Santa Claus is Coming... to Caracas

Maduro Hocks the Crown Jewels to Russia

from the Latin American Herald Tribune

CARACAS - A Delaware Uniform Commercial Code (UCC) filing against Citgo parent PDV Holding, Inc. on November 30 reveals that Venezuela has secretly mortgaged their Citgo refineries in the United States to Russia's Rosneft in exchange for cash.

Redd Intelligence uncovered the UCC filing and broke the news.

CITGO - A Strategic Asset?

PDV Holding Inc., owned by Venezuela state oil company Petroleos de Venezuela, S.A. (PDVSA), owns Citgo Holding Inc., which in turn, owns Citgo Petroleum Corporation, which has 3 refineries and pipelines throughout the United States.

The lien means that should Citgo or PDVSA default, Russia's state controlled oil company Rosneft could end up owning strategically important oil refineries in the United States.

Citgo owns oil and gas pipelines throughout the country as well as oil refineries in Corpus Christi, Texas; Lake Charles, Louisiana; and Lemont, Illinois (outside of Chicago). Citgo's refineries can refine 749,000 barrels per day and the Lake Charles refinery is the sixth-largest refining facility in the U.S.

The UCC filing is used to protect creditors. According to the copy obtained by the Latin American Herald Tribune, the UCC "Financing Statement" was filed by "secured creditor" "Rosneft Trading S.A., Place du Lac, 2, Geneva, ZZ 1204" on November 30.

Steven Bodzin, one of the leading investigative reporters on Latin America who uncovered the filing and broke the story for REDD Intelligence, reported that cash-strapped PDVSA mortgaged 49.9% of Citgo to Rosneft for a $1.5 billion loan.

CITGO MORTGAGES 50.1%

In October, in addition to a 20% bonus, PDVSA used 50.1% of Citgo Holding Inc. as collateral to induce $2.8 billion of holders of debt maturing within the year to extend into a new 4 year bond. Should PDVSA default, the holders of the new $3.4 billion PDVSA 8.5% of 2020 would be able to take 50.1% of Citgo Holding Inc.

On October 30, Venezuela's reserves went up $891 million, according to the Venezuela Central Bank, and analysts were unable to account for it. PDVSA was late paying the almost $3 billion in bond debt that it owed in November, with the last $146 million that was due on November 17 being paid 2 weeks late on November 30 and December 1.

Eulogio del Pino, PDVSA head along with Venezuelan Foreign Minister Delcy Rodríguez met on November 20 with the head of Russia’s Rosneft Igor Sechin to "strengthen the cooperation agenda between the two oil companies."

“We continue consolidating strategic alliances between Pdvsa and Rosneft. Important meetings will be held in the next hours,” Del Pino posted on his Twitter account.

Del Pino also met with Rosneft Vice-President Eric Maurice Liron to track joint projects, according to Venezuela's state-run news agency AVN.

Rosneft is a minority shareholder in five joint crude oil-producing companies: Petro Miranda, Petro Victoria, Petro Perijá, Petro Monagas and Boquerón.

RUSSIA'S EXPANDING ENERGY FOOTHOLD

In 2010, Venezuela President Hugo Chavez sold PDVSA's stakes in 4 Ruhr oil refineries in Germany to Rosneft for $1.6 billion, giving Rosneft a key foothold in the European market.

Founded in 1992, Rosenft became the world's biggest oil and gas producer by volume (5.2 million barrels per day) through acquiring others. In 2004, Rosneft took over competitor Yukos after Vladimir Putin jailed Yukos head Mikhail Khodorkovsky, and in 2013 Rosneft took over TNK. BP owns almost 20%.

The Russian government owns 69.5% of Rosneft, and Rosneft head Igor Sechin is a long-time ally of Russian President Vladimir Putin.

In October, Rosneft acquired Indian refiner Essar Oil in a $13 billion deal. The transaction included India's second-largest refinery at Vadinar (400,000 bpd), as well as port terminals, power plants and pumps.

Rosneft also recently took a stake in an Egyptian gas field worth as much as $2.8 billion.



CITGO SUED FOR FRAUDULENT TRANSFER

Citgo is already being sued in Delaware in separate suits by both ConocoPhillips and Crystallex under Delaware's Uniform Fraudulent Transfer Act, alleging that Citgo, PDVSA and Venezuela "fraudulently transferred" $2.8 billion in wealth out of the country to avoid billions of dollars of claims by creditors.

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Maduro Claus Saves Christmas!

from the BBC

Venezuelan authorities have arrested two toy company executives and seized almost four million toys, which they say they will distribute to the poor.

Officials accused the company of hoarding toys and hiking prices in the run-up to Christmas.

Last week, the government issued an order to retailers to reduce prices on a range of goods by 30%.

Business owners say the order is a populist political move, and pushing them towards bankruptcy.

Venezuela's consumer protection agency, Sundde, said toy distributor Kreisel had stockpiled the goods and was reselling them at a margin of up to 50,000%.

"Our children are sacred, we will not let them rob you of Christmas," it said in a tweet, along with photos and video of thousands of boxes of toys.

In total, 3,821,926 toys were seized from two warehouses, and would be sold at low prices, it said.

William Contreras, head of Sundde, said Kreisel had claimed the toys were old or discontinued. The agency also posted photos of the two executives being marched from the premises by a squad of heavily armed soldiers.

This is not the first time Venezuela has ordered price cuts on retailers, or mobilised armed units to enforce it.

In late 2013, the country introduced laws allowing the government to fix prices and dictate profit margins.

The same legislation limited profits to 30% - the amount often discounted in the compulsory "adjustments" enforced by Sundde at hundreds of retailers in the past week.

The same measures have been used to fix the prices of basic products such as flour, meat and bread - but supply is limited in a country where many people go hungry.

A jar of Nutella - a luxury item - can cost half the monthly minimum wage.

The Venezuelan government is becoming increasingly unpopular as the country's economic crisis grows.

The nation is rich in oil, but international oil prices have fallen in recent years.

The International Monetary Fund estimates that inflation - the rate at which prices go up - will hit 2,000% next year.

Venezuela is ready to issue new, higher-value notes to deal with the problem - but rising prices are still squeezing many ordinary citizens.

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