Update on the (non-existing) huge sales success of the petro

(updated March 6)

20.2.

Maduro announces only 20 hours after the launch of the presale, 4,777 millions yuans or 735 million dollars as the initial result of “operations of intention of buying el petro”. This expression sounds funny (also in the original Spanish) but makes clear what Maduro is speaking about: You could only register online for the presale or initial sale if at a certain point you stated your intention to buy petros in US dollars, euros, yuans, ethereum or bitcoins by giving a range in the given currency. (Let say you would indicate that you intend to buy petros for 10,000-15,000 US dollars.) Now this indication of how much you intend to buy is meaningless. It doesn’t have any legal relevance. Many people gave some numbers just out of curiosity. So, assuming that Maduro isn’t outrightly lying, we are informed that 20 hours after the launch people all over the world registered their non-binding interest to buy petros for 735 million dollars. It is not clear, whether the government used the upper – probably – or loader bound to arrive at that number. (http://www.correodelorinoco.gob.ve/presidente-maduro-intencion-de-compra-del-petro-supera-los-596-millones-de-euros/)

22.2.

Maduro announces that only two days after the launch there are already offers and negotiations surpassing 1 billion dollars. There were 292,000 offers of intention to buy, 36% made in dollars, 15% in euros, 18% in ethereum and 31% in bitcoins. (Together 100%. Interesting to note, that while two days before Madure first mentions the amount of offers in yuans, actually only a minimal amount was offered in this currency.) From theses offers 133,665 people were contacted. (Making it evident, that those “more then 1000 million dollars” are mostly non-binding intentions.) Actually that probably meant, that 133,665 got a second email with a link to a binding contract. (There are many people who never received such a second email!) We don’t know how many people actually signed and sent in this (immoral!) contract. But it is to be expected that we will see some of them complaining on twitter when they realize that they bought petros at a price they never wanted to. (http://www.correodelorinoco.gob.ve/presidente-maduro-ofertas-y-negociaciones-vinculadas-al-petro-superan-los-us-1000-millones/)

In the same talk on facebook Maduro also speaks about negotiations which where (successfully?) completed about 350 million dollars to pay for inputs for Venezuelan industry with petros. (I would like to know the terms of such a contract – if it indeed exists.) As he announced “offers and negatiations” surpassing 1 billion dollars, those 350 million are probably part of the whole sum.

26.2.

Maduro announces the number of 171,000 certified and verified offers of intentions to buy and clarifies that differentially from former numbers these offers are certified and verified. We don’t know what that means. Given the time frame and the fact that Maduro continues to speak about “offers of intentions to buy” I assume that he still speaks of those non-binding online offers which were cut down buy some criterion not known to us. Maybe it is just the number of offers of people who got a second email. I don’t think he speaks about people who actually send in the signed binding contract: To certify and verify these in a meaningful way would take more time.  One would also wonder, why he didn’t change wording away from “offers of intentions to buy” and speaks of potential buyers as users, if he were referring to those binding contracts. Finally all the information he gives (that the offers come from 87,284 users, among them 3,523 companies and 83,761 natural persons; the breakdown into currencies and the list of 127 countries where offers come from) can be gained from the online process. It is telling that he doesn’t say anything about the amount of those “certified and verified” offers: No doubt, this number is much lower than the numbers announced so far. (https://www.youtube.com/watch?v=PzavISvS0vU, http://www.correodelorinoco.gob.ve/criptomoneda-venezolana-petro-ha-recibido-171-015-ofertas-de-compras-certificadas/)

Evidently, in part I’m speculating here. But given that the government fails to actually inform on the process and instead only publishes disconnected numbers for propaganda purposes that’s all we can do.

The same day TeleSur publishes a video “informing” about the petro. The numbers about the presale are based  on Maduros declarations on the 22nd of February (292,000 offers, 36% in USD ...). But they speak of 1.2 billion dollars being “raised” and 40 million of petros being “sold”. This is obviously wrong, as Maduro himself made clear that these were only “offers of intention to buy”. The last number of 40 million of petros being sold seems to be simply derived from those 1.2 billion dollars, dividing them by 30, the dollar price of the first batch of petros during presale according to the latest version of the white paper. If actually already 40 million of petros were sold, this would go against the white paper which only assigns 34 million of petros to presale. They also say that those 40 million of petros where sold in 3 million of operations. This doesn’t make any sense and plainly contradicts the Maduro’s information from the same day and the days before. (https://videos.telesurtv.net/video/705228/el-petro-vende-40-millones-de-unidades/)

27.2.

