September 30th, 2011

Economics & Finance

  

Owens Illinois hits Venezuela with arbitration claim

U.S. bottle maker Owens Illinois has filed a claim for arbitration against Venezuela at a World Bank tribunal after President Hugo Chavez nationalized its operations in October last year. The website of the World Bank's International Center for Settlement of Investment Disputes (ICSID) carried brief details of the claim, which was submitted on Monday. It is one of more than 20 ICSID cases being battled by Venezuela. Chavez has put much of the nation's economy under state control during his 12 years in power, including multi-billion dollar oil projects run by foreign companies. (Reuters, 09-28-2011; http://www.reuters.com/article/2011/09/29/venezuela-arbitration-idUSS1E78R21420110929)

Government has U$D 45 billion to spend

Economic growth, stable oil prices, increased public spending and high inflation are in store for this year and 2012, according to a scenario presented by economist José Luis Saboin, of ECOANALÍTICA. He said they expect 3.1% economic growth this year and 3.4% next year. (More in Spanish at El Universal. 09-30-2011; http://www.eluniversal.com/economia/110930/gobierno-cuenta-con-45-mil-millones-para-impulsar-gasto

Venezuelan bonds rally on speculation cancer to prevent Chavez re-election

Venezuelan bonds rallied the most in seven weeks on speculation President Hugo Chavez’s health is deteriorating and will prevent him from running for re-election, paving the way for a reversal of policies that have fueled the fastest inflation in the Americas. Yields on the benchmark 9.25% dollar bonds maturing in 2027 fell 33 basis points, or 0.33% point, to 15.44% at 4:40 p.m. NYT, according to data compiled by Bloomberg.  “There’s a lot of distrust surrounding his comments about his health,” said Aryam Vazquez, an emerging-markets economist at Wells Fargo & Co. in New York. “His situation does not look good and bonds will rally on the fact he may be eliminated from the picture and not be there for elections.” (Bloomberg, 09-29-2011; http://www.bloomberg.com/news/2011-09-29/venezuela-bonds-rally-on-speculation-chavez-health-deteriorating.html)

Commodities

PDVSA says debt to service providers falls to U$D 5.5 billion

The significant U$D 10.9 billion debt owed to suppliers by state-run oil holding Petroleos de Venezuela (PDVSA) at the end of 2010 has fallen by about 50%, according to Rafael Ramírez, Venezuela's Minister of Energy and Petroleum. As a result, the current PDVSA's financial debt amounts to U$D 5.45 billion. Ramírez acknowledged that in 2008 and 2009, when the Venezuelan oil basket plunged to U$D 35, "PDVSA's service providers made an important effort and we are very grateful. We have been able to reach (debt) agreements and move forward in the development" of projects. (El Universal, 09-29-2011; http://www.eluniversal.com/economia/110928/pdvsas-debt-to-service-providers-falls-to-usd-55-billion)

CHEVRON sees production In Orinoco oil field in early 2012

CHEVRON Corp. expects to begin drilling in its project in Venezuela's large and mostly untapped Orinoco heavy-oil fields by the end of this year, with production as soon as early 2012, according to Don  Stelling, president of the company's Latin America business. The U.S. company has a 34% stake in the Carabobo 3 bloc, which was granted to it last year. State oil company Petroleos de Venezuela, or PDVSA, holds 60% of the project.  Stelling said that challenges still loom for production in Venezuela's large heavy oil belt."These projects are going to cost billions of dollars so we are going to have to figure out where are going to come up with such large amounts of money," he said. (Fox Business, 09-28-2011;  http://www.foxbusiness.com/markets/2011/09/28/chevron-sees-production-in-orinoco-oil-field-in-early-2012/#ixzz1ZLvvPEhW)

LNG projects frozen

Venezuela is freezing its liquefied natural gas export projects due to falling prices over recent years that make investments uneconomical, state oil company PDVSA said on Wednesday.  Fears of rule changes in Venezuela, where President Hugo Chavez has nationalized most of the oil industry, and pricing issues have meant that PDVSA has struggled to attract investment from foreign companies with the right experience.  Anton Castillo, director of PDVSA Gas, says offshore gas projects would now focus on feeding growing local demand for natural gas -- as opposed to creating LNG for the export market. "It is a question of economics. Gas prices have fallen a lot, and very high levels of investment are needed."  The decision affects the giant offshore Mariscal Sucre project, estimated at 14.7 tcf and being developed by PDVSA, and the Plataforma Deltana field, where Chevron (CVX.N) was given the go-ahead last year to begin gas extraction by 2013. (Reuters, 09-28-2011; http://www.reuters.com/article/2011/09/28/venezuela-gas-idUSS1E78R0UG20110928)

Gas imports from Colombia expected to stop in 2014, according to PDVSA director Orlando Chacín. He says the state oil company is seeking partners for its Mariscal Sucre Project, a process that is almost two decades in the making but several invitations to bids have failed. Most of Venezuelan off-shore gas projects present considerable delays which has forced PDVSA to import some 200 million cubic feet of gas daily from Colombia since 2007. (Veneconomy, 09-28-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27807&idc=4)

Venezuela delays Amuay refinery stoppage to Jan '12

Venezuela will delay a planned 70-day maintenance stoppage of key units at its 645,000-barrels-per-day Amuay refinery until January, a top official at the state oil company said on Wednesday.

