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Guaido short on time and money to turn Venezuela

  • Spanish Market: Crude oil
  • 26/07/19

The clock is ticking on Venezuela's opposition leader Juan Guaido amid signs that the White House is losing faith in his ability to execute a political transition before he may be forced to pass the baton.

Guaido, head of the opposition-controlled National Assembly who invoked Venezuela's constitution on 23 January to declare his interim presidency, has been operating on a shoestring budget since launching what looks like an increasingly quixotic quest to oust President Nicolas Maduro, multiple Venezuelan and foreign officials tell Argus. Some members of the young leader's team inside and outside Venezuela are now growing frustrated.

"No one has been paid for weeks," one of Guaido's economic advisers says.

A few of Guaido's senior economic and diplomatic appointments outside Venezuela, such as Inter-American Development Bank representative, former Venezuelan planning minister and prominent Harvard professor Ricardo Hausmann and diplomatic envoys such as Maria Faria in Costa Rica, are seen as having sufficient professional and personal means to allow them to work for the cause on a pro bono basis.

But many others are struggling to make ends meet. These include Venezuelans who were forced into exile and opposition legislators on the ground who no longer have a salary or access to employment and bank loans.

Washington is not footing their bills. A controversial US government decision this month to shift more than $40mn in USAID funds from Central American countries to the Guaido-led opposition is earmarked mainly for administrative support and logistics that will be strictly supervised. And Washington is not allowing access to Venezuelan assets frozen by US sanctions, a senior US government official told Argus privately yesterday.

"Guaido is running out of time and money," the official said. "The Trump administration, contrary to popular belief, is not supporting Guaido's transition government financially."

Guaido "has made mistakes, starting with what in retrospect was an unwise decision" to declare himself interim president, the official said, adding that the move was reminiscent of a failed coup attempt led by then-business leader Pedro Carmona in April 2002. At the time, Maduro's predecessor Hugo Chavez was forced to resign, only to return to power four days later after Carmona was denounced for leading a coup against a democratically elected president, the US official added. Carmona is now in exile.

The US official´s remarks run counter to widespread perceptions that Washington had groomed Guaido for the role, a view reinforced by the White House´s swift recognition of his authority in January.

Six months later, the Trump administration is not opening its purse for the opposition because it fears the funds would be mismanaged, if not stolen. "Venezuelan politicians have a long history of dipping into government funds for personal gain," the official added.

Guaido has not been accused of theft or mismanagement. But besides personal fortunes and donations from the diaspora, the sources for the Guaido administration´s modest funding are unclear. There is concern in Venezuela and abroad that some of the money is coming from unscrupulous sources, which would risk compromising the integrity of the movement down the road.

The till is running low at the same time that Guaido's window for political action may be closing. Low-profile negotiations underway in Barbados have raised the possibility of new presidential elections in April 2020, but Maduro is rebuffing the opposition´s demand for his immediate departure. If a deal in the Norwegian-mediated talks is not hammered out, Guaido may be forced to cede his leadership in the opposition-controlled legislature to another party in the opposition coalition.

Under a power-sharing agreement between the main opposition parties in the National Assembly, Guaido's Voluntad Popular party (VP) would come under pressure to pass the presidency of the body to another political party at the end of December. Accion Democratica (AD), a traditional leftist party that governed Venezuela when the oil industry was nationalized in the 1970s, would be next in line to succeed VP as head of the assembly.

If this happens, Guaido would lose his constitutional authority to serve as interim president in favor of whoever AD designates during the legislature's final year in session before new legislative elections are held in December 2020.

It is unclear whether the opposition coalition would agree to renew Guaido's assembly presidency for a second year, but some political jockeying and patronage in the exile government could play a role in the consensus decision, coalition sources tell Argus. Henry Ramos Allup, AD's titular leader and one of Guaido´s predecessors as assembly head, might be unwilling to relinquish his party's right to take back the helm of the legislature.

Guaido is running low on time and money as Washington is beginning to consider alternative strategies that are anathema to the hawkish wing of the opposition. This morning, the US government extended Chevron´s sanctions waiver to continue operating in Venezuela for another 90 days. And talk is growing of instituting an oil-for-aid program that would decouple efforts to break the political stalemate from the humanitarian crisis that critics say the sanctions are starting to aggravate. That idea, which could lead to a national unity government, is advocated by Henri Falcon, a presidential hopeful seen as accommodating to Maduro.


