Thursday, July 9, 2020

Venezuela: Rulings Threaten Free and Fair Elections Nicolas Maduro, sitting at desk second from right, speaks with Supreme Court President Maikel Moreno at the Supreme Court before giving his annual presidential address in Caracas, Venezuela. January 31, 2020.  © 2020 AP Photo/Ariana Cubillos

Pro-government Supreme Court Co-opts Opposition Parties, Electoral Authority

(Washington, DC) – Venezuela’s Supreme Court is demonstrating its lack of independence by appointing government supporters to leadership positions in three opposition parties and to the National Electoral Council, Human Rights Watch said today. In doing so, it is undermining Venezuelans’ rights to free and fair elections and freedom of association.

On July 7, 2020, the Supreme Court suspended the leadership of the opposition political party Voluntad Popular, to which the National Assembly president Juan Guaidó belongs, and appointed supporters of the Nicolás Maduro administration to lead it. The court also held that the new leadership could use the name and logo of Voluntad Popular in the upcoming parliamentary elections. In a series of rulings in June, the Supreme Court similarly orchestrated the takeover of two other opposition political parties, Acción Democrática and Movimiento Primero Justicia, replacing their leadership with Maduro administration supporters.

“When a judiciary that answers to Maduro decapitates opposition political parties that represent dissenting voices, it undermines the rights of all Venezuelans, dispensing with even the pretense of a democratic process,” said José Miguel Vivanco, Americas director at Human Rights Watch. “Venezuelans’ right to vote for their preferred candidates requires a free and fair election in which all parties and candidates have a reasonable opportunity to present their ideas to the electorate.”

On July 1, the Venezuelan authorities announced that they will hold legislative elections on December 6 to fill 277 seats in the National Assembly, increasing the total number of seats by 110, from the current 167 seats. The move appears to be a first step toward packing the legislative branch.

In June, the Supreme Court suspended opposition leaders of Acción Democrática and Movimiento Primero Justicia, contending that they had breached their respective statutes regulating the election of party authorities and had denied members various political rights. Some members of both political parties claimed that the suspended leaders had changed the parties’ regional, municipal, and local authorities “at their will.” The ruling on Voluntad Popular is not yet available on the Supreme Court’s website.

In each of the two available rulings, the court used almost identical language, appointing an ad hoc board of directors to “restructure” the parties and ruling that new leaders will fulfill “the managerial and representative functions of the organization” and designate “regional, municipal, and local authorities.” The ruling allows the new leadership to use “the electoral card, the logo, symbols, emblems, colors and any other concept of the organization for political purposes” and to modify the party’s internal statutes. The court announced that it was applying similar measures to Voluntad Popular.

The Supreme Court appointed José Gregorio Noriega, Guillermo Luces, and Lucila Ángela Pacheco to head Voluntad Popular. Noriega is a legislator who was expelled from the party after being implicated in bribing other legislators to vote against Guaidó as president of the National Assembly in January. Luces was also expelled after voting for a government supporter, Luis Parra, to lead the National Assembly in the same contested election, which led to the creation of a parallel pro-government National Assembly leadership. Both Parra and Noriega have been recently sanctioned by the European Union and the United States. Pacheco is a former legislator from the government party, the United Socialist Party of Venezuela (PSUV).

Primero Justicia is now chaired by José Dionisio Brito, who had been expelled from the party amid corruption allegations and had also supported Parra’s election. Acción Democrática is currently chaired by Bernabé Gutiérrez, whose brother is a member of the newly appointed National Electoral Council.

A similar case is pending before the Supreme Court, asking it to remove the leadership of Un Nuevo Tiempo, the only one of the so-called G4 parties that oppose the Maduro administration that the court has not yet taken over.

Meanwhile, Venezuela’s attorney general has asked the Supreme Court to declare Voluntad Popular a terrorist organization, arguing that it has sought to destabilize the Maduro government. This case is currently pending before the Supreme Court’s Criminal Chamber. Voluntad Popular’s leader, Leopoldo López, has been the subject of an arbitrary and politically motivated prosecution since 2014.

