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.