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.

Friday, October 7, 2011

October 07th, 2011

Economics & Finance

Venezuela projects U$D 50 per barrel of oil for 2012 budget
Venezuela will calculate its budget for 2012 based on an average price for Venezuelan crude oil of U$D 50 a barrel, according to Ricardo Sanguino, President of the Finance Commission at the National Assembly, who was quoted as saying the budget is in its final phase of calculation. This year’s budget was based on an average price of U$D 40 a barrel. (Bloomberg, 10-05-2011;

Inflation reaches 20.5%
Both the Central Bank and the National Statistics Institute have reported that the September Consumer Price Index closed at 1.6%, which brings year to date inflation to 20.5%. Inflation projected for the year is now 26.5%. Central Bank President Nelson Merentes says inflation is slowing down and added: “It is a complex problem, we are going to work hard on production and we are going to try to avoid speculation". More in Spanish: (Tal Cual, 10-07-2011;

Venezuelan government has taken over 459 companies this year
The Venezuelan government has taken control of 459 companies so far this year, according to data provided by the Venezuelan Confederation of Industries (CONINDUSTRIA). The figure nearly doubles the number of companies (284) that were taken over by Venezuelan authorities last year, according to Conindustria. (El Universal, 10-05-2011;

Gold to begin arriving by mid November
The Central Bank chief says they will begin repatriating gold reserves from Western nations by mid-November.
London clearing house LCH.Clearnet said it will accept gold bullion as collateral by the end of this month, subject to regulatory approval. (Reuters, 10-06-2011;; More in Spanish at: Ultimas Noticias, 10-06-2011;


Chavez eyes new oil cartel
President Chavez proposed creating a new oil exporters group parallel to OPEC that would include only the "giants" of global petroleum producers.  He Chavez made the comments while hosting Russia's Deputy Prime Minister Igor Sechin and Energy Minister Sergei Smatko, saying the two countries could be part of such a super-cartel: "I had an idea, create a new organization... of petroleum giants" adding "we are not more than four or five" countries. He said that "Russia and Venezuela are two of the oil giants of this planet" and that such a super-cartel could co-exist with the Organization of Petroleum Exporting Counties. (AFP, 10-07-2011;

Cost of Venezuela's fuel subsidy up 19.4% in three years
The International Energy Agency (IEA) estimated that in 2010 subsidized fuel cost Venezuela U$D 15.7 billion. Frozen fuel prices have resulted in higher fiscal sacrifices in Venezuela, according to the World Energy Outlook 2011 conducted by the International Energy Agency (IEA). The study shows that in 2010 Venezuela spent U$D 19.9 billion to subsidize fuel, natural gas, and electricity, with discounts hitting 75% of the value of the product. (El Universal, 10-05-2011;

ENI and REPSOL await Venezuela gas project go-ahead
Italy's ENI and Spain's REPSOL are waiting for Venezuela to approve the extraction of gas from a field that has the biggest deposits found so far off the OPEC nation. Amid delays and setbacks to other offshore development plans, ENI and REPSOL completed their exploratory phase at the Cardon 4 block last year with the certification of more than 15 trillion cubic feet (tcf).  A source at one of the companies said they were wary after a senior PDVSA official said last week that the government was freezing its liquefied natural gas projects because the gas was needed domestically, and low prices did not support the cost involved. (Reuters, 10-04-2011;

Venezuela stations are hit by shortages of gasoline, diesel
For the past week, Venezuela has experienced shortages of fuel supplies such as gasoline and diesel, sources and local news reports indicated Wednesday. PDVSA has yet to offer an explanation about the national fuel shortage, and did not immediately return phone calls or emails by Platts.  Daily newspaper El Nacional reported Wednesday that "the crisis of fuel supplies continues and affects the whole country, owing to failures in the PDVSA-managed transport system that does not stock all service stations equally, especially in the metropolitan Caracas area." Ramon Castro, formerly vice president of a previous PDVSA affiliate dedicated to managing the domestic fuel supplies market, said in an interview Wednesday that "national consumption tops 745,000 b/d, of which 400,000 corresponds to gasoline." (Platts, 10-05-2011;

