I. NEWS
This section highlights excerpts of relevant press releases and brief comments on our views regarding such.
“Curaçao will terminate contract with PDVSA to operate the refinery in the island”
The government of Curaçao will terminate the contract of operations of the refinery with the stateowned company Petróleos de Venezuela (PDVSA). Operations will be undertaken by Refineria di Korsou (RdK) for a period of 6 months, until Klesch Group can take over.
https://lta.reuters.com/articulo/venezuela-refiner-acurazao-idLTAKBN1YY16T
“US imposed new sanctions on six Venezuelan vessels”
The United States Department of Treasury issued new administrative sanctions against several vessels as a result of their connections with the Venezuelan government involving the carriage of oil to Cuba. The government continues in their attempt to try to evade the sanctions, by changing the vessel´s names. The Office of Foreign Assets Control indicated that the vessel Esperanza, which was sailing under Cuban flag, is actually the Nedas of Greek flag, which is owned by Caroil Transport Marine Ltd, a company sanctioned since September.
In addition, six blocked vessels owned by PDVSA with disregard to the sanctions, transported oil cargoes to Cuba. The vessels are Ícaro, Luisa Cáceres de Arismendi, Manuela Sáenz, Paramaconi, Terepaima and Yare.
https://www.elnacional.com/economia/ee-uu-impusonuevas-sanciones-a-seis-buques-de-venezuela/
“ConocoPhillips requested the assets of Citgo in the US to settle their accounts”
ConocoPhillips requested a Federal Court in Delaware to have Citgo’s assets as payment in compensation for the expropriation in 2011 of the “Las Cristinas” mine. In July, a Court agreed that the mining company was allowed to confiscate the shares of PDVSA in the US to compensate a payment of 1.4 billion USD. They claimed that ConocoPhillips should be entitled to an order of execution at least to the same extent as it was issued in the case of Crystallex.
https://www.elnacional.com/economia/conocophillipspidio-activos-de-citgo-en-ee-uu-para-saldar-cuentas/
“Order for the temporary closure of Baker Hughes in the State of Zulia issued”
A municipality in the State of Zulia ordered the temporary closure of the local unit of the American oil company Baker Hughes, under the assertion that the company had been avoiding paying municipal taxes.
The company preserves operations in Venezuela under an License from the sanctions imposed by the United States on PDVSA, along with some other companies such as Halliburton and Chevron.
https://www.elnacional.com/economia/ordenaroncierre-temporal-de-la-petrolera-baker-hughes/
“Venezuela approves incentives for Russian Rosneft to invest in offshore gas”
The National Constituent Assembly modified by Decree the cooperation agreement between Russia and Venezuela to include incentives that allow Rosneft Oil Company to develop two natural gas fields on high seas. The oil company has been a strong support to PDVSA, who has been facing countless sanctions. Rosneft has been absorbing about 62% of Venezuela’s total oil exports, selling most of them to refineries in India and China.
Incentives include an exemption of value added tax and import taxes, for the development of the Patao and Mejillones fields.
https://lta.reuters.com/articulo/venezuela-rusia-gasidLTAKBN1XG26P
“Maduro will provide funds to complete PDVSA’s vessels”
President Nicolás Maduro will grant funds to complete the construction of PDVSA tankers, «Eva Perón» and «Juana Azurduy», located in an Argentina State shipyard. Both were supposed to be delivered in 2005.
This decision to continue with the project came after Alberto Fernández assumed the Presidency.
https://www.eluniversal.com/economia/54844/maduro -dara-fondos-para-culminar-buques-de-pdvsa
«The US Department of Treasury issued license to protect Citgo“
The US Department of Treasury modified a license granted to holders of the PDVSA bond, to prohibit any operation related with the shares of Citgo until January 22, 2020. It provided that some payments and renegotiation agreements of this titles might require additional licenses.
On October 28th the payment of 913 million Dollars of interest from the 2020 PDVSA bond expired. The guarantee was 50.1% of the shares of Citgo.
https://www.elnacional.com/economia/departamentodel-tesoro-de-ee-uu-emite-licencia-para-protegercitgo/
“Chinese oil contractor suspended contracts with Venezuelan suppliers because of their debt”
China Huanqiu Contracting and Engineering Corp (HQC), a subsidiary of China National Petroleum Corporation and China’s main contractor in Venezuela, terminated their contracts with their suppliers in Venezuela as a result for lack of payments from PDVSA. This contract was intended to improve the production of Sinovensa, a mixed company with 51% of participation from PDVSA and 49% from the China National Petroleum Corporation.
https://www.elnacional.com/economia/contratistachina-hqc-y-proveedores-venezolanos-en-disputapor-pagos-adeudados/
“Nynas suspended imports of Venezuelan crude because of the sanctions”
Nynas AB, a European refiner company property of PDVSA and the Finnish Neste Oil, will suspend the purchase of Venezuelan oil, after changes in a license that allowed them to operate despite US sanctions.
