November 29th, 2010

Economics, Trade & Business

Manufacturers call for policies to boost production

The long-awaited recovery of the Venezuelan industrial sector will have to wait another year. Although the government rhetoric has supported the results of the measures adopted after the devaluation, both the economic data and the private sector say otherwise. Ricardo Menéndez, Minister of Science, Technology, and Intermediate Industries (MCTII), praised last week the results of the Bicentennial Fund, created in January in order to boost production. Menéndez said that the government has provided VEB 2.8 billion (USD 651.16 million) to some 300 companies that, in some cases, managed to grow by 40 percent and have created 9,700 jobs. (El Universal, 11-29-2010; http://english.eluniversal.com/2010/11/29/en_eco_art_manufacturers-call-f_29A4788731.shtml)

Joint government and private sector effort to bring down inflation

A partnership between the private sector and the government is needed to lower inflation, said the president of the Central Bank of Venezuela, Nelson Merentes, who considers prices as "a complex issue." "There must be many links between government and the private sector to stop the rise in prices," said Merentes during the forum "Returning to the path of growth for the year 2011.” On the country’s economic growth, the president reiterated that "although there has been a fall, there is a change of trend." (El Mundo, 11-29-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=10979)

Seeking cash, Chavez looks to sell Citgo

President Hugo Chavez is promising to build new public housing complexes, boost social programs and renovate the long-neglected Caracas subway - and he needs money. The ambitious plans will squeeze Venezuela's coffers at a time when oil earnings have slipped and Chavez is sending his foreign allies generous amounts of crude on credit. So he has raised a possibility that once seemed remote: selling off Venezuela's U.S.-based oil company, Citgo Petroleum Corp. For Chavez, it's an idea driven both by hard-money realities and by politics. (The Washington Post, 11-28-2010; http://www.washingtonpost.com/wp-dyn/content/article/2010/11/28/AR2010112801646.html)

Nationalized briquette companies

After 18 months, the transformation of the iron briquette manufacturing companies into state enterprises has not materialized, although the three major companies (Comsigua, Venprecar and Orinoco Iron) have a "provisional socialist model." The companies are just "vegetating" which is the worst case scenario. They are totally paralyzed, their production ranges between 40% and 48% of what was usual in the good times, the marketing and management of their finances was confiscated, so there is no investment, maintenance is minimal and workers’ socio-economic achievements are "frozen." (Tal Cual, 11-29-2010; www.talcualdigital.com/ediciones/2010/11/29/default.asp)

Transition to socialism

When looking at indicators such as inflation, fall of wages, falling per capita GDP, the reduction of national production and hence greater reliance on the oil industry, one could simply conclude that the government is totally inefficient. But others agree that the country’s current situation is not just a product of bad management, but the result of government practices to move towards a political project called XXI century socialism. Since 2007, the government has been explicit about its intentions of changing the prevailing economic model in Venezuela, whose guidelines are expressed in the 2007-2013 Simon Bolivar National Project. It states the model will work with new sources of income generation, distribution and appropriation of surplus, and it will be composed primarily of Socialist Production Companies. (Tal Cual, 11-29-2010; http://www.talcualdigital.com/ediciones/2010/11/29/default.asp)

Commission of 1% on bond transactions

Bond transactions in the Foreign Currency Bond Trading System (SITME) will have to pay a commission of 1% from December 1. The Central Bank of Venezuela (BCV) published a resolution in the Official Gazette which establishes the maximum commissions, fees or surcharges for any bank transaction. It includes the collection of 1% for each operation with securities in foreign currency. (El Mundo, 11-29-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=19&Id_Noticia=38572)

BBVA denies trying to sell Venezuela bank for $2 bn

Spanish finance group BBVA denied it was trying to sell its Venezuelan unit after a prominent former government official said on Sunday the subsidiary was on offer for $2 billion. "The board of directors of BBVA Banco Provincial emphatically denies the irresponsible and unconfirmed information transmitted today on the program "Jose Vicente Hoy," the bank said in a statement posted on its website. (Reuters, 11-28-2010; www.reuters.com/article/idUSN2817674520101128)

Politics

WikiLeaks: France leadership believes Venezuela's Chavez "crazy"

According to Top Secret US documents of US diplomatic meetings in Paris, Sarkozy's top Diplomatic Advisor Jean-David Levitte (formerly the French ambassador to the United States) "observed that Venezuelan President Hugo Chavez is "crazy" and said that even Brazil wasn't able to support him anymore. Unfortunately, Chavez is taking one of the richest countries in Latin America and turning it into another Zimbabwe." (Latin American Herald Tribune, 11-28-2010; http://www.laht.com/article.asp?ArticleId=380224&CategoryId=10717)