The court’s appointment of pro-government politicians to lead Venezuela’s opposition parties severely undermines the ability of dissenting voices to participate in the electoral process, unjustifiably restricting its members’ human rights to freedom of association and expression, Human Rights Watch said. The new leadership’s ability to use logos, symbols, and emblems from the opposition parties also threatens basic rights to information and political participation, as it creates a serious risk of misinformation and deception of voters who have associated those images with the opposition parties’ ideals.

The right to associate for political purposes, the Inter-American Court of Human Rights has said, not only entails the right to associate freely without interference from public authorities, but also the freedom “to seek the common achievement of a licit goal, without pressure or interference that could alter or change their purpose.” The Inter-American Commission on Human Rights “considers that the right to vote and to participate in government includes the right to organize parties and political associations that, through the free exchange of ideas, prevent a monopoly on power[.]” Similarly, the Inter-American Democratic Charter establishes that “The strengthening of political parties and other political organizations is a priority for democracy.”

Governments – including courts – may only restrict political rights if it is lawful to do so and necessary and proportionate for a legitimate purpose. The Supreme Court’s rulings did not analyze whether these criteria were met. The Venezuelan Constitution provides that political parties’ governing bodies and candidates running for office are to be selected in internal elections in which party members should participate. For the court to address a dispute about the election of party leadership by imposing its own hand-picked choices is not lawful, necessary, or proportional.

On June 12, the Supreme Court selected all five members of the National Election Council, despite constitutional provisions establishing that the National Assembly, currently the only opposition-led institution that acts as a check on executive power, should do so. All appointed members of the Council are government supporters, including two former Supreme Court justices who have issued several rulings favoring the government. Three of them have been sanctioned by the United States, Canada, Panama, and/or members of the Inter-American Treaty of Reciprocal Assistance.

The removed leadership of opposition political parties had publicly said they would not participate in the upcoming legislative elections because there are no guarantees they will be free and fair. The new court-appointed leadership, instead, has announced that they intend to do so.

Since former President Hugo Chávez and his supporters in the National Assembly conducted a political takeover of the Supreme Court in 2004, Venezuela’s judiciary has stopped functioning as an independent branch of government. Members of the Supreme Court have openly rejected the principle of separation of powers and have consistently upheld abusive policies and practices.

The Supreme Court has interfered with the leadership or internal structure of eight opposition political parties since 2012. The playing field leading up to past elections was far from even, with arbitrary disqualifications of opposition members from running from office and credible allegations of political discrimination in government jobs, which undermine the ability of many Venezuelans to express their views freely. Venezuelan authorities have also used hunger as a tool of social and political control during past elections.

The last elections in 2017 to choose Constituent Assembly members were marred by allegations of fraud leveled by Smartmatic, a British company hired by the government to oversee the vote that concluded that there had been tampering with the turnout figures and estimated that actual voter turnout was probably at least 1 million less than the 8 million official reported. There has been no independent oversight of Venezuelan elections for years.

Wednesday, July 8, 2020

Saudi Arabia Is Bullying OPEC Members Into Compliance

 Elliot Blondet / Getty

First, they said it nicely: play along and cut to your quotas, or we’ll all suffer low oil prices for longer. Then they put their foot down: start cutting deeper or else. And now it has emerged what the “or else” part was—a new price war.

The Wall Street Journal’s Benoit Faucon and Summer Said reported earlier this week that Saudi Energy Minister Abdulaziz bin Saud had threatened Nigeria, Angola, and Iraq with another oil price war if they didn’t get in line with the production cuts, according to OPEC delegates. If they kept producing more than their quotas, Saudi Arabia would start selling its crude at a discount on these three countries’ key markets, stealing market share. In a phrase reminiscent of some of the best crime dramas, bin Saud reportedly told Angolan and Nigerian delegates, “We know who your customers are.”

OPEC’s crude oil production last month fell to the lowest in thirty years, at 22.69 million bpd. However, Iraq, Angola, and Nigeria still fell short of their quotas: Iraq only managed to achieve 70 percent compliance, Nigeria did a little better at 77 percent, and Angola even better at 83 percent. But that was not good enough.

