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Exclusive Venezuela increased fuel exports to allies even as supply crunc...


A gasoline shortage in OPEC member Venezuela was exacerbated by an increase in fuel exports to foreign allies such as Cuba and Nicaragua and an exodus of crucial personnel from state-run energy company PDVSA, according to internal PDVSA documents and sources familiar with its operations. Leftist-run Venezuela sells its citizens the world's cheapest gasoline. Fuel supplies have continued flowing despite a domestic oil industry in turmoil and a deepening economic crisis under President Nicolas Maduro that has left the South American country with scant supplies of many basic necessities. That changed on Wednesday, when Venezuelans faced their first nationwide shortage of motor fuel since an explosion ripped through one of the world's largest refineries five years ago. At the time, the government of then-President Hugo Chavez curbed exports to guarantee there was enough fuel at home. This week's shortage was also mainly due to problems at refineries, as a mix of plant glitches and maintenance cut fuel production in half. Unlike five years ago, Caracas has continued exporting fuel to political allies and even raised the volume of shipments last month despite warnings within the government-run company that doing so could trigger a domestic supply crunch. Shipments from refineries to the domestic market needed to be redirected to meet those export commitments, the internal documents showed."Should this additional volume ... be exported, it would impact a cargo scheduled for the local market," read one email sent from an official in the company's domestic marketing department to its international trade unit. Venezuela last month exported 88,000 barrels per day (bpd) of fuels - equivalent to a fifth of its domestic consumption - to Cuba, Nicaragua and other countries, according to internal PDVSA documents seen by Reuters. That was up 22,000 bpd on the volumes Venezuela had been shipping to those two countries under accords struck by Chavez to expand his diplomatic clout by lowering their fuel costs through cheap supplies of crude and fuel. The order to increase exports came from PDVSA's top executives, according to the internal emails seen by Reuters. Venezuela's oil ministry and state-run PDVSA, formally known as Petroleos de Venezuela SA, did not reply to requests for comment for this story.

FUEL STRAIN, BRAIN DRAIN The strain on the country's fuel system has been worsened by the departure of staff in PDVSA's trade and supply unit who are key to ensuring fuel gets to where it is needed and making payments for imports, three sources close to the company said. The unit has seen around a dozen key staffers depart since Maduro shook up PDVSA's top management in January. Among those who left was the head of budget and payments, two sources said."Every week someone leaves for one reason or another," said a PDVSA source familiar with the unit's operations. Some have been fired, while others have left since the shake-up inserted political and military officials into top positions and bolstered Maduro's grip on the company that powers the nation's economy. The imposition of leaders with little or no experience in the industry has further disillusioned some of the company's experienced professionals and accelerated an exodus that had already taken hold as economic and social conditions in Venezuela worsened.

A recent internal PDVSA report seen by Reuters mentioned "a low capacity to retain key personnel," amid salaries of a few dozen dollars a month at the black market rate. UNPAID BILLS The departure of staff responsible for paying suppliers, as well as a cash crunch in the company and the country, have led to an accumulation of unpaid bills for fuel imports into Venezuela. Had those bills been paid, the supply crunch would have been less acute, the company sources said. About 10 tankers are waiting near PDVSA ports in Venezuela and the Caribbean to discharge fuel for domestic consumption and for oil blending.

Only one vessel bringing fuel imports has been discharged since the beginning of the week, shipping data showed. PDVSA ordered some of the cargoes as it prepared alternative supplies while refineries undergo maintenance. The tankers sitting offshore will not unload until PDVSA pays for their cargoes, said shippers and the company sources. Should PDVSA pay - up to $20 million per cargo - shortages could blow over relatively soon. The cash-strapped company has struggled since the global oil price crash that began in 2014 cut revenue for its crude exports. PDVSA is tight on cash as it prepares for some $2.5 billion in bond payments due next month. While the vessels sit offshore, lines of dozens of cars waited at gas stations in central Venezuela on Wednesday and Thursday. The shortages angered Venezuelans who already face long lines for scarce food and drugs. PDVSA blamed the supply crunch on unspecified problems for shipping fuel from domestic refineries to distribution centers. The company said it was working hard to solve the gasoline situation by boosting deliveries to the worst-hit regions. A shortage of trucks to move refined products has also caused bottlenecks, oil workers told PDVSA President Eulogio Del Pino during a visit to a fuel facility this week, asking for help. Trucks are in short supply because the country does not have enough funds to pay for imports of spare parts. It was unclear when fuel supplies would return to normal, although by late Thursday PDVSA appeared to have distributed some fuel from storage to Caracas and the eastern city of Puerto Ordaz. Lines to fill up at gasoline stations shortened in both cities, according to Reuters witnesses. Workers at the 335,000-bpd Isla refinery on the nearby island of Curacao operated by PDVSA said on Friday that the refinery had begun restarting its catalytic cracking unit, which could boost fuel supplies in the coming days.