The repairs at Amuay, which will include the facility's catalytic cracker and several smaller units, had originally been scheduled to take place later this year. (TD Waterhouse,  https://research.tdwaterhouse.ca/research/public/Markets/CommoditiesNews?documentKey=1314-S1E78R1OY-1)

Opposition says power sector requires U$D 40 billion investment in six years

The opposition High-Level Commission on the Electricity Sector has presented guidelines for a national unity government platform which calls for domestic and foreign private investors to implement projects, which they intend to again decentralize and regionalize. (El Universal, 09-28-2011; http://www.eluniversal.com/nacional-y-politica/110928/power-sector-requires-usd-40-billion-investment-in-six-years)

Logistics & Transport

Forty-eight aircraft incidents reported this year in Venezuela

Forty-eight aircrafts events or incidents have been reported so far this year in Venezuela, according to the Minister of Transport and Communications, Francisco Garcés, who said the number includes landing and take-off incidents as well as problems with routes and maneuvers. He reported that 22 out of the 48 incidents occurred on landing, and added that causes have yet to be determined in 23% of the accidents. (El Universal, 09-29-2011; http://www.eluniversal.com/economia/110928/forty-eight-aircraft-incidents-reported-this-year-in-venezuela)

Politics

Chavez moves to put a stop to health rumors

President Hugo Chavez moved to put a stop to rumors circulating about his being hospitalized due to a health crisis by placing a telephone call to state television to assure the public that his recovery from cancer is "going well" and to ask Venezuelans not to pay any attention to rumors about the state of his health. He made his remarks after El Nuevo Herald, a U.S. Spanish-language newspaper, reported that he had been rushed to the Caracas Military Hospital on Tuesday and that his doctors were assessing whether to transport him to another facility to treat problems associated with insufficient kidney function."I would be the first, everyone knows me, I would be the first of all Venezuelans to come out and say, to explain or communicate any difficulty in the process. Nothing out of the ordinary has arisen," Chavez said Thursday. (Fox News, 09-29-2011;  http://latino.foxnews.com/latino/politics/2011/09/29/venezuelas-chavez-moves-to-put-stop-to-health-rumors/)

Maduro to meet Guyanese Foreign Minister in Port of Spain

During his meeting with journalists, President Chavez announced Foreign Minister Maduro would meet shortly with his Guyanese counterpart, Carolyne Rodrigues, in Port of Spain (Trinidad), and UN mediator Norman Girvan, to discuss the boundary dispute over the Essequibo territory. He said both nations have agreed to handle their border dispute at the highest level and in a very responsible manner. He added that they are conducting very intensive work and will not let "some sectors there (Guyana) or here (Venezuela) create internal conflicts. We will not let that happen." (El Universal, 09-29-2011; http://www.eluniversal.com/nacional-y-politica/110929/chavez-venezuela-guyana-dispute-handled-at-the-highest-level)

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.

September 27, 2011

Economics & Finance

PDVSA sued by Helmerich & Payne over seizure of 11 oil rigs

Helmerich & Payne has sued Venezuela and Petróleos de Venezuela (PDVSA) in a US Federal Court for “forcibly seizing” 11 of the company’s oil rigs last year after it ceased operations following a dispute with PDVSA over pending payments. The suit comes as a protracted U$D 6 billion suit brought by ExxonMobil moves to a close in the World Bank International Center for Settlement of Investment Disputes. More in Spanish: (Enfoques 365, 09-27-2011; http://www.enfoques365.net/N29212-venezuela--demandan-a-pdvsa-por-tomar-11-plataformas-de-perforacion.html)

FOREX board changes rules for allocation of US dollars for imports

The Foreign Exchange Administration Commission (CADIVI) published new rules that set requirements and paperwork needed to get foreign exchange allocation approvals for imports, as of 26 September 2011.  (El Universal, 09-26-2011; http://www.eluniversal.com/2011/09/26/forex-board-changes-rules-for-allocation-of-us-dollars-for-imports.shtml)

Industry Confederation anticipates product shortages due to Law on Costs and Prices.

Carlos Larrazábal, President of the Venezuelan Industry Confederation (CONINDUSTRIA), anticipates that the Law on Costs and Fair Prices will cause more inflation and shortage of products in the domestic market, adding: "The economy cannot be managed by decree". (El Universal, 09-26-2011; http://www.eluniversal.com/2011/09/26/conindustria-fears-shortage-of-products-due-to-costs-law.shtml)

Chavez announces CONFERRY to be taken over

President Chavez says he has ordered the “nationalization” and “temporary occupation” of the navigation company which provides transportation to the Island of Margarita and other points. He also said the “screws must be tightened” on all public and private transportation companies. More in Spanish: (Noticiero Venevision, 09-26-2011; http://noticiero.venevision.net/index_not.asp?id_noticia=20110926004101&id_seccion=01)