Chavez vows to expedite socialist initiative

President Hugo Chavez is vowing to accelerate his drive to turn Venezuela into a socialist state and urging his supporters to become "true revolutionaries" as they prepare for crucial political battles ahead. "Radicalize the revolution!" Chavez trumpeted in a newspaper column published on Sunday, calling on his allies to "create truly revolutionary groups; the vanguard of the people, a party and movement that guarantees the construction of socialism." (Miami Herald, 11-27-2010; http://www.miamiherald.com/2010/11/27/1945864/chavez-promotes-general-criticized.html)

Transport & Logistics

Lift restrictions on sea and airport

The Minister for Transport and Communications (MTC), Francisco Garces, reported Sunday that the restrictions which were implemented as security measures because of the rain have been lifted at sea and airports,. "They have lifted restrictions at sea and air, but there are restrictions to sailing of small boats, mostly because of bad weather, maintenance problems on the islands of Curacao and Aruba, but the rest of the weather has improved," said Garces from Tocuyo off the Coast in Falcon state. (Ultimas Noticias, 11-28-2010; www.ultimasnoticias.com.ve/Noticias/Levantan-restricciones-maritimas-y-aeroportuarias.aspx)

Petroleum & Energy

Venezuela's Cardón refinery stops operations amidst storm

Venezuela's 310,000-bpd Cardón refinery halted operations on Monday due to an electrical fault caused by a storm, a source of the state-run oil refinery said. The nearby 645,000-bpd Amuay refinery was also affected, and four of its units were shut down due to "rains and an electrical storm," a source said. (El Universal, 11-29-2010; http://english.eluniversal.com/2010/11/29/en_eco_esp_venezuelas-cardon-r_29A4790217.shtml)

Pdvsa still has debts with oil suppliers incurred in 2009

Given the difficult financial situation facing state-run oil company Petróleos de Venezuela (PDVSA) since 2009, Venezuela's main company still has a large debt to oil service providers. Guillermo Romero, CEO of the local subsidiary of Houston-based oilfield services company Baker Hughes, said that "the debt has improved over the past two quarters, but it is still important. There are no payment arrangements with PDVSA. The state-run oil company has shown its good will and has said that it is making all efforts to honor its commitments." However, Romero said that "we asked PDVSA to pay old debts which affect us from the financial point of view." (El Universal, 11-29-2010; http://english.eluniversal.com/2010/11/29/en_eco_art_pdvsa-still-has-debt_29A4789051.shtml)

Corpoelec to suspend electric service to big debtors

Corpoelec plans to suspend the electric service to governorships, mayoralties, public institutions and high-consumers (25KVA) that have large debts with the industry, informed the company’s Distribution and Marketing Commissioner Joaquín Osorio. Also, he said next year they will do the same within the popular sectors. (Veneconomy, 11-27-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24066&idc=2)

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.

November 25th, 2010

Economics, Trade & Business

Venezuelan exchange rate could be unregulated

Asdrúbal Oliveros, director of research firm Ecoanalítica, considers that during the first two months of 2011 there could be an increase in the volume of foreign currency in the market and a change in the exchange rate band that is traded in the Transaction System for Foreign Currency Denominated Securities (Sitme). He said that the daily demand for foreign currency through that system has reached about USD 100 million. (El Universal, 11-24-2010; http://english.eluniversal.com/2010/11/24/en_eco_esp_venezuelan-exchange_24A4770857.shtml)

Venezuela's business sector rejects violation of economic rights

The Federation of Trade and Industry Chambers (Fedecámaras), Venezuela's main business association, condemned the "violation" of the economic rights enshrined in the Constitution and the insistence of the Executive Office on establishing a "socialist economy." "The whole country has witnessed how the economic rights enshrined in the Constitution have been violated and scorned with impunity. As a result, the national production structure, which had been consolidated for decades with great effort, has been greatly impacted and was downsized with the consequent decrease in the volume of goods and services produced in Venezuela," said Noel Álvarez, the president of Venezuela's main business association, in a press release. (El Universal, 11-24-2010; http://english.eluniversal.com/2010/11/24/en_eco_art_venezuelas-business_24A4770491.shtml)

Consecomercio published the results of its latest survey of its affiliate members and they show the sales of the sector dropped 5.5% in the third quarter for an annual drop of 30.4% while unemployment increased by 6.1% for 23% annually. Also, the survey shows that 70.5% of the companies polled have not made any investments in this last quarter and only 10% of the dollars used to import were obtained from Cadivi. (Veneconomy, 11-23-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24032&idc=3)