Maduro anounces that the day before offers of already more than 3 billions dollars were received. This tops the 1,2 billions from the 22nd of February (as reported by TeleSur on the 26) but (if it isn’t an outright lie) most probably is based again mostly on non-binding online offers and not on binding contracts and not even on “certified and verified” online offers. (http://www.radiomundial.com.ve/sites/default/files//Nicol%C3%A1s%20Maduro_378.mp3, http://www.radiomundial.com.ve/article/m%C3%A1s-de-3-mil-millones-de-d%C3%B3lares-reportan-ofertas-vinculadas-al-petro)

5.3.

Maduro declares that Venezuela is completing the protocol of 30 days of presale. The number of certified offers of intention to buy went up to 186.306. Again he doesn’t say how much was offered through these certified offers. 0,3% of the offers were in yuan. The offers were certified by a Russian company which uses the most advanced technological platform of the world. (Zeus? What technology would that be?)

http://ciudadmcy.info.ve/?p=29564
https://mundo.sputniknews.com/americalatina/201803061076781051-caracas-moneda-virtual/

Presale didn't start yet

According to the white paper “Pre-sale will start on February 20,2018 and will consist of the creation and sale of smart-asset on the NEM blockchain platform.” CriptoNoticias (a digital journal dedicated to information on bitcoin and its technology) claims that it was told by sources near to the Venezuelan government that as of 22nd of February there is no such smart asset, repeating this claim on the 25th. (https://www.criptonoticias.com/sucesos/petro-no-posee-contrato-inteligente-token-oficial-aun-fuentes/, https://www.criptonoticias.com/adopcion/10-cosas-debes-saber-sobre-petro-criptoactivo-creado-estado-venezolano/) If this is true, presale, which was “launched” on February 20, didn’t start yet as no smart-asset was created, contrary to the time line of the white paper. There is actually a NEM-contract which is widely believed to be the contract for the presale token. But if this was the true contract then presale wouldn’t have started either, as no token (“mosaic”) was sold so far: All tokens are held by the same owner. (http://explorer.ournem.com/#/s_account?account=NCGBBZKOTERO3EXMPPCNDNDXZQQJXBEMWWO7MB66)

Resume

If Maduro isn’t simply lying, they received a lot of non-binding offers (some of them not at all serious) and they are in the process of sifting them through. At the same time there might be private negotiations (like the ones about the 350 million dollar sales in petro) we don’t know anything about and which might be successful or not. If they are successful, we will probably never hear about their terms. Presale in the terms of the white paper didn't start.

Deutsche Bank doesn't estimate that Venezuela could raise between $ 3,400 million and $ 4,400 million. It estimates that the goverment plans to raise between $ 3,400 million and $ 4,400 million. Huge difference.

What makes you believe that the discount, which according to the last English version of the white paper applies to the first batch of petros to be sold during pre-sale, will be available to those signing and handing in this contract? Isn't it only institutional investors who can buy petros during pre-sale?

What makes you believe that somebody buying petro options with this contract will receive a discount of 40%?

I didn't say nobody. I said "nobody in his right mind and understanding anything about investment". I'm sure there are many people happy to sign something like this. Did you make an online offer or fill in and send in this contract?

Oh, they took it down. You didn't get it, because you expressed your "offer of intention to buy" (one of those 171.015 Maduro informed us about) in Ethereum and not in foreign currency.

For the moment it is still available in google cache. Search for "Oferta de Opción de Compra del criptoactivo".

You can also find it here: http://s000.tinyupload.com/?file_id=94401636341335571359

Please note: Nobody in his right mind and understanding anything about investment will fill in, sign and send in this document!

I don’t understand why there isn’t any analysis of the contract the Venezuelan government want people to sign to acquire petros. It is quite impressive. You can find it online: http://elpetro.gob.ve/docs/OFERTA%20FINAL%205.pdf

Here then, my take at it.