POLAR plans U$D 50 million investment in Colombia

POLAR, the main Venezuelan foodstuffs and beverage group, is developing a growth strategy for Colombia and has announced an investment of U$D 50 million in order to double sales within three years. The company has been in Colombia for 15 years and it’s key product is precooked cornmeal, with a 45% market share. More in Spanish: (El Universal, 09-26-2011; http://www.eluniversal.com/2011/09/26/polar-preve-invertir-$50-millones-en-colombia.shtml)

Commodities

Oil basket drops to U$D 102.46

According to the Energy and Petroleum Ministry the price of the Venezuelan oil basket dropped U$D 2.01 and ended the week at U$D 102.46. The Ministry says this behavior is due to "unfavorable macroeconomic data in the US and China, the debt crisis in Europe and the strengthening of the US dollar against the euro." (El Universal, 09-23-2011; http://www.eluniversal.com/2011/09/23/venezuelas-oil-basket-falls-to-usd-10246.shtml)

Aluminum company eyes slow recovery

Venezuela's state aluminum smelter VENALUM is hoping for gradual but sustained improvement in production after being badly hit by a power crisis and low prices, its president said. Production sank to 258,000 tons last year, from a capacity of 430,000 tons and output of 355,000 tons in 2009. But it should rise to 270,000 tons this year, Rada Gamluch told reporters in Venezuela's mineral-rich south." (Reuters, 09-23-2011; http://www.reuters.com/)

Europe exports ethylene to Venezuela on faltering local demand

As the European ethylene supply continued to outpace demand, producers were prompted to explore export options, sources said. Shipping reports showed two cargoes fixed from Europe to Venezuela. A 4.5kt cargo for 20-25 September loading was fixed from Italy and a 5kt cargo end September loading was fixed from ARA. Sources pegged FOB prices at Eur900-930/mt, but this could not be confirmed with the sellers of the cargoes. For inland prices, sell ideas we heard at Eur950/mt FD NWE, whereas buy ideas were heard at Eur930/mt. Ideas were notional, however, as there was "no demand" for spot volumes by European buyers. Prices were assessed at Eur930/mt FD NWE Monday, losing Eur30/mt on the week. (Platts, 09-26-2011; http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Petrochemicals/6524735)

JODI reports increase in Venezuela's oil exports

According to official data published by the Joint Organization Data Initiative (JODI), which includes oil consumer and producer countries, oil exports from the United Arab Emirates (UAE) and Kuwait declined in June, despite the fact that both countries backed a proposal for the Organization of the Petroleum Exporting Countries (OPEC) to increase oil output. In contrast, exports from Algeria and Venezuela, two leading opponents of the Saudi proposal to offer more crude to the market, increased, according to Reuters. Venezuela was reported increasing its exports from May to June by 39,000 bpd. (El Universal, 09-26-2011; http://www.eluniversal.com/2011/09/26/jodi-reports-increase-in-venezuelas-oil-exports.shtml)

Politics

Chavez says he’s recovering well from “impacts” of chemotherapy

President Hugo Chavez said Sunday that he is recovering “favorably” from the “impacts” of his fourth and latest round of chemotherapy, although he admitted that he feels that his physical strength is “a little diminished.” “I’m recovering from the effects of four continuous, very strong cycles (of) chemotherapy,” said the president in a telephone call to state television following an announcement that a scheduled visit by Iranian leader Mahmoud Ahmadinejad had been postponed because of Mr. Chavez’s health. (Latin American Herald Tribune, 09-25-2011; http://www.laht.com/article.asp?ArticleId=427347&CategoryId=10717)

Venezuela and Iran have signed 9 more cooperation agreements

The agreements are in over housing, foodstuffs, oil, agri and technology transfers, among others. The first of the memorandums of understanding should lead to installing plants in Venezuela for producing fibers, cement and steel products for housing programs. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/node/78937)

Government vows to defend Venezuelan interests in the Essequibo region

The Venezuelan government promised to "continue advocating the country's key interests in the firmest manner through internationally established mechanisms of dialogue" and reasserted its commitment to the Good Offices of the UN General Secretariat over the Guyanese claim on the Essequibo. The Ministry of Foreign Affairs made the statement in reply to a report by Guyana to the Commission on the Limits of the Continental Shelf, which claims "there are no relevant disputes on the region linked to this submission, related to the outside boundaries of the continental shelf beyond 200 nautical miles." (El Universal, 09-26-2011; http://www.eluniversal.com/2011/09/26/venezuelan-government-vows-to-defend-interests-in-essequibo.shtml)

Opposition leader: we are at the service of Venezuela

Candidates to the opposition primary election to be held in 2012 attended on Monday a meeting of opposition umbrella group Unified Democratic Panel (MUD), in order to present their project called "A commitment to national unity."

"Today we join together again to be at the service of Venezuela and to serve it without any division, exclusion and discrimination. The claim has been heard. Hope has a role... change has a sense and a reason: the national unity." With this statement, Ramón Guillermo Aveledo, the executive secretary of opposition umbrella group Unified Democratic Panel (MUD), sealed an agreement with the country to offer a unity platform ahead of the presidential elections to be held in October 2012. (El Universal, 09-26-2011; http://www.eluniversal.com/2011/09/26/opposition-leader-we-are-at-the-service-of-venezuela.shtml)

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.

