Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Tuesday, April 15, 2014

April 15, 2014

International Trade

Recent imports at Puerto Cabello
  • 30,000 tons of corn from Brazil, for state company CASA
  • 195 tons of frozen beef from Brazil, also for CASA.
  • 338 tons in 19 vans of condensed milk and baby formula, from NESTLÉ Mexico to NESTLÉ Venezuela.
  • 765 tons in 26 containers of condensed milk from Uruguay to Alimentos NISA and Lácteos La Cabaña 
  • 60 tons of butter from ECOLAT Uruguay, for Flor de Aragua. 
  • 5,495 tons of cement, along with steel mesh and corrugated cardboard also arrived.

Commodities have been left behind in Panama
Since the government broke relations with Panama goods coming from that country were left there, including appliances, medicines, chemicals for agriculture and food were left behind while merchants here have been left with little to sell. More in Spanish: (Ultimas Noticias,; El Mundo,

Logistics & Transport

Airlines will not be repaid at VEB 4.30 or at 6.30, contrary to what the Minister had announced 
Contrary to what General Hebert García Plaza, Minister for Aquatic and Air Transportation, said a few weeks ago, an inside source who asked to remain anonymous says the decision has been made to repay all government debts with airlines pending since 2012 at the SICAD 1 rate, which averages VEB 11/U$D. "Negotiations are stalled, no payment has been made since the announcement made by General García Plaza. Authorities are proposing different forms of payment to the airlines, and the companies are studying them. For the time being no airline has accepted full repayment at the SICAD 1 rate", it said. More in Spanish (El Nacional;

Oil & Energy

Venezuela's proven oil reserves up 0.2%
Venezuela's proven reserves went up 0.2% in 2012-2013, says the Ministry of Petroleum and Mining. (El Universal,


Basic food scarcity index was up to 60.2% at the close of Q1 2014
According to measurements taken by DATANALISIS the scarcity index for regulated foodstuff averaged 51.9% during Q1 2014, and rose to 60.2% by the end of March. The survey includes supermarket chains, independents, grocery stores, informal trade and the government network including MERCA, PDVAL AND Abastos Bicentenario. Consumers could access an average of 9 out of 18 products in the basic food basket. The scarcity index rose 36% above 2012 and 14.7% above 2013. More in Spanish: (El Universal,

Economy & Finance

High oil prices do not translate into high international reserves
Constraints on FOREX available at the official exchange rate for key sectors of the Venezuelan economy are due to fewer US dollars available at the Central Bank of Venezuela.  International reserves available for core imports and debt service is running below demand. Whereas oil prices have been above U$D 90 over the past years, commitments by state-run oil holding Petróleos de Venezuela (PDVSA) have limited the sale of foreign currency to the BCV. As a result, the flow for purchases of raw materials, finished products and equipment, as well as payment of services, has narrowed. (El Universal,

Fewer items will be imported at VEB6.30/U$D
The Cencoex is going over the current customs codes (goods and services) to determine which could go from the Bs.6.30:$ rate to the fluctuating SICAD 1 rate, set at Bs.10:$ in the most recent bid. The procedure with the Cencoex would be the same (the companies would not participate in the bidding) but when the Venezuelan Central Bank (BCV) liquidates the dollars, it would do at the SICAD 1 rate. (Veneconomy,

Anglo American sues Venezuela over U$D 600 million expropriation
Global mining company Anglo American PLC has become the latest corporation to file suit against Venezuela over its treatment of investors. Venezuela now has 28 cases pending against it – the most of any nation in the world. Argentina, which had previously held the number one spot, now has only 24 cases listed as pending. The World Bank’s International Center for the Settlement of Investment Disputes (ICSID) has accepted a request for arbitration against Venezuela filed by Anglo American’s lawyers. The company says that Venezuela's actions regarding the Loma de Niquel mining concession - including the expropriation of Loma’s assets without prompt, adequate and effective compensation - breached the UK-Venezuela Bilateral Investment Treaty. According to the ICSID docket, Venezuela now has 28 cases pending against it – the most of any nation in the world -- after a rash of expropriations and nationalizations by Venezuela's late President Hugo Chavez - who formally removed the country from ICSID jurisdiction in January of 2012, saying he would not accept any further rulings from the arbitration court. However, clauses in bilateral investment treaties and individual contracts continue to give ICSID jurisdiction to hear cases against Venezuela. Other companies with pending ICSID arbitrations against Venezuela include mining and smelting companies Gold Reserve Inc., RUSORO Mining Ltd., CRYSTALLEX International Corporation, and TENARIS SA; food industry companies GRUMA, POLAR, LONGREEF, VESTEY, and OWENS-ILLINOIS Inc.; and oil industry companies Tidewater Inc., Williams Cos. Inc., KOCH Industries Inc., CONOCOPHILLIPS, and EXXONMOBIL. (Reuters,; Bloomberg,; and Latin American Herald Tribune,

