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, April 12, 2011

April 12th

Economics & Finance

Antitrust Law would erase major Venezuelan economic groups
The economic project promoted by the government of President Hugo Chavez is directed against powerful economic groups. The National Assembly has been tasked with creating an Antimonopoly Law, which they say does not violate private property, but is directed against capital and business concentration in few hands. The project began during the 2006 election year, but was shelved. It has now been reactivated and assigned to the Finance Committee. (El Mundo, 04-11-2011;

USD$ supply for imports rises by 5.8%
As the average price for Venezuelan oil exports took off in the third quarter of 2010, USD$ 68.95 up to USD$ 91.14, the Foreign Exchange Management Committee (CADIVI) has moderately increased allocation of foreign currency for several domestic sectors during the first quarter of this year. The agency apportioned allocated USD& 5.73 billion to imports, including the purchases made under the ALADI agreement, this is a 5.8% hike over the same period in 2010. (El Universal, 04-08-2011;

Congressman says seized production centers are in poor shape
Exactly six months ago, Venezuela's President Hugo announced the occupation of AGROISLEÑA. Two days later, troops and police agents appeared at its headquarters. Congressman Hiram Gaviria says they seized "52 years of entrepreneurial effort and 3,000 direct jobs, thus harming 18,000 customers (farmers)." Gaviria calls occupation of AGROISLEÑA a landmark for the general standstill in Venezuelan agriculture. "AGROISLEÑA was the main support of domestic agriculture; the supplier of seeds, chemicals for agriculture, machinery and technical assistance; the lender, as well as the buyer of crops." (El Universal, 04-08-2011;

The industrial sector has been seriously hit by power failures, according to the head of the National Industrial Council (CONINDUSTRIA) Carlos Larrazábal. He explained 58% of companies have been prevented from increasing their production due to government obstacles and power failures, among other problems. (Veneconomy, 04-08-2011;

IMF forecasts 1.8% economic growth for Venezuela in 2011
The International Monetary Fund revised upwards (an additional 0.4%) its 2011 growth forecast for Latin American and the Caribbean to 4.7 percent this year due to a greater confidence in the strength of global recovery and better prospects for commodity prices. The Latin American and Caribbean economic growth rose last year to an average of 6.1%, after a 1.7% contraction in 2009 due to the global crisis. Venezuela is the country with the lowest economic growth prospects: 1.8% in 2011 and 1.6% in 2012. (El Universal, 04-11-2011;

Fitch affirms Venezuela's credit ratings at B-plus
Fitch affirmed Venezuela's B-plus credit ratings on Monday in a move that may comfort investors holding bonds that indicators consistently rank as having one of the highest default risks in the world. Some analysts think a default is increasingly possible before President Hugo Chavez seeks re-election in December 2012, but most experts expect his socialist government to keep paying based on its good track record and soaring oil prices. Fitch said despite problems with Venezuela's economic policies, its ratings were underpinned by its manageable debt service profile, range of financing options and its history of servicing debt even at times of political and economic stress. (Reuters, 04-11-2011;


Venezuelan oil export average closes at USD$ 105.30
The Venezuelan oil export average price closed the week at USD$ 105.30 per barrel, according to the Ministry of Energy and Petroleum. This is a hike of USD$ 4.58 in a week. So far this year, the Venezuelan oil barrel averages USD$ 92.14. Shorter supply of crude oil from Libya and geopolitical tensions elsewhere in the Middle East continue making the difference in the market. (El Universal, 04-08-2011;

ENI, REPSOL to begin gas output from Venezuela field during 2013
ENI SPA said it will begin natural gas production with partner REPSOL YPF, S.A. at the Perla field, Venezuela’s largest gas discovery, by 2013. Perla, in the Cardón IV block located in the shallow waters of the Gulf of Venezuela, “contains significant amounts of gas reserves,” ENI said today in a U.S. Securities and Exchange Commission filing. ENI reported Feb. 24 that the field holds 16 trillion cubic feet of natural-gas reserves. ENI and REPSOL, Italy and Spain’s largest oil companies, respectively, each own 50% of the block where the field is located. State oil producer Petróleos de Venezuela, S.A. has the option to take as much as 35% when commercial operations begin. (Bloomberg, 04-07-2011;

Venezuela: no need for OPEC talks on oil prices
Venezuela's top oil official says there is no need for OPEC to hold a special meeting to try to tame oil prices, saying prices are high in part due to the Libya conflict. Oil Minister Rafael Ramirez says Venezuela doesn't agree with convening a special meeting of the Organization of Petroleum Exporting Countries to address the issue. Oil prices settled on Friday at $112.79 per barrel on the New York Mercantile Exchange. Ramirez said on Saturday that "what should cease is the violence" in Libya. Venezuelan President Hugo Chavez has criticized the intervention by U.S. and European forces in Libya. (AP, 04-09-2011;

ALCASA posts USD 511.6 million loss in 2010
Venezuelan state-run aluminum smelter Aluminios del Caroní S.A., ALCASA, a subsidiary of the Venezuelan Guayana Corporation (CVG), had a poor performance in 2010, after losses almost doubled compared to 2009. The aluminum smelter, located in Ciudad Guayana (southeastern Venezuela), has reported continuous losses for at least 15 years. However, according to the company's net result in the 2010 fiscal year, losses reached USD$ 511.6 million versus 302.3 million in the previous year. According to the 2010 Report and Accounts of the Ministry of Basic Industries and Mining (Mibam), the activities of the company were carried out in a "context of power rationing and cash flow deficit." (El Universal, 04-11-2011;


Santos, Chavez end summit with 16 agreements on energy and development
The summit meeting held in Cartagena between Venezuelan President Hugo Chávez and his Colombian counterpart Juan Manuel Santos, led to signing 16 cooperation agreements in the areas of energy, science, health, tourism, combating drug trafficking and social development in border communities. After more than eight hours, governments in Caracas and Bogota signed several agreements, most notably a social investment plan for border areas, an agreement to extend the existing mechanisms in the battle drug trafficking, feasibility studies for energy projects such as an oil pipeline to the Colombian Pacific. Santos Chavez and agreed on the need for more dynamic trade relationship in order to retrieve the exchange rate before the rupture of relations which led the previous government of New Granada in mid-2010. (AVN; 04-09-2011;

Colombia, Venezuela extend trade benefits, eye deal
The leaders of U.S. ally Colombia and Washington critic Venezuela extended for three months trade preferences that were set to expire, and said on Saturday they hoped to reach a new agreement by mid-July. Colombian President Juan Manuel Santos and Venezuelan leader Hugo Chavez have been rebuilding relations since last year, after Caracas broke ties with the previous Colombian government in the often volatile Andean region. Santos said the two countries had extended for three months trade preferences that were set to expire later in April when Venezuela withdraws from the Andean Community, a regional economic and social development organization. (Reuters, 04-09-2011;

Ecuador and Venezuela trade agreement finalized
Ecuador and Venezuela plan to have a trade agreement ready by April 21st in order to replace provisions in the covenants of the Andean Community of Nations (CAN), from which Caracas will retire the next day. According to Ecuador's foreign minister Ricardo Patiño, the negotiated agreement aims at "maintaining tariff preferences and essentially maintain a high level of trade" between the two countries. (Ultimas Noticias, 04-11-2011;

Union elections at VENALUM did not go well for the Government
Three out of labor four representatives to the company board are independent, and the fourth pro Chavez representative is apparently of a moderate stripe. More information in Spanish. (Correo del Caroní, 04-08-2011;,com_wrapper/Itemid,174/?id=176551)

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.

No comments:

Post a Comment