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, December 28, 2010

December 27th, 2010

Economics, & Finance

Banks have 180 days to divest their holdings in financial groups
A correction to a "material error" in the Organic Law for the Financial System was published in the Official Gazette dated December 21. The law forces banks to carry out a financial corporate divestiture, that is, to reduce the structure that currently allows them to gather a bank, an insurance company and a brokerage firm under one corporation. Although this prohibition had already been included in the Law on Banking Sector Institutions, passed last Tuesday, bankers were confident that the Organic Law, as a fundamental law, is more important than a regular law, and as a result, financial groups would remain unaffected. (El Universal, 12-27-2010;


PDVSA production down amidst increasing debt
The Venezuelan oil industry is past its prime. State-run oil conglomerate Petróleos de Venezuela faces a bleak outlook, amidst a number of shortcomings in core operations, increasing debt and significant financial commitments. In numbers, oil production and oil shipments abroad continue to decline -a trend that began about two years ago. But other secondary sources such as the Organization of Petroleum Exporting Countries (OPEC) reported that Venezuela's production of crude oil is 2.25 million barrels a day. According to OPEC statistics, this volume involves a year-on-year decline of 2.9 percent compared to 2.31 million barrels per day produced by PDVSA in November 2009. In November 2008, before the OPEC adjusted quotas, the Organization reported that Venezuela produced 2.3 million barrels a day. (El Universal, 12-27-2010;

Venezuelan crude oil sales to the US down by 12 percent
The steady decline in crude oil shipments from Venezuela to the US worsened over the week that ended on December 17, according to data provided by the Energy Information Administration, the statistical arm of the Department of Energy in Washington. Weekly statistics show that during the week of 13-17 December, the average US daily crude oil imports from Venezuela hit 758,000 barrels per day. This means a decline of 103,000 barrels per day, or 12 percent, compared to 6-10 December, when shipments to the United States averaged 861,000 bpd. Including the average exports to the US over the past 30 days, 799,000 bpd represent the lowest average weekly oil sales since July this year, when oil sales to the US were about 733,000 barrels per day. (El Universal, 12-27-2010;

Logistics & Transport

Venezuela – Illegal narcotics onboard ships
The International Group supports efforts by all countries to prevent ships being used to smuggle illegal narcotics. However, the International Group has become increasingly concerned with what appears to be the indiscriminate and disproportionate application of criminal law in Venezuela in cases where ships have been targeted by drug smugglers for the carriage of illegal narcotics…We accordingly wish to draw members’ attention to certain risks associated with trading their ships to Venezuela. (The Standard, 12-22-2010;


A democratic test for Venezuela
A new Venezuelan congress is due to take office in January in which opposition representation will rise from virtually zero to nearly 40 percent. A presidential election is scheduled in two years, and with the country suffering from one of the worst economic crises and highest murder rates in the world, the chances that Hugo Chavez would win a free and fair vote are not looking good. (The Washington Post, 12-20-2010;

Venezuela Parliament pushes through host of new laws
Venezuela's outgoing parliament has pushed through a raft of new laws, including giving President Hugo Chavez decree powers for 18 months, outraging opponents who accuse him of ushering in Cuban-style Communism. Here is some of the most important legislation that has been passed ahead of a new National Assembly being sworn in on January 5 in South America's top oil producer, plus other measures that Chavez could take using his fast-track decree powers. (Reuters, 12-23-2010;

Three more laws to close this year in Venezuela
The Enabling Law (Ley Habilitante), granting extraordinary legislative powers to the President for 18 months, the Reform of the Organic Law on Science, Technology and Innovation and the Decree extending the Bar against Dismissals until December 2011. Venezuela parliament pushes through host of new laws. (Laws attached)

Venezuela's Hugo Chavez uses new powers for flood fund
Venezuelan President Hugo Chavez has made his first use of new decree powers to create a fund for reconstruction after recent flooding. Mr. Chavez said the first part of the initial $2.3bn (£1.5bn) fund would be used to build houses in the western state of Zulia. He said the new powers were needed to respond to the disaster that left more than 130,000 people homeless. But critics say they will allow him to repress dissent. (BBC News, 12-27-2010;

Venezuela, Peru strengthen bilateral relationship
The governments of Venezuela and Peru agreed to find mechanisms to strengthen their bilateral relationship and increase commerce, informed on Tuesday Peruvian Foreign Minister Jose Garcia Belaunde after a meeting with his Venezuelan counterpart, Nicolas Maduro. “We are working hard to guarantee that commerce between the two countries, which has been affected by the international economic crisis, improves,” Belaunde stated. The Peruvian Foreign Minister expressed they may use the Unified System for Regional Compensation (SUCRE) -virtual currency implemented by the Bolivarian Alliance for the Peoples of our America, ALBA- as trade currency. (AVN, 12-22-2010;

This is our last 2010 bulletin, and we will resume activity
on January 10, 2011. 
We wish you a new year filled with health, wisdom and prosperity.

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

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