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07/11/24

US extends oil service firms' Venezuela waiver

US extends oil service firms' Venezuela waiver

Washington, 7 November (Argus) — The outgoing administration of US president Joe Biden extended authorization for oilfield services companies Halliburton, SLB, Baker Hughes and Weatherford to continue working in Venezuela until 9 May 2025. The waiver allows the service companies to pay their staff and maintain limited operations, but it prevents them from drilling new wells or otherwise contributing to state-owned PdV's production and exports. The Biden administration reimposed sanctions on Venezuela's oil sector in April, after a six-month reprieve. The sole exemption is a waiver for Chevron allowing it to import oil into the US from its joint venture with state-owned PdV. US crude imports from Venezuela averaged 212,000 b/d in January-August, US Energy Information Administration data show. Chevron's Venezuela output has stood at about 200,000 b/d. Neither president-elect Donald Trump nor his campaign addressed the Venezuela sanctions regime or indicated if they would change it. Republicans in Congress ahead of the election called for the Chevron exemption to be revoked. The Biden administration separately extended a prohibition for holders of $3.4bn in PdV 2020 bonds guaranteed by 50.1pc in US refiner Citgo's holding company to exercise their claim, this time until 7 March 2025. The PdV bondholders in theory hold a superior claim to Citgo Holding — a legal entity that directly owns Citgo and, in turn, is owned by Citgo parent company PdVH. A federal court in Delaware recently oversaw an auction of PdVH shares that yielded a $7.3bn bid from a company backed by investors including Elliott Investment Management. Legal wrangling over the bids and the distribution of auction proceeds is likely to keep Citgo ownership unresolved in the near term. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexican peso plummets on Trump win


06/11/24
06/11/24

Mexican peso plummets on Trump win

Mexico City, 6 November (Argus) — The Mexican peso fell sharply against the US dollar as markets priced in potential retaliation against Mexico following former president's Donald Trump's victory in the US presidential election. "A Republican Senate majority and potential House win raise the chances of Trump's radical reforms, which could hurt Mexico's economic dynamism," said a financial analyst from Mexican bank Monex in a note today. The peso initially dropped around 3pc to Ps20.71/$1 early today, hitting a two-year low before recovering to Ps20.20/$1 by midday. The peso may weaken further, as Mexico is vulnerable to tariff hikes amid strained relations over issues like immigration and the opioid crisis, according to a desk report from a major Mexican bank. Trump repeatedly threatened tariffs on Mexico during his presidential campaign, most recently pledging a 25pc tariff on all Mexican imports unless President Claudia Sheinbaum's administration launches a severe crackdown on Mexico's drug cartels, which ship fentanyl and other drugs across the border to the US. Recent constitutional amendments in Mexico, including judicial reforms and proposed eliminations of independent regulators, may also add downward pressure on the peso, according to the report. "The government's goal to direct private-sector involvement could limit market forces," it noted. Mexico's state-owned oil company Pemex typically offsets peso depreciation due to its dollar-denominated oil export revenues, which help cover increased import costs. "Pemex's exports and domestic sales are tied to international hydrocarbon prices, providing a natural hedge," the company stated in its most recent report. Still, analysts warn that Pemex's focus on domestic refining over crude exports could erode this hedge, leaving it more exposed to foreign exchange swings on USD-denominated debt. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop 29 finance talks need leadership after Trump win


06/11/24
06/11/24

Cop 29 finance talks need leadership after Trump win

Edinburgh, 6 November (Argus) — Donald Trump's US presidential election victory will likely affect finance negotiations during the UN Cop 29 climate summit starting next week, but the US can still play a role while other developed countries step up to the plate, according to observers. Key negotiations at Cop on a new finance goal for developing nations, the so-called NCQG, could be "severely undermined" by Trump's victory, as the prospect of Washington withdrawing from the Paris Agreement may discourage other countries from engaging with US officials, non-profit IISD's policy adviser Natalie Jones told Argus . Trump pulled the US out of the Paris Agreement during his last term in office, calling it "horrendously unfair", and he has signalled he will do so again. "This could potentially weaken ambitions" at Cop 29, but it is unlikely to derail negotiations, Jones said. Observers agree that the US can still play a role in talks on the new finance goal, a key topic at this year's summit. Parties to the Paris deal will seek to agree on a new finance goal for developing nations, following on from the current $100bn/yr target, which is broadly recognised as inadequate. "The Biden administration still has a critical window to support vulnerable nations' calls to mobilise climate finance and deliver a strong climate target," civil society organisation Oil Change International's US campaign manager Collin Rees told Argus . The Biden administration's delegation, which will still take part in Cop 29, will not change position at this stage, according to Jones. And the US could continue to show some leadership, she said, adding that Washington likely intends to release its 2035 Nationally Determined Contribution (NDC) early. Countries' new climate plans must be submitted to the UN climate body the UNFCCC by February 2025, but the US could release its NDC at Cop 29 before Trump takes power early next year, she said. "President Biden must do everything he can in the final weeks of his term to protect our climate and communities," including on fossil fuels, Rees said. The prospect of Trump pulling the US out of the Paris accord could cause initial anxiety at Cop 29, Climate Action Network executive director Tasneem Essop said. But "the world's majority recognises that climate action does not hinge on who is in power in the US". "As we saw before and will see again, other countries will step up if the US reneges on their responsibilities and stands back," Essop said. Trump's victory might also present the EU with an opportunity to strengthen its leadership among other developed countries, according to Jones. "It is really on the EU and other countries to step up now," she said. This is a view echoed by German Green lawmaker Michael Bloss, a member of the European Parliament's delegation at Cop 29. "Europe needs to become the adult in the room," Bloss told Argus . The EU cannot rely on the US anymore and must become a global climate leader to ensure success at Cop 29, he said. Meanwhile, Oil Change's Rees stressed that the NCQG is a collective goal. "Other major economies must now step forward to fill the gaps, much as they would have needed to in any scenario given how the US has long refused to pay its fair share," he said. By Caroline Varin and Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Iraq proposes doubling payment for KRG crude