The license allowed Nynas to operate until April 2020, but it did not authorize the refiner or its subsidiaries to purchase oil or derivative products of Venezuelan origin, directly or indirectly. The company may still sell Venezuelan products that are already in stock.
https://www.elnacional.com/economia/nynassuspende-importaciones-de-crudo-venezolano-porsanciones/
“Nayara supplies Rosneft of fuel in exchange for Venezuelan oil”
The Indian refining company Nayara Energy has worked with Rosneft as an intermediary to acquire Venezuelan oil, paying with fuel instead of cash to avoid violating US sanctions, after the country prohibited the use of the Dollar currency to pay for oil sales made by PDVSA or its subsidiaries.
https://lta.reuters.com/articulo/venezuela-petroleoindia-idLTAKBN1WU2VT
“Main Indian refinery resumes Venezuelan oil imports”
The main private oil refinery in India, Reliance Industries, resumed its imports of crude oil from Venezuela which will be paid with diesel exports, in order to avoid the sanctions imposed by the US to Venezuela.
The company had to suspend its imports in March, when Washington warned non-US companies about the sanctions if they collaborated with the Venezuelan government. Now, thanks to this agreement, the company is exporting diesel and importing crude from Venezuela in barter conditions.
https://www.elnacional.com/economia/principalrefineria-india-reanuda-importaciones-de-petroleovenezolano/
“Chinese Oil Company bans the use of vessels associated to Venezuela”
UNIPEC, a commercial unit of the Chinese oil company SINOPEC, banned the use of vessels that have been related to the carriage of crude oil from Venezuela in the last year. This arises after Exxon Mobil Corp used a similar clause prohibiting the hiring of tankers related to the movement of Venezuelan oil, affecting approximately 250 of them.
https://www.elnacional.com/economia/reuterspetrolera-china-prohibe-el-uso-de-embarcacionesvinculadas-con-venezuela/
https://lta.reuters.com/articulo/venezuela-exxonidLTAKBN1WJ1ZP
II. CASE LAW
This section comments on relevant case law during the corresponding quarter and our brief comments to it.
Judgement of the Civil Chamber of the Supreme Court of Justice dated October 16, 2019 in the matter Grupo Empresarial Urbina G.E.U., C.A. v. Centro Clínico Vista California, C.A.
This Supreme Court ordered the Respondent to pay the Plaintiff a significant amount in Dollars of the United States of America, on the basis of pending rent fees. The Respondent owed the Owner of the real estate, many months of rent payments, since 2014 up to the date of the final judgment. The currency and exchange rate used to calculate the amount due, was determined by the Court which concluded that the Respondent was liable for an amount in Dollars of the United States of America and that may only release himself by paying in Venezuelan legal currency at the exchange rate of the effective date of payment.
Judgement of the Political and Administrative Chamber of the Supreme Court of Justice dated October 2, 2019 in the matter of Seguros Caracas de Liberty Mutual, C.A.
The Chamber stated that Municipalities hold tax powers despite of those entrusted to the National Public Power. Hence, Municipalities may impose taxes to the economic activities performed within their territorial limits, unless expressly prohibited. Based on articles 156 and 180 of the Constitution, the Court argues that there are no doubts as to the tax powers entrusted to the Municipalities, which are certainly independent and different from that of Nation and States.
The fundament of tax Municipal powers on economic activities performed within their territories, requires of a regular exercise of that certain activity in the jurisdiction of that Municipality. The activity must correspond to the main purpose of the company and will be deem as accountable for tax base. Therefore, Insurance Activities and Insurance Companies may be taxed by Municipalities.
III. LEGISLATION
This section expands on National and International Legislation adopted in the country and relevant to the industry.
National Decree N° 4.080 dated 26 December 2019
This Decree exempts until June 30th 2020, the payment of Value Added Tax, Import Tax and determines the Customs Regime for the definitive imports of new or used personal movable goods, carried out by the Public Administration, as well such as those carried out by individuals and entities. The goods are classified by tariff codes as provided in Appendix I included in the Decree. The beneficiaries must file a description of the goods to be imported with a commercial invoice under their name in order to be exempted.
National Decree N° 4.037 dated 6 December 2019
The National Executive ordered the National Channels Institute (INCANAL), to delegate to the Venezuelan Corporation of Guayana (CVG), the administration, maintenance and operation of tolls and port terminals located in the navigation channel of the Orinoco River.
Resolution N° 106 of the Ministry of Oil dated 12 November 2019
Private national flag aircraft that carry out national routes must pay fuel to PDVSA at international prices and payment must be made in Bolivares at the daily exchange rate set by the Venezuelan Central Bank or at their value in crypto assets or cryptocurrency.
Fuel may only be paid directly in foreign currency or in crypto assets or cryptocurrencies, by private national flagged aircrafts that carry out international routes, or private foreign flagged aircrafts that carry out national or international routes, and has to be paid likewise to PDVSA at international prices.
National Decree N° 4.019 dated 6 November 2019
The National Executive declared once again State of Exception and Economic Emergency, throughout the national territory, given the extraordinary circumstances that still affect the social, economic and political field and the security of the Nation.
Provision N° 05/2019 of Bolivarian of Ports (BOLIPUERTOS), S.A dated 15 October 2019
Pedro Antonio Sánchez Basabe was appointed General Manager of Bolivarian of Ports (BOLIPUERTOS) of the Port of Maracaibo, State of Zulia.
Provision N° 314 of the National Institute of Aquatic Spaces dated 10 October 2019
Miguel Angel Aguilar Montiel was appointed Harbormaster of the Port of Apure.
IV. BILLS
This section lists draft regulations/bills being proposed to and/or discussed in Congress or relevant institutions
There are no bills to report on this quarter
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