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, December 2, 2011

December 02nd, 2011

Economics & Finance

Barclays estimates Venezuela inflation at 36.5% in 2012
In its latest report, Barclay’s says liquidity has increased 15.6% in real terms, and projects new official incentives due to the election campaign, which leads them to raise their 2012 inflation estimates for Venezuela from 26.2% to 36.5%. “It would be the highest rate since 1997”. More in Spanish: (El Universal, 12-02-2011;

Foreign debt up to U$D 94.6 billion
Despite an oil price exceeding U$D 90 per barrel, Venezuela's public sector has increased its debt through loans and the issuance of bonds. According to data provided by the Central Bank of Venezuela (BCV), external public debt (which includes the debt of the central government and state-owned companies) hit U$D 94.6 billion in the third quarter of 2011, up 21% compared to the same period of 2010, when the foreign debt was U$D 78.5 billion. According to analysts, even though Venezuela's debt levels are still manageable and there are collateral guarantees of payment given the upward trend of oil revenues, the growing debt has raised concern, in view of the substantial costs associated to high interest rates. (El Universal, 11-29-2011;

Chavez pays half of CEMEX demand for seized Venezuela unit
Venezuela agreed to pay Mexican cement maker CEMEX SAB about half of what the company had been seeking in arbitration for a local unit that was nationalized by President Hugo Chavez in 2008. The deal, which Cemex expects to complete by Dec. 7, includes a cash payment of U$D 240 million and U$D 360 million in bonds issued by state oil company Petroleos de Venezuela SA, the Mexican cement maker said today in a filing to Mexico's stock exchange. The arbitration proceedings will be terminated "subject to receiving full payment," said Jorge Perez, a Cemex spokesman. (San Francisco Chronicle, 12-02-2011;

Estimates indicate U$D 22 billion pending tab for nationalizations
According to ECOANALITICA, the Government has paid out U$D 11.4 billion for nationalizations, including the recent CEMEX settlement. It estimates pending obligations add up to U$D 22 billion, which is 79% of international reserves currently pegged at U$ 27.8 billion. More in Spanish: (El Universal, 12-02-2011;

300 companies have registered in the Price Control Authority (SUNDECOP)
Over 300 companies have registered at, according to information in the SUNDECOP’s web page. Costs and Prices Superintendent Karlin Granadillo has said that once its true value has been determined for a product, the Maximum Sale Price (PMV, in Spanish) to the public will be established as of December 15. (Veneconomy, 12-01-2011;

Caracas among the cities with the worst standard of living
The Venezuelan capital ranked 164th out of 211 cities in the world included in the Mercer's 2011 Quality of Living Survey. Montevideo, Buenos Aires, Santiago de Chile, and Panama City are the Latin American cities with the highest quality of living in the region, according to a ranking released by consulting firm Mercer. Vienna has the best living standard in the world, followed by Zurich and Auckland. (El Universal, 11-30-2011;


Area to be developed by CVP and Odebrecht E&P Spain is delimited
Delimitation of the geographical area where a joint venture formed by state-run oil company Corporación Venezolana de Petróleo (CVP) and Odebrecht E&P Spain will operate was published in the Official Gazette No. 39,810, dated Tuesday, November 29, 2011. The area will include three oil fields: Mara Oeste (41 square miles), Mara Este (111 square miles), both located at Mara Municipality; and La Paz area (68 square miles), located in Jesús Enrique Lossada municipality, in the northwestern state of Zulia, according to Resolution No. 174 of the Ministry of Petroleum and Mining. The joint venture will develop an area of 220 square miles. (El Universal, 11-30-2011;

PDVSA revives project to build pipeline through Colombia
Colombian President Juan Manuel Santos and his Venezuelan counterpart Hugo Chávez signed this week several bilateral energy agreements, one of which dusts off the state-run oil company Petróleos de Venezuela's idea of laying a pipeline from Venezuela through Colombian territory in order to take advantage of Colombia's access to the Pacific Ocean. This project was first outlined in 2006, but the idea did not materialize because bilateral relations were frozen amidst verbal clashes between former Colombian President Álvaro Uribe Vélez and Chávez. (El Universal, 11-30-2011;

Cement and concrete sales fall short of 2009 levels
Sales of construction materials such as concrete and cement rebounded between January and September 2011, but remained far below those recorded in 2009. According to data compiled by cement companies and steelmakers, sales of these construction materials rose only 8%, despite the fact an official priority for the Great Housing Mission, intended to solve a substantial housing deficit in the country. (El Universal, 11-30-2011;

PDVSA’s negotiations in Brazil’s refinery still ongoing
Negotiations regarding Petroleos de Venezuela S.A. (PDVSA) stake in the Refinery Abreu e Lima S.A. (RNEST) are still ongoing, according to PETROBRAS. PDVSA has been taking action to formalize guarantees for the Brazilian Development Bank (BNDES) to back its future obligations in respect of the RNEST Loan Contract with BNDES. (Latin American Herald Tribune, 11-30-2011;

International Trade

Colombia, Venezuela agree to zero-tariff for 3,800 items
Venezuela and Colombia have signed a Partial Trade Agreement (PSA). Although it’s terms and conditions are far different from those governing trade relations among the member countries of the Andean Community of Nations (CAN), the agreement provides some stability. Venezuela's Minister of Industry Ricardo Menéndez said that the two countries agreed to keep "zero-tariff" for 3,800 items. "The agreement will include all the tariff codes that we have been in place over the past five years," Menéndez said. The Venezuelan official stated that the number of items included would prevent any "disturbance" in the economies of the two countries. (El Universal, 11-30-2011;

PARMALAT apologizes for riling Chavez
Italy's PARMALAT apologized on Tuesday to President Hugo Chavez after a highly public spat over alleged milk hoarding by the dairy company's local unit in the South American nation. "We respectfully address you to offer our most sincere apologies," PARMALAT said in a letter to Chavez published by local media, saying it had failed to communicate its position clearly over authorities' confiscation of some milk. (Reuters, 11-29-2011;


Chavez sees a Caracas-Brazil-Buenos Aires axis; signs deals with Rousseff and Fernández
Presidente Chavez underlined the importance of an axis of Argentina-Brasil-Venezuela within the context of the newly formed Community of Latin American and Caribbean States (CELAC). He signed several agreements with his Brazilian and Argentine counterparts, Dilma Rousseff and Cristina Kirchner. Brazil obtained agreements to set up a mixed venture between the Venezuelan Petroleum Corporation (CVP) and the ODEBRECHT construction firm in order to expand primary projects called for in the Hydrocarbons Law; and an agreement to carry out a hydroelectric project in Uribante-Caparo (Táchira state). Argentina will sell Venezuela powdered milk, beef, refined soy oil, chickens, rice, soy beans and yellow corn throughout 2012. More in Spanish: (Agencia Venezolana de Noticias, 12-02-2011;áreas-energía-industria-y-comercio;ía-petróleo-y-agricultura;ávez-discutió-fernández-y-rousseff-creación-eje-caracas-brasil-buenos-aires; El Universal,

Venezuela perceived as the most corrupt country in the region and one of the most corrupt countries in the world, ranking 172nd in a study by Transparency International (TI) that included 182 nations. The least corrupt countries are New Zealand, Denmark and Finland while the bottom of the pack includes Myanmar, North Korea and Somalia. Chile ranked 22nd. (Veneconomy, 12-01-2011;

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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