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 24, 2012

February 24th, 2012

Economics & Finance

Chavez cancer surgery spurs investors to buy Venezuela debt
Venezuela’s bonds rose, sending yields relative to Treasuries to the lowest in 21 months, after President Hugo Chavez said he’ll travel to Cuba for another cancer operation, spurring speculation he may not be able to run in October elections. The extra yield investors demand to own Venezuelan government bonds instead of U.S. Treasuries fell 30 basis points, or 0.30 percentage point, to 988 at 12:38 p.m. in New York, according to JPMorgan Chase & Co.’s EMBI Global index. That compares to an average four basis-point decline in Latin America. (Bloomberg, 02-22-2012; http://www.bloomberg.com/news/2012-02-22/chavez-cancer-surgery-spurs-investors-to-buy-venezuela-debt-caracas-mover.html; El Universal; http://www.eluniversal.com/economia/120222/venezuelan-debt-rebounds-for-uncertainty-about-chavezs-health)

Spanish companies lose interest in Venezuelan market
The Venezuelan market is becoming less and less attractive for Spanish companies. Such is the conclusion from the report "2012: An Overview of Spanish Investment in Latin America," prepared by the IE Business School, based in Madrid. According to their research, countries like Brazil, Colombia, Mexico and Peru still attract Spanish investment. The opposite happens with Venezuela. (El Universal, 02-23-2012;

Private construction dropped 70% over the past two years
The president of the Venezuelan Construction Chamber, Juan Francisco Jiménez, says private construction has dropped 70% over the last two years. The situation was described as serious by the business leader, who said that the construction industry is necessary for the country's development. (El Universal, 02-23-2012; http://www.eluniversal.com/economia/120223/private-construction-drops-70-in-the-past-two-years)




Commodities

Is Venezuela on the cusp of a post-Chavez oil boom?
If Venezuelan President Hugo Chavez is forced to drop his bid for re-election for health reasons, will the primary repercussion for the West be the exit of a voluble thorn in the side? Perhaps, but it will also mean the prospect of yet more newly available oil reserves -- on top of the widely projected U.S. shale oil bonanza. The takeaway: If the shale oil projections are accurate, and Chavez leaves politics under whatever scenario, we have the prospect of a geopolitical shakeup analogous to what has accompanied the rise of shale gas. Venezuela has the largest proven oil reserves on the planet -- 296 billion barrels, according to OPEC figures. The number is slightly misleading: Saudi Arabia's 264 billion barrels are higher quality and cheaper to produce than the extremely heavy crude of Venezuela's Orinoco Basin; yet Venezuela's reserves are so massive that such details almost don't matter. (The Oil and Glory, Foreign Policy, 02-22-2012; http://oilandglory.foreignpolicy.com/posts/2012/02/22/is_venezuela_on_the_cusp_of_a_post_chavez_oil_boom)

Catalytic cracking unit starts up at Venezuelan refinery
The catalytic cracking unit at PDVSA's Cardón refinery, Venezuela's second largest oil plant, began a start-up process, according to oil workers. The 89,000 bpd unit shut down last Monday due to a failure in a valve of steam equipments.
"Getting back to normal can take more than six hours," said an oil worker who preferred not to be identified by name, as quoted by Reuters. (El Universal, 02-23-2012; http://www.eluniversal.com/economia/120222/catalytic-cracking-unit-starts-up-in-venezuelan-refinery)

Around 80 CVG Alcasa workers chained themselves to the gates of the company to demand payment of insurance premiums, food tickets and severance, among others. Protestors say their bargaining collective agreement expired four years ago. (Veneconomy, 02-23-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29527&idc=3)

Venezuelan government would need six years to reach the 500,000 barrels a day production increase offered for this year if it continues with the present oil policies. Tax conditions for investment in Venezuelan oil are poorly perceived and the State cannot face the increasing needs for capital to dynamize the industry on its own. (Veneconomy, 02-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29511&idc=4)

HOVENSA: St Croix refinery shutdown completed
HOVENSA LLC completed the shutdown of its 350,000 barrel-a-day refinery on the U.S. Virgin Island of St. Croix, the company said. On Jan. 18, the company announced the refinery shutdown and said the complex will be operated as an oil storage terminal going forward. That plan is subject to the completion of negotiations with the government of the Virgin Islands, the company said. (Fox Business, 02-22-2012; http://www.foxbusiness.com/news/2012/02/22/hovensa-st-croix-refinery-shutdown-completed/)




International Trade

Lack of technology raises shipping costs, according to specialists, who say that as long as there is no modernization costs of shipping to Venezuela will remain above other ports in the region. As an example, shipping a 40 foot container from Shanghai to Colón, in Panama, costs an average U$D 2.600 dollars, yet costs to Puerto Cabello or La Guaira rise to some U$D 4.200 dollars, due to technology shortcomings unloading. More in Spanish: (Notitarde, 02-24-2012; http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1567529&idcat=9849&tipo=2; El Carabobeño, http://www.el-carabobeno.com/litoral/articulo/29471/comunidad-martima-preocupada-por-incremento-de-fletes)




