Fernandez-Concheso

Derecho Maritimo

Fourth Quarter 2020 Report –Venezuela –

I.NEWS

This section highlights excerpts of relevant press releases and brief comments on our views regarding such.

«United States extended the protection to CITGO until mid-2021“

The U.S. Department of Treasury extended until July 2021 an order which prevents creditors of PDVSA 2020 bonds, from filling claims or performing transactions that may affect the shares of CITGO – considering that such PDVSA bonds are supported by the shares of its subsidiary CITGO.

Additionally, yet another Court of the United States had previously ruled that the bonds were «valid and enforceable» if on default.

https://www.elnacional.com/economia/ee-uu-extendio-proteccion-de-citgo-hasta-mediados-de-2021/

https://www.elnacional.com/economia/jueza-de-ee-uu-dictamino-que-bonos-2020-de-pdvsa-son-validos/

«PDVSA doubled its exports due to new Russian buyers“

By November 2020, Venezuelan oil exports almost doubled in comparison to previous months. The increase on the sales of crude oil and refined products was caused by the incorporation of new clients such as Xiamen Logistic Grass, Olympia Stly Trading, Zaguhan & Co, Karaznbas, Kailin Business International, Wanneng Munay and Poseidon GDL Solutions, which were registered in Russia by OGX Trading.

Exports are mainly destined to the Asian market, particularly China. Two significant shipments were delivered to the company Cirrosti Technology Co LTD, on board of 2 tankers of the state-owned Petro China.

In order to carry on these shipments, most tankers are reportedly turning off AIS or performing STS operations.

Nonetheless, while oil exports increased, fuel imports significantly decreased. From 100,500 barrels per day on October to 21,000 on November.

https://www.elnacional.com/economia/exportaciones-de-pdvsa-se-duplicaron-debido-a-nuevos-compradores-rusos/

https://lta.reuters.com/article/venezuela-petroleo-china-idLTAKBN2862HU

«Repsol ruled out leaving Venezuela or Libya“

The CEO of the Spanish company Repsol, Josu Jon Imaz, informed that the company plans to reduce its presence in 14 countries. Today, it has operations in over 20 countries. However, they ruled out leaving Venezuela or Libya.

https://www.elnacional.com/economia/repsol-descarto-abandonar-venezuela-o-libia/

«The Unites States gave Chevron six more months in Venezuela“

The Department of Treasury extended the General License to Chevron, allowing them to remain in Venezuela until 3 June 2021.

The conditions, however, remain unchanged preventing the company from carrying out activities such as drilling, lifting, purchasing or processing crude or Venezuelan products.

https://www.argusmedia.com/en/news/2160677-us-gives-chevron-six-more-months-in-venezuela?backToResults=true

«Venezuela will discuss a dollarization plan with local banks”

Officials of the Venezuelan Central Bank have been meeting with local financial firms to discuss a plausible plan to promote the construction and settlement of a financial system in US dollars starting next year.

The order is expected to formalize transactions in dollars in the Venezuelan banking system. This would allow banks to grant loans in dollars, which would help boost the credit market, which now a days is practically non-existent.

To this date, certain banks already offer some services to clients including the opening accounts in foreign currency, but these are limited to cash deposit operations, withdrawals and/or wire transfers between accounts of the same bank.

https://www.bloomberg.com/news/articles/2020-11-16/venezuela-is-said-to-discuss-dollarization-plan-with-local-banks

«Cargill sells its assets in Venezuela and exits the country”

After 34 years, the multinational food corporation Cargill, decided to sell its assets and operations in Venezuela to a group of investors represented by the Phoenix Global Investment Fund and Puig Group – an important leader in the food market in Venezuela.

The buyers confirmed they will guarantee the continuity of their operations without affecting their employees, processes and supplies of wheat flour, pasta, edible oils, vegetable fats, salt, among others.

https://www.elnacional.com/venezuela/la-multinacional-cargill-vende-sus-activos-en-venezuela-y-sale-del-pais/

“Venezuelan coal exports rise as U.S. Sanctions intensify”

Venezuela has increased its production and export of coal to European countries in order to achieve new sources of income and mitigate the impact of sanctions.

By June 2020, the export shipments of coal were estimated in the amount of 365,000 tons. Therefore, this year’s exports of coal are expected to significantly surpass last year, in which Venezuela only exported 310,000 tons.

https://lta.reuters.com/article/venezuela-sanciones-carbon-idLTAKBN26Y2GO

«Venezuela resorts to Asian company to avoid sanctions“

The state-owned oil company PDVSA has relied on Thailand’s Tipco Asphalt as a financial intermediary, in order to pay invoices to its creditors in exchange for large discounts on oil.

