Stabilization

The Economist has an article about the chances of a Venezuelan bond default. It manages to go the whole story without mentioning that news articles about the risks of Venezuelan debt are something of a self-fulfilling prophecy, as people get unduly scared of default, raise borrowing costs, and thereby increase the chance of default. The article neglects to mention the single biggest argument against Venezuela defaulting — it needs financing for $250 billion worth of oil projects. If there’s anybody who’s going to be a victim of default, it’s state employees, especially when it comes to many billions of dollars in promised retirement packages.

But one item in the Economist story really jumped out as a surprise. Venezuela’s long-running stabilization fund, an attempt to pull dollars out of circulation during good times so they’d be available in bad times, has all but disappeared. According to this Central Bank Excel sheet, the government took all but $3 million out of the account on Feb 1 — a withdrawal of $829 million. That money was sitting there for as long as I’ve followed Venezuela. Makes you wonder why PDVSA suddenly needed U.S. dollar liquidity.

Colombian coal notes from here and there

Some editorial writer in El Tiempo (a newspaper supposedly owned by the family of Colombia’s president, Juan Manual Santos, says coal companies should pay more royalties.

The railway that hauls from country’s biggest coal mine gets blown up again.

And Chilean authorities say that the planned Castilla coal-fired power plant, which is to be fueled with Colombian coal, should never have been classified as a pollutant. Rather, it is an “annoyance” — a 2.4-gigawatt annoyance. That, along with agreement the prior week by developer MXP (an Eike Batista company) to spend $10 million on mitigations puts Chile on track to build its biggest ever carbon emitter. And don’t worry about those bombings, Eike plans to truck the coal to the Colombian port. Hey, when it comes to greenhouse gas emissions, in for a dime, in for a dollar, right?

Will PDVSA be sanctioned for Iran fuel sales?

Ending updated

Venezuela’s on-again, off-again approach to fuel sales to Iran has become more intriguing in recent weeks, since Reuters published a story saying that Venezuela had shipped two cargoes of fuel. It would be of purely passing interest except that the U.S. strengthened its sanctions (PDF) on Iran last year to punish companies that provide fuel to the country, as a way of pressuring the Islamic Republic to be more servile about proving it has no nuclear weapons-related program activities.

This makes it explosive that there are supposedly documents proving a sale of reformate from PDVSA to Iran. Josh Shahryar posted three documents purporting to show that the shipments happened. As for describing his sources, he said only “Documents obtained by credible sources close to the matter.”

PDVSA President Rafael Ramirez has repeatedly denied such sales in recent months (news reports from October and February), and a PDVSA spokesman, who requested not to be named citing company policy, referred me to Ramirez’s remarks in response to the Pajamas Media article. I sent him links to the documents and am awaiting a reply about whether the company can confirm their veracity.

A U.S. State Department brochure on Iran sanctions (sorry, no link as my source requested that the document not be distributed in full) says the executive branch has little discretion when it comes to companies known to have violated the law. It’s not like some foreign policy items, like deciding whether a country is cooperative against terrorism or drugs, where judgment can play a role. If a country ships fuel to Iran, sanctions click in:

Do you know the way to San Jose?

N56LP at San Jose, Costa Rica. Stolen from Tomás Cubero Mangot at Jetphotos.net, click for more attractive original at that site.

“A common visitor at SJO,” plane spotter Tomás Cubero says of N56LP. SJO is the international airport at San Jose, Costa Rica.

Registered to “LP AIRCRAFT GROUP LLC…C/O HIGHVIEW POINT PARTNERS LLC,” the FAA says of N56LP.

Highview Point is Francisco Illarramendi’s hedge fund.

Caracas water: Glad to have been wrong, sad to have been right

One of the first posts on this website was about the ongoing crisis in Caracas’s drinking water system. The drought last year made the crisis more obvious, but as I said at the time, there was a structural deficit in the system, and few of the government’s actions meant to conserve water really amounted to anything. The drought ended with a vengeance, as the deep El Niño converted into the most severe La Niña in a long time. Over 100,000 Venezuelans were displaced by floods. In terms of reservoir levels, this was probably the best-case scenario.

Venezuela to take on Belarussian refineries?

Courtesy of the CIA World Factbook. Click for full entry on Belarus.

OK, I guess I’m back to all Venezuela, all the time. Site friend Kepler points me to this story:

Venezuela may acquire the assets of the Belarusian oil refineries in the near future. This was stated by the Belarusian Ambassador in Caracas, Valentin Hurinovich. “I think we will go further, and Venezuela will participate in the assets of our businesses, our refineries,” said the Belarusian diplomat.

According to Valentin Hurinovich, it is necessary for Venezuela to have its own assets for participation in the Belarusian industry, including oil refining. “Such negotiations are conducted, and I think Venezuela will become a partner in the near future,” said Valentin Hurinovich on air of the First National TV Channel on January 26.

On the one hand, this may be just the moment to buy refineries.

Two more Venezuela arbitrations

Messi gets nervous as Venezuela closes in. (Click for original!)

Nova Scotia, which long ago took Venezuela to arbitration for ending shipments of Orimulsion fuel, has opened a new proceeding at the International Centre for the Settlement of Investment Disputes (ICSID), according to the organization’s website.

Crystallex International Corp. says today that it filed a case at ICSID over the loss of its contract to mine gold at the Las Cristinas deposit in Bolivar state.

Once Crystallex gets up on the website, that will be 15 “pending” cases against Venezuela, including a couple where the arbitration is on hold. Argentina continues to kick royal tush, with 27.

PDVSA pension’s $500 million bolivar bet may turn into nuke ties

A securities fraud case in Connecticut has opened a window into how Petroleos de Venezuela SA’s pension fund apparently speculates in Venezuelan currency transactions — a business that is illegal in Venezuela. The U.S. Securities and Exchange Commission has interrupted the scheme, along with some allegedly improper private equity investments, in a way that may end up making PDVSA into a major investor in a U.S. nuclear power company.

Updated: Changed fifth paragraph to say that Illarramendi’s registration status with the SEC may have been OK.

In the absence of a price signal

Gasoline consumption rises. Four-fold in 12 years in Venezuela, according to El Nacional. Please keep that in mind next time President Hugo Chavez stands on principle to block a climate-change resolution.

Dear Secret Agent: I can see you (Kroll using anonymous comments to defend Chevron)

So yesterday, I get this provocative comment on my post “Chevron-Kroll story shows how companies recruit reporters:”

At first, I replied by reiterating what I said in the story — mostly that this Chien Andalou should go look at the original reporting. I then (like a fool) repeated the doubts that Kroll has been trying to sow regarding whether the anti-Chevron forces may have tampered with or concealed evidence.

But then I noticed this in my access logs

This commenter, with his or her provocative question, was logged in from “Kroll Ontrack,” which calls itself “the world leader in legal technologies, litigation consulting, e-discovery, computer forensics, jury and trial consulting.”

The person’s post linked to a blog, Debaser84. I don’t know if Debaser84 is written by some Kroll troll. It’s a bunch of geopolitical bla blah.

The poster did give me an e-mail address that included a name — though the address was at Hotmail. The name matches a “Senior Analyst at Kroll” on LinkedIn.

I don’t know that this was the person who left the note. The person at that address hasn’t written back to my e-mailed query. All I know is that the comment came from a Kroll computer and that the commentor didn’t say s/he was from there.

Point being very simple: If you want to defend your company, fine. But stand up and be a human being about it. Don’t use anonymous blogs and comments as a front for multinationals — not for Kroll and not for Chevron. I have many regular readers at Chevron. It’s a big, grown-up company and it can defend itself, thank you.