October 21th, 2010

Economics, Trade & Business

A total of 195 businesses have been seized in 2010

The Venezuelan Confederation of Industries (Conindustria) rejected recent expropriations by the Venezuelan government.  Upon the seizure of the motor lubricants company Venoco and Fertinitro, a producer of nitrogen fertilizer, the number of confiscated companies rose to 195 in 2010. In addition Conindustria stated that "strongly rejects new threats of expropriation.” (El Universal, 10-20-2010; http://english.eluniversal.com/2010/10/20/en_eco_art_a-total-of-195-busin_20A4631291.shtml)

Venezuela central bank lowers reserve deposit requirement

Venezuela's central bank said on Wednesday it had lowered bank reserve requirements to increase liquidity after a bond issue last week aimed at local banks. The central bank dropped the minimum reserve requirement for bolivar deposits to 20 percent from 23 percent, the bank said on its website. Analysts say the measure is aimed at bolstering the banking system's liquidity at a time when the government is seeking local buyers for a $3 billion bond issued by state oil company PDVSA on Monday. (Reuters, 10-20-2010; http://www.reuters.com/article/idUSN2022302720101020)

Venezuelan inflation, as measured by the basic goods basket, is up 26% year on year

The basic goods basket -the cost of providing foods, goods and services for an average Venezuelan household- amounted to VEB 4,730.05 (USD 1,100, at the official exchange rate of VEB 4.30 per US dollar) in September, a 26.3 percent increase from September 2009, said the Workers' Center for Documentation and Social Analysis (Cenda). Between January and September 2010, the basic household basket soared 19 percent. (El Universal, 10-20-2010; http://english.eluniversal.com/2010/10/20/en_eco_art_venezuelas-basic-ba_20A4630417.shtml)

Second stage of expropriation of Empresa Polar’s lots in the Barquisimeto Industrial Zone began today with a formal inspection by a commission from the Prosecutor’s Office in the plant today. The inspection is expected to conclude on Friday. President Chávez announced the lots would be expropriated last February. (Veneconomy, 10-21-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23571&idc=3)

Some thrive, others sink on land "rescued" by Chavez

With red harvesters shearing rice and tall corn across the vast farm it should be a happy day in this young community, but Idelmaro Ceteno looks decidedly grumpy as the machines circle his land. Ceteno, 61, is one of nearly a thousand farmers given land five years ago by the government of President Hugo Chavez on the El Charcote farm, a vast cattle ranch that until then belonged to one of Britain's wealthiest families, the Vesteys. (Reuters, 10-20-2010; http://www.reuters.com/article/idUSN2019699920101020)

Four banks in Venezuela have been authorized to carry out good imports or exports for public or private companies through the Regional Compensation Payment Single System (SUCRE, after its initials in Spanish). These are: Banco de Venezuela, Banco del Tesoro, The Venezuelan office of the Cuban Banco de Comercio Exterior and Banco de Comercio Exterior (Bancoex). (Veneconomy, 10-21-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23568&idc=2)

Trade between Alba nations rises to $ 8,000 million

Trade between the nations of the Bolivarian Alternative for the Peoples of Our Americas (ALBA) increased from $ 700 million, which was the average between 1996 and 2003, to a present sum of $ 8 billion. This was announced on Wednesday by the president of the Regional Monetary Sucre, Eudomar Tovar.  This economic union was aimed at reducing the effects of the global economic crisis -and those of dependence on the dollar as the currency for international transactions- on its member nations. (AVN, 10-20-2010; http://www.avn.info.ve/node/24014)

Iron ore imports on the up

The World Steel Association’s August reports shows how some of the large steel producers are recovering, while others are struggling to get back to production levels recorded a couple of years ago. Indian steel production has recovered from the low production in the early part of 2009, and posted over a 6% increase year-on-year from August last year, from 5.3m tonnes to 5.7m tonnes, which is one of the highest output recorded. This is in stark contrast to the USA that has seen steel production decline for several years. (Dry Bulk Review, 10-21-2010; http://drybulkreview.msgfocus.com/q/18CbvS0aNjkhxcX/wv)

