October 18th, 2010

Economics, Trade & Business

2017 PDVSA bond sale starts today

The offer period for PDVSA bonds with 2017 maturity begins today, according to the prospectus for the issue that intends to place a total of $ 3,000 million in the local market and will culminate next Friday 22. The coupon of the paper is 8.5%, with three annual amortizations in 2015, 2016 and 2017. The bond is being offered at par value, payable in Bolivars. (El Mundo, 10-18-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=9815)

Sitme operations rise as demand grows

Trading volume in the Securities Transactions in Foreign Currency (Sitme) system has increased since last September, daily volumes averaging between $30 million and $ 40 million. Nevertheless, this has yet to satisfy demand, which has also risen in recent weeks. Sources connected to the Central Bank of Venezuela (BCV) reported that requests for foreign currency have amounted to $120 million a day, partly driven by proximity to the holiday season. Importing companies that supply the country have had to go over to this system to supply the market. (El Mundo, 10-18-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=19&Id_Noticia=33728)

Venezuela commissioned 16,000 tons of milk powder from Belarus

Venezuela ordered 16,000 tons of milk powder from Belarus next year, almost twice as much as has been purchased so far this year, said the agency in that country (Belta). Vasili Prudnikov, head of foreign economic activity under the Ministry of Agriculture, said that "during the months of January to August this year to 9,000 tons were sent to Venezuela." (El Mundo, 10-18-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=17&Id_Noticia=33686)

Venezuela and Belarus endorse mining and industry agreements

Venezuela and Belarus endorsed on Sunday six new cooperation agreements, mainly in mining and industry, during the visit of President Chavez to said European country. Among the accords there is a letter of commitment for the purchase of a production line of electrically welded mesh, as informed the Foreign Affairs Vice Minister for Asia, Oceania and Middle East Temir Porras. Likewise, the Basic Industries and Mining Minister Jose Khan explained that said production line would use wire rods produced by Venezuela’s state-run iron and steel industry. (AVN, 10-18-2010; http://www.avn.info.ve/node/23547)

Venezuela agreed to sell 20,000 MT of coffee to Belarus

The Venezuelan government agreed to the sale of 10,000 tons of ground coffee, from Café Venezuela, to Russia, by the end of 2010, and another 20,000 tons of coffee to Belarus, as a result of agreements reached during his tour, President Hugo Chávez. The Minister of Agriculture and Land, Juan Carlos Loyo, stated that with the placement of Venezuelan products on the Byelorussian market, "This visit has not only strengthened ties, but accelerated the geopolitical and strategic consolidation of trade". (El Mundo, 10-18-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=9798)

Which steel if production is not enough?

Venezuela is studying the possibility of exporting steel to Belarus, announced Chávez on Sunday. He also announced the nationalization of Las Cristinas and Las Brisas mines. On the other hand, Venezuelan Basic Industries and Mining Minister José Khan informed they signed an agreement with Belaz to buy 128 mine dump trucks for mining production in the country. (Veneconomy, 10-18-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23504&idc=3)

FAO highlights that 14 million Venezuelans have access to food at fair prices

The United Nations Food and Agriculture Organization (FAO) representative to Venezuela Alfredo Missair highlighted on Monday the achievements reached by Venezuela in this matter, such as the fact that 14 million Venezuelan citizens have access to food at fair prices. Missair also underscored that Venezuela is on its way to achieve the Millennium Development Goals in reference to the reduction be half the percentage of undernourished population. In the nineties, the indicator was at 7.7%; currently is at 3.7%, a very low record compared to Latin America´s average, which is 6%. (AVN, 10-18-2010; http://www.avn.info.ve/node/23591)

"The economic model established in Venezuela does not work. With no legal certainty, there is no investment and without investment, there is no growth,” said Brookings Institution’s Initiative for Latin America director Mauricio Cárdenas. He added companies operate under a permanent confiscation threat and the state of despair and uncertainty is general. (Veneconomy, 10-15-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23492&idc=3)

Politics

Ukraine and Venezuela to open embassies

Presidents Victor Yanukovich and Hugo Chávez agreed to open embassies in both countries today. Later in the day, Chávez will visit State plane manufacturer Antonov facilities where he could announce the purchase of two An-74s. (Veneconomy, 10-18-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23506&idc=1)

Chavez heads to Iran on diplomatic tour

Venezuelan President Hugo Chavez is set to arrive in Iran Monday night to discuss the expansion of relations between the two countries, according to Iran's semiofficial Fars News Agency. His visit comes on the heels of stops in the Russian Federation and Belarus, where the Venezuelan leader signed economic cooperation deals, which included an agreement with Moscow to build Venezuela's first nuclear power plant. With its burgeoning nuclear program, Iran has shown interest in uranium deposits in Venezuela. (CNN, 10-18-2010; http://edition.cnn.com/2010/WORLD/meast/10/18/iran.chavez.visit/index.html?section=cnn_latest)

There! He said it!

Caracas’ elected lawmaker to the National Assembly -Aristóbulo Istúriz (PSUV)- said all governorships and mayors’ offices should disappear in order to catalyze the movement towards a Socialist system in Venezuela. He claimed “with these mayoralties, with these governorships, we’re not going to carry out the revolution.” Istúriz added that they also have to move “towards the socialization of the means of production.” (Veneconomy, 10-18-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23508&idc=1)

Petroleum & Energy

Ukrainian companies to develop oil and gas fields in Venezuela

The presidents of Ukraine, Viktor Yanukovych, and Venezuela, Hugo Chávez, reached an agreement on Monday under which Ukrainian companies will develop oil and gas in Venezuela. "I agreed with Chávez that Ukraine will start to develop oil and gas in Venezuelan territory," Yanukovich said in a joint news conference with Chávez, according to Ukrainian agencies. (El Universal, 10-18-2010; http://english.eluniversal.com/2010/10/18/en_pol_esp_ukrainian-companies_18A4622491.shtml)

Rosneft will pay PDVSA $1.6 billion for its 50% stake in four Ruhr Oel refineries in Germany, according to the agreement signed in Moscow on Friday. PDVSA co-owns the refineries with BP. The plants have a combined capacity of 1.04 million barrels per day. (Veneconomy, 10-15-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23495&idc=3)

Russia to Build Venezuela’s First Nuclear Power Plant

Russia agreed to build Venezuela’s first nuclear power plant after talks in Moscow between the countries’ presidents, Dmitry Medvedev and Hugo Chavez. The two nations will cooperate to develop nuclear power in Venezuela, including a research reactor, according to the agreement signed today by Sergei Kiriyenko, head of Rosatom Corp., Russia’s state-run nuclear holding company. (Bloomberg, 10-15-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aaFfwM94Uaew)

Venezuela inks oil deal with Belarus--Chavez

Venezuelan President Hugo Chavez agreed on Saturday to supply the former Soviet republic of Belarus with 30 million tons of oil over three years from 2011 in a deal worth as much as $19.4 billion. Belarus has slashed imports of Russian Urals blend oil and increased purchases from Venezuela since Moscow imposed export duties, a step that raised the price of Russian exports to Belarus by about 36 percent. (Reuters, 10-16-2010; http://www.reuters.com/article/idUSLDE69F0CK20101016)

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.