March 02nd, 2012

Economics & Finance

Combined Gov't and PDVSA debt skyrockets to U$D 114 billion

Despite oil prices averaging U$D 101 in 2011, Venezuelan authorities embarked increased indebtedness. Numbers emerging from the Finance Ministry state-run oil holding Petróleos de Venezuela (PDVSA), during 2011 Central Government and PDVSA debt rose to U$D 141 billion, a 18% hike over U$D 96.6 billion in 2010. This figure does not include borrowing from China, Russia and Brazil. If these loans are added, total liabilities rise considerably higher. This week, government made a additional deal with China for U$D 10 billion funding. At the end of the day, loans contracted with the Asian giant amount to an aggregate U$D 38 billion. (El Universal, 03-01-2012; http://www.eluniversal.com/economia/120301/govt-and-pdvsa-debt-sums-up-usd-114-billion)

Price controls hit small business

Business leaders have cautioned that standard pricing set by the National Superintendent of Costs and Prices (SUNDECOP) is risky. Carlos Larrazábal, President of the Venezuelan Industrial Confederation (CONINDUSTRIA) is afraid smaller manufacturers will find it difficult to survive the price regulation. "They could damage small enterprises, the costs of which are not as competitive as those of big enterprises," Larrazábal noted. (El Universal, 02-29-2012; http://www.eluniversal.com/economia/120229/price-control-hits-smaller-enterprises)

Chavez cancer surgery makes Venezuela bonds best emerging-market performer

Venezuelan debt returned the most in emerging markets this month as investors boosted holdings of the oil producer’s bonds on speculation President Hugo Chavez’s deteriorating health will prevent him from seeking re-election. Venezuelan bonds returned 14% this month through yesterday, compared to 7.4% for the Ivory Coast, 5.2% for Vietnam and 3.1% for Belarus, according to JPMorgan Chase & Co.’s EMBI Global index. Year-to-date, Venezuela’s dollar bonds have returned 22%. (Bloomberg, 02-29-2012; http://www.bloomberg.com/news/2012-02-29/chavez-cancer-surgery-makes-venezuela-bonds-best-emerging-market-performer.html)

Unemployment remains around 10.3% in January 2012

The unemployment rate in Venezuela closed at 10.3% in January 2012, according to the Monthly Workforce Report presented by the president of the National Statistics Institute (INE), Elias Eljuri, who said this figure "showed barely a reduction of 0.1% between January 2011 and January 2012." (AVN, 02-29-2012; http://www.avn.info.ve/node/101240)

Commodities

Aluminum and steel production under 1997 numbers

Official statistics show that output for subsidiaries of the Venezuelan Guayana Corporation (CVG) and private manufacturing, essential in order to diversify exports and supply raw materials to the economy, is seriously shrinking.

At September 2011, latest data released by the Central Bank of Venezuela (BCV), the output of iron, steel and aluminum, items produced by the CVG, is 15%, 30% and 50% below 1997 output. At the same time, the schedule for private manufacturing shows that in 2011, the output of textiles, vehicles, electrical items, machinery and equipment was also lower than 1997 levels. (El Universal, 02-29-2012; http://www.eluniversal.com/economia/120229/venezuelas-aluminum-and-steel-production-below-1997-numbers)

Oil shipments to China total 200,000 bpd

Venezuela-China financial relationship adds up U$D 38 billion, including the agreements under the Chinese Fund, loans to state-run Petróleos de Venezuela (PDVSA) and joint ventures where the oil holding company has a majority interest. In exchange for Chinese lending, Venezuela sends around 200,000 barrels per day of crude oil, according to Rafael Ramirez, Minister for Energy and Petroleum. (El Universal, 02-29-2012; http://www.eluniversal.com/economia/120229/oil-shipments-to-china-under-agreements-total-200000-bpd)

PDVSA Says PETROMONAGAS project producing 120,000 Barrels a Day

The PETROMONAGAS project, a joint venture between state oil company Petroleos de Venezuela SA and Russia’s TNK-BP (BP/), is producing 120,000 barrels of oil a day and will increase production to 145,000 barrels a day by the end of the year, PDVSA’s Vice President of Exploration and Production Eulogio del Pino said. (Bloomberg, 02-29-2012; http://www.bloomberg.com/news/2012-02-29/pdvsa-says-petromonagas-project-producing-120-000-barrels-a-day.html)