September 23th, 2011

Economics & Finance

Venezuela proposes U$D 1 billion compensation for EXXON MOBIL

Venezuela has proposed paying EXXON MOBIL Corp U$D 1 billion in compensation for the nationalization of its assets in 2007. In a telephone call to Reuters, Energy Minister Rafael Ramirez denied that the government of President Hugo Chavez was negotiating with Exxon separately from an ongoing arbitration process at New York's International Chamber of Commerce. "Our proposal is $1 billion for its assets .... We are not in negotiations with EXXON MOBIL, nor has it crossed our minds to approach them," Ramirez said. His statement seemed to contradict an earlier one made by Solicitor General, who had told media: “Venezuela has to pay -- we are clear on that. The problem now is how much we will pay”. (Reuters, 09-21-2011; http://www.reuters.com/article/2011/09/22/exxon-venezuela-idUSS1E78K26F20110922; Bloomberg, 09-21-2011; http://www.bloomberg.com/news/2011-09-21/exxon-pdvsa-arbitration-negotiations-at-6-billion-escarra-says.html)

IMF: Venezuela has region’s worst outlook

In its latest edition of the World Economic Outlook, the International Monetary Fund (IMF) forecast that Venezuela's economy should expand 2.8% this year, with an inflation rate of 25.8%. According to the intergovernmental organization, Venezuela has the worst outlook in South America and a poor performance among oil exporters.

The projected economic growth in the countries of the region is higher than Venezuela's, with their inflation rate much lower, at 7.9% on average. (El Universal, 09-21-2011; http://www.eluniversal.com/2011/09/21/imf-venezuela-has-the-worst-prospects-in-the-region.shtml)

World Bank calls Venezuela unresponsive to global crisis

The World Bank says that within the emerging environment it will be essential for Latin American economies to leverage their connections with China. The institution added that although Venezuela has ties with the Asian country, it is included in the group of low- and medium-growth countries. (El Universal, 09-21-2011; http://www.eluniversal.com/2011/09/21/world-bank-warns-that-venezuela-is-unresponsive-to-global-crisis.shtml)

Closer to Zimbabwe

Venezuela ranked 139th –down one rank from 2010- with 4.23 points out of 10 in the 2011 Annual Report on Economic Freedom of the World, published by the Canadian Fraser Institute and by CEDICE Libertad in Venezuela. Zimbabwe once again received the worst ranking among the 141 countries studied, preceded by Myanmar, Venezuela and Angola. (Veneconomy, 09-22-2011; http://www.veneconomy.com/site/index.asp?idt=27716&idc=2&ids=44&Var_Send=1&mmD=09&ddD=21&mmH=09&aaD=2011&ddH=22&aaH=2011&Send=Find)

Companies still waiting on foreign currency for dividends

Carlos Tejera, the general manager of the Venezuelan-American Chamber of Commerce and Industry (VenAmCham), said that none of the companies belonging to the trade organization has received foreign currency to repatriate dividends. He added that only 10 out of the 50 VenAmCham companies that have been seized by the government have received a compensation for their assets. (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/companies-wait-for-foreign-currency-to-repatriate-capital.shtml)

Costs Law to hit all economic sectors

The government is speeding up the mechanisms to implement the Law on Costs and Fair Prices starting November 22. Against all original statements, officials now say that the legislation will include all economic sectors. Trade Minister Edmée Betancourt says the Superintendent of Costs and Fair Prices will continue to assess cost structures, and that the study will first focus on food items, but later encompass all economic sectors. (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/costs-law-to-reach-all-economic-sectors-in-venezuela.shtml)

Eight month liquidity is more than all of 2010

Central Bank figures show liquidity for the first eight months of this year has risen by 19,89%, which is more than 19,06% for all of 2010. More in Spanish at: (Tal Cual; http://www.talcualdigital.com/index.html)

GDP projected to grow 3,1% this year and 3,4% in 2012

Cristina Rodríguez, director of METROECONÓMICA-ECOANALÍTICA, says a weakened global demand for hydrocarbons and renewed production in Libya will bring down the Venezuelan oil basked to an average U$D 85 per barrel. More in Spanish at: (El Universal, 09-23-2011; http://www.eluniversal.com/2011/09/23/proyectan-que-el-pib-crecera-31-este-ao-y-34-en-2012.shtml)

International reserves up to U$D 30.842 billion

International Reserves on closed Tuesday at U$D 30,842 according to the Central Bank of Venezuela (BCV). More in Spanish at: (El Mundo, 09-22-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-subieron-a-$30-842-millon.aspx)

Commodities

US Department of Energy says Venezuela's oil policy will hinder Orinoco belt development

The US Department of Energy International Energy Outlook for 2011-2035 says sustained high oil prices will make it cost competitive to develop unconventional petroleum resources such as heavy crudes in the Orinoco belt, oil sands in Canada, deep-water oil reservoirs in Mexico. However, it adds that "for some resource-rich countries it is assumed that current political barriers to production increases will not continue after 2015. For instance, both Mexico and Venezuela currently have laws that restrict foreign ownership of hydrocarbon resources. Their resources policies have discouraged investment, both foreign and domestic, and hindered their ability to increase or even maintain historic production levels." (El Universal, 09-21-2011; http://www.eluniversal.com/2011/09/21/us-agency-venezuelas-oil-policy-is-to-hit-orinoco-belt.shtml)

