August 12th, 2011

Economics & Finance

Venezuela gets an additional U$D 4 billion loan from China, seeks another U$D 4 billion from Russia

President, Hugo Chavez announced that Venezuela is signing a new agreement with China for U$D4 billion. The vice-president of the state-owned oil company Petróleos de Venezuela (PDVSA), Asdrúbal Chávez, and the Minister for Commerce, Edmee Betancourt, are in China to negotiate the loan. He also said he spoke with Russian Prime Minister Vladimir Putin to “push forward” a U$D 4 billion loan. His remarks came during a telephone conversation broadcast by state television. (Bloomberg, 08-11-2011; http://www.bloomberg.com/news/2011-08-11/venezuela-s-chavez-spoke-with-putin-about-4-billion-loan.html and AVN, 09-11-2011; http://www.avn.info.ve/node/72121)

Venezuelan debt trades down

Venezuelan bonds experienced a negative trend for a third consecutive day as global stock markets continued to fall on fears of a possible downgrade of France, and the problems with Greece and the Euro area. The 2022 Global rose slightly by 0.30 percentage points to your quote and closed at 86.8%, still down from Monday’s 89.25%. The recently issued Global 2031, issued by the Republic last month, was not so lucky and fell short 0.35 points to 78.9%, down from 82.5% at the beginning of this week. More in Spanish. (El Nacional; 08-11-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Exports to the US at U$D 22.62 billion, up 49% from last year

The Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM) reports that the Venezuela-US balance of trade in June 2011 amounted to USD 3.28 billion; 49% over the same term last year. It termed the improvement is "a clear expression of the effect of higher Venezuelan oil prices on the nation's revenues." (El Universal, 08-11-2011; http://www.eluniversal.com/2011/08/11/venezuela-has-exported-usd-2262-billion-to-the-us.shtml)

Trade with Colombia up 16%

Despite uncertainties caused by the absence of a bilateral trade agreement, Venezuela-Colombia trade rose, according to Luis Alberto Russián, CEO of the Colombian-Venezuelan Chamber of Commerce (CAVECOL).  He reported that trade over the first semester this year rose to U$D 1.04 billion, a 16% hike over the same term in 2010; and added that should this pace continue in the second half of the year, operations could end up over U$D 2 billion. (El Universal, 08-11-2011; http://www.eluniversal.com/2011/08/11/upturn-in-venezuela-colombia-trade-at-16.shtml)

Agriculture downturn confirmed by the Central Bank

Despite efforts to conceal the entire picture, the Central Bank 2010 economic report includes a graph which shows agricultural production trending down since 2008; last year, it barely surpassed 0%. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/crop-loss-at-the-central-bank-of-venezuela.shtml)

Central Bank report shows 5,4% drop in household income by the close of 2010

According to information from the Central Bank (BCV) household income dropped 5,4%, at the close of 2010; at a pace “more accelerated than the previous year” More in Spanish. (El Universal; 08-12-2011; http://www.eluniversal.com/2011/08/12/bcv-reporto-caida-de-54-en-remuneraciones-al-cierre-de-2010.shtml)

Report shows confiscated companies have become a ghost industrial complex

A lengthy report by Madrid’s El País daily shows companies taken over by the Chavez Government have become a “great ghost industrial complex”. Between 2007 and 2009 Venezuela has put more money into paying for expropriations and nationalizations than into oil production. According to official data investment in exploration and production at PDVSA was U$D 21.931 billion; while the amount allocated to buy huge companies such as Siderúrgica del Orinoco (Sidor) or the national telephone company (CANTV), was U$D 23.377 billion. The amount does not include 17 cases (oil, mining, cement) currently subject to international arbitration. Studies show most companies taken over “do not generate income enough to cover their own operating costs”. More in Spanish. (El País, 08-07-2011; http://www.elpais.com/articulo/economia/global/Expropiaciones/fruto/elpepueconeg/20110807elpnegeco_1/Tes)

Venezuela to resolve Koch plant nationalization, Mundo reports

Venezuela is in talks with Koch Industries Inc. over the nationalization of the FERTINITRO plant and plans to resolve the issue by year end, El Mundo reported, citing Saul Ameliach, president of state petrochemical firm PEQUIVEN.