Politics

Chavez: Pluripolar world is the alternative to imperialist hegemony

Venezuela’s President Hugo Chavez emphasized that his visit to the Syrian Arab Republic is a manifestation of desired strategic alliances in the Middle East which aim to catalyze the construction of a new pluripolar world as an alternative to the “imperialist hegemony”. “Syria is like the core of a new world, the pluripolar world. We are obliged to recognize that world, which is an alternative to the imperialist hegemony,” he said at his arrival to (AVN, 10-21-2010; http://www.avn.info.ve/node/24169)

Transport & Logistics

La Guaira port traffic fell 6.9%

Traffic at the La Guaira port continues in full retreat. Very few vessels are trying to reach the state of Vargas. According to numbers obtained from the state-owned Central Coast Ports (PLC), vessel traffic for September 2010 was 6.9% lower than that for the same period in 2009. The port’s container throughput, as measured in TEU’s was 229,790 for the month of September.  A significant decrease from a September 2009 throughput of 291,077 TEUs. (Tal Cual, 10-21-2010; http://www.talcualdigital.com/index.html)

Petroleum & Energy

Venezuela and Syria to sign agreement to build a refinery

Following negotiations between Syria and Venezuela, it is expected that the two nations will endorse an agreement to build a refinery in Syria with the capacity to refine 140,000 barrel per day.  Iran and Malaysia are expected to co-invest. The information was released by the Energy and Oil Minister Rafael Ramirez while detailing the agenda that for the visit of President Chavez to Damascus, Syria. (AVN, 10-21-2010; http://www.avn.info.ve/node/24180)

Pdvsa's revenue up 47 percent while net profit down 14 percent

In the context of the company's bond issue, state-run oil company Petróleos de Venezuela presented its financial statements at the end of the first half of 2010. The report showed increased revenue on higher global crude oil prices, but also mirrored higher payments which ultimately undermined net profits. According to data issued by the state-run oil company, revenue from sales of crude oil and oil byproducts amounted to USD 46.7 billion, which means a 47.2 percent increase versus the same period a year earlier, when revenue stood at USD 37.8 billion. This increase was partly due to the fact that oil prices recovered to USD 70 in the first half of 2010, from USD 46 in the first six months of 2009. (El Universal, 10-20-2010; http://english.eluniversal.com/2010/10/20/en_eco_esp_pdvsas-revenue-up-4_20A4630333.shtml)

Venezuela says Exxon drops demand to $7 billion

Exxon Mobil Corp has reduced to $7 billion from $12 billion a compensation claim against Venezuelan state oil company PDVSA, which nationalized assets belonging to the U.S. major three years ago, according to a PDVSA document seen by Reuters on Wednesday. In 2007, Venezuela's socialist President Hugo Chavez pushed foreign oil companies into minority partnerships with PDVSA at multibillion dollar projects in the Orinoco Belt crude region, home to some of the world's largest oil reserves. Exxon and ConocoPhillips rejected the new terms and began international legal proceedings for compensation. (Reuters, 10-20-2010; http://www.reuters.com/article/idUSN2024579720101020)

Venezuela draft oil law would make takeovers easier

Venezuelan President Hugo Chavez's government is studying a draft law that would make it easier to nationalize the assets of oil field service companies working in South America's biggest crude exporter. Big service companies including Schlumberger Ltd, Halliburton Co and Baker Hughes have avoided public spats with the Caracas authorities, while resisting calls to create joint ventures with state oil company PDVSA. They have declined to comment in the past on nationalizations that put most of the OPEC member's oil sector under Chavez's control. If the proposed legislation is passed, it could make their position in the country less secure. (Reuters, 10-19-2010; http://www.reuters.com/article/idUSTRE69I44W20101019)

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.