Central bank to purchase gold produced in Venezuela

The Central Bank of Venezuela (BCV) was designated as the entity responsible of the purchase of gold obtained from mining activities in Venezuela following the recently issued law that reserves exploration and development of gold activities to the State. (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/central-bank-to-purchase-gold-produced-in-venezuela.shtml)

Logistics & Transport

Air Cargo: Monterrey, Caracas Gain

Airports in Monterrey, Caracas and Buenos Aires were among the fastest-growing in cargo traffic in Latin America last year, according to a Latin Business Chronicle analysis based on data from Swiss-based Airports Council International (ACI).  Cargo traffic at Monterrey (MTY), the 20th-largest cargo airport in Latin America, grew 42.4% to 48,710 metric tons. Meanwhile, traffic at Caracas (CCS), the 14th-largest cargo airport, grew 39.6% to 85,655 metric tons.  And at the Aeroparque Jorge Newbery in Buenos Aires (AEP), the 34th-largest cargo airport, traffic grew 38.3% to 18,945 metric tons. The three were among the top five winners in Latin American cargo growth last year. (Latin Business Chronicle, 09-19-2011; http://www.latinbusinesschronicle.com/app/article.aspx?id=5129)

Politics

Chavez said "The chemotherapy cycle is over, we will now work on a full recovery", as he returned to Venezuela from Cuba. He added: “I know speculation continues, let’s not pay attention. I feel well and will continue to undertake my duties at an adequate pace”. More in Spanish at: (Enfoques 365; 09-23-2011; http://www.enfoques365.net/N29021-ha-terminado-la-fase-de-quimioterapia-dijo-chavez-a-su-regreso-de-cuba.html)

Solicitor General to challenge IACHR Court ruling

Solicitor General Carlos Escarrá says independence and national sovereignty will be official arguments for asking the Supreme Court to support the Government’s position of disregarding the ruling by the Inter-American Court of Human Rights (IACHR Court), which orders political reinstatement of opposition leader and former Chacao municipality mayor Leopoldo López, and would allow him to participate in primary elections to be held in 2012. (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/solicitor-general-to-challenge-iachr-court-ruling.shtml)

Chavez opponents prepare for Venezuela's 2012 vote

Venezuela's opposition coalition will pick a unity candidate in February to fight the 2012 presidential election and try to scupper President Hugo Chavez's re-election bid. Henrique Capriles Radonski. The youthful governor of Venezuela's second most populous state, Capriles has emerged as the strongest candidate in a crowded field, according to polls. (Reuters, 09-22-2011; http://www.reuters.com/article/2011/09/22/us-venezuela-opposition-fb-idUSTRE78L3DU20110922)

Expert: Guyana's request is a hostile act against Venezuela

Aníbal Martínez, head of non-governmental organization Instituto de Defensa del Petróleo (Institute for the Defense of Oil), considers Guyana's request to extend its continental shelf from 200 miles to 350 miles is "the culmination of a series of hostile acts that have been carried out by this country against Venezuela, while our country has not exercised its legitimate right to defend territorial integrity." He adds that: "Venezuela has indisputable rights in its Atlantic front." (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/expert-guyanas-request-is-a-hostile-act-against-venezuela.shtml)

Peru seeks trade complementation agreement with Venezuela

Peruvian Trade and Tourism Minister José Luis Silva say his country seeks to close negotiations for a trade complementation agreement with Venezuela before October 19, which will mark the end of bilateral tariff preferences by Venezuela within. More in Spanish at: (El Nacional, 09-22-2011; http://www.el-nacional.com/)

Chavez in telephone conversation with CARICOM leaders about ALBA

President Hugo Chávez held a telephone conference with representatives of the 14 nations within the Caribbean Community (CARICOM), about a possible agreement between this regional grouping and ALBA toward an integrated economic area for South America and the Caribbean. More in Spanish: (Agencia Venezolana de Noticias, 09-23-2011;  http://www.avn.info.ve/node/78634)

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.

September 19th, 2011

Economics & Finance

Chavez again threatens to nationalize Venezuela banks

Venezuelan President Hugo Chavez on Saturday again threatened to nationalize the country's private banks, arguing that they are not financing families seeking to buy a house. “We really need to keep an eye on private banks," said Chavez. "I do not have any problem nationalizing them, or expropriating them. We will not accept that banks continue to joke around with people who do not have a home.” (Latin American Herald Tribune, 09-19-2011; http://www.laht.com/article.asp?ArticleId=425910&CategoryId=10717)

Financial controls damage Venezuelan competitiveness

According to overall rankings in The World Economic Forum’s Global Competitiveness Report for 2011-2012, based on World Bank data, Venezuela ranks 124^th in global market sophistication. Its’ low ranking is due to the removal of financial market instruments and obstacles to foreign private investment essential to productivity. (El Universal, 09-19-2011; http://www.eluniversal.com/2011/09/19/financial-inflexibility-hits-venezuelas-competitiveness.shtml)