External debt on the rise

Venezuelan external debt was up to $68,884 million during this year’s third quarter which represents a 9.61% increase compared to the same period last year, according to data published by the Venezuelan Central Bank (BCV) in its web page on Tuesday. Out of the total amount, $60,390 million corresponds to the public sector while the remaining $8,494 million corresponds to private debt. (Veneconomy, 11-23-2010; http://www.veneconomy.com/site/index.asp?idt=24030&idc=2&ids=44&Var_Send=1&mmD=11&ddD=23&mmH=11&aaD=2010&ddH=25&aaH=2010&Send=Find)

Venezuela ends negotiation with French Casino Groupe, purchases 81.2% of Cativen shares

“Venezuela now owns most of Cativen shares, after closing the purchase on Thursday of 81.2% of them,” pointed out the Vice President of Venezuela Elias Jaua. Thus, the Government ends the negotiations with the French transnational Grupo Casino and concretes the purchase of most of the shares of the Chain of Venezuelan Stores (Cativen), composed of the food distribution network Bicentenary (formerly known as Cada) and the Bicentenary hypermarkets (formerly known as Exito). (AVN, 11-25-2010; http://www.avn.info.ve/node/30261)

Minerven aims to produce over 8,000 kilos of gold per year from 2011

The state-owned Mining Company of Venezuela (Minerven) unveiled a project for the comprehensive upgrading of its equipment and the expansion of operations, enabling it to produce more than 8,000 kilos of gold per year from 2011. This was announced by president of the company –a subsidiary of the Corporación Venezolana de Guayana (CVG)- , Luis Herrera, who noted that this plan will be financed with resources from the Central Bank of Venezuela (BCV). Herrera said the plan will be implemented in 100 days and aims primarily to return the production of different plants affected by the lack of spare parts and technological obsolescence to their previous levels. "These problems have reduced 50% of our production capacity, leaving it at 4,500 kilos a yea.  Following new investments, we hope to the production levels we enjoyed just two or three years ago," he said. (AVN, 11-25-2010; http://www.avn.info.ve/node/30126)

PDVSA plans to issue 3,000 million dollars in bonuses per year

PDVSA plans to issue between 3,000 million and 4,000 million dollars a year in bonds to continue to be financed in the medium term, Reuters reported. The oil company has been increasing its emissions in recent years to support its heavy cost structure and expenses, largely directed to social programs devised by President Hugo Chávez. "PDVSA plans to continue issuing bonds at a rate of between 3,000 (million) and 4,000 million dollars a year. It is not referred to a plan to significantly reduce the level of debt," said a source close to the company, who declined to be identified. (El Universal; http://www.eluniversal.com/2010/11/24/eco_art_pdvsa-preve-emitir-3_2116616.shtml)

Politics

Venezuela Globovision’s Zuloaga Requests U.S. Political Asylum

Guillermo Zuloaga, principal owner of Venezuela’s opposition television network Globovisión, said he has requested political asylum in the U.S, according to an interview broadcast on CNN en Espanol. Zuloaga, who is wanted in Venezuela on usury charges, said the process for requesting asylum was nearing conclusion. (Bloomberg, 11-24-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=akb_UMvs1pgg)

National Assembly to limit funds for NGOs involved in politics

President Hugo Chavez's requests have been heard. On Tuesday evening, the Venezuelan Head of State said in the National Assembly: "I beg you to pass a very strict law" to prevent political parties groups and non-governmental organizations from being financed by the "US empire."
Roy Daza (ruling United Socialist Party of Venezuela, PSUV, state of Aragua), the President of the National Assembly's Foreign Policy Committee, said on Wednesday that the Venezuelan Parliament will discuss on December 1 a "final draft" of the Bill on International Cooperation. (El Universal, 11-25-2010; http://english.eluniversal.com/2010/11/25/en_pol_esp_national-assembly-to_25A4775451.shtml)

Petroleum & Energy

Venezuela is touting a vast natural gas discovery off its coast

Energy and Oil Minister and PDVSA president Rafael Ramirez said Monday that the latest exploratory drilling has confirmed "extraordinary results": about 15 trillion cubic feet of gas under the sea floor in a place where experts once thought there was only a fraction of that amount. However, energy analysts caution that Venezuela remains far from being able to sell its gas internationally and is still working on trying to meet its domestic demand. (Veneconomy, 11-23-2010; http://www.veneconomy.com/site/index.asp?idt=24016&idc=4&NPag=2&Start=15&aaD=2010&ids=44&Var_Send=1&mmD=11&ddD=23&mmH=11&ddH=25&aaH=2010&Send=Find)