Opposition demands inflation data
Venezuela's opposition has accused the government of delaying publication of March inflation data for political reasons, saying the annual rate has reached an alarming 60%. The Central Bank is supposed to publish the closely watched consumer price index in the first 10 days of the month, but delays sometimes occur. Venezuela has the highest inflation in the Americas, with the opposition saying that is evidence of the failure of socialism and President Nicolas Maduro blaming his opponents for sabotage, hoarding and economic "war" against him. (Reuters,


Dialogue is continuing between the government and opposition, Brazilian FM back in Caracas
Talks are continuing between government representatives and members of the opposition Democratic Unity Conference, and Brazil's Foreign Minister Luiz Alberto Figueiredo is back in Caracas to act as "witness" on behalf of UNASUR. (El Universal,; Ultimas Noticias,;

Capriles: Change in Venezuela will not be driven by violence, calls on the government to truly dialogue
"Whether you like it or not, our Venezuela changed on April 14, but it changed for an inclusive proposal and a country where we all represent everyone," says opposition leader Henrique Capriles Radonski in summarizing opposition achievements in the presidential election of April 14, 2013. Capriles apparently lost by a margin of 1.49% (7.3 million votes, that is, 49.12%), but asked the National Elections Council to audit all ballot boxes, tally sheets, and poll books on grounds that the election had been subject to irregularities. The initially promised audit never took place. Capriles also said the government must prove that it wants to dialogue. He said "The country is skeptical of dialogue because a lot of water has gone under the bridge and since there are no concrete actions, they can be indifferent. But it is up to the government for that to change. How can it change and prove that it really wants a dialogue? If there are actions, there are signs." (El Universal,; and

Machado asks European Parliament to send a mission to Venezuela
Ousted National Assembly legislator María Corina Machado spoke to the Foreign Affairs Commission of the European Parliament on the situation in Venezuela, and requested the group send a mission to Venezuela, "to get a first hand view of repression carried out by the Maduro regime". Her request was supported by Spain's Socialist legislator Luis Yañez, who proposed the mission travel next June. More in Spanish: (El Universal,

Venezuela's military admits excesses during deadly protests
The military here has admitted it committed "some excesses" during weeks of political unrest that have left more than 40 people dead. The military's strategic command chief, General Vladimir Padrino, said they were investigating 97 officers and police staff for "cruelty and torture". But the general stressed these were less than 1% of all officers. Security forces have been accused of human rights abuse during the almost daily anti-government protests. The opposition and human rights activists accuse the security forces of repression and using heavy-handed tactics. "No soldiers have received orders to hurt anyone, harass or end the life of a Venezuelan," says General Padrino. (BBC)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Friday, April 11, 2014

April 11, 2014

International Trade
Inbound cargo at Puerto Cabello
116.000 tons of frozen beef from Argentina, Brazil and Uruguay, for the CASA government agency.
32,000 tons of yellow corn from US ADM Américas to Alimentos Balanceados Tinaquillo.
4,999 tons of yellow corn from Bunge Latin America to Concentrados Valera, along with 1,999 of soybean meal 20.000 tons of Canadian wheat from Avalon Grain for Pastas Capri
18.000 tons of soybean meal
7.000 tons of malt
4.500 tons of barley
2.000 tons of chicken from Mulsa, Granja Tres Arroyos, Bonnen Hermanos and el Frigorífico de Aves Sochuy for CASA
1.643 tons of frozen chicken from Rasic Hermanos for CASA
Over 1,500 tons of sodium phosphate from Potashcorp for PROAGRO.
871 tons of construction supplies from Isotex Dominicana for PDVSA
720 tons of meat from Brazil RXM Importación y Exportación for CASA
563 tons of milk and concentrated cream, from Argentina for PDVSA, CASA and BARIVEN
427 tons of chicken and 201.000 tons of meat from Granja Tres Arroyos for CASA
384 tons of parts for government power plants
231 tons of meat from Brazil's Domvil for CASA
167 tons of frozen chicken from Frigorífico Garina Saic for CASA
112 tons of aluminum tubing from China Machinery Engineering (CHEM) sent to its subsidiary in Venezuela
10.200 Brazilian heads of cattle from Cooperativa Catalpa for Inversiones 6308, Inveragro and Importadora Nutricional
4.913 tons (10.100 heads) of Brazilian cattle for several consignees
2.992 tons (6.100 head) of cattle for Distribuidora Alemán, Importadora San Pedro e Inversiones 6308
Exports: Several loads of aluminum products, cattle skins and coaxial cables were sent to Colombia and the US.