Brazil Development Bank accepts PDVSA guarantees on refinery
Brazil’s main development bank has accepted the bank guarantees provided by Venezuelan state-owned oil giant PDVSA for its stake in the oil refinery being constructed in Pernambuco state, with Nov. 30 now the deadline for sealing the agreement, PETROBRAS said. The BNDES development bank decided on Sept. 30 that the guarantees PDVSA offered as a partial substitute for the debt taken on to build the Abreu e Lima refinery, which was originally planned to be a binational project, were acceptable. (Latin American Herald Tribune, 10-05-2011;

Logistics & Transport

Venezuela will double the capacity of Puerto Cabello port with support from China
Puerto Cabello, Venezuela's main port and one of the most important in Latin America will be the subject of extensive modernization project that involves building a new terminal, which specializes in containers, which will double to 700,000 20-foot containers (TEUs) to years their ability to manage in a first stage. The first phase is scheduled to begin in mid 2012 and end in 2014. There will be three phases, to be completed in 2030 and to be carried 200,000 TEUs a million annual capacity of this terminal sea. The new terminal is to be located northwest of Puerto Cabello. More in Spanish: (AVN, 10-06-2011;; Notitarde,; El Carabobeño,


Reuters identifies key political risks to watch in Venezuela
Speculation about President Hugo Chavez's health after cancer treatment, falling oil output that could slow economic recovery and rising passions ahead of next year's presidential election are the main risks to watch in Venezuela. What to watch: - Further twists and turns in Chavez's health saga. - Opposition candidates positioning ahead of primaries. - More controversial economic announcements by Chavez. - Possible new debt issuances by PDVSA. - Movements in global oil prices which are significant to Venezuela's income and overall economic picture. - More details of investments in projects to exploit the huge reserves in the Orinoco belt. - Unscheduled maintenance, stoppages and outages at Venezuela's refineries and heavy oil upgraders. - Possible ruling in the Exxon arbitration case. (Reuters, 10-03-2011;

DATANALISIS poll shows six out of 10 people think Chavez should not be reelected
DATANALISIS polling company says positive assessment of President Chavez reached 58.9% in September, a 10% increase over July. The same poll found that the willingness to vote for Chavez in a polarized environment with only one opposition candidate rose from 31% to 40% from July to September. (El Universal, 10-05-2011;

A Keller poll indicates half of the Venezuelans consider Chavez must not be re-elected in the next presidential election. The same poll indicates the President’s popularity rose eight points to 57% after the cancer announcement. (Veneconomy, 10-04-2011;

Venezuela to present advances in Geneva
A team of ministers and Government representatives has left for Geneva to present a progress report to the United Nations Universal Periodic Review (UPR). The team includes Foreign Minister Nicolas Maduro; Luisa Estela Morales, President of the Supreme Court; Attorney General Ortega Diaz; Interior Minister Tareck El Aissami and others. (AVN, 10-05-2011;

Chavez eyes tourist islands for takeover
President Chavez said his government would seize private homes on the idyllic Los Roques archipelago in the Caribbean and use them for state-run tourism in the latest move to implant socialism across Venezuela. "I've always said we should nationalize Los Roques," the ever-pugnacious Chavez said. (Reuters, 10-06-2011;

Colombia anticipates smoother relations with Venezuela
During a radio interview Colombian Foreign Minister María Angela Holguín said "President Chávez has been a little bit distant from the daily issues due to his illness". She added that "those duties have been gradually assumed by Foreign Minister (Nicolás Maduro)" and said she talks with Maduro "almost every week," and that bilateral ties have been developing "but not as smoothly as we would like." Colombian Defense Minister Juan Carlos Pinzón has also said relations between his country and Venezuela have steadily improved and strengthened since they were restored in August 2010, after meeting with his Venezuelan counterpart and Interior Minister Al aissami. (El Universal, 10-05-2011; and ;

Trade between Venezuela and Colombia un 24%
Year to date binational trade is now at U$D 1.3 billion, which is 24% above last year, according to the Venezuela-Colombia Chamber of Commerce. Business, however, remains very much under earlier years. More in Spanish: (El Nacional, 10-07-2011;

Venezuela among the last places in democratic progress
Germany’s Konrad Adenauer Foundation has published its 2011 Index on Democracy noting that “Inequality was slightly reduced thanks, among others, to successful transference programs, but in many countries this trend has not meant improved a democratic for their citizens”. Those best rated on their democratic structure were Chile, Uruguay and Costa Rica. The worst positions are held by Nicaragua, Venezuela, Ecuador and Guatemala. More in Spanish at: (El Mundo, 10-07-2011;

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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