CAN re-entry considered best deal for Venezuela

Most analysts agree that member countries of the Andean Community have made great strides in tariff and economic integration, whereas Venezuela remains stagnant by applying dated rules. Both Colombian and Venezuelan private sectors, plus the Secretary General of the Andean Community, Adalid Contreras, suggest reinstating Venezuela into the multilateral group in order to promote trade, which has fallen to unprecedented levels. More in Spanish at: (El Mundo, 09-19-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reingreso-a-la-can--es-el-mejor-negocio--para-vene.aspx)

Local stock market up 53.75% YTD

Caracas stocks rose 0.7% last week on continued low volume with the Caracas Stock Index closing at 100,450 for the week. Banco Provincial rose 2.78% to Bs. 37, with Envases Venezolanos dropping 13% at Bs. 20.88, CANTV losing 3.7% to Bs. 6.5, Mercantil Servicios Financieros A down 0.7% at Bs. 35 and Sivensa lost 0.27% to Bs. 7.3. All other stocks in the Caracas Stock Index did not change in price. The Venezuela Stock Market Index is now up 53.75% for the year to date. (Latin American Herald Tribune, 09-19-2011; http://www.laht.com/article.asp?ArticleId=426138&CategoryId=10717)

Commodities

Oil Minister says PDVSA will import 138 Chinese rigs

Venezuelan Energy and Petroleum Minister Rafael Ramírez says PDVSA will import 138 rigs from China, and that another 20 rigs are being built in Venezuela. The Minister also said the state owned oil holding will continue to use its agreements with the People's Republic of China. (El Universal, 09-19-2011; http://www.eluniversal.com/2011/09/19/oil-minister-pdvsa-is-to-import-138-chinese-rigs.shtml)

Chavez orders new state gold grab

A new law regulating gold mining in Venezuela took effect Monday and will require mining companies to sell all the gold they extract to the government. The decree, which was signed by President Hugo Chavez is aimed at boosting government control of gold mining operations. Private companies will still be allowed to participate in mining, but as minority partners in joint ventures with the government. There was no immediate reaction from Rusoro Mining Ltd., the one company with significant mining operations under way in Venezuela. Chavez said last month that officials had contacted the company, based in Vancouver, British Columbia, to continue mining as a joint venture. (Washington Post, 09-19-2011; http://www.washingtonpost.com/business/industries/mining-companies-will-have-to-sell-all-gold-extracted-to-venezuelan-government-under-new-law/2011/09/19/gIQAFEMTgK_story.html)

Gold prices picked up Monday after European officials failed to calm fears over a Greek default and a spread to other countries in the Euro Zone. Gold in cash was trading at U$D 1,817.99 the troy ounce at 10:33 GMT. It posted a record at U$D 1,920.30 on September 6. (Veneconomy, 09-19-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27653&idc=2)

Venezuela oil basket rises to U$D104.47

Venezuela’s oil export basket gained U$D 1.19 to U$D 104.47 a barrel for the week of September 12-16, edging the annual average closer to U$D 100 a barrel, the Energy and Oil Ministry said. According to the Ministry, the average price so far in 2011 for Venezuela's mix of heavy and medium crude is now U$D 99.54 -- higher than 2010's U$D 72.43, and much higher than 2009’s average price of U$D 57.01, and above the previous high set by 2008's U$D 86.49 average. (Latin American Herald Tribune, 09-17-2011; http://www.laht.com/article.asp?ArticleId=425779&CategoryId=10717)

Logistics & Transport

Venezuela’s port authority (BOLIPUERTOS) signs new contracts with China and Portugal

Elsa Graff, President of BOLIPUERTOS announced that plans are underway to strengthen port operations, including contracts signed with Chinese and Portuguese companies to purchase machinery that will streamline operations at both Puerto Cabello and La Guaira. More in Spanish at: (Notitarde, 09-19-2011; http://www.notitarde.com/notitarde/plantillas/nota.aspx?idart=1432205&idcat=9849&tipo=2)

Politics

Chavez heads to Cuba for 4th round of chemotherapy

Venezuela's cancer-stricken leader Hugo Chavez returned to Cuba on Saturday for a fourth and probably last round of chemotherapy, vowing to be recovered and fit for a tough re-election campaign next year. The charismatic leftist has led Latin America's top oil exporting country since 1999 and wants to stay in office until at least 2025 to consolidate his self-styled "revolution." But his hopes for a lengthy rule were put in doubt by a cancer diagnosis this year. (Reuters, 09-17-2011; http://www.reuters.com/article/2011/09/17/venezuela-chavez-idUSS1E78G05720110917)

Chavez calls IACHR Court worthless after it ruled to reinstate Leopoldo López’ political rights