FERTINITRO, 35% owned by Koch when President Hugo Chavez took it over last year, produces ammonia and other chemicals in Anzoátegui state, central east Venezuela. Ameliach didn’t give further details, according to the newspaper. (Bloomberg, 08-11-2011; http://www.bloomberg.com/news/2011-08-11/venezuela-to-resolve-koch-plant-nationalization-mundo-reports.html)

Commodities

PDVSA says electricity supply to upgraders is now restored

State-run oil company Petróleos de Venezuela, S.A. (PDVSA) says on its website that operations were restored at the four heavy oil upgraders in José Antonio Anzoátegui Industrial Complex in northeast Venezuela, after a power failure on Monday. The blackout started in the Yaracuy-El Tablazo 400 KV line of the National Interconnected System, which feeds the transmission substation at the heavy crude oil processing compound. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/pdvsa-announces-restoration-of-electrical-supply-to-upgraders.shtml)

OPEC reports slight increase in Venezuela’s oil production in July

OPEC member Venezuela produced 2.77 million barrels of oil per day (bpd) in June, down from 2.79 million bpd in May, the oil ministry said on Thursday. The South American nation exported 2.41 million bpd of crude and products in June, compared with 2.48 million bpd in May. During July, Venezuela produced 2.42 million bpd, an increase of 5.2% over July 2010, when production averaged 2.3 million barrels a day. Venezuela's July extraction increased by 17,000 bpd, 0.7% up from June. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/opec-reports-increase-in-production-in-venezuela-in-july.shtml and Reuters, 08-11-2011; http://www.reuters.com/article/2011/08/11/venezuela-oil-production-idUSN1E77A0RQ20110811)

Politics

Chavez says he feels well after chemotherapy

President Hugo Chavez told Venezuelans on Thursday he was reacting well to a second round of chemotherapy in Cuba and believed he was winning his battle against cancer. In a telephone call to state television from his hospital bed in Havana, the 57-year-old said he would finish this session of treatment on Friday but gave no date for his return home. "I'm taking well to the treatment, which began Monday and should finish on Friday," he said. (Reuters, 08-11-2011; http://www.reuters.com/article/2011/08/11/venezuela-chavez-idUSN1E77A16M20110811)

According to analyst Michael Rowan there may be 5 million phantom voters on official voting rolls

Rowan writes that serious academic statistical analysis estimates that there may be five million phantom voters on the Venezuelan official voters roll, which has not been independently audited for seven years.

In a July 29 TV address, President Chávez claimed that the US government is conspiring with the united opposition to defraud the actual winner of the 2012 presidential election, which Chávez knows is going to be him, Chávez. "They will claim electoral fraud," Chávez mused, "and then say they won and that the tyrant does not deliver. They will then threaten violence. That is the scenario that they are preparing." (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/election-fraud.shtml)

National Assembly to investigate purchase of Colombian news channel by former director of Globovisión

Venezuela's National Assembly (AN) today agreed to investigate the former director of the news channel Globovisión Alberto Ravell to determine the origin of the "large amount" in dollars paid for the purchase of a Colombian television news channel. "We would like to know how this man has ten million dollars when we have had seven years of foreign exchange controls in Venezuela”, says the chairman of the Standing Committee on Finance, Ricardo Sanguino. Ravell replied that he is "a promoter" and not a businessman or entrepreneur. "I managed to get a group of businessmen who deal with American media to agree, I sold the project, they liked my idea and embarked on this project with me". (Google News, 08-10-2011; http://www.google.com/hostednews/epa/article/ALeqM5jyRhh0-SF6Ipp0M89xd6Hj5-psVw?docId=1585064)

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.