One first point: This is a contract in which all obligations are assumed by the client, who wants to buy petro, while the partner (the SUPCACVEN) doesn’t assume any obligation through the contract. (SUPCACVEN is the “Venezuelan Superintendency of Cryptoassets and Related Activities” or “Superintendencia de los Criptoactivos y Actividades Conexas Venezolana” in Spanish.)

Another important point to note: It is a contract with the SUPCACVEN. The petro is released by SUPCACVEN and not the Central Bank, while according to the Venezuelan constitution the “monetary competence of National Authority shall necessarily be exercised exclusively by the Venezuelan Central Bank”. (According to the translation provided by the embassy of Venezuela in the US: http://www.embavenez-us.org/constitution/title_vi.htm.)

Let’s go through the details of the contract:

The sections 1.-3. make sense for such kind of contract: One is asked to provide information on the natural or judicial person wanting to buy petros (the “client”), information on the bank account and finally information on the employment of the client.

The section 4. contains the actual offer to buy petros. The client has to fill out two fields, one stating the currency he is going to use to buy petros and the other stating the amount (in that currency) he is going to offer. With the text around these fields the client affirms that he is making a formal and binding offer to buy any amount of petros up to the amount of foreign currency indicated by him at a (variable) closing price which will depend on the total amount of petros assigned and the buying offers received. There is no explanation at all (in the whole contract or anywhere else), how this closing price is going to be determined.

So just as an example: You might offer to buy petros for 100,000 US dollars. And you are contractually committed to accept that in the end you might receive 500 petros paying 50,000 US dollars. This wouldn’t go against the contract, because SUPCACVEN could always claim that the effective price of 100 US dollars was in some way dependent on the total assignment of petros and the total amount offered.

Section 5. contains space for the signature. With it the client commits himself to acquire the amount of petros assigned to him, gives the SUPCACVEN the right automatically to debit the corresponding amount in foreign currency in the client’s bank account and declares in lieu of an oath that the amount of currency indicated by him is available in his bank account.  

The next section is to be filled in by SUPCACVEN. Interesting is the first part of the section where SUPCACVEN is going to indicate which kind of product is approved here. This doesn’t make any sense in the context of the pre-sale of petros and shows (together with the next lines of this area) that the form is taken over from some other context. But it is interesting anyway, as there are only four possible choices for the product and only one suits the given context: In the pre-sale of the petro you acquire no stock option, no index option and no option on foreign currency. This leaves just one choice: Option on a debt instrument!

The next section, labeled “6.”, contains the terms of the offer. All 12 are interesting, but let’s take up just a selection and this selection only in part:

2. The client explicitly accepts that SUPCACVEN doesn’t guarantee the final price of the option.

3. In case that the the client’s account doesn’t contain the amount of foreign currency finally accepted by SUPCACVEN the client is liable to penal and civil sanctions.

6. The signing and handing in of the contract through the client doesn’t result in any obligation on the side of SUPCACVEN, given that the assignation will depend on an appraisal of the client according to “objective” criteria at the discretion of the national government.

8. The client has received and read all the publications of SUPCACVEN (does this include all its tweets?) and also the most current risk discloser document of the "option". (Such a document wasn’t made public, nobody can have read it.)

11. The client accepts that the resolution of all disputes falls under Venezuelan jurisdiction and
only and exclusively Venezuelan law applies. (As there is no independent judiciary in Venezuela this means that there is no way whatsoever to recover your investment in court.)

12. Disclosure of the contract or parts of it by the client of the contract results in its immediate annulment, and is liable to civil and penal sanctions according to Venezuelan law. (This is funny, as this is a contract to be signed by thousands of people and you can find it through google. But it demonstrates well the lack of transparency around the the launch of the petro.)

Read the article, evaluate its arguments. By discounting from the outset all information and reflection made available by sources associated with the opposition and by international mainstream media your are insulating yourself from rational reasoning.

This excelent article about the "backing" of the petro is now also available in English:
https://www.caracaschronicles.com/2018/02/27/petro-truly-backed-oil-reserves/

Another helpful opinion piece:
https://www.bloomberg.com/view/articles/2018-02-25/venezuela-s-petro-cryptocurrency-won-t-help-debt

Not refined, not even extracted. And the oilfield supposedly to back the petro isn't developed.

