents can capitalize on the situation.
Hours after releasing new video on Wednesday of the president walking and chatting with his friend and mentor, Cuba's Fidel Castro, Venezuela canceled a July 5-6 summit coinciding with its 200th anniversary of independence.
That was a heavy blow for supporters who wanted the charismatic but authoritarian president -- who loves to grandstand at such big events -- back home in time for the national party.
"Uncertainty is now intensifying in Venezuela," said Diego Moya-Ocampos, a Venezuelan analyst at IHS Global Insight. "A prolonged absence by Chavez could encourage a likely political crisis of unprecedented levels."
Inheriting Castro's mantle as Washington's main irritant in Latin America, Chavez has become one of the world's most well known leaders during his 12 years in power.
The official line remains that he is recovering well from an operation to remove a pelvic abscess and will return soon. |
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rffrydr
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rffrydr
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| Posted: Mon Feb 21, 2011 9:01 am Post subject: |
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Those autocrats sure know how to "get things done." Here, lowly cereal maker can't make it:
| Quote: | | Kellogg, the Battle Creek, Michigan-based maker of Froot Loops cereal and Soft Batch cookies, said on Feb. 3 that it can no longer “cost effectively import” in Venezuela. A Kellogg’s unit bought an average of $15.8 million of dollars per year from the government between 2004 and 2009, according to Cadivi’s website. Last year, it purchased $2.6 million. |
Chavez will be an interesting test of the non-democracy democratic revolution sweeping through the MidEast and causing jitters in "steady hands" everywhere. Chavez would stand out as the one to "do" the most for the most of his population, even discounting the spillover effects of naked capitalism. But if its about the freedom "earning" one's way then he'll go too. Those who say China's on the chopping block are missing the point IMHO. Far from a target, china IS the inspiration. But that doesn't preclude a good scare in the meantime.
Nothing is obvious.
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rffrydr
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HenryTo
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| Posted: Sun Nov 28, 2010 3:47 pm Post subject: |
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Chavez gears up for 2012 election:
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Seeking cash, Chavez looks to sell Citgo
Looking for cash, Chavez mulls sale of Venezuela's oil company in the US
CARACAS, Venezuela (AP) -- President Hugo Chavez is promising to build new public housing complexes, boost social programs and renovate the long-neglected Caracas subway -- and he needs money.
The ambitious plans will squeeze Venezuela's coffers at a time when oil earnings have slipped and Chavez is sending his foreign allies generous amounts of crude on credit. So he has raised a possibility that once seemed remote: selling off Venezuela's U.S.-based oil company, Citgo Petroleum Corp.
For Chavez, it's an idea driven both by hard-money realities and by politics.
Getting rid of the company and its refineries in the U.S. would give Chavez billions of dollars for domestic spending as he approaches his 2012 re-election bid and seeks to remedy problems including an acute shortage of affordable housing. A sale would also fit with the leftist leader's interest in distancing Venezuela from the U.S. while building stronger ties with allies such as Russia, China and Iran.
Citgo has delivered oil to Venezuela's No. 1 client for two decades, but judging by Chavez's complaints about Citgo not turning a profit, he seems more than ready to sell it, if a buyer can be found.
"Citgo is a bad business, and we haven't been able to get out of it," Chavez said in a televised speech late last month. He ordered his oil minister, Rafael Ramirez, to look at options for selling off the state oil company's assets in the United States.
Chavez says the Houston-based company could be worth at least $10 billion, but analysts say it would likely fetch much less -- perhaps half that -- and it might be hard to find a buyer in a difficult economic climate.
The government's budget next year -- not counting the additional spending often approved by Chavez's congressional allies -- is the equivalent of $47.5 billion, making the possible sale of Citgo a potential shot in the arm for the president's efforts to shore up support.
Critics say that selling Citgo could endanger Venezuela's long-term business interests since oil is the lifeblood of the economy and much of the earnings come from the U.S.
Chavez, meanwhile, has increasingly sold oil elsewhere under less profitable deals aimed at cementing relationships with friends abroad.
"It's hard for rational observers to understand that (Chavez) would take oil away from U.S. clients that pay cash for Venezuelan oil, in order to supply countries that consider Venezuelan oil almost as a right or as a political gift," said Gustavo Coronel, an energy consultant and former executive of state oil company Petroleos de Venezuela SA (PDVSA). "However, Chavez is no longer driven by economics but by ideology."
If Chavez were to go ahead with a sale, Venezuela would likely seek to negotiate a supply contract to keep selling crude to U.S. refineries.
Even so, Venezuela's oil exports to the U.S. have been declining while Chavez has sought to diversify the country's markets, shipping more crude under preferential deals to allies including Belarus, Cuba and other Caribbean islands. Some buyers are granted low-interest loans, decreasing upfront revenue.
Oil shipments to the U.S. declined from 49 million barrels in February 1999, when Chavez took office, to 31.9 million barrels during the same month last year.
Venezuela's overall oil output has also been declining due to lower OPEC quotas and -- experts say -- inadequate maintenance at some oil fields. While Venezuela says it produces about 3 million barrels of oil a day, the U.S. Energy Information Administration estimates 2.2 million barrels a day in 2009, down about 190,000 barrels from 2008.