373 oil drills to be operative in Venezuela at the end 2012

Rafael Ramirez, Petroleum and Mining minister says that by the end of this year, 373 oil drills should be operative in the country. "It is a historic figure, unprecedented in our country". It is estimated that 202 drills shall be operating in the Orinoco Oil Belt. He also claimed they have already drilled and connected 88 oil drills in the Belt (AVN, 03-01-2012; http://www.avn.info.ve/node/101380) and http://www.avn.info.ve/node/101402)

Politics

Chavez on state TV: 'I am doing well'

President Hugo Chavez made his first live communication with his country's news media in nearly a week Thursday, saying he was in good shape and recovering quickly from tumor surgery in Cuba. In a five-minute phone conversation broadcast on state television, Chavez said he is keeping active, eating well and even working just days after the operation to remove a possibly cancerous growth. "We're here in battle, and sooner rather than later I will be with you physically as well." His campaign rival, Henrique Capriles, repeated his wish for the president to have a full and quick recovery, but also criticized authorities for being less than forthcoming about the president's health situation. "If I were president, my health, my life in general, due to the very high responsibility I have, should be a matter of public knowledge," Capriles said. (Newsok, 03-02-2012; http://newsok.com/venezuelas-chavez-on-state-tv-i-am-doing-well/article/feed/354431#ixzz1nxQAH82C; also Reuters, 02-29-2012; http://www.reuters.com/article/2012/03/01/us-venezuela-chavez-idUSTRE81S19V20120301; El Universal, 03-01-2012; http://www.eluniversal.com/nacional-y-politica/120301/president-chavez-reappears-on-his-twitter-account; CNN, http://edition.cnn.com/2012/03/01/world/americas/venezuela-chavez/index.html?iref=allsearch)

Chavez illness changes the game for Venezuelan election

The possibility that poor health may prevent Venezuelan President Hugo Chavez from being re-elected in October has altered the country's political landscape. On Monday, Chavez underwent an operation in Cuba to remove a tumor from his abdomen. He also was diagnosed with cancer last June, though the type wasn't revealed. The detection of the tumor comes at a bad time for the ruling United Socialist Party. With the presidential election campaign scheduled to start soon, the opposition Democratic Unity alliance is in better shape than ever. Just days before the president announced his health issues, the alliance had elected its own presidential candidate in primaries featuring an unexpectedly high turnout of 3 million voters. (CNN, 01-03-2012; http://edition.cnn.com/2012/02/29/world/americas/chavez-re-election/index.html?iref=allsearch)

In a world without Chavez, analysts see greater potential for turmoil in Venezuela

It’s hard to imagine an election in Venezuela without Hugo Chavez, the larger-than-life personality who gazes down from billboards and murals and fills the airwaves for hours at a stretch with his unique mixture of fiery speeches and folksy banter. Yet that’s just the scenario this South American nation must contemplate as the charismatic populist, who has dominated the political landscape during 13 years as president, is treated in Cuba for a possible return of the cancer he thought he had licked. (The Washington Post, 02-29-2012; http://www.washingtonpost.com/world/the_americas/in-a-world-without-chavez-analysts-see-greater-potential-for-turmoil-in-venezuela/2012/02/29/gIQAXI0UiR_story.html)

Fitch Ratings reflect the continuous concentration of power and decision making in the hands of President Chávez, and the erosion of the country’s institutional strength is perceived as the greatest obstacles for overcoming uncertainties over the political and economic outlooks after the elections now that Chávez is seriously sick. (Veneconomy, 03-01-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29619&idc=3)

Total population estimated at 28.8 million people

Elias Eljuri, President of the National Statistics Institute (INE) says the 14th national census on population and housing may result in a total 28 million 800 thousand inhabitants in Venezuela. The figure includes the overall population effectively registered in the census, which add up to 27,150,095 people, plus census omissions, which rates about 6%, according to an INE press release. (AVN, 03-01-2012; http://www.avn.info.ve/node/101388)