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Sears shares sink as investors fret over going concern risk


Sears Holdings Corp's (SHLD. O) shares tumbled as much as 16 percent on Wednesday as bondholders and investors questioned how long the storied retailer could remain in business after it flagged doubts that it could continue as a going concern. For several years, the parent of Sears, Roebuck and Co and Kmart has taken on big losses, closed stores and divested businesses as it faced stiff competition. A changing retail landscape in which many brick-and-mortar retailers have gone bust and e-commerce has boomed has also plagued the retailer. The warning on Tuesday added a new element of uncertainty for a company that has $13.19 billion in liabilities and said it could have difficulty obtaining merchandise from vendors. Bondholders are watching to see whether Sears will have the cash and credit needed to stock its shelves for the crucial 2017 holiday season. Sears Chief Financial Officer Jason Hollar wrote in a blog post on Wednesday that the company had boosted its liquidity by up to $1 billion through loan agreements and amended an existing credit facility to provide an additional $250 million, among other steps to improve performance and finances."As 2016 proved to be another challenging year for most 'bricks and mortar' retailers, our disclosures reflected these developments," Hollar wrote. "While historical performance drives the disclosure, our financial plans and forecast do not reflect the continuation of that performance." Many question the company's chances for survival, however. Sears last turned an annual profit in 2011."The retail industry is just too competitive, the brand value of Sears has diminished dramatically, the seismic shifts in consumer spending both in terms of the move to e-commerce and to experiences don’t bode well for Sears," said Ken Perkins, president of industry research firm Retail Metrics. "We have seen a spate of Chapter 11 filings in recent months, and it is difficult to see how Sears avoids the same fate."Shares of Sears were down 11.9 percent at $8.02 in late afternoon after falling to $7.60, their largest one-day percentage decline since an 18.79 percent drop on Nov. 16, 2012. THE FATE OF AN AMERICAN RETAIL ICON Sears, Roebuck and Co - and its famed catalog - was once an American retailing icon. The company traces its origins to 1886, when Minnesota railroad station agent Richard Sears bought an unwanted shipment of watches, then sold them "at a nice profit," according to the company's website.

The company was also a mail-order pioneer, selling a wide variety of goods to farmers and others in far-flung rural areas. By 1895, its 532-page catalog's offerings included a treasure trove of offerings. It was not until 1925 that Sears opened its first retail store - and that was an experiment, according to the website. But keeping up with the times has been costly as nimbler competitors, internet shopping and empty malls have taken a toll and the company has had to restructure. Some analysts and industry experts wonder if the efforts can pull it out of its current situation."They would need to make so many cost cuts, the business wouldn't exist anymore," said Neil Saunders, managing director of retail at research firm GlobalData. "They can't make all of those cuts because they have lease obligations and contractual obligations. The business is fundamentally broken. Its liabilities outweigh its assets."The only way it could survive is enter bankruptcy protection and have a fundamental restructuring, which would be extremely painful," he added. "There's no other option."The company has been controlled by its billionaire chief executive, Edward Lampert, who has cut U.S. stores by nearly a third, reduced holdings in Sears Canada and spun off the Lands' End clothing chain. The company has also placed some of its stores into a real estate investment trust, sold its Craftsman line of tools and repeatedly raised debt from Lampert's hedge fund.“This revelation in their annual report that they may not be able to continue as a going concern is really just another step towards what is inevitably going to be a financial collapse,” said Mark Cohen, former CEO of Sears Canada and director of retail studies at Columbia Business School.

BLOW TO LAMBERT The news is a blow to Lampert, who took command of Sears after merging it with Kmart, which he controlled, in 2004. Lampert owned nearly 10 percent of the REIT that paid Sears $2.6 billion in 2015 for the stores it purchased, many of which were then leased back to the retailer. The company had said that actions taken to boost liquidity, including the Craftsman sale to power tool maker Stanley Black & Decker Inc (SWK. N), could satisfy its capital needs for the current fiscal year. But in a filing on Tuesday it also makes clear that additional asset sales could prove problematic.

Walmart announces plan to invest $800 million in Chile SANTIAGO Wal-Mart Stores Inc's Chilean unit will invest $800 million in the country over the next three years and open 55 to 60 new supermarkets, the company said on Wednesday, a significant outlay at a time of slow economic growth.

Exclusive: Advent pulls bid for Pfizer's Brazil venture - sources SAO PAULO U.S. private equity firm Advent International Corp has withdrawn from a bidding process to acquire Pfizer Inc's Brazilian generic drugs joint venture, leaving rival Bain Capital LP as the only contender for the company, two people with direct knowledge of the matter said on Thursday.

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