Studied arbitration ban oil contracts

The Venezuelan Government is not fond of accepting decisions made by international courts regarding its oil and gas industry.  Consequently, the Executive Branch is studying the possibility of prohibiting arbitration agreements in contracts involving or oil and gas activities. (El Universal, 11-25-2010; http://www.eluniversal.com/2010/11/25/eco_art_estudian-prohibicion_2117864.shtml)

Venezuela says nuclear reactor for peaceful uses

A nuclear reactor that Venezuela plans to build with Russian help will be used to generate electricity and for medical and industrial purposes - not to make weapons, according to an agreement published Wednesday. The accord, which appeared in the Venezuelan Official Gazette, sets limits on the enrichment of uranium and says the reactor will not be used for "any military objective." (The Washington Post; http://www.washingtonpost.com/wp-dyn/content/article/2010/11/24/AR2010112406352.html)

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.

November 22th, 2010

Economics, Trade & Business

Public sector imports up 47 percent; private sector's down 22 percent

In a report on Venezuela's economic activity at the end of the third quarter, the Central Bank of Venezuela (BCV) stressed there was an increased flow of foreign exchange throughout the different economic sectors during the period. However, there was only a partial recovery. According to accumulated figures, private imports declined while government procurement abroad rose. Venezuelan public sector imports amounted to USD 5.4 billion in the first nine months of the year, an increase of 47 percent compared to the same period last year, when they reached USD 3.9 billion, according to data released by the BCV. By contrast, Venezuela’s private sector imports amounted to USD 17.9 billion, a 22 percent fall compared to 2009, when they amounted to USD 22.9 billion. (El Universal, 11-22-2010; http://english.eluniversal.com/2010/11/22/en_eco_esp_public-sectors-impo_22A4760091.shtml)

40% private sector imports fell in 2010

The private sector imports so far in 2010 dropped 40% compared with the previous year, while in the public sector have increased since the National Government continues to bring food and other products, said Avendaño Franco, executive director of the Chamber of Commerce of Puerto Cabello. Customs specialist stressed that the disparity of the dollar and other actions to determine the trade flow is not equal to three years ago. Avendaño stressed that the difficult access to foreign exchange has resulted in an imbalance in the purchasing power to the supply and demand. Regarding exports, the business leader said that not happening, because the country is not encouraged private sector production permanently. (Notitarde, 11-22-2010; http://www.notitarde.com/notitarde/plantillas/nota.aspx?idart=1185225&idcat=9849&tipo=2)

Food imports will reach $ 6,500 million in 2011

The bill for food imports around the world could surpass one trillion dollars in 2010, according to the latest Food Outlook report of the Food and Agriculture Organization (FAO, for its acronym in English). Venezuela is no exception to this upward trend that could grow in 2011. The expert in food and agriculture, Carlos Machado Allison, estimated that by the end of this year, the value of foreign food purchases could come close to $5,500 million dollars, after 2009 closed at about $5,000 million, according to his calculations. (El Mundo, 11-22-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=17&Id_Noticia=37866)

Rusoro plans to increase gold production in Venezuela

Rusoro Mining, a Russian-Canadian gold producer and explorer, expects gold production in two Venezuelan mines to amount to 20,000 ounces in October and November, it said on Monday. Rusoro Mining operates several rich gold deposits in the southeastern state of Bolívar, particularly the Isidora mine and Chocó 10 mine, which is one of the most productive deposits. (El Universal, 11-22-2010; http://english.eluniversal.com/2010/11/22/en_eco_esp_rusoro-plans-to-incr_22A4761651.shtml)

Venezuela steelmaker sees improved output for 2011

Venezuelan state steelmaker Sidor hopes to double production to nearly 4.5 million tonnes in 2011 thanks to a recovery in the South American nation's power sector, the company's president said on Saturday. Carlos D'Oliveira was quoted saying Sidor should produce 98 percent of its annual capacity of 4.5 million tonnes next year due to the recovery of the hydro-electric sector and new thermoelectric generators. (Reuters, 11-20-2010; www.reuters.com/article/idUSN2019960220101120)

Venezuela facing currency devaluation

Venezuela's recession-hit economy is on the mend but the ravages of drought, nationalizations and slow growth have combined to make a further devaluation of the bolívar inevitable in 2011, industry analysts said. Figures cited by the International Monetary Fund and industry experts suggested a formal revision of the bolívar-U.S. dollar parity would make official what is already in effect in Venezuela's burgeoning informal economy. Venezuela last devalued its currency in January 2010. (UPI, 11-19-2010; www.upi.com/Top_News/Special/2010/11/19/Venezuela-facing-currency-devaluation/UPI-23911290194483/)