There was just published the presidential decree establishing this (fictional) backing and it determines that "the potential development of 5.342 million of barrels (net) of original oil in situ" will form the backing.

If you know Spanish you can read it yourself: http://gacetaoficial.tuabogado.com/gaceta-oficial/decada-2010/2018/gaceta-oficial-41347-del-23-febrero-2018

Of course, the "potential development" of a barrel of heavy oil in an undeveloped oil field of the Orinoco isn't worth 58$. Far from it.

All of this might be the case (or not), some of it probably will be the case (assuming that the thing goes ahead, anyway), but most of it is irrelevant for the question whether petros will be backed by oil (which was the point I was discussing here).


As the petro is not really backed by Venezuelan oil in any meaningful way (this was the discussion) the value of a barrel of Venezuelan oil will not be the base value of the petro. Its value might be lower. (But of course, as you say, it might be also higher.)

In accordance with the present English version of the white paper the petro will be based on NEM too: "Prior to the Initial Offer, the 100 million (100,000,000) cryptoassets of the issue will be pre-mined in the Petro blocks chain. The Petro NEM blockchain token will have Petro from its own blockchain reserved to be exchanged when decided by its holders."


It makes more or less as much sense as destroying the bolivar by increasing the money supply to finance the fiscal deficit and by a disastrous exchange policy.

This article is very good and explains well various reasons (there are more) why the supposed oil backing is pure fiction. If you know Spanish: Highly recommended.


The government is not even promising this. It only promises to accept petros at a rate they themselves set and at a discount as payment of "national taxes, fees, contributions and public services". If you don't owe anything to the government and don't need it's services (as will be mostly the case for foreign investors) this promise isn't of any direct value to you.

The black market is the result of inadequate supply of foreign exchange through official channels. A website cannot impose an exchange rate. The Central Bank increased supply to finance the fiscal deficit.


Lower oil prices surely explain something as do US sanctions since August 2017. For the rest, there is no economic war on Venezuela, but disastrous economic policy.

No fake news, just plain truth. From December 2016 to December 2017 the money supply  (M2) in Venezuela was increased by 1120,78%. This according to data published by the Central Bank of Venezuela. Check it yourself if you doubt it: http://www.bcv.org.ve/excel/1_3_1.xls


It does make sense for instance if the government forces economic agents in Venezuela to accept petros as payment by making it legal tender. Maduro's decrees at the "launching" of the petro point into that direction.

You indeed copied the phrase from the white paper. That doesn't make it true. As I said: You are spreading the official propaganda around the petro. That it is supposedly backed by oil assests is central part of this propaganda. Only that the white paper shows it isn't. That the mechanism isn't in place yet is not the problem. The problem is that there is no mechanism foreseen. If there was going to be one it would have been the task of the white paper to describe it. There is none and there won't be one.

Part of what is said by taseenb is right but unfortunately much is wrong or misleading and simply reflects the official propaganda around the petro. Only a few examples:


El Petro will not be backed by oil assets as is made clear by the white paper. There is no mechanism at all by which a holder of petros will be able to successfully claim oil assets or their value from the Venezuelan state.


While it is true that Venezuela is one of the cheapest countries to mine cryptocurrencies, this is only the case because electricity is subsidized and sold under its real costs. The electric system of Venezuela is in shambles as shown by rationing and frequent blackouts. From the perspective of the country as a whole there is a real disadvantage in terms of energy, as through mining the precarious supply of electricity is diverged from other essential uses.


This is, so far, only a promise. And there is every reason to doubt it. In the original English version of the white paper we read: “There will be no extraordinary issues without the approval of Petro’s holders in a vote conducted through the chain of Petro blocks on the basis of one (1) Petro equal to one (1) vote.”


This is correct and I hope people heed the warning!


According to the white paper the government will not pay anything for petros, not even in bolivares. (Which are not of much interest for foreign inverstors.) It only promisses to accept Petro’s as a form of payment of national taxes, fees, contributions and public services with a discount of at least 10% according to a formula which gives the government much leeway to manipulate the rate at which it will accept petros for bolivares. (This is one of Vitalik’s points https://twitter.com/VitalikButerin/status/966308397103570944) This promise isn’t of much value for foreign investors, and given the record of Venezuela of not fulfilling it’s obligations together with the discount and the ease of manipulations, the market price of petros might be well under the international price of Venezuelan oil. (But of course, what actually will be the market price we do not know.)


