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, March 29, 2011

March 28th, 2011

Economics & Finance

Venezuela ranks lowest in growth among oil producing nations
In its recent report on the global economy a leading British investment bank, Barclays Capital, compared growth in 1999-2010 for Latin American countries and members of the Organization of the Petroleum Exporting Countries (OPEC). The report showed that despite high revenues, Venezuela performed badly over the past 12 years. The numbers show that OPEC Member States, except for Iraq, grow 6.1% annually. Latin American countries, with Venezuela joining the bigger economies in the region -Brazil, Argentina, Colombia, Mexico and Peru- grew by 3.4%. In contrast, Venezuela barely reached an average annual growth of 2.3%, despite skyrocketing oil prices that injected USD$ 529 billion into the government vaults. (El Universal, 03-25-2011;

Private exports fell by 32, 4% during Chávez’s second term in office
The collapse of this economic indicator over the past few years has been highest for the private sector and in non-petroleum exports. Sales for products other than oil were USD$ 3,39 billion in 2009 and USD$ 3,47 billion in 2010, according to the Central Bank. This is a 54,9% drop from 2006 when such exports were a record USD$ 7,61 billion, and the lowest level since 1992. More information in Spanish: (El Nacional;

Local banks face losses with excess idle funds in their vaults
With a feeble credit demand and a government that uses oil income to inject more local currency into the domestic economy, Venezuelan financial organizations have plenty of cash in their vaults. The mismatch translates into losses. In 2010, banks kept a monthly average of USD$ 3.72 billion above the requisite for legal reserves with the Venezuelan Central Bank (BCV). By¿ February 2011, this average doubled up to USD$ 7.45 billion. Deposits are used to extend loans or buy bonds but local banks have not succeeded in placing funds in an economy where the private sector has been in recession for two years. (El Universal, 03-25-2011;

Venezuelan stock market up 9.57%
Caracas stocks rose on low volume, as the Caracas Stock Exchange Index rose 2.25% to close at 71,587 for the week. Only one stock, Banco Provincial, changed in price, closing at Bs. 30. With many of the largest brokerage firms shut down last year by President Chavez’s government, volume was low all week, with 25,000 shares changing hands over five days of trading ending March 25. (Latin American Herald Tribune, 03-28-2011;

Government considers increased price for food staples such as rice, oil, powdered milk, pre-cooked corn flour, sugar, chicken and cheese, informed Venezuelan Food Minister Carlos Osorio. He explained the prices of products at MERCAL will not be increased as the official subsidy will rise from Bs.F.5.2 billion to Bs.F.7 billion. (Veneconomy, 03-25-2011;

Oil expert Gustavo Coronel asks for the immediate dismissal of PDVSA board of directors and an in-depth investigation of its true operational, financial and managerial situation.  After reviewing the 2010 Annual Report from State to the National Assembly. Coronel concludes that PDVSA is a bankrupt company, led to failure by inept management and by the president of the Republic who uses it for its personal goals. (Veneconomy, 03-25-2011;


Venezuela projects an oil output of 4.5-5.0 mln BPD by 2014
Venezuela aims to boost oil production by two-thirds to 4.5 million or 5.0 million barrels per day (BPD) over the next three years, according to Energy Minister Rafael Ramirez. Ramirez routinely announces high output figures for this OPEC member's main export, which actually has fallen over the past two years. Industry experts point to figures from his ministry, certified by an independent auditor, which show production down to 2.78 million BPD in 2010, from 3.01 million BPD the year before. Ramirez claims current output is some 3.1 million BPD. (Reuters, 03-27-2011;

Venezuelan oil climbs back to USD$ 100
The Venezuelan oil basket of crude oil and products ended the week at USD 100.15 per barrel, according to the Venezuelan Ministry of Energy and Petroleum. The Venezuelan oil basket returned to the USD 100 level amid an upward trend in oil prices driven by the Libyan conflict and demonstrations in oil-producing countries in the Middle East and North Africa. (El Universal, 03-25-2011;