Newsprint arrives
300 tons of printing and writing paper from United States, Pérez Trading for Multi Suministros Plastitol.

Logistics & Transport
Government to acknowledge only up to 70% of the $3.8 billion debt it has with international air carriers and at the SICAD 2 exchange rate while dismissing between 29% and 35% of that debt accrued in 2013. (Veneconomy,

Oil & Energy
Asia overtakes U.S. as top destination for Venezuela oil –PDVSA
Asia overtook North America last year as the main destination for Venezuelan exports of crude oil and processed fuels, according to preliminary data submitted to parliament by state oil company PDVSA. Asia received an average of 1.04 million barrels per day (bpd) from Venezuela in 2013, up a fifth compared with the previous year. Meanwhile, exports to the United States, Canada and Mexico fell 11% to 879,000 bpd. PDVSA said it was increasing shipments to Asia, while maintaining those to South and Central America and the Caribbean, as part of a long-held strategy of market diversification. Asia accounted for 41% of Venezuela's oil exports last year, PDVSA said, with the majority being received by China at 563,000 bpd, and India at 396,000 bpd. The decline in Venezuelan oil shipments to the United States has affected PDVSA's Houston-based refining subsidiary, CITGO Petroleum Corp, which no longer receives processed fuels, condensate or light sweet crude from Venezuela. (Reuters,

PDVSA exports to PETROCARIBE nations rose 21% in 2013
During 2013, PDVSA dispatched 122,000 barrels per day to nations participating in the PETROCARIBE system, for an increase of 21%. Those nations benefitted were Antigua and Barbuda, Belize, Dominica, Granada, Guyana, Haiti, Jamaica, Nicaragua, Dominican Republic, Saint Kitts and Nevis, Saint Vincent and the Grenadines, and Surinam". PDVSA supplies 50% of the energy needs of member nations. (El Universal,

PDVSA social spending was down 18% in 2013 as income drops 7%, earnings come from devaluation
PDVSA has reported that their 2013 income was around U$D 116.2 billion, down 7% from 2012, and expenditures for social programs dropped 18% to U$D 14.1 billion. Total expenses were U$D 75.8 billion, 21% below 2013. According to the report, the U$D 8.2 billion setback was "mainly caused by a 2% decrease in the average export price of the Venezuelan oil basket, from U$D 103.42 per barrel in 2012 to U$D 101.40 per barrel in 2013." (El Universal,; and more in Spanish: El Nacional,

STRATFOR special report: Politics cloud the chances of an energy sector revival
For the Venezuelan energy sector uncertainty will remain prevalent, limiting the government's ability to address key structural concerns. Karen Hooper, Director of STRATFOR's Latin America analytical section, says "the political issues that are at stake really aren't going away so we'll probably see those spring up again in the coming months...but Rafael Ramirez, was promoted to be in charge of the country's economic planning just recently, and we did see them settle a negotiation with the PDVSA laborers to give them a 90% raise for their next contract. PDVSA (has) given China and Chinese companies a leg up in investing in Venezuela, but there hasn't really been a recovery in energy production in Venezuela, no matter what the government is reporting, production has really declined. Everybody in Venezuela who's vying for participation in the government or control of the country has an interest in that energy infrastructure existing and persisting so that when they come to power they are able to sort of glean the benefits from it. The threats to energy exports from Venezuela are really not that big this time around...The biggest challenge though is that the sector is overall underinvested...We need to be looking for the new fiscal regime, to see how much they are going to be able to rein in inflation, shortages, things like that, things that are affecting not just consumers on a day-to-day basis but also energy producers, so there are shortages of cement, there are shortages of steel in Venezuela. These are all affecting the ability of foreign investors and domestic actors to be able to even actually service oil production in Venezuela. We also have to make sure we're keeping an eye on how labor morale is at PDVSA because challenges in the unions there could really impact output and also exports. So that's what we're watching, but overall it looks like there's going to continue to be a slow decline in the quality of output and also the quantity of output that the energy infrastructure is able to handle, and we'll just be looking for those disruptive signs going forward." More important would be possible changes in government spending and subsidies. Officials have acknowledged that electricity rates will have to rise, because the government can no longer afford to subsidize 80% of the cost of the utility. Raising the extremely low cost of gasoline is also under discussion... (But) the greatest potential threat to Maduro comes from a loss of legitimacy with the base of support that drove Chavez's ascendance..(which).. could worsen the unrest and force the military to step in against Maduro. But if the president does not make the difficult economic decisions that could negatively affect his base of support, widespread economic deterioration is likely. In short, he faces a loss of political power whether or not he implements reforms. All of this uncertainty, combined with the legacy of nationalization left to Maduro by Chavez, has made foreign investors wary...Best-case scenarios suggest it would take tens of billions of dollars and 5 to 10 years before a real reversal in Venezuela's energy fortunes would be seen. (STRATFOR,