Politics

Chavez demands action against owner of TV channel

President Hugo Chavez stepped up his threats against Venezuela's only remaining opposition-aligned television channel on Saturday, calling its owner a fugitive criminal and accusing him of conspiring against his government. Chavez demanded that authorities including the attorney general and the Supreme Court take action in a pending criminal case against Globovision owner Guillermo Zuloaga, who fled the country earlier this year after a court issued an arrest warrant. (Washington Post, 11-20-2010; www.washingtonpost.com/wp-dyn/content/article/2010/11/20/AR2010112002459.html)

Transport & Logistics

Yellow alert for Venezuelan coasts

The National Institute of Aquatic Spaces (INEA)’s General Manager Cristóbal Figueroa decreed a yellow alert for the Venezuelan coasts due to the atmospheric instability over the Caribbean Sea. Navigation for ships of less than 150 gross tonnage units in Nueva Esparta, Falcón and Anzoátegui has also been restricted. (Veneconomy, 11-22-2010; www.veneconomy.com/site/index.asp?ids=44&idt=23997&idc=3)

Port activity decreases in the port of La Guaira

Movement in the terminal port of La Guaira, Venezuela has continued to decline. According to data released by the Central Coast Ports Company (PLC), until last October, the terminal had received some 583 ships, while in the same period last year, La Guaira received 641 motorboats (container, general cargo, passenger ships and bulk carriers). In percentages, the numbers represent a decline of 9% with respect to 2009. However, on the tenth month of the year, the port handled 67 ships (more than eight ships in September and three more than the same month in 2009). In terms of TEUs, 35,763 were mobilized. The cumulative year to date shows 265,553 TEUs have been moved. Likewise, the numbers indicate that in the similar period of 2009, the port had mobilized 320,845. (Mundo Marítimo, 11-19-2010; www.mundomaritimo.cl/noticias/baja-actividad-portuaria-en-el-puerto-de-la-guaira)

Petroleum & Energy

Eni and PDVSA agreed investment of $ 17,000 million and operating refinery

Italian oil company Eni and Petróleos de Venezuela agreed on terms for the exploitation of the Junín 5 Block of the Orinoco Belt and the construction of a refinery through a $ 17,000 million investment. In the joint venture, called PetroBicentenario, PDVSA will have 60% and Eni 40%, the minister of Energy and Petroleum Rafael Ramírez said during the signing of the agreemnt at PDVSA headquarters. Eni CEO Paolo Scaroni said the agreement makes "Venezuela a strategic partner” while Ramirez, said it is the largest investment between Italy and Venezuela. (El Mundo, 11-22-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=10776)

State public utility study all oil operations

The government intends to further accentuate the control over oil and gas activity by declaring all oil operations in the country of "public interest and public or social utility", as envisaged in the draft Law for the Protection of the National Hydrocarbons Sector. This draft, which is under study by the National Assembly and that could be discussed before the end of this year, states the "principles and mechanisms that ensure the protection and safeguarding of assets and activities of the national oil and gas sector." (El Universal, 11-22-2010; http://www.eluniversal.com/2010/11/22/eco_art_estudian-declarar-de_2113744.shtml)

PDVSA sys there are 220 operational drills

Venezuela has about 220 active oil drills, slightly above the official figures reported last year, reported Saturday the vice president of exploration and production of state-owned PDVSA. In its financial and operational report of 2009, Petróleos de Venezuela (PDVSA) had reported 208 active rigs. "Currently there are 220 active rigs in our country, and fifteen ready to enter service soon," said Eulogio Del Pino in a statement. The numbers of oil production and drilling assets reported by Venezuela may differ from agencies like the International Energy Agency and OPEC itself, of which Venezuela is a member. (Ultimas Noticias, 11-20-2010; www.ultimasnoticias.com.ve/Noticias/Pdvsa-dice-que-hay-220-taladros-operativos.aspx)

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.