06/11/24
06/11/24

Iraq proposes doubling payment for KRG crude

Dubai, 6 November (Argus) — Iraq's government has proposed doubling the amount it pays the Kurdistan Regional Government (KRG) for crude production and transportation costs, as it seeks a compromise aimed at resuming exports from the semi-autonomous northern region. The government on 5 November approved an amendment to the three-year budget passed in 2022, setting compensation at $16/bl. But this remains $10/bl below the KRG ministry of natural resources' calculation of production costs in contracts it signed with international oil companies (IOCs) operating in Iraqi Kurdistan. "The KRG is not yet on board with the new arrangement," a senior Iraqi source with knowledge of the matter told Argus . Another source, with knowledge of IOC thinking, described the move as "a positive development" and said companies are "waiting to see what the Iraqi parliament decides." Parliament must ratify the amendment. The amendment stipulates "production and transportation costs for each field will be estimated fairly by an internationally specialised consulting entity" to be selected mutually by Iraq's oil ministry and the KRG's ministry of natural resources within 60 days. "If no agreement is reached within this period, the Federal Council of Ministers will determine the consulting entity," the government said. Parliamentary finance committee member Narmin Maarouf said the decision is "an important step to resolve one of the outstanding issues between the Kurdistan region and Baghdad." Iraqi prime minister Mohammed Shia al-Sudani has been working on a middle ground agreement that would allow it to pay IOCs operating in Kurdistan in return for a compromise with the KRG and the IOCs over the recovery cost for oil produced in the region. In this case, the KRG has to hand over its crude oil production to state-owned marketing firm Somo. A senior Iraqi government official said told Argus the result of the US presidential election may shift things in Iraq, "but the decision is clear, the Iraqi government wants to solve the issue." Around 470,000 b/d of crude exports from Kurdistan have been absent from international markets since March 2023, when Turkey closed the pipeline linking oil fields in northern Iraq to the export terminals at Ceyhan. That followed an international tribunal ruling that said Ankara had breached a bilateral agreement with Baghdad by allowing KRG crude to be exported without the federal government's consent. Iraq's federal government is finding it difficult to strike a balance between repairing its rift with the KRG and complying with its Opec+ commitments. But the KRG "cannot immediately resume exporting around 400,000 b/d," the Iraqi source said. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump nears victory in US election: Update 3


06/11/24
06/11/24

Trump nears victory in US election: Update 3

Updates throughout with latest election results, market reaction Washington, 6 November (Argus) — Former president Donald Trump appears to be closing in on victory in the US election, after winning several key swing states. Trump, the Republican nominee, was declared the victor in Georgia and North Carolina shortly after midnight ET on election night, according to the Associated Press. Trump has also won the key state of Pennsylvania, several US networks said. Trump was leading vice president Kamala Harris in all four other key swing states — Wisconsin and Arizona, Michigan and Nevada — based on partial results as of 02:00 ET (07:00 GMT) on 6 November. The seven swing states will decide which candidate reaches the threshold of 270 electoral votes needed to win the election. Trump had secured 248 electoral votes as 02:00 ET, with Harris at 214. Victory in Pennsylvania, if confirmed, would give Trump 267 votes and all-but end Harris' chances of victory. The prospect of Trump's re-election sent Brent crude futures down by as much as 2.5pc to a low of $73.64/bl, largely reflecting gains in the US dollar. A strong dollar tends to weigh on prices of commodities by making purchases more expensive for buyers using other currencies. Trump has promised to pursue a radical shift for the US on policies related to energy, taxes, trade and foreign affairs — reversing many of the policies and legislation that Democrats have put in place under President Joe Biden. On energy policy, Trump said he wants oil and gas producers to "drill, baby, drill" to bring down domestic energy prices and to dismantle many of the regulations and climate policies put in place by Biden, which Trump dubbed the "Green New Scam". Trump said he would immediately lift a "pause" on licensing new LNG export terminals and restart oil development in Alaska's Arctic National Wildlife Refuge. Trump wants to impose a 20pc tariff on all foreign imports and even higher tariffs on China. The next president faces decisions on the future of US support for Ukraine and related restrictions on Russian energy exports, enforcing US sanctions against Iran and Venezuela and how to contain the growing threat of an Israel-Iran war and its potential impacts on oil flows from the Middle East. Republicans also took control of the US Senate for the first time in four years. In the US House of Representatives, too many races are undecided for major networks to project control. In 2025, the US Congress is poised for a major fight on tax policy because of the year-end expiration of an estimated $4 trillion in tax cuts. By Chris Knight, Haik Gugarats and Kevin Foster Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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