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, January 27, 2012

January 27th, 2012

Economics & Finance

World Bank confirms Venezuela will be out of ICSID in six months, current liabilities remain
The World Bank confirmed it has received Venezuela’s request to withdraw from the International Center for Settlement of Investment Disputes (ICSID) and added withdrawal will take effect six months after receipt of such notification, which is July 25, 2012. The Foreign Ministry said in a press release the 1966 treaty that established the ICSID undermines Venezuela's sovereignty. Withdrawing from ICSID does not mean Venezuela can avoid over 20 suits that have been brought against the Chavez regime, including suits brought by international oil companies. (Veneconomy, 01-25-2012;; El Universal,; More in Spanish: El Mundo, 01-27-2012,; Tal Cual;

Trade association thinks that Law on Fair Prices is risky for the government
Carlos Fernández, president of the Venezuelan Council of Trade and Services (CONSECOMERCIO), thinks that "it is a political risk for the government" to enforce the Law on Costs and Fair Prices. The businessman says, "when prices increase, the blame is placed on storekeepers; but when the government raises prices, the blame is also placed on retailers; if the government does not adjust prices, this will lead to product shortages. And it is politically costlier than raising prices." (El Universal, 01-25-2012;;

Former central bank manager: there will be no devaluation in 2012
José Guerra, former manager for economic research at the Central Bank of Venezuela (BCV), says the Government can count on high oil prices, indebtedness and funding from the National Development Fund (FONDEN), the Venezuelan Bank for Economic and Social Development (BANDES) and the Treasury Bank. (El Universal, 01-25-2012;


PDVSA says it invested U$D 15.1 billion in 2011
Rafael Ramírez, Minister of Petroleum and Mining, visited the Orinoco Oil Belt and said that oil production in that area is expected to increase from 1.18 million bpd to 1.63 million. He said that about 100,000 workers will be needed in the Orinoco Belt to meet the goals of the Oil Sowing Plan. Ramírez also said that state-run oil company Petróleos de Venezuela (PDVSA) invested U$D 15.1 billion in 2011, 31% more than in 2010, when PDVSA invested U$D 11.5 billion. According to the 2010 annual management report released by PDVSA, the Venezuelan oil industry had planned to invest U$D 18.36 billion (including partners' contribution) in the Oil Sowing Plan in 2011. (El Universal, 01-25-2012;

New Orinoco oil wells drilled to boost production
Petróleos de Venezuela SA, the state oil company, and a group of Russian companies started drilling the first oil well on the Junín 6 block today in the Orinoco crude belt, Oil Minister Rafael Ramirez said. PDVSA operates the block in a venture with Consorcio Nacional Ruso SRL and will reach production of 20,000 barrels of oil a day by December after starting early production in June, Ramirez told reporters. “The plan that we presented to increase current production of about 3 million barrels a day to 3.5 million barrels a day is based on 470,000 barrels a day of new output from the Orinoco belt and 88,000 barrels a day that will come from the West of the country,” said Ramirez. (Bloomberg, 01-24-2012;

Agriculture Minister says China will help develop 600,000 hectares of farmland, under an agreement signed that calls for road recovery, irrigation systems, and building infrastructure for agriculture and agribusiness. More in Spanish: (El Universal, 01-27-2012;

International Trade

China-Venezuela trade reached U$D18 billion
Chinese and Venezuelan trade exchange reached U$D18 billion in 2011, according to the Chinese Ambassador in Caracas Zhao Rongxian. He announced they expect to exceed the U$D 20 billion in 2012 and reminded reporters by the end of 1999, the first year of the Chávez administration, trade amounted to U$D 358 million. (Veneconomy, 01-25-2012;

Russian official says Venezuela has no plans to buy more weapons
Sergei Chemezov, director of Russian state-run industrial holding company ROSTEKHNOLOGII, said that the company does not expect that the Venezuelan government will sign new contracts to buy Russian weapons. (El Universal, 01-25-2012;


Obama says Chavez blames US for his own failures
US President Barack Obama expressed his wish for an improvement of relations with Venezuela, but said “There is an unfortunate tendency by the Venezuelan Government to use the United States as an excuse for the failure of some of their domestic policies; and also to cause problems for some of their neighbors”. Obama said bilateral problems were “manageable”. More in Spanish: (El Universal, 01-27-2012;

Lopez bows out of Venezuela presidential race, supports opposition front-runner Capriles
Opposition politician Leopoldo Lopez bowed out of Venezuela’s presidential race on Tuesday, saying he will support his leading rival as the opposition seeks to field a single candidate to challenge President Hugo Chavez. The announcement gives a significant boost to Henrique Capriles, the youthful 39-year-old state governor who has a commanding lead in the polls ahead of the Feb. 12 opposition primary. It also shakes up the field of five remaining contenders in the primary, which will choose a unity candidate to face Chavez in the Oct. 7 election. (The Washington post, 01-25-2012;

Counting the cost of crime
A recent report shows that Venezuela’s acute insecurity problem – it has one of the highest homicide rates in the world – also makes it the Latin American country where crime affects businesses the most. Basing its findings on World Bank figures, a new survey by Latin Business Chronicle looked at factors like the losses sustained by companies as a result of robberies and vandalism, as well as the cost of security. (Latin Business Chronicle, 01-25-2012;

Venezuela expects OPEC to discuss Iran situation
The members of the Organization of Petroleum Exporting Countries, or OPEC, must urgently discuss the “aggression against Iran” by the United States and Europe, according to Energy Minister Rafael Ramirez. OPEC, whose rotating presidency is held by Iraq, has not called a meeting of member countries to discuss the situation, but the oil cartel must do so because “any direct aggression or attack on Iran will cause a sharp rise in oil prices,” Ramirez said. (Latin American Herald Tribune, 01-25-2012;

Brazil, Venezuela defense ministers meet in Caracas
Brazilian Defense Minister Celso Amorim arrived in Caracas to hold a meeting with President Hugo Chavez and with his Venezuelan counterpart, Henry Rangel Silva, to tackle with issues related to security and defense in the two nations. (AVN, 01-25-2012;; El Universal, 01-25-2012;

CNE says it is ready for all of the three elections this year
Tibisay Lucena, president of the National Electoral Council (CNE) has said that the CNE is "ready" to carry out all of the three elections scheduled for 2012. Some of the work completed in 2011 included preparing handbooks for polling station members, review of nominations, streamlining of voting machines and year long enrollment. (El Universal, 01-25-2012;

Attorney General Carlos Escarra dies of heart attack
Justice Minister Tareck Al Aissami announced that that the Attorney General has died of a heart attack on Wednesday. Lawmakers allied with President Hugo Chavez chose Escarra as attorney general in August 2011. (The Washington post, 01-25-2012;; Bloomberg,

US offers help to reopen Venezuela's consulate in Miami
Mike Hammer, Acting Assistant Secretary for Public Affairs, said Tuesday through Twitter that his government is willing to work with Venezuela to keep the Venezuelan consulate in Miami open. "The decision to close the consulate is that of the government of Venezuela. We are unaware of threats to the Consulate. We take seriously the obligation to protect diplomats. We are willing to work with Venezuela if they keep the consulate open," Hammer replied to a journalist's question. (El Universal, 01-25-2012;

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