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, February 10, 2012

February 10th, 2012

Economics & Finance

Venezuela still risky for investment
Economist Jesús Casique says the nation remains among the riskiest emerging nations according to daily measurements. This is when country risk for foreign investment is rated by companies such as Moody ´s, Standard & Poor´s, and J.P. Morgan; there is a surcharge on its bonds above the rate paid for US Treasury Bonds. More in Spanish: (Tal Cual, 02-10-2012; http://www.talcualdigital.com/index.html)

Trade Minister admits inflation linked to low production
Trade Minister Edmée Betancourt admitted that production must meet demand in order to reduce inflation. She recently said: “We have not yet managed to balance demand with production and that is why we have inflation”. She added that “we need to produce more”, saying: “Whenever we manage to balance production and demand we will have beaten inflation”. More in Spanish: (El Universal, 02-10-2012 http://www.eluniversal.com/economia/120209/admiten-que-inflacion-esta-ligada-a-escasa-produccion)




Commodities

PDVSA had record revenue of U$D128 billion in 2011
Petroleos de Venezuela SA, the state oil company, posted record annual revenue of U$D 127.8 billion in 2011, Venezuelan Oil Minister Rafael Ramirez said. That compares with revenue of U$D 94.9 billion in 2010. The company is using loans to finance its investment plan of about U$D 15 billion a year and pays expenses with cash flow, he said, without providing additional financial results. “When a company like PETROBRAS takes on new debt, everyone is happy,” Ramirez said, referring to Brazil’s state-controlled Petroleo Brasileiro SA. “But they criticize us when we do. We get loans because our company is strong. The China Development Bank, for example, has a very rigorous way of qualifying a company for a loan.” PDVSA’s total debt surged 40% in 2011 from a year earlier to U$D 34.9 billion after issuing more than U$D 10 billion last year in dollar-denominated bonds. (Business Week, 02-10-2012; http://www.businessweek.com/news/2012-02-10/venezuela-s-pdvsa-had-record-revenue-of-128-billion-in-2011.html and Reuters, 02-09-2012; http://www.reuters.com/article/2012/02/09/venezuela-pdvsa-idUSL2E8D9AE620120209)

PDVSA Ponzi scheme's US receiver sues to recover U$D 550 million for Venezuela
The US court-appointed receiver responsible for unwinding the asset management companies at the center of a Ponzi scheme involving Venezuelan state oil company Petroleos de Venezuela (PDVSA)'s pension funds in the US has filed 6 lawsuits in US Federal Court seeking U$D 550 million dollars from a host of figures, including PDVSA investment manager Juan Montes for bribery; Venezuelan multi-millionaire Moris Beracha and a host of his companies; and Ponzi schemer Francisco Illarramendi and his partners. (Latin American Herald Tribune, 02-09-2012; http://www.laht.com/article.asp?ArticleId=469516&CategoryId=10717)

Venezuela to increase oil production capacity to satisfy global demand
In view of estimates of rising oil demand worldwide, in excess of 100 million barrels a day, Venezuela is increasing its production capacity to satisfy future market demands, said the Petroleum and Mining minister, Rafael Ramirez.
Government expects to increase production from current three million barrels per day to four million in 2014 and to six million in 2019. (AVN, 02-09-2012; http://www.avn.info.ve/node/98633; http://www.avn.info.ve/node/98648)

By 2015 oil exports to China in 2015 will match current oil shipments to the US
Rafael Ramírez, Venezuela's Minister of Petroleum and Mining and president of state-run oil company Petróleos de Venezuela (Pdvsa) predicted that oil exports to China would be equal to current shipments of Venezuelan oil to the United States. Ramírez commented that PDVSA intends to export one million barrels a day to China in two years. The Asian superpower currently imports 460,000 barrels a day from Venezuela. (El Universal, 02-09-2012; http://www.eluniversal.com/economia/120209/oil-exports-to-china-in-2015-are-to-match-current-oil-shipments-to-the)

Refinery closing threatens Virgin Islands’ debt, employment
The U.S. Virgin Islands will confront the threat of a debt downgrade when one of the region’s largest oil refineries shuts down this month, doubling joblessness on St. Croix, the archipelago’s poorest island. About 2,000 workers will lose their jobs when the 350,000- barrel-a-day HOVENSA LLC refinery, a partnership of Hess Corp. (HES) and Petroleos de Venezuela SA, closes in mid-February to stem $UD 1.3 billion in losses over the last three years. The decision leaves the Virgin Islands without its biggest private employer and facing a widening budget deficit and higher energy costs as some of its best-paid jobs disappear. (Bloomberg, 02-09-2012; http://www.bloomberg.com/news/2012-02-09/refinery-closing-threatens-virgin-islands-debt-employment-1-.html)

PDVSA says secures March deadline on Brazil refinery
Venezuela's state oil company PDVSA says it managed to extend until the end of March a deadline to make its contribution to a long-delayed refinery project with Brazil's PETROBRAS. PETROBRAS said on Tuesday that PDVSA had failed to secure a U$D 10 billion loan from Brazil's state-development bank BNDES that it was counting on to pay its 40-percent stake in the Abreu e Lima facility. (Reuters, 02-09-2012; http://www.reuters.com/article/2012/02/09/venezuela-brasil-refinery-idUSL2E8D9BLG20120209; El Universal, 02-07-2012; http://www.eluniversal.com/economia/120207/pdvsa-fails-to-get-loan-for-pernambuco-refinery)

