April 24, 2012

Economics & Finance

Amid food shortages, some blame price controls

Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here. The shortages hit both the poor and the well-off, in surprising ways. The heart government imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor, and these are often the very products that are the hardest to find. Prices are set so low that companies and producers cannot make a profit. So farmers grow less food, manufacturers cut back production and retailers stock less inventory. Moreover, some of the shortages are in industries, like dairy and coffee, where the government has seized private companies and is now running them, saying it is in the national interest. (The New York Times, 04-21-2012; http://www.nytimes.com/2012/04/21/world/americas/venezuela-faces-shortages-in-grocery-staples.html?_r=1)

Commodities

PDVSA: U$D 16 billion disbursed in interest payments since 2007

According to reports by the KPMG auditing firm, PDVSA's financial debt grew 1097% over the past five years, leading to high interest payments by the company. Audit reports show PDVSA disbursed U$D 16 billion for interest payments between 2007 and 2011. The report shows that in 2011 figures disclosed include devaluation costs, foreign currency sales to the Central Bank and assets transferred to government companies such as PDVAL. More in Spanish: (El Nacional; http://www.el-nacional.com/)

... and reported profits up due to sale of Germany-based refinery

PDVSA 2011 financial and operating results show the net profits of the state-owned oil company rose 42%, from U$D 3.14 billion to U$D 4.49 billion last year. However, PDVSA's financial statements show that the increase in the state-run oil company profits was due to the sale of PDVSA's shares in the four Ruhr Oel GmgH refineries in Germany, which were sold to Russian company ROSNEFT in October 2010, and to increasing oil prices. (El Universal, 04-21-2012; http://www.eluniversal.com/economia/120421/pdvsas-profits-climb-due-to-sale-of-germany-based-refinery)

           

... and the company meets 96% of oil export goals to China

PDVSA, which is committed to pay the loans made to Venezuela under the Chinese Fund, has shipped oil and oil products to China since 2007 at market prices. Based on data released last week by the state-owned oil company, Venezuela has achieved 96% of the oil export goals set under the agreements signed with Chinese authorities. (El Universal, 04-23-2012; http://www.eluniversal.com/economia/120423/pdvsa-meets-96-of-oil-export-goals-to-china)

CNPC, PDVSA to start building joint refinery in late April

State-run China National Petroleum Corp (CNPC) and Petróleos de Venezuela SA (PDVSA) will start building their mega joint refinery on China's southern coast later this month, a move would pave the way for more Venezuelan oil to flow to the world's second-largest oil user. CNPC, which operates key businesses via PetroChina, has been preparing for a formal construction kickoff of the 400,000 barrels-per-day (bpd) Jieyang plant in the coming weekend, two company officials said. (Reuters, 04-23-2012; http://www.reuters.com/article/2012/04/23/us-china-venezuela-refinery-idUSBRE83M07D20120423)

Vietnam, Venezuela begin tapping a new oil field

A Vietnam-Venezuela oil and gas joint venture has begun production at a new field in the Orinoco region with an initial output of 50,000 barrels per day (bpd), the Vietnamese government said on Thursday. The venture, PETROMACAREO, would raise extra heavy crude oil output from the field in Junin 2 block to 200,000 bpd by 2015, the government said in a statement. (Reuters, 04-19-2012; http://www.reuters.com/article/2012/04/19/vietnam-venezuela-oil-idUSL3E8FJ3OA20120419)

Iran to deliver oil tanker to Venezuela by September, Mehr says

Iran Marine Industrial Co. has completed two-thirds of an oil tanker ordered by Venezuela’s state oil company and will be delivering the vessel by late September, Mehr reported, citing, managing director of the Iranian company Mehdi Etesam. PDVSA signed a contract with the Iranian company, known as Sadra, for the construction of four Aframax tankers, each capable of carrying 113,000 tons of crude oil, Etesam said, according to a report by the state-run news agency published yesterday. The vessels will each cost about $52 million and delivery time will depend on the financing, he said. (Bloomberg, 04-23-2012; http://www.bloomberg.com/news/2012-04-23/iran-to-deliver-oil-tanker-to-venezuela-by-september-mehr-says.html)