FX regime wiping out car makers, vehicle production plunges 76.07%. One of the world’s most complex foreign exchange regimes is wiping out profits at some of the world’s biggest carmakers. First, FORD said it would take a charge of U$D 350m in the first quarter because of currency losses in Venezuela. Next, GM said it expected to take a pre-tax charge of U$D 400m in the first quarter for the same reason, cancelling out the U$D 327m it made in South America during 2013. Both companies took the hit because they could not cash out the Bolívares they make in Venezuela at the official exchange rate of 6.3 Bolívares to the dollar. Both have said they will now use one of the central bank’s alternative FX platforms, SICAD 1, where the rate is about 10.7. This adds to an already grim outlook for car makers in Venezuela. Manufacturers are operating far below capacity for lack of components and supplies. TOYOTA has simply stopped producing, while FORD said in January it was cutting output. “That market is basically on ice at the moment,” says Bob Shanks, Ford’s chief financial officer. According to the latest data from Venezuela’s chamber of carmakers, CAVENEZ, Ford produced 292 units and GM 232 in February. In total, 1,425 cars were produced that month, compared to 5,817 in February 2013. When it comes to sales, merely 817 cars were sold in the country in February – a 90% drop from the previous year. Only 3,424 vehicles were assembled in January-March. The sector shrunk 76.08% compared with the same period in 2013, when production totaled 14,316 vehicles. (Financial Times,; El Universal,

The scarcity index rose to 31.03% in March for 58 staples that make up the basic food basket, according to the reputable Teachers’ Federation’s Documentation and Social Analysis Center (CENDAS-FVM, in Spanish). The report also shows that other staples other than food are also scarce, such as soap, detergents, dishwashers, toilet paper, bleach, diapers, softeners and napkins. (Veneconomy,

Consumer product inventories down to 0.6 months, says Pedro Manosalva, of Nielsen Venezuela, who is chairman of the VENAMCHAM Consumer Products Committee. Shortages are due to FOREX restrictions, so there will be an "additional impact" on scarcities and recovery will not be immediate. More in Spanish: (El Universal,

Economy & Finance
Venezuela hits 18-year inflation record, the IMF predicts 133% in 2016, further contraction
Venezuela is expected to see an inflation rate of 50.7% this year, the International Monetary Fund estimates. That will be an 18-year high, according to a LATINVEX analysis of IMF data. However, the IMF predicts it will get even worse in Venezuela. Two years from now, the country should see a whopping 133.4% inflation, the fund says. That would mark an all-time high in the South American country, beating the previous record from 1996 of 99.9%. This year’s estimated inflation in Venezuela will be the world’s highest for the second year in a row. The IMF also predicts Venezuela's economy will continue to deteriorate and will shrink by 0.5% this year, amid "high uncertainty". (LATINVEX,; and more in Spanish: El Universal,

Trade has slowed down by 17.4%, according to the commercial and business survey responded by merchants for the 4th quarter and presented by CONSECOMERCIO. Also, it shows 40.2% of the merchants polled indicate inventories have been reduced. They point out their main problem is inflation, followed by insecurity, lack of FX for imports, price regulations and disloyal competition from the informal sector. (Veneconomy,; El Universal,

