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, April 6, 2012

April 06, 2012

Economics & Finance

Fitch revises Venezuela outlook to negative
Fitch Ratings revised down its sovereign credit outlook for Venezuela to negative on Wednesday, citing a weakening fiscal policy framework. Fitch said the South American country's economy is becoming more vulnerable to commodity price shocks. It affirmed the nation's B-plus rating. Venezuela is rated B-plus with a stable outlook by Standard & Poor's and B2, a notch lower but also stable, by Moody's Investors Service. Venezuela's benchmark 2027 Global bond, already slightly weaker on the day, saw its bid level drop to 87.563, down 0.562 points in price, yielding 10.934 percent. (Reuters, 04-04-2012;;;  Bloomberg,

Analyst: Too soon to say that inflation is diving
According to the Central Bank of Venezuela, the Consumer Price Index (CPI) decreased for the fourth month in a row. However, economist José Guerra, ex manager of economic research at the BCV, feels "it is too early to claim victory." Guerra pointed out that since 2005, prices have shown an upward trend. Therefore, he thinks that results obtained in the past four months can’t be used as an indicator to set a trend. "I am not sure that one can speak of a downward trend. I think it would be wise to wait some months," Guerra said. (El Universal, 04-04-2012;

Bank of the South constitutive agreement came into effect
The Constitutive agreement of the Bank of the South came into effect last Tuesday, as it has been ratified by five of its seven founding members, according to a statement by the Venezuelan Foreign Ministry. The founding of the Bank of the South was endorsed in December 9th, 2007 by Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela, with the aim to devise a regional funding agency independent from organizations such as the International Monetary Fund (IMF). (AVN, 04-04-2012;


Crude oil output at the Orinoco Oil Belt over 1.6 million
According to Minister of Energy and Mines Rafael Ramírez, "We are currently at a record production level of 1.21 million barrels a day. Everything indicates that our set goal is feasible, like the U$D 5 billion in additional resources that we have to raise production at the Belt". (El Universal, 04-05-2012;

Fitch revises PDVSA's rating outlook to negative
Fitch Ratings has affirmed Petróleos de Venezuela S.A.'s (PDVSA) 'B+' Foreign and Local currency Issuer Default Ratings (IDRs) and its 'AAA (ven)' National scale rating. This rating action affects approximately U$D19.5 billion of debt outstanding with a Recovery Rating of 'RR4'. Fitch has also affirmed C.A. La Electricidad de Caracas's (EDC) Foreign and Local currency (IDRs) at 'B+' as well as its National scale long- and short-term ratings of 'AAA (ven)' and 'F-1+ (ven)', respectively. (Reuters, 04-04-2012;

Gazprom Neft to begin Venezuela output later than Deputy PM date
OAO Gazprom Neft (SIBN) will begin output at a joint venture with Petróleos de Venezuela SA in in August, three months later than a target set by the Russian Deputy Prime Minister Igor Sechin last October. “We have gained all permits and begun drilling,” said Alexander Dyukov, chief executive officer of the oil arm of Russia’s natural-gas export monopoly, on state-run Rossiya 24 television today. “In August we will produce first oil and in the summer of 2013 reach 50,000 barrels a day.” By 2018 production should reach a daily 450,000 barrels, he said. (Bloomberg, 04-04-2012;

Harvest may eye Chinese buyer for PETRODELTA stake, analyst says
Harvest Natural Resources Inc. (HNR), a U.S. oil company with producing assets in Venezuela, may find a Chinese buyer for its stake in the Petrodelta venture, according to Little Bear Research. The “likely acquiror” for Harvest’s 32% stake in PETRODELTA may be China National Offshore Oil Corp or China Petroleum & Chemical Corp, Zachary Prensky, an analyst with Little Bear Research in New York, wrote in a note to clients today. Petróleos de Venezuela SA, the state-owned oil company, has a 60% stake PETRODELTA, located in eastern Venezuela. (Bloomberg, 04-04-2012;


Positive results mark President Chavez's recovery
Upon returning to Venezuela on Wednesday night, President Hugo Chavez underscored that positive results have marked his physical recovery and he informed that a second radiotherapy session concluded successfully. "Today (Wednesday) I finished a second radiotherapy session. So far, fortunately, there has not been any adverse reaction to the treatment. The body has assimilated it well and all tests I've gone through have showed positive results of physical recovery," Chavez said. (AVN, 04-05-2012;; The Washington Post,; CNN,

Lula shows Chávez interest in visiting Brazil soon
Former Brazilian president Luiz Inácio Lula Da Silva promised his President Chavez that as soon as his doctors deem it appropriate he would visit Caracas in order to have a meeting with him. The news was provided in a communiqué from the Ministry of Foreign Affairs which said Lula made a phone call to his friend Chávez on Tuesday. (El Universal, 04-05-2012;

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