International Trade

Spain to dispatch seventh ship to Venezuela on Monday

Next Monday, Spanish company NAVANTIA will dispatch to Venezuela the offshore patrol ship Kariña (PC-24). This is the seventh vessel built by said corporation as part of a cooperation agreement reached between Spain and Venezuela in 2005. The agreement is for construction and purchase of four offshore patrol ships and four coast patrol vessels for patrol duties in exclusive economic zones, and surveillance of coasts. (AVN, 04-20-2012; http://www.avn.info.ve/contenido/spain-dispatch-seventh-ship-venezuela-monday)

Venezuela expects arbitration award with ConocoPhillips by 2013

According to PDVSA's 2011 financial report, an arbitration award on the dispute filed by US oil company ConocoPhillips against state-run oil company Petróleos de Venezuela (PDVSA) at the International Chamber of Commerce (ICC) could be issued in 2013. (El Universal, 04-23-2012; http://www.eluniversal.com/economia/120423/venezuela-expects-arbitration-award-with-conocophillips-in-2013)

Oil for food barters increased by 64%

Venezuela's trade through the oil for food barter scheme increased by 64% in 2011 compared to 2010, while debt owed to Venezuela for oil shipments rose to U$D 493 million in 2011 versus U$D 301 million in 2010. Among the main items received by Venezuela are agricultural raw products shipped by countries within the Bolivarian Alliance for the Peoples of Our America (ALBA) and the PETROCARIBE oil pact. (El Universal, 04-23-2012; http://www.eluniversal.com/economia/120423/venezuelas-oil-for-food-barter-deals-increase-by-64)

Politics

Chávez rejects rumors on his health as an opposition scheme

In a telephone call from Havana, President Hugo Chavez said he would return to Venezuela on April 26, but then he must leave again for another session of radiation therapy and further medical tests. "On April 26, 27 and 28, I will be in Venezuela," he announced. (El Universal, 04-23-2012; http://www.eluniversal.com/nacional-y-politica/120423/chavez-rejects-rumors-on-his-health-as-an-opposition-scheme)

Authorities issue arrest order for judge fired for alleged links to drug suspect

The Prosecutor General says a request was issued through INTERPOL for the arrest of former Magistrate Eladio Aponte, who was dismissed from his post by the National Assembly on March 20 over accusations that he had ties to drug suspect Walid Makled. Aponte has accused officials in President Hugo Chavez’s government and military of manipulating court cases, and acknowledged that he had participated in these actions. Asked if he had received any calls from government officials seeking to manipulate court cases, he said: “Sure, from the president on down.” Aponte said that as military prosecutor and later as a Supreme Court magistrate, he received calls from officials including Prosecutor General Luisa Ortega and Supreme Court President Luisa Estella Morales seeking to intervene in cases. He also said there have been weekly meetings at which the Vice President met with the Supreme Court president, the chief prosecutor and other officials to lay out “guidelines” for the judiciary. (Washington Post, 04-20-2012; http://www.washingtonpost.com/world/the_americas/venezuelan-authorities-issue-arrest-order-for-judge-fired-for-alleged-links-to-drug-suspect/2012/04/20/gIQAK3YoWT_story.html)

US alert on the use of weapons by Venezuela

US Defense Secretary Leon Panetta has expressed concern over the use Venezuela will make of weapons is has recently bought from Russia, China and Iran. "We have no objection to the purchases, but we are concerned with they are going to do with that material". More in Spanish: (El Universal, 04-24-2012; http://www.eluniversal.com/internacional/120424/eeuu-alerta-por-uso-que-dara-venezuela-a-su-armamento)

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.