November 18th, 2010

Economics, Trade & Business

Venezuelan Economy Contracts 0.4% in 3rd Quarter

Venezuela’s economy shrank 0.4 percent in the third quarter compared to the same period last year, the central bank reported. The country’s gross domestic product declined 5.2 percent in the first quarter and fell by 1.9 percent in the second quarter, while the cumulative contraction for the year’s first nine months totaled 2.4 percent, the bank said Tuesday. Venezuela’s GDP shrank by 3.3 percent in 2009, while the value of goods and services produced by both the public and private sectors fell in the third quarter of 2010, down 0.1 percent and 0.7 percent, respectively, the institution said. (Latin American Herald, 11-17-2010; http://www.laht.com/article.asp?ArticleId=378086&CategoryId=10717)

Venezuela Could Devalue Currency 15% in 2011, Barclays Says

Venezuela may formally devalue its currency “at least” 15 percent in early 2011, Barclays Capital said in a report, changing its position after meetings with Finance Ministry and central bank officials in Caracas. The government would then sell dollars at official rates of 3 and 5 bolivars per dollar, instead of the current rates of 2.6 and 4.3 bolivars that it established in January, Barclays analyst Alejandro Grisanti wrote. (Bloomberg, 11-18-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aX4TT85d8d04)

Venezuela's oil GDP down 3 percent so far this year

Oil prices have risen in world markets, but declining exports of oil by state-run oil company Petróleos de Venezuela (Pdvsa) has prevented recovery of the sector that generates the most US dollars for the Venezuelan economy. During the first nine months, the oil sector tumbled 3 percent, as shown in the data submitted on Tuesday by the Central Bank of Venezuela (BCV). The oil sector's Gross Domestic Product (GDP), which has an accumulated decline of 11.4 percent since the third quarter of 2008, has been hit by the drop in oil production. (El Universal, 11-18-2010; http://english.eluniversal.com/2010/11/18/en_eco_esp_venezuelas-oil-gdp_18A4746133.shtml)

Venezuela May Exit Recession in Fourth Quarter, Merentes Says

Venezuela’s economy is showing signs of exiting a six-quarter contraction and could post positive growth in the fourth quarter of 2010, central bank President Nelson Merentes said. Venezuela’s economy will grow 2 percent in 2011 and “a little more than that” in 2012, Merentes said in comments carried on state television. Inflation will close the year at levels similar to 2009. (Bloomberg, 11-17-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=arnbDefgYrl4)

Venezuelan government to seize 450,000 hectares in 2011

As part of its policy to seize and occupy agricultural lands, the Venezuelan government plans to seize some 450,000 hectares of lands (1,111,974 acres) in 2011, said Yván Gil, the Vice Minister of Agroproductive Circuits, Ministry of Agriculture and Lands (MAT). The ministry's budget includes VEB 17.9 billion (USD 4.16 billion) to seize lands. (El Universal, 11-18-2010; http://english.eluniversal.com/2010/11/18/en_eco_esp_venezuelan-governmen_18A4746493.shtml)

Venezuela PDVSA to reopen 2017 bond

Venezuelan state oil company PDVSA will reopen its 2017 bond within two weeks to raise $3 billion, a senior government source told Reuters on Wednesday. The source, who asked not to be named, also forecast Venezuela's long recession, will end in the fourth quarter, with the economy growing 1 percent in that three-month period. A swap of 2011 PDVSA bonds for a new 2013 bond with better conditions closed last week after anemic interest from investors. (Reuters, 11-17-2010; http://www.reuters.com/article/idUSN1722483420101117)

Empresas Polar estimates investments for $134.8 million in the food sector next year despite constant government threats to expropriate the company, informed Food director Pablo Baraybar. These planned investments include a yoghurt plant and the purchase of new machinery to expand production of pet foods, among others. (Veneconomy, 11-18-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23960&idc=3)

Chinese mining company looks for gold deposits in Venezuela

China National Gold Group Corporation (CNGGC), China's largest gold producer, said that it is looking for gold deposits in countries such as Brazil, Venezuela, Russia, Mongolia or Congo, the state-run newspaper China Daily said. CNGGC will increase its annual capacity to 50 tons in five years, out of which 40 percent will be produced overseas. (El Universal, 11-18-2010; http://english.eluniversal.com/2010/11/18/en_eco_esp_chinese-mining-compa_18A4747371.shtml)

Politics

Towards state socialism

Owners of property, large or small, sleep uneasily in Venezuela these days. After the opposition narrowly won a majority of the vote in a legislative election in September, Hugo Chávez, the country’s leftist president, has been on a nationalization spree, seizing everything from steel companies and bottle makers to housing schemes. When workers have protested, he has deployed the national guard against them. The government has justified the confiscations by saying that it was breaking up monopolies or stopping breaches of labor or environmental rules. But the aim appears to be to move decisively against what Mr. Chávez calls “the oligarchy” before the new parliament, which has a sizeable opposition minority, comes into session in January. (The Economist, 11-18-2010; http://www.economist.com/node/17527250?story_id=17527250)

