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.

Friday, February 18, 2011

February 18th, 2011

Economics & Finance

Former BCV leading economist says Government uses reserves to finance current expense
According to economist José Guerra, the Central Bank has suffered a loss of 64.3 billion Bolivars, according to its latest balance, where – he points out – liabilities are accounted for as assets. “Venezuela does not guarantee monetary stability because the Central Bank is an appendix the Government uses to finance its expenditures by creating valueless currency in order to finance fiscal deficits.” Guerra says that from 2005 to date U$ 38.8 billion dollars have been transferred by PDVSA to the National, upon which the Central Bank has printed bolivars using these dollars as a reserve. These reserves are later depleted without reimbursement to the Bank, thus weakening its position. More information in Spanish. (Entorno Inteligente, 02-14-2011;

Sales fell 28.4% in the fourth quarter of 2010, according to CONSECOMERCIO president, Fernando Morgado. A survey carried out by the National Trade Council shows commercial increased by 38% during the last three months of last year. The same period reveals a job loss of 20.4%. (Veneconomy, 02-16-2011;

Likely shortage of products in the absence of price increases
The manufacturing sector has requested the Venezuelan government to allow price increases for regulated products, in order to prevent shortage of goods in the domestic market, said Carlos Larrazábal, the President of the Venezuelan Confederation of Industry (CONINDUSTRIA). "We are very concerned about the fact that the Venezuelan government has not taken any decisions so far about the impact of the devaluation" of the bolivar, said the business leader at a press conference. (El Universal, 02-17-2011;

2022 PDVSA Bonds soaked up by health and food sectors
Within this group, all orders between $3,000 and $20 million were assigned in full while the remaining orders which were over this amount were assigned at $20 million. In the case of individuals, the top assignment was of $10,000. (Veneconomy, 02-15-2011;

The basic goods basket rose 1,5% to Bs.F.5,051.36 in January, according to the most recent report from The Union’ Documentation and Analysis Center (CENDA). The CENDA pointed out hygiene and toiletries were the items that experienced the greatest increase (2.2%) compared to December 2010. (Veneconomy, 02-16-2011;

Agriculture and Food Ministries have issued no import licenses so far this year
The National Council of Industries CONINDUSTRIA noted that ministries of Food (Minal) and Agriculture and Lands (MAT) have not granted import licenses so far this year, which heightens uncertainty about the lack of decisions on price adjustments after the devaluation implicit December past. "There are firms that are not receiving licenses, which together with strong delays in the delivery of certificates of non-production to suggest that the supply situation is getting complicated," said Carlos Larrazabal, president of CONINDUSTRIA. More information in Spanish. (El Mundo, 02-17-2011;

State-run bank provides USD 2 billion to Pdvsa
The financial needs of state-run oil company Petróleos de Venezuela (PDVSA) have been on the rise in the last three years, thus pushing the oil holding to resort to public entities, including state-run bank Banco del Tesoro. In a report published upon the offering of USD 3 billion in PDVSA bonds expiring in 2022, the Venezuelan oil giant said that it issued two investment certificates in December 2010 to Banco del Tesoro for a total of USD 2 billion, thus paving the way for the state-run bank to pump funds into the Venezuelan oil company. (El Universal, 02-17-2011;

Heinz ready to resume discussion of collective bargaining agreement
According to a statement released by the US food company, a total of 167 companies and some 2,000 workers are hurt by the strike at a plant run by Heinz in San Joaquín, state of Carabobo, north central Venezuela. The companies that have been affected include sugar mills, glass containers manufacturers, cardboard industries, manufacturers of metal lids for bottles, fruit pulp processors, producers of tomatoes and tomato paste and manufacturers of spare parts for industrial equipment maintenance. (El Universal, 02-17-2011;


Venezuela's oil reserves rose to 296.5 billion barrels
Venezuela's proven oil reserves total 296.5 billion barrels, according to figures updated and officially announced by the Ministry of Energy and Petroleum (Menpet) in a statement. The new proven oil reserves come from traditional and offshore areas which total 242.41 billion barrels, while crude oil from the Orinoco Oil Belt amounts to 86.16 billion barrels. The Menpet said that in February "Minister of Energy and Petroleum Rafael Ramírez announced that Venezuela was in a position to certify the data, and now it can confirm it has become the nation with the largest proven crude oil reserves in the world." (El Universal, 02-15-2011;