In less than five minutes, Venezuela's President Hugo Chavez went from saying that it was not up to him to comment on the ruling of the Inter-American Court of Human Rights (IACHR Court) in the case of former Chacao municipality mayor Leopoldo López to state that the hemispheric court has no value for his government and is “worthless”. At the same time, Venezuelan Solicitor General Carlos Escarrá said that the ruling – which orders the Venezuelan government to reinstate the political rights of López, and enable him to run for elected office, violates all universal legal principles. (El Universal, 09-19-2011; http://www.eluniversal.com/2011/09/19/chavez-the-iachr-court-has-no-value-it-is-worthless.shtml and http://www.eluniversal.com/2011/09/19/solicitor-general-iachr-court-ruling-disregards-the-constitution.shtml)

Electoral Council says it will wait for a Supreme Court decision on the López case

Socorro Hernández, a director of the National Electoral Council (CNE) has said that the CNE will wait for a decision by the Supreme Court in the case of ex mayor and political leader Leopoldo López before it takes a formal stance on the issue. "The CNE cannot make a decision on its own on the situation of Leopoldo (López). The CNE will take steps as soon as it receives an official decision from the TSJ or the Comptroller General Office. We have to wait for the decision of the TSJ. When it decides, the CNE will do what it has to do in such cases," said Hernández. (El Universal, 09-19-2011; http://www.eluniversal.com/2011/09/19/electoral-body-waits-for-top-court-decision-on-leopoldo-lopezs-case.shtml)

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.

September 16th, 2011

Economics & Finance

Government considers denouncing investment protection treaties

A recently disclosed Venezuelan Foreign Ministry paper reveals that several meetings have been held to assess the possibility of denouncing several investment protection treaties signed with other nations; as well as a possible denunciation of the Convention on the Settlement of Investment Disputes between States and National of other States (ICSID Convention) in order to withdraw from the International Center for Settlement of Investment Disputes (Icsid). (El Universal, 09-14-2011; http://www.eluniversal.com/2011/09/14/venezuela-reviews-investment-protection-agreements.shtml)

Venezuelan bonds reach lowest level YTD on worsened risk perception

Despite a surge in the international bond market due to the agreement between Germany and France to aid Greece, The Venezuelan Global 27 closed at 66.75%, and the PDVSA 2022 at 76.5% of value, down from 86.5% in March. Brokers say the official announcements about gold repatriation and revising investment treaties have increased risk perception. More in Spanish at: (El Universal, 09-15-2011; http://www.eluniversal.com/2011/09/15/bono-marcador-venezolano-cae-al-nivel-mas-bajo-del-ao.shtml)

Central bank ponders keeping some gold reserves abroad

The board of directors of the Central Bank of Venezuela (BCV) is considering the possibility of keeping some of the gold reserves in foreign banks, so that they can be readily cashable, if necessary. BCV sources said that the number of gold ingots that will be brought to Venezuela and the gold bars that will remain in foreign financial institutions has not yet been determined. (El Universal, 09-14-2011; http://www.eluniversal.com/2011/09/14/central-bank-ponders-keeping-some-gold-reserves-abroad.shtml)

China has injected over U$D 30 billion into Venezuelan economy, U$D 4 billion more sought

Foreign Minister Nicolás Maduro has said agreements with China have brought over U$D 30 billion into the Venezuelan economy though two special funds. Venezuela has recently signed a long term agreement (2013-2030) with the China Development Bank to cover large investments in construction, telecommunications, health, technology and agriculture, among others. After a meeting between President Chavez and the President of the China Development Bank it was announced the Bank is currently financing 137 development projects locally. Maduro said there is a plan to install 3 refineries in China over the next 10-15 years to process heavy oil from the Orinoci Oil Belt. Chavez met this week with the Bank president to negotiate a new U$D 4 billion tranche. More in Spanish: (AVN, 09-14-2011; http://www.avn.info.ve/node/77403; http://www.avn.info.ve/node/77381 and http://www.avn.info.ve/node/77555; El Universal, 09-16-2011; http://www.eluniversal.com/2011/09/16/venezuela-negocia-nuevo-tramo-de-endeudamiento-con-china.shtml)

PDVSA has provided Treasury 61% of its annual fiscal contribution over first five months of 2011

According to the Central Bank. Petróleos de Venezuela (PDVSA) made a fiscal contribution of U$D 6.39 billion in five months. By the end of May, the state-owned oil company had transferred 61% of its expected fiscal contribution for 2011, which is projected at U$D 10.51 billion. (El Universal, 09-14-2011; http://www.eluniversal.com/2011/09/14/pdvsa-transfers-61-of-2011-contribution-to-the-treasury.shtml)

International reserves down slightly to U$D 31.113 billion

The Central Bank says international reserves remain over U$D 31 billion, although slightly down from U$D 31.223 billion last Monday. More information in Spanish: (El Mundo, 09-14-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-bajan-a-$31-113-millones.aspx)

Commodities

PETROBRAS-PDVSA talks on refinery hit snags

Brazilian federal oil company Petroleo Brasileiro (PBR, PETR4.BR) confirmed it is still talking to Petroleos de Venezuela SA (PDVSA) over a joint-venture deal to build a refinery in Brazil's Pernambuco state. PDVSA still faces several hurdles to officially take its expected 40% stake in the Abreu e Lima refinery currently under construction, and assume 40% of already contracted loans for the project and meet loan guarantee demands from the Brazilian National Development Bank, or BNDES. Petrobras has pledged to build the nearly U$D15 billion refinery with or without the participation of PDVSA, and would be able to save some cash by not needing to install specialized equipment to process heavy crude from Venezuela's Carabobo field should PDVSA not participate. (Fox Business, 09-13-2011; http://www.foxbusiness.com/industries/2011/09/13/brazil-petrobras-in-talks-with-venezuelas-pdvsa-on-refinery-jv/#ixzz1XvcBLRQT)