Petroleum & Energy

Pdvsa and ENI set up joint venture to build a refinery

Venezuela on Thursday authorized the creation of a joint venture by and between state-run oil company Petróleos de Venezuela (Pdvsa) and Italian oil and gas multinational company ENI, to build a refinery intended to process heavy crude oil from the Orinoco Oil Belt and to produce oil finished products. Pdvsa and ENI participate in a joint venture for the development of the Junín 5 block of the Orinoco Oil Belt, which is expected to process a total of 240,000 bpd in its phase of development. Pdvsa has a 60 percent stake in the company. (El Universal, 11-18-2010; http://english.eluniversal.com/2010/11/18/en_eco_esp_pdvsa-and-eni-set-up_18A4747531.shtml)

Venezuela in Talks With China on Power Projects After Shortages

Venezuela is in talks with China for 3,000 megawatts of new electricity projects as it seeks to boost production capacity following a crisis earlier this year that forced power rationing to avoid a collapse of the national grid. Chinese companies may work on at least five projects to build hydroelectric reservoirs and thermoelectric plants in Venezuela as the nation seeks to boost capacity by 18,700 megawatts, Electricity Minister Ali Rodríguez said yesterday in an interview in Caracas, without naming the companies involved. (Bloomberg, 11-16-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=asFoo2Zrye4s)

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.

November 15th, 2010

Economics, Trade & Business

Escotet says bank law won’t spark seizures

Venezuela’s Juan Carlos Escotet, president of the Banking Association, said that a bill being discussed by lawmakers to tighten control of the industry won’t usher in a general nationalization. “We’re studying the bill closely because it allows greater control of banks, but it’s not a first step in a state takeover of the industry,” Escotet said today during a news conference in Caracas. “The bill includes a separation between private and public banks so deposits aren’t at risk.” (Bloomberg, 11-12-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aBsumVrnZkSk)

Venezuelan Congress devises a socialist financial system

The socialist production model promoted by the Venezuelan government requires a financial system which can be adapted to that plan, and the National Assembly has paved the way to reach that goal and consolidate the "new financial architecture." In the 2007 proposal to amend the Constitution, President Hugo Chávez suggested the creation of a new system and, in spite of its defeat at the ballots, that same model is now being bolstered. (El Universal, 11-15-2010; http://english.eluniversal.com/2010/11/15/en_eco_esp_venezuelan-congress_15A4731535.shtml)

Chavez creates ‘socialist’ bourse with ‘high yields’

Venezuelan President Hugo Chavez said he is creating a “socialist” state-run Public Bond Market that will offer local investors high yields to stimulate saving and allow nationalized companies to seek financing. The Public Bond Market, which will begin operations in December, will allow state-run companies to sell debt to finance operations and individuals to seek investment opportunities, Chavez said. (Bloomberg, 11-15-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aClviN3326L0)

PDVSA completes bond swap for $618 million, 18.3% of investors

Petróleos de Venezuela SA said that 18.3 percent of investors agreed to exchange zero-coupon bonds maturing in 2011 for 8 percent notes due in 2013 for a total of $618.7 million, according to a statement posted on the company’s website. PDVSA offered to exchange the $3 billion of bonds maturing in 2011 at 112.5 percent of face value on Oct. 15. There will now be $2.45 billion of 2011 bonds outstanding, PDVSA said in the statement. (Bloomberg, 11-12-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a47Iq61FHaKU)

"Flagship" items are at half mast

The Government has tried to promote the development of domestic production through economic policies that allow food self-sufficiency, especially agricultural products. In the attempt to achieve endogenous development, on two occasions the Executive set priorities to enhance the development of a number of items. Hence arose the so-called flagship products: rice, corn, coffee, cocoa, palm oil and dual purpose cattle (milk and meat) which were classified as strategic products years later. However, these efforts have not capitalized in all areas and much less materialized, as the country continues to rely heavily on imported raw materials, including those in which it was previously self-sufficient. (El Universal, 11-14-2010; http://eluniversal.com/2010/11/14/eco_art_rubros-denominados_2105748.shtml)

Government requires farmers to give up its

The National Land Institute (INTI) does not recognize private ownership of livestock and agricultural producers and only grants certificates of occupancy and stay on farms. Fedenaga president, Manuel Cipriano Heredia, said that instead of certifying they are legitimate landowners to access bank credits, mortgages or make any financial transaction to finance  production, INTI is forcing ranchers and farmers to renounce their status as owners. "Producers who have owned their farms for over 40 years and have all legal documents are only supplied with proof of residence or occupation of land. Titles are not recognized either," said Heredia, who added the population must be alert to the Government's intention of taking over more than 250 farms in the region south of Lake Maracaibo, which includes parts of Táchira, Merida and Zulia. (El Nacional, 11-15-2010; http://www.el-nacional.com/www/site/p_contenido.php)