Suggested gasoline rationing may hide a drop in Venezuelan oil production, former PDVSA president Humberto Calderón Berti told Globovisión on Wednesday. He said the possibility of enforcing a rationing of gas consumption would be absurd since it would not solve the high consumption and would rather generate “corruption.” (Veneconomy, 02-16-2011;

Venezuelan Government to boost campaign on proper use of gasoline, denies rationing
There is not rationing of gasoline in Venezuela. The Energy and Petroleum Ministry seeks to begin a campaign to teach the proper use of gasoline”, explained on Wednesday the chairman of the National Federation of Hydrocarbons Businesses (FENEGAS), Giuseppe Gherardi. Gherardi said to the official Venezuelan News Agency (AVN) that the campaign to be boosted by the Ministry seeks to prevent the waste of gasoline, which is sometimes used for purposes different to supply vehicles, such as cleaning floors. “As gasoline is so cheap, we are wasting it”, affirmed the representative of the association, which joins more than 1,200 gasoline pump stations out of 1,820 existing in the country. (AVN, 02-16-2011;

Venezuela choses firms for 15 tcf gas project-sources
Venezuela has picked at least four companies from China, Malaysia, Russia and Algeria for a long-delayed offshore natural gas project in the South American OPEC member, sources at the companies said on Tuesday. The continent's biggest crude oil producer is sitting on some of the world's largest offshore gas reserves, experts say, but it has yet to begin producing any commercial gas. Venezuelan state oil company PDVSA has spent more than a decade searching for partners to develop its Mariscal Sucre project, which is estimated to hold 14.7 trillion cubic feet. (Reuters, 02-15-2011;

Simon Bolivar gold mine 70% paralyzed
Trade unions representing workers at the Simon Bolivar gold mine in south-eastern Venezuela held a special meeting to protest against Central Bank´s (BCV) red tape creating obstacles in carrying out a 50-50 export agreement with private mining companies. SUTRAMIOCS union general secretary, Manuel Montiel declared that the mine is currently at a 70% standstill because of a lack of tools and supplies. He charged the Central Bank has not released the necessary cash for the company to purchase tools and manage a necessary cash flow. (VHeadline, 02-15-2011;

Yarmouth industries urged to link-up with Venezuela
A representative from UK Trade and Investment visited the seaside town to discuss developing links with the the South American country. "They can win business and that will help save jobs in the region," said Haden Spicer, a representative from the British Embassy in Caracas. Venezuela has one of the world's largest oil reserves. "There's a big push in the UK to try and export our way out of the current economic downturn," said Mr. Spicer. (BBC News, 02-17-2011;

Crystallex seeks USD 3.8 billion compensation from Venezuela
Under terms of the treaty between Canada and Venezuela for the Promotion and Protection of Investments, Canadian mining company Crystallex International Corp. has filed a request for arbitration against the Venezuelan government. The Toronto-based company decided to file the request before the World Bank's International Centre for Settlement of Investment Disputes ("Icsid"), seeking a full compensation in excess of USD 3.8 billion. (El Universal, 02-17-2011;

Logistics & Transport

Chinese will take part in building a new container terminal
Representatives of the Asian company Chec visited the port of Puerto Cabello, to join the team responsible for building the new container terminal, agreed action, under an agreement between Venezuela and the Republic of China. The new company technicians from China Harbour Engineering Company Limited, together with staff from Bolivariana de Puertos, will undertake geological and geotechnical studies, including topography and hydrography, prior to starting construction. (El Carabobeño, 02-18-2011;


Colombia, Venezuela foreign ministers review bilateral accords
Venezuelan Foreign Minister Nicolas Maduro and Colombia’s Maria Angela Holguin met in Caracas this week to focus basically on politics, frontier security and commerce. In a statement before his encounter with his Colombian counterpart, and Colombian National Defense Minister Rodrigo Rivera and Minister of Commerce, Industry and Tourism, Sergio Diaz Granados, Maduro said they do not expect to sign any agreements because the meeting aims at reviewing those already signed. “We will specially tackle with the debt, illicit acts in commercial matters, the accord to substitute the Andean Community of Nations (CAN) and joint ventures in matters of production.” (AVN, 02-16-2011;

US examining whether Venezuela violates Iran sanctions
A top US official said Tuesday that Washington is closely examining whether Venezuela's cooperation with Iran on energy issues violates international sanctions on the Tehran regime. Arturo Valenzuela, the top State Department diplomat for Latin America, told a congressional panel that "we are looking at that issue" and that the US administration is "trying to determine if in fact there is a violation." (AFP, 02-15-2011;

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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