U$D 15 billion foreign credit freeze reported
Affiliates of the Venezuelan American Chamber of Commerce (VENAMCHAM) report frozen dividend repatriations are around U$D 10 billion for the past 5-6 years. General Manager Carlos Tejera also reports companies now owe their headquarters or foreign suppliers "around U$D 13 billion", and the amount has grown over the past few months and credit has dried up. More in Spanish: (El Universal,; El Mundo,;

DATOS: 77% are purchasing half the food they need
DATOS polling company general manager Luis Maturén reports that their latest survey shows crime, the high cost of living and scarcities are the main problems facing Venezuela's population. The report also shows 77% say they can purchase less than half of their needs. More in Spanish: (El Universal,; El Mundo,

Maduro and opposition in landmark crisis talks
President Nicolas Maduro has met opposition leaders in crisis talks aimed at quelling weeks of protests. Maduro met his bitter rival, opposition leader Henrique Capriles, for six hours. More talks are scheduled for Tuesday. The meeting was brokered by foreign ministers from South American nations, and the Vatican. Maduro told the meeting that there would be no deal with the opposition. "There are no negotiations here. No pacts. All we're looking for is a model of peaceful coexistence, of mutual tolerance," he said, and called on the opposition to renounce violence. Capriles, who was narrowly defeated in last year's presidential election, insisted that the opposition did not want a coup against the government. "We don't want a coup d'etat. We don't want an explosion on the streets," he said. "Either this situation changes or it bursts. I hope it changes because I don't want violence." Capriles also accused Maduro of being disrespectful to the Venezuelan people: "How are you going to ask the country to accept you if you call half the country fascists or you threaten them?" he asked. "I think it is very difficult to govern a country where half the people are against you." The talks were broadcast live on television. Pope Francis sent a letter giving his support to the talks: "I urge you not to get stuck in the conflict of the moment but open yourselves to one another to become true builders of peace," the Roman Catholic leader said, in a letter read out at the meeting. . 11 opposition and 8 government representatives spoke. Participants traded accusations and demands, including amnesty for political prisoners, economic solutions, and an explicit condemnation of all violence. Henry Ramos-Allup, Secretary General of the opposition AD party said that today Venezuelans arose with "another vision of the country", which gives the public a full vision of both sides so that they can evaluate. He also said students will also enter into discussions with President Maduro to state their grievances. There will be follow up meetings and Vice President Jorge Arreaza, Caracas Mayor Jorge Rodríguez and Foreign Minister Elías Jaua were designated as a committee to continue talks with representatives of the Democratic Unity Conference, the major opposition coalition. Key opposition leaders who led protests, including the imprisoned Leopoldo López, of Popular Will; Antonio Ledezma, of the Brave People´s Alliance; María Corina Machado, and major student leaders, refused to attend, demanding the release of all political prisoners as a precondition.  A local court is scheduled to decide on May 8th whether to try Leopoldo López, who is currently being held without bail in a military prison. (BBC; and more in Spanish: NTN24,; Ultimas Noticias,; Agencia Venezolana de Noticias;; El Nacional;; El Nacional;; El Universal,; Infolatam)

Lula advises Maduro to "call a coalition government", Maduro retorts is able to rule
Former Brazilian president Luiz Inacio Lula da Silva has advised President Nicolás Maduro to call a coalition government to reduce political tensions between supporters and opponents of this regime. "Maduro should try to tone down public debate so he can devote his time entirely to governance, establish a coalition policy, construct a minimum program and diminish tensions. I am pushing for a negotiated solution because Venezuela is strategic to Brazil." Maduro promptly replies he is capable of ruling alone. (El Universal,

Washington will not accept a new Venezuelan ambassador for now
The United States said on Wednesday it will not consider Caracas' proposal to send a Venezuelan ambassador to Washington, terming it a "distraction" from the country's problems, which are internal rather than in Washington-Caracas bilateral relations. Roberta Jacobson, Assistant Secretary of State for Western Hemisphere Affairs, told the US Congress that: "We feel very, very strongly that this is not about the bilateral relationship between the US and Venezuela, and therefore we are not taking action to allow a Venezuelan ambassador in the US yet". (El Universal,

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group. 