Politics

Why Venezuela's government is taking over apartments

"Expropriese!" came the cry from Hugo Chavez, a command which has come to fill private investors in Venezuela with dread: "Expropriate it!”. Hilton, Banco Santander, Williams, Cargill, Owens Illinois - the list of companies whose Venezuelan subsidiaries have been on the receiving end of President Chavez's orders in recent months reads like a Who's Who of major foreign investors. Banking, agriculture, tourism, energy, construction and steel production have all been affected by the government's decision to intervene in private ownership over the past year. Banco Santander received $1bn (£620m) compensation. Others are still waiting. (BBC News, 11-15-2010; http://www.bbc.co.uk/news/world-latin-america-11756492)

Transport & Logistics

Port will operate during holiday season

Members of the local maritime community insured Puerto Cabello will operate normally during the holidays. Santos Rivas, president of the Chamber of Commerce, recalled in casual conversation with the newsroom that the port activities are minimized but not paralyze as a whole over the holidays. Reduction of vessels calling at that time on Puerto Cabello, as is traditional in December, will be a good ally for operators working on Christmas Day and New Year. (El Carabobeño, 11-14-2010; www.el-carabobeno.com/impreso/articulo/t151110-sl06/el-puerto-operar-durante-fiestas-decembrinas)

Puerto Cabello flow reduced to three weekly arrivals

Workers in Puerto Cabello port assert that the flow of vessels arriving at this terminal has been reduced by over 70%. This week, only three ships berthed at the docks. The same source indicates that many of the ships arriving at Puerto Cabello are coming with fewer loads than usual. Representatives from business have warned repeatedly that this is due primarily to lower grant of dollars, forcing them to go to the swap market which makes transactions less competitive. (El Carabobeño, 11-12-2010; www.el-carabobeno.com/litoral/articulo/3672/se-redujo-a-tres-los-arribos-semanales-de-buques-al-puerto)

Operations at the port of La Guaira fall by 9%

Activity in the port of La Guaira continues to decline. According to data presented by the Central Coast Ports Company (PLC), until last October, the Vargas state port had tended to some 583 vessels while in the same period last year (January to October), La Guaira received 641 motorboats (container, general cargo, passenger ships and bulk carriers, etc.). The numbers represent a decline of 9% for 2009. However, for the tenth month, the port handled 67 ships (eight ships more than in September and three more than the same month in 2009). In terms of TEUs (measurement unit used to calculate 20 feet container capacity), 35,763 were mobilized. The year to date indicates that 265,553 TEUs have been mobilized. Likewise, the numbers indicate that in the similar period of 2009, 320,845 had been mobilized. (Tal Cual, 11-15-2010; http://www.talcualdigital.com/ediciones/2010/11/15/default.asp)

Petroleum & Energy

eni confirms another Perla discovery in offshore Venezuela

eni announced the successful results of the Perla 3 well, located in the Cardón IV Block, in the shallow water of the Gulf of Venezuela. This well confirms Perla as a world-class supergiant gas discovery, one of the most significant in recent years and the largest ever in Venezuela, upgrading current estimates of gas in place to over 14 Tcf (2.5 billion barrels of oil equivalent). Perla 3, drilled in 70 m of water depth, encountered 675 ft (210 m) of net pay carbonate sequence with the same hydraulic regime as the discovery well and with excellent reservoir characteristics, confirmed by the 730 ft (225m) of bottom hole cores that have been recovered. During the production test, the well flowed 68 million scf per day of gas and 1,350 barrels of condensate per day, highlighting the high productivity of this reservoir. (Latin Petroleum, 11-15-2010; http://www.latinpetroleum.com/new/newsdetail.php?cid=34&art_id=9045&content=F&aid=9045)

PDVSA gives contract for Mariscal Sucre platform to France's Technip

Venezuelan state oil company PDVSA said Friday it awarded French oil technology company Technip a contract to build Venezuela's first offshore natural gas production platform. The platform will be used for the Mariscal Sucre exploration and production project. PDVSA, in a statement, reiterated that production from Mariscal Sucre will begin in 2012. The offshore gas will be sent to the mainland through a 115-km underwater pipeline and then processed in CIGMA, a petrochemical complex being built in Sucre state, in eastern Venezuela. (VHeadline, 11-12-2010; http://www.vheadline.com/readnews.asp?id=98673)

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.