Politics

Chavez surgery rocks Venezuela ahead of election
Venezuelan President Hugo Chavez's imminent departure for more cancer surgery in Cuba has thrown his re-election campaign into uncertainty and once again shaken the socialist leader's passionate supporters.
Though the 57-year-old former soldier looked stoic and played down the dangers of his latest condition, the announcement inevitably raises questions over his ability to stand for the Oct. 7 presidential vote - or rule beyond it. (Reuters, 02-22-2012; http://www.reuters.com/article/2012/02/22/venezuela-chavez-idUSL2E8DM2EM20120222; Fox News, http://www.foxnews.com/world/2012/02/22/chavez-surgery-throws-venezuela-into-uncertainty/; The Wall Street Journal, http://online.wsj.com/article/SB10001424052970203960804577239753236433604.html?KEYWORDS=venezuela; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=472213&CategoryId=10717)

President Chavez is fully fit to govern the country
Executive Vice-President Elias Jaua says that President Hugo Chavez, has full capacity to continue heading the National Government, and denied that there would be a temporary absence which would make him assume the presidency. (AVN, 02-23-2012; http://www.avn.info.ve/node/100444; Bloomberg, http://www.bloomberg.com/news/2012-02-23/venezuela-s-jaua-says-won-t-hold-presidency-in-chavez-s-absence.html; El Universal, http://www.eluniversal.com/nacional-y-politica/120223/vp-jaua-no-need-to-act-in-president-chavezs-stead))

PSUV ratifies Chávez as its presidential candidate
National Assembly President and PSUV Vice President Diosdado Cabello has announced that President Chávez has been ratified as their presidential candidate. “Chávez is and will continue being our candidate,” he said. He announced the National Assembly approved President Chávez’ request to travel to Cuba to undergo surgery. (Veneconomy, 02-23-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29524&idc=1)

"Telling the truth is a democratic duty"
In a short statement, Venezuela's opposition umbrella group Unified Democratic Panel (MUD) lashed out at Hugo Chávez's administration for the "secrecy, lack of accurate, clear and reliable medical information" about the president's health. The MUD commented that due to the government's attitude lots of rumors have spread about the president's health. "The harmful consequences of the lack of transparency in reporting this information can be substantially blunted with responsible, clear and timely reporting," the text cited. (El Universal, 02-23-2012; http://www.eluniversal.com/nacional-y-politica/120223/telling-the-truth-is-a-democratic-duty)

Supreme Court fines opposition for burning voter registries
The Supreme Court fined the head of the opposition coalition’s election body 15,200 bolivars ($3,500) for defying an order to hand over voter lists compiled during a Feb. 12 primary and instead burning the register to preserve voter anonymity. The Supreme Court ruled that Teresa Albanes allowed the registry books to be burned in spite of the ruling that followed a candidate’s complaint, according to a statement. The attorney general’s office is studying whether Albanes could be imprisoned, the court said in the statement. (Bloomberg, 02-23-2012; http://www.bloomberg.com/news/2012-02-23/venezuela-court-fines-opposition-for-burning-voter-registries.html)

As others isolate Syria, Chávez ships fuel to It
A day before the United Nations General Assembly voted overwhelmingly to condemn President Bashar al-Assad of Syria this month for his bloody crackdown on the uprising in his country, President Hugo Chávez of Venezuela was conducting a very different kind of diplomacy on his own. A ship owned by the Venezuelan state oil company sailed into the Syrian port of Baniyas, its location captured by a satellite system that tracks ship movements. The ship, making its second trip to Baniyas since December, appeared to be carrying fuel to help prop up the embattled Mr. Assad. The Venezuelan shipment flies in the face of international efforts to isolate Mr. Assad and pressure him to step down, but Mr. Chávez is no stranger to such controversy. Last month, he played host to another Middle Eastern ally, President Mahmoud Ahmadinejad of Iran, ridiculing Western claims that Iran was seeking to be able to produce nuclear weapons. (The New York Times, 02-23-2012; http://www.nytimes.com/2012/02/23/world/americas/chavez-appears-to-use-venezuelan-fuel-to-help-syrias-assad.html?_r=1; UPI; http://www.upi.com/Business_News/Energy-Resources/2012/02/23/Caracas-defends-Syrian-oil-shipment/UPI-39191330002676/)

Census: preliminary count at 27.150.095
Venezuela has a population of 27.150.095 habitants, according to preliminary results from the latest census, and adjusted results could come to 28.800.000, which would be 1.6% annual growth since 2001. 66.6% of the population is calculated to be at working age, between 15 y 64 years old; 27.6% under 14 years of age; and 5.8% over 65 years old. More in Spanish: (AVN, 02-24-2012; http://www.avn.info.ve/node/100456)

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