It is understandable why the OPEC leader has had enough. The Saudis were not only the driver behind the latest agreement. They also voluntarily deepened their own production quota, pledging to cut an additional one million bpd on top of the more than two million bpd they agreed to cut, shouldering the largest part of the total 9.7-million-bpd OEPC+ cut.

And they have stuck to it, unlike the three laggards. Last month, the Kingdom pumped 7.53 million bpd, when it had originally been set a quota of 8.5 million bpd, the same as OPEC+ fellow Russia, which, however, has been slow to reach its own quota. The Saudis have literally done whatever it takes to prop up prices. And prices have remained weak. That would frustrate even the most patient of producers. 
Brent crude traded at more than $51 a barrel in early March, a few days before Saudi Arabia declared its first price war of the year against Russia for its refusal to sign up for an extension of the previous round of cuts, agreed on last December. On March 9, the benchmark plummeted below $35 a barrel.

After a further plunge in April on the back of the coronavirus lockdowns, Brent has to date recovered to about $40. So, if Saudi Arabia makes good on its threat, this time Brent—and WTI—will be falling from a lower starting point. This is the only thing we can be sure of.

Of course, the threat of a price war remains hypothetical. Perhaps it would prove to be enough to get Iraq, Nigeria, and Angola to mend their ways and start cutting production like they mean it. It would be the safer choice because Saudi Arabia has more oil, and it can afford to sell it more cheaply than the three laggards, at least for a while. But what if they don’t?

Well, if they don’t, we’ll likely have a new price crash, and it could turn out to be worse than the first one as it would come amid a rising fear—and perhaps some evidence—of a second wave of Covid-19 infections in the world’s largest consumer. Meanwhile, demand has been slow to rebound.
There have been some good signs such as a pickup in gasoline production in the U.S. and a drawdown in floating oil storage. And yet, most analysts warn that people around the world would continue to be cautious in commuting and traveling, which will continue to affect oil demand.

If, in such an environment, Saudi Arabia decides to make good on its threat, oil will fall sharply. Just how low it would fall is anyone’s guess, but it is safe to say such a development would hardly benefit anyone, including Saudi Arabia. Certainly, it could beef up exports to undermine the market shares of Iraq, Nigeria, and Angola in China and India by cutting prices, but it wouldn’t be able to keep on doing it for a very long time. The Kingdom has a deficit to deal with.

It could do it for a short while, to make its point. And then Iraq, Nigeria, and Angola could continue under complying because there would be nothing else Saudi Arabia could do to stop them. And that’s not all. Earlier this week, Russia’s Energy Minister said there had been no discussions in OPEC+ to continue cutting deep after the end of July.

As per the agreement, the cuts would be relaxed from 9.7 million bpd to 7.7 million bpd after the July extension. But it’s still early July, and there is a problem with compliance. That Saudi Arabia could propose another extension is not out of the question because oil continues to be way too cheap for it. And then we will have another OPEC+ drama brewing and, should the Saudis’ patience expire, a second price war.

By Irina Slav for

Tuesday, July 7, 2020

Aramco raises August prices for grades to Asia by $1 a barrel Increase is less than expected for flagship Arab Light crude 

  • Aramco raises August prices for grades to Asia by $1 a barrel
  • Increase is less than expected for flagship Arab Light crude
Saudi Arabia raised pricing for August oil shipments to Asia, the U.S. and northern Europe amid signs that energy demand is recovering from its coronavirus-triggered collapse.

The world’s biggest crude exporter is increasing rates as it pushes other major producers to keep cutting supply to re-balance the market.

State producer Saudi Aramco lifted the official selling price for its flagship Arab Light crude to buyers in Asia, its biggest market, for a third consecutive month, though by less than expected. Aramco raised pricing to the U.S., where it’s also reining in shipments, for a fourth month.

“The increase in prices reflects the overall recovery in oil markets,” said Carole Nakhle, chief executive officer of London-based consultant Crystol Energy. “Demand growth remains uneven and may even be subject to temporary reversals, but it is unlikely to fall off a cliff because lockdowns, if re-introduced, are likely to be more localized.”