Tuesday, April 8, 2014

April 08, 2014

International Trade

Inbound cargo at Puerto Cabello, mainly construction material and foodstuff
  • 18.951 tons of bagged cement from Aveiro, Portugal for PDVSA Industrial.
  • 15.999 tons of US wheat for MOLINOS CARABOBO
  • Two batches with over 15.000 tons of sémola durum for Molinos Carabobo.
  • 13.000 tons of yellow corn and 6.000 tons of bulk soybean meal from Argentina, for several importers.
  • 12.000 tons of yellow corn from CARGILL for AGRIBRAND PURINA and AVÍCOLA MAYUPAN
  • 11.999 tons of American soy flour, in 2 batches
  • 11.999 tons 859 kg of American soy flour from United States for IND Pollo Premium and Alimentos del Centro Alceca
  • Over 6,000 tons of Argentine soy bulk of Industrias Oleaginosas, in 2 batches for Seravian and Agribrand Purina.
  • 6.000 tons of soda ash from Solvay Chemicals for Venezolana del Vidrio
  • Over 2.000 tons of sulfate and 6.000 tons of phosphate from US Mosaic Corporation for PEQUIVEN
  • Over 1,847 tons of frozen chicken in 48 containers, from Jamaica for the government's CASA Corporation.
  • 1. 422 tons of cattle standing from Brazil's SCT Artigas
  • 895 tons of Portuguese cement for PDVSA Industrial.
  • Over 880 tons of roofing in 166 containers, from Italpanelli Ibérica for PDVSA, along with several tons of construction kits and other building material. 
  • Over 851 tons of semola durum spaghetti in 33 containers, from Jamaica for CASA.
  • Over 665 tons of beef in 24 vans, from Jamaica for CASA.
  • 572 tons of paper towels
  • 563 tons of toilet paper for different consignees
  • Over 524 tons of bottled soy oil in 23 containers, from Bunge in Jamaica, for CASA
  • 330 tons of frozen chicken for CASA
  • Over 177 tons of concentrated milk in 7 containers, from Jamaica, for Industrias Maru. 
  • Over 109 tons of tissue napkins in 9 vans from Trinidad, for Papeles Venezolanos. 

Government food imports rose 51%
Government food distribution networks were supplied by imports during 2013, according to a report by the Ministry for Nutrition. The report indicates the government's Agricultural Supplies Corporation (CASA) bought 4,911,099 tons of foodstuff during the year, of which 87.52% was purchased on international markets (about 4,298,196 tons) and only 12.48% (612,993 tons) came from local producers. CASA imports rose 51% in 2013: Including, 4.298.196 tons of foodstuff; 624,600 tons of white and paddy rice, chicken, sugar, black beans, meat, milk, crude palm oil and refined soybean oil and soybean arrived in agreements with Argentina, Belarus, Brazil, Bolivia, Guyana, Nicaragua and Uruguay. More in Spanish: (Ultimas Noticias,

Panama import debts under scrutiny by Venezuelan authorities
A report by CENCOEX (formerly CADIVI) indicates that 5,748 requests for FOREX to be applied to imports from Panama came from companies that were subsequently suspended or excluded from the system. This reflects a total of U$D 1.192 billion. The report includes a list of 412 companies that were under investigation. It also shows over 5,000 approvals for imports from 1006 exporters in Panama, which would mean the net debt owed by the Venezuelan government institution (CENCOEX) could be U$D 1.305 billion. More in Spanish: (Ultimas Noticias,