No problems in Sidetur
Unlike the situation in SIDOR-Guayana, there are no problems with contract workers at Sidetur, located in Barquisimeto’s Industrial Zone II, since they are few (around 20 people) and in charge of maintenance and services and are not “inherent in the company’s productivity,” said Vicente D’ Ángelo, a representative of the Sidetur Socialist Workers’ Union. (Veneconomy, 02-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29349&idc=3)

National Assembly approves agreement between PDVSA and GAZPROM
The National Assembly gave final approval to an agreement between Venezuelan Petroleum Corporation (Corporación Venezolana de Petróleo), a subsidiary of state-run oil company Petróleos de Venezuela (PDVSA), and GAZPROMBANK Latin America Ventures for the creation of a joint venture in the Orinoco Oil Belt. Under the agreement, PDVSA will own 60% of the venture and the Russian oil company will own 40% of the firm. The joint venture comprises an area of 21,236 square miles, in the states of Anzoátegui, Monagas and Guárico. (El Universal, 02-08-2012; http://www.eluniversal.com/economia/120208/national-assembly-approves-agreement-between-pdvsa-and-gazprom; AVN; http://www.avn.info.ve/node/98510)


International Trade

Trade agreement with Colombia reached, Colombia expects to increase sales to over U$D 2.5 billion
Colombian President Juan Manuel Santos has announced that Colombia and Venezuela reached a trade agreement to take the place of Andean Community rules. Colombia´s Trade Minister Sergio Díaz-Granados added that the final signature on annexes is expected soon, adding that over 91% of items exported by Colombia between 2006 and 2010 will have zero tariffs. Businessmen within the Colombia-Venezuelan Chamber are optimistic and expect to increase exports to Venezuela by U$D 2.5-3 billion, according to Chamber President Magdalena Pardo. More in Spanish: (El Nacional, 02-10-2012; http://www.el-nacional.com/ and  El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/colombianos-preven-aumentar-sus-ventas-a-venezuela.aspx)

Venezuela to purchase 20 Brazilian planes
President Hugo Chavez announced he signed an agreement with a representative of the Brazilian Government, Alessandro Teixeira, to purchase 20 airplanes to extend the air connection with Latin America and the Caribbean.
President Chavez said the deal discussed with Teixeira seeks to "ensure the future of Venezuela and the future of Brazil." The President highlighted other important projects reviewed as he said Venezuela is very interested in having Brazil's oil company PETROBRAS work in the Orinoco Oil Belt with the national venture, PDVSA. More in Spanish: (AVN, 02-09-2012; http://www.avn.info.ve/node/98629)

Venezuela and Haiti will cooperate in 12 areas under a three year agreement signed by Haitian President Michel Martelly and Venezuela´s Hugo Chávez. Areas covered by the agreement include agricultural development, irrigation systems, fertilizer production, industrial development, financial cooperation for productive credits, storage for oil byproducts, among others. More in Spanish: (El Universal, 02-10-2012; http://www.eluniversal.com/nacional-y-politica/120210/venezuela-y-haiti-acuerdan-cooperar-en-12-areas)




Politics

Chavez faces tough challenge in likely foe Henrique Capriles
When Chavez came on the political scene as a trim, 44-year-old former army paratrooper, his fresh face and revolutionary ideas made him a viable alternative to the established order. Now Capriles, who has a wiry athletic build and is 39, is offering a similar break — not only from the aging opposition politicians who came from the two-party system Chavez replaced but also from the president himself. Capriles faces an uphill battle, but polls released late last year showed him closer to the president than any other politician who has challenged Chavez. On Sunday, Capriles is expected to emerge from a field of five opposition leaders in a first-ever primary designed to choose one strong candidate who could end Chavez’s long rule in October’s presidential election, according to the Caracas-based pollster DATANALISIS. The very fact that a primary is taking place — one in which various parties are represented — demonstrates how a once-fractured opposition has united, political analysts say. (Washington Post, 02-07-2012; http://www.washingtonpost.com/world/venezuelas-hugo-chavez-faces-tough-challenge-in-likely-foe-henrique-capriles/2012/02/07/gIQArEVLyQ_story.html)

Election Board will announce primary results when 90% are tallied
Results will be given to the Election Committee of the National Unity Committee. No hour has been set for announcements, but polling stations will close at 4 PM if there are no voters in line. Experts feel it unlikely there will be results before 9 PM Sunday. More in Spanish: (El Nacional, 02-10-2012; http://www.el-nacional.com/)

Chávez postpones meeting with Brazil's Dilma Rousseff
President Hugo Chavez will not meet this weekend with his Brazilian counterpart Dilma Rousseff, as he had previously announced. He says he will travel to Brazil by the end of March to meet with Dilma Rousseff and promote the bilateral relationship. (El Universal, 02-09-2012; http://www.eluniversal.com/nacional-y-politica/120209/chavez-postpones-meeting-with-brazils-dilma-rousseff)




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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