Arab Light crude to Asia rises to $1.20 a barrel above the Middle East benchmark, compared with a 20-cent premium for July, the company said in a statement. Traders and refiners, who are struggling with low margins, expected the premium to climb to $1.45, according to a Bloomberg survey.

Aramco raised U.S. pricing by between 20 cents and 40 cents a barrel. Light crude will sell at a premium of $1.65 a barrel, up by 30 cents, the company said. It also increased rates for most grades sold to northwestern Europe -- the main hub for which is Rotterdam. The only reductions are to the Mediterranean region, where Aramco pared prices by as much as $1 a barrel.
Aramco increased August pricing for its flagship grade to Asia and other regions
Saudi Arabia and Russia have led efforts by the OPEC+ producer alliance since April to reduce output and drain stockpiles. The group agreed in June to extend cuts totaling nearly 10 million barrels a day -- roughly 10% of world supply before the pandemic hit -- for a third month until the end of July. They plan to scale them back after that.

                                     August OSPs to AsiaChangePremium
                                     Arab Super Light+$1/bbl$2.65/bbl
                                     Arab Extra Light+$1$1.20
                                     Arab Light+$1$1.20
                                     Arab Medium+$1$1.20
                                     Arab Heavy+$1$0.90

OPEC+ is “on the right track” but still has “a long way to go” before re-balancing oil markets, Saudi Energy Minister Prince Abdulaziz bin Salman said in mid-June. The Saudis slashed their crude shipments last month to a multi-year low, according to Bloomberg tanker tracking.

Brent crude has more than doubled since OPEC+’s April agreement to around $43 a barrel. The global benchmark is still down 34% this year.

— With assistance by Sharon Cho

(Updates with analyst comment in fourth paragraph; pricing details in fifth.)

Monday, July 6, 2020

Exclusive: Venezuela's PDVSA weighs plan to pay for refinery work with fuel, byproducts - sources

CARACAS (Reuters) - Officials from Venezuelan state oil company Petroleos de Venezuela [PDVSA.UL] have spoken with private contractors about paying for work fixing the country’s refineries with fuel and byproducts, a half dozen people familiar with the talks said.

The possibility of in-kind compensation comes as U.S. sanctions on PDVSA and severe cash-flow problems at the company have complicated its ability to pay third-party contractors, whose help it needs to revamp gasoline output at its 1.3 million barrel-per-day refining network, which is mostly halted. 

The outages have contributed to widespread fuel shortages in recent months, which President Nicolas Maduro’s government temporarily alleviated by importing gasoline from ally Iran.
But the shortages have made it hard for farmers to harvest their crops and for doctors to get to hospitals. 

“We want to attend to a humanitarian issue, because there are many people suffering,” said one of the people, who spoke on condition of anonymity because the talks were not yet public. 

PDVSA has racked up sizable debts to contractors due to failure to make promised payments for work on oilfields and to infrastructure, which has led to the suspension of many projects and left many private contractors struggling with a lack of cash flow. The company has not recently published figures on its total debts to contractors. 

The person said the private companies involved planned to discuss the plan with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which enforces sanctions, to try to obtain a license permitting the activities despite the broad sanctions on PDVSA.

The U.S. Treasury Department declined to comment. Neither PDVSA nor Venezuela’s oil ministry responded to requests for comment. 

Payment in fuel could pave the way for those private contractors to export the products themselves. That could boost Venezuela’s oil exports by cutting sanctioned PDVSA out of the process, a bet that customers and shippers would be willing to interact with non-sanctioned private companies. 

To be sure, that part of the plan likely would not hold up without an OFAC license. The Trump administration has sanctioned several oil and shipping companies for dealing with Venezuela in recent months to ratchet up efforts to oust Maduro, a socialist who has overseen an economic collapse and stands accused of corruption and human rights violations. 

It is also weighing sanctions on a Venezuelan shipping magnate who coordinated a gasoline shipment to the country in April, which he described as “humanitarian work.” 

Maduro blames the U.S. sanctions for the fuel shortages and the once-prosperous OPEC nation’s economic woes. Washington has pressured PDVSA’s remaining customers not to send gasoline to the country in exchange for crude, a practice known as a swap that Venezuela had long used to supply the internal market. 