The US-sanctions didn't force Venezuela to trade in other currencies and most probably it continues to trade in US dollars with the US and many other partners.


Whether pre-sale is working, we don’t know. According to the white paper during pre-sale some people should be able to buy tokens which later on can be changed to petro-tokens. Definitely this isn’t possible through the use of other cryptocurrencies and a wallet, and obviously you weren’t able to do it either. The possibility to make a non-binding offer is not what the white paper speaks about when it explains the pre-sale. I guess the only use of these non-binding offers is to give the government the possibility to boost those inflated numbers of intentions to buy petros. (735 million dollars during only 20 hours, more than 1000 million in only two days. Stay tuned for updates!)


As for me, I made an offer too, but without any intentions to buy this very risky “currency”. But it gave me access to the contract the government expects investors to sign: http://elpetro.gob.ve/docs/OFERTA%20FINAL%205.pdf Only the most ignorant will do so. (But I’m sure, some people already did it.) You are supposed to provide a binding offer to buy petros for a certain amount of foreign currency without any information of how much petros you will get. In the contract there is nothing about the link to the international price of Venezuelan oil and the discounts which would apply during pre-sale. Actually you have explicitly to accept that SUPCACVEN (Superintendencia de los Criptoactivos y Actividades Conexas Venezolana) doesn’t guarantee any price and the price is variable and depends on the total amount of the placement of the assets for the offers to buy it received. (My translation tries to make sense of "es variable y dependerá del monto total de la colocación de los activos por la oferta de éstos recibida".) You also have to accept explicitly all risks and dangers of the offering and agree that SUPCACVEN is not responsible for any losses of value the petro might suffer. Basically the contract indicates that the collocation of petro-tokens is done in some form of very intransparent bidding. (Even worse than the DICOM.)


What taseenb provides under this heading isn’t facts but a collection typical for the “bolivarian” propaganda. I could show that with many examples but two might suffice.


You will find this claim all over the internet. But if you actually bother to inquire what Carter was trying to say, you will see that it does not mean that Venezuela has the most democratic electoral system. Carter speaks of the technical side of the voting process:

“Venezuela does have the best electoral system on earth as far as the voting procedure is concerned. Everybody goes in and you touch a screen and you vote automatically and then in addition to that you fill out a paper ballot and you put the paper ballot, after you made sure it’s the same as the screen, in a box and then those paper ballots can be counted later on and they are counted in Venezuela to make sure that the representative sample match the screen. So the voting procedure in Venezuela is very good but there are also very serious problems with Venezuelan elections which we pointed out very clearly. One is that the incumbent government always uses the power of the government for their own advantage. The last two elections Venezuela has not let the Carter Center come in. They have refused to let us come in and monitor the elections.” https://www.youtube.com/watch?v=G9PF-r0yKBU

Small irony: This system, praised by Carter, was implemented by Smartmatic and the company proudly quotes Carter on its webpage: https://elections.smartmatic.com/carter-the-electoral-system-in-venezuela-is-the-best-in-the-world The very same company which revealed that the elections to the unconstitutional (yes, unconstitutional) “National Constitutional Assembly” were manipulated up by least 1 million votes: https://www.reuters.com/article/us-venezuela-politics-vote-smartmatic/venezuelan-election-turnout-figures-manipulated-by-one-million-votes-election-company-idUSKBN1AI1KZ


Basically any independent observer disagrees. Let’s only quote amnesty international:

“Venezuela remained in a state of emergency, repeatedly extended since January 2016. A National Constituent Assembly was elected without the participation of the opposition. The Attorney General was dismissed under irregular circumstances. Security forces continued to use excessive and undue force to disperse protests. Hundreds of people were arbitrarily detained. There were many reports of torture and other ill-treatment, including sexual violence against demonstrators. The judicial system continued to be used to silence dissidents, including using military jurisdiction to prosecute civilians. Human rights defenders were harassed, intimidated and subject to raids. Conditions of detention were extremely harsh.” https://www.amnesty.org/en/countries/americas/venezuela/

And please note, Amnesty International does its own independent research and does not simply rely on major TV networks and news outlets. And the Venezuelan government rejects all independent human rights bodies if itself is concerned.