Oil & Energy

Venezuela: Producing oil amid political unrest
Concerns abound as to whether Venezuela's recent political unrest will eventually disrupt the flow of oil exports. But the biggest threat to Venezuelan oil production is not the protest movement but the continued degradation of the energy sector. PDVSA has never fully recovered from losing 40% of its experienced personnel after the 2002 strike, and it has since been made responsible for financing several social causes, which have drained its resources and reduced investment in exploration, production and maintenance. Combined with subsequent energy nationalizations, these factors have prevented PDVSA from producing at pre-2002 levels. Since foreign oil company holdings were nationalized in 2007, only a few countries -- mostly China and Russia -- have been willing to invest in Venezuela's energy sector. Some investors have become more willing lately, with companies striking U$D 10.4 billion worth of financial deals over the past year. These include CHEVRON, GAZPROM, China National Petroleum Corporation, Italy's ENI and Spain's REPSOL. These funds are being borrowed by Venezuela on the condition that it will then be reinvested in joint projects between those companies and PDVSA. The official goal of this round of financing has been to add more than 200,000 barrels per day over the next several years. But given the challenges facing the energy sector, not to mention declining output of older fields, added production may only compensate for declines elsewhere, assuming the goals are reached. Rising costs are also affecting companies that operate in Venezuela. This includes inflation, which reached 56% percent in 2013. The effect of inflation can be seen clearly in the recent agreement between the government and the Federation of Venezuelan Oil Workers on Feb. 5, when the government agreed to a 90% salary increase for the two-year contract. Also, the difference between the black market and official exchange rates also affects oil companies significantly. Though oil companies have been granted a more favorable exchange rate of VEB 11.3/U$D, the service providers they work with are frequently forced to use the black market rate. Meanwhile, shortages of other goods, including cement and steel, have hurt the energy sector by creating delays in production. Not only do the economic conditions discourage investment, but political unrest has raised doubts about the government's ability to manage the delicate domestic situation. With such low oil production and export rates, there are fewer dollars in Venezuela's domestic market to finance imports, which will only perpetuate ongoing shortages of basic goods and drive further unrest. The low price of gasoline has encouraged high consumption, which is compounded by all the fuel that is smuggled to Colombia. What fuel is consumed at home cannot be sold by PDVSA abroad, so foreign currency reserves will continue to dwindle -- they fell by nearly U$D 10 billion in 2013 alone. Right now, PDVSA has no choice but to absorb these costs until the government is ready to accept the political consequences of raising prices on consumers. (Stratfor,

Venezuela oil price slips
Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor, slipping as Brent oil fell and WTI oil prices moved up toward each other. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending April 4 was U$D 95.27, down U$D 0.14 from the previous week's U$D 95.41. (Latin American Herald Tribune,


Continuing shortages
According to DATANÁLISIS, the lack of basic foods on the store shelves has reached worrisome levels. During the first two months of this year the shortage of regulated products rose to 47.7%, which implies an unstoppable advance, compared with the behavior in recent years. According to the numbers reported by the consulting firm, in 2012 the shortage level was 15.9%, and rose to 37.2% a year later. More in Spanish: (El Universal,

Economy & Finance

BARCLAY's is now estimating SICAD II will provide U$D 8.4 billion in FOREX
In a revised report on the new SICAD II FOREX allocation system, BARCLAY's Capital estimates it will provide U$D 8.4 billion, down from its original estimation of U$D 11.6 billion of 24 March. The report says "supply grew during the first week, but dropped considerably toward the end of the past week". More in Spanish: (El Universal,

Government allows exchange bureaus to bid within SICAD II, brokers return to the market
Exchange bureaus may now trade within the ancillary exchange market SICAD II. According to the latest provision their involvement will be regulated by the Central Bank. “Four bankers from ECONOINVEST served two years and seven months in jail without ever being tried or convicted when the law was changed after they were arrested and applied to them retroactively,” says Russ Dallen, head trader at Caracas Capital Markets. “In the sad comedy of errors that Venezuela’s economic management has become, the charges against the bankers were dropped when the law was changed again in January of this year.” (El Universal,; and Latin American Herald Tribune,

Venezuela ranks below Cuba on private property rights
Venezuela's record on private ownership rights ranks among the worst in the world, as shown by the Social Progress Index, prepared by the US non-profit group Social Progress Imperative. In a list of 132 nations, Venezuela ranked 130, running last in Latin America, even after Cuba and other nations with stringent private property policies. The index, which also assesses public utilities, gave Venezuela the 113th position among 132 nations in electricity supply. (El Universal,

Land takeovers slowed down in 2013
A report from the Agriculture Ministry shows government land takeovers slowed down during 2013. 43,620 hectares were taken over last year, as opposed to 550,495 hectares grabbed by the regime in 2012, for a drop of 92%. More in Spanish: (El Mundo,


Maduro accepts proposal to meet with opposition
President Nicolas Maduro says he has accepted a proposal of the foreign ministers from the Union of South American Nations to meet with representatives of the opposition. “We had a rather broad conversation. They proposed to me to have a meeting with the opposition delegation and, well, I accepted, as I’ve been calling for political dialogue, for peace, for democracy for eight weeks,” said Maduro after meeting with the diplomats. (Latin American Herald Tribune,; Veneconomy,; AVN,; El Universal, and; More in Spanish: CNN,