Venezuela's PDVSA says upgrader to halt on Sept 21

Venezuela's state-run oil company PDVSA announced that its 130,000-barrels-per-day Petroanzoategui heavy crude upgrader will shut down for planned maintenance on Sept. 21. The company announced the suspension of operations in a statement that did not mention how long the upgrader was expected to be closed. In February the local oil workers' union said the scheduled shutdown would last 40 days. (Reuters, 09-14-2011; http://www.reuters.com/article/2011/09/14/venezuela-upgrader-idUSS1E78D1WQ20110914)

Venezuelan oilmen find opportunities in Colombia

Oil workers banished by President Hugo Chavez have taken their experience drilling for Venezuela’s tar-like oil to countries as varied as Iraq, Nigeria and Canada. But the presence of Venezuelan petro-scientists has been most vital here in Colombia, where they have helped oil companies sharply increase the production of crude, much of which is exported to the United States. Colombia is now on the verge of achieving what just a few years ago were unthinkable: pumping 1 million barrels of oil a day, up from 540,000 barrels daily in 2005. (Washington Post, 09-12-2011; http://www.washingtonpost.com/world/americas/venezuelan-oilmen-find-opportunities-in-colombia/2011/09/12/gIQAiOcjTK_story.html)

Politics

Presidential elections in Venezuela scheduled for October 7, 2012

The National Electoral Council (CNE) has announced presidential elections for the 2013-2019 term will be held on October 7, 2012. It was decided unanimously that the presidential, governors and municipal elections would be carried out at different dates. Elections for governors will be held in December 2012 and municipal elections in April 2013. (AVN, 09-13-2011; http://www.avn.info.ve/node/77081)

Chavez to undergo fourth and last chemotherapy round, will skip UN General Assembly

President Chávez has announced he will soon begin the fourth and last round of chemotherapy. He explained he will undergo a comprehensive evaluation in October to “verify there are no malignant cells. Once that is done, we would enter a new stage.” However, he expects not to attend a United Nations General Assembly meeting this month in New York because of cancer treatment. (Veneconomy, 09-13-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27579&idc=1 and Bloomberg, 09-15-2011; http://www.bloomberg.com/news/2011-09-15/chavez-says-he-will-likely-start-new-round-of-chemo-on-sept-19.html)

Chávez avoids comment on China's recognition of Libyan rebels

President Hugo Chávez refrained from giving an opinion on a decision of the Chinese government to recognize the National Transitional Council (NTC) as Libya's official government. He reckoned that the Beijing had his reasons to do so. He says: “Beijing will certainly have reasons to do so. I am not going to question that decision". (El Universal, 09-13-2011; http://www.eluniversal.com/2011/09/13/chavez-avoids-assessing-chinas-recognition-of-the-ntc.shtml)

Chavez aims for 2012 re-election, says he will seek additional enabling powers after victory

Venezuela's 2012 presidential election race has kicked off with President Hugo Chavez confident of victory in South America's biggest oil exporter next year. The socialist leader has won three presidential votes during 12 years in power and has vowed to emerge triumphant again -- despite undergoing chemotherapy treatment for cancer. He recently said: “Once we achieve a ‘bolivarian’ victory on October 7th I may ask for a Special Enabling Law from October to February, for a transition from my Third Government to my Fourth Government” (Reuters, 09-14-2011; http://www.reuters.com/article/2011/09/14/us-venezuela-chavez-fb-idUSTRE78D45N20110914 and more in Spanish: El Universal, 09-15-2011; http://www.eluniversal.com/2011/09/15/chavez-pedira-ley-habilitante-si-gana-las-elecciones-de-2012.shtml)

Trade with Argentina rose 23% over the first semester 2011

Trade between Argentina and Venezuela totaled U$D 749,2 million over the first semester of 2011, an increase of 23% over the same period in 2010.Argentina sold U$D 742,6 million – mainly in food and beverages - and bought only U$D 6,6 million from Venezuela. More in Spanish: (El Nacional, 09-15-2011; http://www.el-nacional.com/)

Billionaire Cisneros seeking to buy Spanish assets amid crisis

Venezuelan billionaire Gustavo Cisneros is looking to buy Spanish companies as the European debt crisis drives down asset valuations. Cisneros says he has decided to “look at Spain again. It’s a natural market for us. These are good companies, especially companies that export to Latin America.”  He added: “Media obviously in Spain for us would be a natural, but I don’t discard manufacturing companies. I’m not interested in banking.” Cisneros is also setting up joint ventures with Chinese banks to carry out investment in Latin American commodities industries. (Business Week, 09-15-2011; http://www.businessweek.com/news/2011-09-15/billionaire-cisneros-seeking-to-buy-spanish-assets-amid-crisis.html)

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.