The company has recently restarted the catalytic cracker at its 310,000 barrel-per-day (bpd) Cardon refinery, a necessary step for producing gasoline. It is also aiming to restart gasoline output at the 146,000 bpd El Palito refinery. 

The sanctions have hindered PDVSA’s ability to pay contractors through bank transfers. In-kind payments are not the first method the company has come up with to overcome this obstacle: last year, it paid suppliers and contractors with euros in cash.

But cash has dried up as crude output continues to fall. Venezuela produced just 411,000 barrels per day on June 15 and an average of 421,000 in the first two weeks of June, according to an oil ministry document seen by Reuters. That was down from 573,000 in May, according to figures the country provided to OPEC. 

The people said the products PDVSA could pay the contractors include fuel oil, jet fuel and petcoke - a byproduct of the refining process. 

Reporting by Deisy Buitrago in Caracas and Luc Cohen in New York; Editing by Daniel Flynn and Jonathan Oatis

Saturday, July 4, 2020

Happy Independence Day!

Stout elderly man in his 60s with long white hair, facing partway leftward 
John Adams

Happy Independence Day!

In 1776, after signing the Declaration of Independence, John Adams wrote to his wife Abigail that this act should long be celebrated with great fanfare - and today “We the People” come together to celebrate our nation’s birthday.
"I am apt to believe that it will be celebrated, by succeeding Generations, as the great anniversary Festival. It ought to be commemorated, as the Day of Deliverance by solemn Acts of Devotion to God Almighty. It ought to be solemnized with Pomp and Parade, with Shows, Games, Sports, Guns, Bells, Bonfires and Illuminations from one End of this Continent to the other from this Time forward forever more." - John Adams, July 1776

As we gather with friends and family to celebrate Independence Day, we also remember and celebrate the principles that our nation was founded on.

May God bless all who serve to ensure these ideals endure. We wish everyone a happy and safe holiday!

Thursday, July 2, 2020

Oil barrels come off the water as storage boom at sea fades

FILE PHOTO: Oil tankers pass through the Strait of Hormuz, December 21, 2018. REUTERS/Hamad I Mohammed/File Photo  

LONDON (Reuters) - Tens of millions of barrels of crude and oil products stored on tankers at sea due to the coronavirus crisis are being sold, in a sign fuel demand is recovering as lockdowns ease, shipping sources say.

Fuel demand tumbled as much 30% from March to May, with some surplus stored at sea as land storage filled up. 

Crude held on tankers fell below 150 million barrels by the end of June, down from more than 180 million barrels in late April, IHS Markit estimated. 

Refined products held on vessels dropped to 50 million barrels from a mid-May peak close to 75 million barrels, IHS said, adding gasoline stocks were the fastest to be offloaded.

“Volumes shown under floating storage can potentially drop rather fast during July,” Fotios Katsoulas of IHS said, adding there were several tankers off China waiting to discharge. 

Demand for floating storage at the peak of the crisis was helped by a market contango, a price structure where cargoes for delivery in the shorter term are cheaper than those for later delivery, encouraging traders to store fuel until prices pick up. 

As the contango has narrowed with rising demand, there is less incentive to store fuel. 

In addition, OPEC, Russia and other allies, a group known as OPEC+, have curbed production and output from the United States and elsewhere has fallen, leaving less surplus oil to keep at sea, a more costly alternative to onshore storage.

“With output levels lower, this has reduced the need for storage on land and combined with a reduction in price contangos, there is less of an incentive to store crude at sea,” said Rebecca Galanopoulos Jones, with broker Alibra Shipping. 

Clarksons Research estimated 218 million barrels of crude was held on tankers by June 26 from a peak of 290 million barrels in early May, while about 70.5 million barrels of oil products were stored versus a May peak of 100 million barrels. 

“We believe floating storage is going to gradually decline from now and reach normal levels sometime during the autumn,” a spokeswoman with shipping group NORDEN said.
Editing by Dmitry Zhdannikov and Edmund Blair