Opposition leadership sets conditions for talks with Maduro
In a letter to the UNASUR Foreign Ministers, the opposition's United Democratic Conference (MUD) has stated that it would talk to the government "on equal footing", and that the first meeting should be fully televised live nationwide. They also wrote that they expect to establish an agenda that establishes as its priorities an Amnesty law for all political prisoners, an independent Truth Commission to investigate crimes committed over the past weeks, a balanced renewal of powers such as the Elections Board and the Supreme Court, and disarming civilian paramilitary groups. The opposition's leadership says that - contrary to prior reports - UNASUR has not set up a committee of 3 foreign ministers to facilitate talks, and that the government has not formally invited the Vatican to take part, which they  the opposition - consider "essential" for talks. More in Spanish: (El Universal,

Opposition leader formally charged
Jailed opposition leader Leopoldo Lopez was formally charged Friday with inciting violence at an anti-government protest that has been followed by weeks of unrest across Venezuela. Chief prosecutor Luisa Ortega Diaz announced the charges a day before the legal deadline to make the case for keeping Lopez in custody. The Harvard-educated Lopez has become a cause celebre among opponents of President Nicolas Maduro during the month and a half he has spent in a military prison outside the capital. (The Washington Post,; Fox News,

Latin American legislators have asked the International Criminal Court to prosecute Maduro
A group of Latin American legislators have asked the International Criminal Court at The Hague to formally prosecute President Nicolás Maduro for "systematic" human rights violations against opponents demonstrating in Venezuela's streets. Perú's Cecilia Chacón said: "There are already 40 dead, aside from crimes against humanity such as tortures and kidnappings." More in Spanish: (El Universal,

Spain suspends exports of riot control material to Venezuela
Spain has indefinitely suspended the export of riot control equipment to Venezuela’s government following weeks of unrest there which have seen an increase in violence as police face sustained protests by the opposition. Foreign Minister Jose Manuel Garcia Margallo said “it is a fact” that Spain has suspended sales because “it is logical not to add fuel to the fire when there is a conflict.” The decision was made by a government panel March 6, but only now confirmed publicly. Garcia Margallo said Spain has a special interest in Venezuela because 200,000 Spaniards live there. (The Washington Post,; Fox News,

Student leaders reports threats
Juan Requesens, president of the Federation of University Councils (FCU), reports that members of the Student Movement have been threatened via social networks by pro-government individuals. "My fellow students have been threatened via social networks; their telephone numbers have been shared. Paramilitary groups have been asked to look for them. Their (students') addresses and IDs have been posted; their capture has been ordered because they are fascist; pictures of their relatives have been leaked; they have been declared military targets. The government will not intimidate us. It will not frighten us; we will keep on demonstrating in the streets," Requesens said. (El Universal,

TV journalist kidnapped by armed men
The father of a Venezuelan TV journalist says his daughter has been kidnapped by armed, masked men in the western section of the capital of Caracas. Luis Pinto reports that his daughter Nairobi Pinto was taken hostage Sunday afternoon at the entrance to the building where she lives. She is the chief of correspondents for the GLOBOVISION news channel and her whereabouts remain unknown. The elder Pinto called on the kidnappers to free his daughter during an interview with the local broadcaster Union Radio. Police officials have not commented on the case. (The Washington Post,

Oppenheimer: Danger of a coup in Venezuela
According to a study by the Netherlands based Global Partnership for the Prevention of Armed Conflict (GPPAC), the "most probable" scenario for Venezuela is anarchy, followed by "the possibility of intervention by the nationalist-institutional segment of the armed forces". Partnership co-chair Andres Serbin says those segments of the armed forces resent Cuban military advisors and the creation of paramilitary groups. In addition, they do not want to engage in repressing demonstrations by the opposition. Some local analysts are skeptical about the possibility of a military coup because of the degree of military control already in effect within the government. Others argue that Venezuela has already undergone a slow motion military coup with over 1600 officers in government positions. 25% of the Maduro cabinet, including the powerful Ministries of the Interior and Finance, and 52% of the governorships are in the hands of active or retired officers. In addition, Maduro has created a record number of officers: Venezuela has 1200 generals in a force of 120,000 soldiers. However, they say Chavez had a firm grip on the military whereas Maduro is a weaker president who is controlled by the military in many areas. Rocío San Miguel, who heads Control Ciudadano, a group that keeps close watch over the military says: "Under Chavez the military were under vertical control. Now military control is atomized, with the military holding parcels of power, with no control whatsoever." Serbin concludes that unless there are meaningful negotiations between the regime and the opposition, the alternative could be "a military coup, or a self-coup by the government itself, with an even greater cycle of violence that could end up in a civil war." More in Spanish: (Infolatam)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.