The Thai company claims that such payments are legal and that these oil purchases are not prohibited by US Sanctions, since these only apply to US companies. Nevertheless, the U.S. administration has been examining these payments since they are known to provide financial relief to Maduro’s regime.

https://apnews.com/article/noticias-0813a510c4521ea4ce76a40eb964d21e

https://www.argusmedia.com/en/news/2125938-us-rethinking-venezuela-diesel-swaps

”The US assures that sanctions do not prevent ENI from assisting the Venezuelan FSO NABARIMA”

The US administration argued that the Italian oil company ENI was free to assist the FSO NABARIMA, which is owned by the mixed company Petrosucre (property of PDVSA and ENI). They stated that such operations would not be impacted by US Sanctions. Therefore, ENI could safely discharge the 1.3 million barrels contained in the facility.

Finally, PDVSA has begun operations to transfer the crude to one of its tankers, M/T ICARO, using a tank barge called ‘Inmaculada.’

Images released over the last few months showed FSO NABARIMA listed to one side, which caused serious concerns about a possible environmental catastrophe. Nevertheless, the government of Trinidad and Tobago assured that the facility was stable and did not represent any risks.

https://lta.reuters.com/article/idLTAKBN27I2RF

https://www.elnacional.com/economia/pdvsa-inicio-transferencia-de-crudo-del-tanquero-nabarima/

https://www.elnacional.com/economia/trinidad-y-tobago-aseguro-que-el-nabarima-se-encuentra-estable-y-sin-riesgo-de-hundimiento/

  1. CASE LAW

This section comments on relevant case law during the corresponding quarter and our brief comments to it.

Decision of the International Court of Justice dated 18 December 2020

The International Court of Justice (“ICJ”) declared itself competent to rule on the validity of the arbitration award of 1899 which established the country’s borders between Venezuela and Guyana.

In 1966, the United Kingdom and Venezuela signed the Geneva Agreement, which set forth the foundations to resolve this long-lasting controversy. However, negotiations persisted for more than two decades without any real results.

Venezuela continues to claim that the dispute must be resolved bilaterally and that the country has never provided their consent for the matter to be resolved before the International Court of Justice. Venezuela did not attend any of the hearings held by the Court.

The ICJ argued that both countries agreed under the Geneva Agreement that the UN Secretary had the power to define where to resolve this controversy, and, therefore, the Hague Court was a valid alternative. Nevertheless, the Judge refused jurisdiction to rule on any claims after the Geneva Agreement.

A final ruling may take years and the ICJ will most likely have major difficulties trying to enforce such decision.

https://www.nodal.am/2020/12/la-corte-internacional-de-justicia-se-declara-competente-en-disputa-por-el-esequibo-entre-venezuela-y-guyana/

Resolution by Plenary Chamber of the Supreme Court No. 0008 dated 1 October 2020.

Courts will only work from Monday to Friday during “pandemic flexible weeks” as determined by the Executive. During this time they will process and rule on all new and ongoing matters.

During “restricted weeks”, causes will remain suspended and the lapses will not continue their course, except for those that can be processed through any of the available means of communication.

III. LEGISLATION

This section expands on National and International Legislation adopted in the country and relevant to the industry.

National Decree No. 4.389 dated 15 December 2020

A new Board of Directors for Petroquímica de Venezuela S.A. (PEQUIVEN) was recently appointed:

National Decree No. 4.387 dated 14 December 2020

Jacinto Erick Pérez Rodríguez was appointed as Vice minister on Hydrocarbons and Leonardo Federico Graterol was appointed as Vice minister for Gas under the Ministry of Oil.

National Decree No. 4.361 dated 3 November 2020

The National Executive declared once again a “State of Alarm” throughout all the national territory to deal with the health emergency generated by COVID-19.

The actions agreed on March 2020 are maintained, including traffic restrictions between certain areas, except any mobility for the procurement of essential goods, such as food and/or medicine, as well as to any health care requirements.

Public and private academic activities remain suspended, as well as any activity that involves crowded environments.

Resolution No.006 of the Ministry of Transport dated 15 October 2020

Gerardo Enrique Rojas was appointed as Accountant and Head of the Administration and Finance Office of the National Institute of Aquatic Spaces (INEA – the Maritime Authority).

Order by the Venezuelan Central Bank of dated 9 October 2020

The Venezuelan Central Bank ordered all banks and financial institutions to immediately cease the offer of any product or services to users or clients, in which there is  payment in foreign currency involved within Venezuelan borders.

  1. BILLS

This section lists draft regulations/bills being proposed to and/or discussed in Congress.

There are no bills to report.