Coronel said that when Venezuela bought Citgo, it was a good deal. PDVSA purchased 50 percent of the company in 1986 from Southland Corp. for $290 million as part of a drive to have its own refineries and other facilities in its key markets, the U.S. and Latin America. The state oil company purchased the remaining 50 percent of Southland's shares in Citgo in 1990 for $675 million.
Since then, Citgo has grown. It now operates three refineries in Texas, Louisiana and Illinois, and sells fuel through thousands of gas stations. Citgo has been used by Chavez to distribute discounted heating oil to poor American families in a high-profile program aimed at criticizing Washington's approach to the needy.
Another motive for selling Citgo could be to reduce Venezuela's exposure to U.S. court suits over Chavez's expropriations of U.S. company assets.
U.S.-based Exxon Mobil Corp. has sought international arbitration to claim billions of dollars in compensation after it refused to accept the government's terms for a 2007 nationalization of an oil project in which it had invested heavily.
Citgo, for its part, took a $201 million loss last year, and issued $3.5 billion in bonds this year as its profits plummeted. Profits were battered by lower world prices and a declining flow of heavy, sulfur-laden crude.
"I don't think there would be much interest now" in buying Citgo, said Lou Pugliaresi, president of the Energy Policy Research Foundation, a Washington-based think tank. "But Chavez might find a buyer at the right price."
None has publicly stepped forward yet. Exxon and other major U.S. refiners such as Chevron Corp. and ConocoPhillips might end up being interested in Citgo or some of its assets, said Guaicaipuro Lameda, a former PDVSA president and government critic.
"It has the potential to be a good business if it's well managed," Lameda said. "But it's not being well managed, and that's causing problems." |
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HenryTo
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| Posted: Thu Feb 04, 2010 1:12 pm Post subject: |
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This would be so funny if it wasn't so tragic:
| Quote: | By CHRISTOPHER TOOTHAKER, Associated Press Writer Christopher Toothaker, Associated Press Writer – Wed Feb 3, 10:58 pm ET
CARACAS, Venezuela – President Hugo Chavez has turned to his friends in Cuba for help in tackling Venezuela's energy crisis, drawing criticism for seeking advice from the communist-led island that has struggled with its own electricity woes.
Chavez gave few details on Wednesday about what is expected of Cuba, but insisted that "it's valuable experience that's serving us well." He said that he spoke for hours Tuesday with Cuban Vice President Ramiro Valdes after his arrival in Venezuela to lead the consulting team.
The decision to seek help from Cuba bewildered Venezuelans coping with the nation's power shortage.
"It's laughable that he's looking for help from Cuba," said Aixa Lopez, director of the Committee for People Affected by Power Outages, which monitors the extent of current energy shortages and rationing in Venezuela.
Chavez blames a drought for bringing the country's hydroelectric reservoirs to their lowest levels in decades, prompting a wave of planned and unplanned blackouts across the country.
Critics acknowledge the lack of rainfall, but blame Chavez's government for failing to upgrade power generation capacity even as the oil-rich country's consumption has soared.
Cuba itself has suffered a series of electricity crises since the collapse of the Soviet Union removed a major source of oil and financing. It now gets much of its imported oil from Venezuela.
The island's communist government has had some success against once-routine blackouts by upgrading generating capacity and imposing sometimes draconian energy-saving measures.
Even so, Cuban officials last summer were forced to idle some state factories while turning off the lights and air conditioners in many government office buildings, banks, retail stores and other businesses. Officials have hinted at even more strict conservation methods will be imposed throughout 2010.
Chavez has experimented with similar measures, ordering some public institutions to close at 1 p.m. and partially shutting down state-run steel and aluminum plants. Officials also are installing tens of thousands of energy-saving light bulbs imported from Cuba.
Cuba is already aiding Venezuela in a cloud-seeding effort the government hopes will ease the drought.
Valdes, who fought alongside Fidel and Raul Castro to topple dictator Fulgencio Batista in 1959, is a former interior minister and current minister of communications. For more than a decade, he ran Cuba's Electronic Group, overseeing technology projects and skirting the U.S. trade embargo by importing tons of equipment into Cuba through third-party nations.
Lopez said the electricity crisis should be resolved by Venezuelans and not Cuba's vice president.
"I don't think that Mr. Valdez is the most suitable for the job because of what's he's done in Cuba is impose rationing," he said "He's not en expert in investment, maintenance and production."
Chavez downplayed the criticism as something he expects from his opponents, saying: "Whenever Cubans come here, the counter-revolutionary fury immediately explodes." |
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rffrydr
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HenryTo
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| Posted: Tue Jan 26, 2010 2:21 am Post subject: |
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GaveKal's cautious comments on Venezuela:
| Quote: | | Even after the recent devaluation, the Bolivar continues to slide in the black market, despite open-market operations by the country's central bank aimed at maintaining the currency's new rate. On top of this we now have the vice president and two ministers handing in their resignations to Chavez ("strictly for personal reasons"), and students protesting in the streets against the recent closure of a TV station critical of the president. There is also discontent over power and water shortages (see article).... Could a potential blowup in Venezuela cause havoc on the oil market? After all, the country is the biggest supplier of crude to the US, and when Venezuelan oil workers went on strike for five days in the 2002, oil prices soared some 50% to $38/bbl. While we think the risk of a supply disruption from Venezuela is lower this time (in fact, the country's growing economic woes could end up forcing the country to up its production rate), the country's instability remains another risk factor and a cause for uncertainty. |
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rffrydr
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