Ramírez says attacks on Libya are a serious crime against petroleum exporting countries
Venezuela’s Oil Minister and President of the state oil company PDVSA, Rafael Ramirez, said Sunday that the military aggression against Libya represents a serious crime against the petroleum exporting countries. During an interview withe a local TV show, Ramirez said Libya is one of the main producing nations in Africa and a founding member of the Organization of Petroleum Exporting Countries (OPEC). He also claimed that Venezuela has the world’s largest oil reserves and a production of close to 3.16 million barrels per day BPD. (AVN, 03-28-2011;

PETROANDINA to invest USD 240 million in exploration
PETROANDINA, a joint venture between Bolivian and Venezuelan state-owned energy companies, plans to invest USD$ 240 million this year in exploration for new oil and gas reserves, according to Bolivian officials. The Bolivian company, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), noted that it has a 40% interest in exploration activities in traditional and non-traditional areas. (El Universal, 03-25-2011;

PDVSA plans on revamping exploration units to raise output
Petróleos de Venezuela, S.A., Venezuela’s state-owned oil company, is planning to restructure its exploration and production division to increase output and boost efficiency. The exploration and production division of PDVSA, as the Caracas-based company is known, will create a new unit to oversee projects in the heavy crude Orinoco Belt, a Venezuelan newspaper reported today, without identifying its sources. PDVSA’s oil output declined by 3.9% last year, after disputes with oil service providers and refinery power outages. Eulogio Del Pino, a vice president at PDVSA, will continue to head the exploration and production division, which will absorb PDVSA’s unit that oversees international joint ventures with private oil firms known as CVP. (Bloomberg, 03-28-2011;

Briquette production at 28% capacity
Briquette production has collapsed in less than two years. The "Giordani Plan" to create a completely state-owned enclave, using Guayana for the experiment, is a glaring failure. The "Plan for a Socialist Guayana 2019, calls for the "the disappearance of dissolved companies and stifling centralism of "corporate social iron-steel and aluminum." MATESI COMSIGUA, VENPRECAR, and FERROMINERA produced one million 739 thousand tons of product in 2010. Production is now a mere 28% of that figure. More information in Spanish. (Tal Cual, 03-28-2011;


Venezuela seeks commercial pact with Colombia in view of its own imminent departure from the Andean Community
According to diplomatic sources in both countries, Venezuela’s Government presented Colombia´s a draft bilateral trade agreement in order to fill a void left by its own exit from the Andean Community. According to Colombian Foreign Minister María Ángela Holguín, the initiative was left with Colombia last week, as it´s government has been negotiating a similar agreement since last November with their Venezuelan counterparts. The proposal will be discussed by President Juan Manuel Santos and Hugo Chávez during their forthcoming meeting in Cartagena. The Minister made the announcement at a joint press conference with her Venezuelan counterpart, Nicolás Maduro, in Bogotá; adding that the expect further progress during the Presidential meeting next Friday. (More information in Spanish: La República/ Bogotá) -

Chávez visits Argentina, Uruguay, Bolivia, Colombia
Venezuelan President Hugo Chavez will be on tour beginning March 27, to 4 South American countries to strengthen integration and review the progress of agreements made with countries of the region. He reaffirmed that he will travel to Argentina, Uruguay, Bolivia and Colombia to strengthen regional integration. (AVN, 03-27-2011;

Venezuela poll: Preferences split, many undecided
A poll suggests Venezuelans are split between President Hugo Chavez and the opposition, although a sizable one third is undecided about whom they would vote for if elections were held soon. Luis Vicente Leon, director of the polling firm DATANALISIS, said Thursday that results of a survey last month said 26% of those questioned were sure they would vote for Chavez if elections were held within a week. Support for all the opposition's potential candidates reached 28%, while 34% of those surveyed said they were undecided. More than 13% said they would not vote for anybody. (Boston, 03-24-2011;

Venezuela’s Chavez supports Syrian leader amid protests, blames US for unrest
Venezuelan President Hugo Chavez expressed support for Syria’s president on Saturday, calling him a “humanist” and a “brother” facing a wave of violent protests backed by the United States and its allies. Chavez’s support for President Bashar Assad follows his defense of Libyan leader Moammar Gadhafi, who is fighting rebels backed by international airstrikes. Venezuela’s socialist leader accused Washington of fomenting the protests in Syria as a pretext for Libya-style airstrikes. (The Washington Post, 03-26-2011;

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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