How Bad Off Is Oil-Rich Venezuela? It’s Buying U.S. Oil


#1

NY Times:

How Bad Off Is Oil-Rich Venezuela? It’s Buying U.S. Oil

EL FURRIAL, Venezuela — One oil rig was idle for weeks because a single piece of equipment was missing. Another was attacked by armed gangs who made off with all they could carry. Many oil workers say they are paid so little that they barely eat and have to keep watch over one another in case they faint while high up on the rigs.Venezuela’s petroleum industry, whose vast revenues once fueled the country’s Socialist-inspired revolution, underwriting everything from housing to education, is spiraling into disarray.
To add insult to injury, the Venezuelan government has been forced to turn to its nemesis, the United States, for help.

“You call them the empire,” said Luis Centeno, a union leader for the oil workers, referring to what government officials call the United States, “and yet you’re buying their oil.”
The declining oil industry is perhaps the most urgent chapter of Venezuela’s economic crisis. Oil accounts for half of the Venezuelan government’s revenues, what former President Hugo Chávez once called an “instrument of national development.” The state oil company poured its profits, more than $250 billion in all from 2001 to 2015, into the country’s social programs, including food imports.

But those profits have evaporated with mismanagement and the drop in global oil prices over the past two years. Now, even Venezuela’s subsidized oil shipments to its vital ally Cuba are slowly being phased out, oil executives with operations in Venezuela contend, forcing Havana to look to Russia for cheap oil.
For President Nicolás Maduro — like Mr. Chávez, who died in 2013, before him — Venezuela’s oil wealth has been essential to the nation’s identity and sovereignty, the financial might behind its regional ambitions and its angry defiance of the United States.


#2

I pray often for the people in Venezuela. Socialism has utterly destroyed that country, and it’s so unnecessary, Venezuela is rich in natural resources.


#3
    1. I once lived there. Retrieving the once most amicable relations between our nations will take at least a generation.

ICXC NIKA


#4

[quote=New York Times]Last year, Citgo borrowed $2.5 billion to keep PDVSA afloat. And now it plans to borrow an additional $800 million to update a refinery on the island of Aruba to produce synthetic light oil, according to executives who have been briefed on the plans.
[/quote]

Citgo is a US company which is an indirect, but wholly owned subsidiary, of Venezuela’s state oil company. PDVSA has been leaning on Citgo’s resources to borrow money. But that strategy may be running dry. Just recently the state oil company announced an offer to swap bonds due in 2017 for bonds due in 2020, but with no incentive for bond holders to take this deal. PDVSA did, however, offer up half of Citgo as collateral.

[quote=Bloomberg]Citigroup Inc. on Wednesday said that the value of Citgo collateral may be “low” as prior creditors may seek to challenge it in court.
[/quote]

bloomberg.com/news/articles/2016-09-16/pdvsa-s-late-friday-swap-surprise-no-pick-up-for-longer-debt

[quote=Reuters]Standard & Poor’s on Monday said PDVSA’s swap plan was “tantamount to default” if carried out, while Fitch Ratings said PDVSA’s 2020 bond to be issued as part of the swap had a “real possibility of default.”
[/quote]

reuters.com/article/venezuela-pdvsa-idUSL2N1BW1VP


#5

The ruling Socialists, led by Maduro, seem likely to stay in power for the next few years.

[quote=Reuters]The Democratic Unity coalition is running out of options to force a plebiscite this year to trigger a presidential election should Maduro lose. If a referendum is held in 2017 and he loses, the vice president would take over for the second half of Maduro’s six-year term, ensuring the Socialists stay in power.

Maduro, 53, has seen his popularity plummet with the failing economy and is determined to stop a referendum this year that polls show he probably would lose.

The election board said a meeting to organize the next stage of the referendum process - the collection of 20 percent of voter signatures, or about 4 million - was postponed to Monday because of “threats” to the institution.

That was a reference to the opposition’s latest street rallies on Friday to protest foot-dragging by the election board, which it accuses of bias.
[/quote]

reuters.com/article/us-venezuela-politics-idUSKCN11M1WS


#6

Very sad. With Venezuela experiencing the inevitable end of a socialist system, I can’t see why people want to bring it to the US.


#7

Socialism: the only economic system capable of causing an oil shortage in Venezuela or a sugar shortage in Cuba.


#8

Not only those. Before 1917, it was said that “nobody ever starves in Russia”, reflecting the fact that grain production was so vast that bread was easily affordable by all. Then the Bolsheviks took over and millions starved.


#9

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