Economics & Finance

U$D 9 billion drop in foreign reserves projected

NOMURA projects a U$D 9 billion drop in Venezuela's reserves in 2012, and a ceiling of U$D 20 billion as a result of falling oil prices. It adds there will be added pressure on reserves due to lower gold prices. The firm points out diminished import authorizations by CADIVI due to increased government imports and pressure on reserves, whereas SITME has increased authorizations for buying abroad: "We therefore suspect this instrument is a substitute, not a complement to CADIVI". It also doubts 48% growth in imports registered during the first semester can be sustained for the remainder of the year. "The difficulty with this strategy is possible scarcity". More in Spanish: (El Nacional, 06-29-2012; http://www.el-nacional.com/)

BCV expands foreign currency supply through SITME by 32%

Last week, the Central Bank's SITME (Transaction System for Foreign Currency Denominated Securities) disbursed the highest amount since the beginning of its operations in June 2009. Thus the process accelerates for the official exchange rate at VEB 4.30 per US dollar to lose weight in the economy, while the exchange rate of VEB 5.30 per US dollar gets stronger, which is slow motion devaluation. Reports show that by June 22, the accrued amount for this year is U$D 4.93 billion, a 32% hike relative to the same term in 2011. (El Universal, 06-27-2012; http://www.eluniversal.com/economia/120627/bcv-expands-by-32-foreign-currency-supply-through-sitme)

Investment in development can continue despite oil prices

President Hugo Chavez says that Venezuela has sufficient resources to continue investing on the country's development, even though oil process drop. "The Bolivarian Republic of Venezuela still has a high ceiling to extend debt. The ratio between foreign debt and GDP is over 20%," he said. (AVN, 06-27-2012; http://www.avn.info.ve/contenido/venezuela-can-continue-investing-development-despite-oil-prices)

Commodities

Venezuela wants OPEC price band restored, will maintain production through 2012

Venezuela on Wednesday proposed that OPEC set an oil price band of U$D 80 to U$D 120 a barrel, Energy Minister Rafael Ramirez told Reuters, bidding to restore a policy the cartel tried 12 years ago in a failed attempt to control prices in a tight range by adjusting supply. The Organization of the Petroleum Exporting Countries in 2000 adopted a U$D $22 to U$D $28 price band, requiring its members to cut or raise output in an effort to keep prices in that range for an OPEC basket of crudes. The policy quickly proved unworkable, however, and increasing demand from China pushed prices irreversibly through U$D 30 in 2004. "We need to restore the band system, says Ramirez." It could be between U$D 80 and U$D 120 right now that would be sufficiently wide to allow flexibility." He also said Venezuela will maintain an average production level of 3.011 million BPD through 2012. (Reuters, 06-27-2012; http://www.reuters.com/article/2012/06/27/us-venezuela-oil-idUSBRE85Q0TX20120627; and more in Spanish: AVN, 06-29-2012; http://www.avn.info.ve/contenido/venezuela-mantendrá-producción-promedio-crudo-3-millones-11-mil-bd-2012)

Harvest says Venezuela supports asset sale to Indonesia

Harvest Natural Resources Inc. (HNR), the U.S. oil producer seeking to shed Venezuelan assets, has had support from the Venezuelan government to sell a joint-venture stake to Indonesia, Chief Executive Officer James Edmiston said.

The Houston-based company sees no reason why the U$D 725 million deal won’t be approved by officials and state oil company Petroleos de Venezuela SA, known as PDVSA, Edmiston said today on a conference call with investors and analysts. (Bloomberg, 06-27-2012; http://www.bloomberg.com/news/2012-06-27/harvest-says-venezuela-supports-asset-sale-to-indonesia.html)

Amuay refinery reported to be partially halted

Various plants at Venezuela's largest refinery, the 645,000-barrel-per-day (BPD) Amuay complex, have been paralyzed by a fault in the cooling system, sources at state oil company PDVSA said on Thursday. The plants' operations were halted late on Wednesday after the problem was detected, one source said. "There is a fault. Some of the units are down," the source said, without giving more details of how much of the refinery was affected. (Reuters, 06-28-2012; http://www.reuters.com/article/2012/06/28/venezuela-refinery-idUSL2E8HS2KE20120628)

Hyundai E&C says it wins U$D 1.35 billion order in Venezuela

Hyundai Engineering & Construction announced that it had won a 1.56 trillion Korean won (U$D1.35 billion) order to expand and improve the structure of an oil factory in Puerto La Cruz, Venezuela, from Petroleos de Venezuela S.A.

The South Korean builder said in a regulatory filing that the construction is slated to be completed in 42 months. The company did not say when construction will begin. (Reuters, 06-28-2012; http://www.reuters.com/article/2012/06/28/hyundai-ec-deal-idUSL3E8HS1L120120628)

China's Wison wins Venezuela refinery upgrade project

China's Wison Engineering Ltd said on Wednesday it won a contract to upgrade Venezuela's 210,000 barrel per day Puerto la Cruz refinery to process heavy crude. The project, which is expected to be completed within 42 months after it is launched, also calls for the expansion of the refinery's facilities that produce gasoline, diesel and jet fuel, Wison said in a press release. The release did not specify when the project would begin or further details of the project. (Reuters, 06-28-2012; http://www.reuters.com/article/2012/06/27/venezuela-wison-refinery-idUSL2E8HRGYL20120627)

Venezuela to seek oil in Cuba

According to Oil and Mining Minister Rafael Ramírez, Venezuela will invest around U$D 40 million to drill an exploratory well in Cuba's deep waters after Malasia's PETRONAS ends work there. More in Spanish: (Ultimas Noticias, 06-29-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-explorara-petroleo-en-cuba.aspx)

International Trade

Venezuela, Belarus sign accords in strategic areas

The governments of Venezuela and Belarus have signed over 20 agreements in areas such as mining, petroleum and energy, habitat, food security, technology and communications during a meeting in Miraflores Palace between President Hugo Chavez and Belarus president Alexander Lukashenko. Agreements include memorandum of understanding between Venezuela and Belarus to design and construct a gas pipeline to create a national gas development plan. (AVN, 06-27-2012; http://www.avn.info.ve/node/119603)

Logistics & Transport

Government admits BOLIPUERTOS delays delivery of imports

The Ministry of Planning and Finance and the Central Bank have acknowledged in a note to the Executive Vice President, that operations are "challenged by high levels of deliveries of imported inputs ". The report, also notes that there are obstacles to manufacturing certain foods because of "delays in the settlement of foreign exchange operations generates problems with suppliers." The report also points out problems in some industries due to lack of approval of import licenses by the Ministry for Food. More in Spanish: (Entorno Inteligente, 06-27-2012; http://www.entornointeligente.com/articulo/1283168/Gobierno-admite-que-Bolipuertos-demora-entrega-de-importaciones-27062012)

Politics

CONSULTORES 21 polls show Chavez and Capriles in a dead heat

The well known CONSULTORES 21 polling firm says its research at the beginning of the campaign shows President Chavez and candidate Henrique Capriles in a technical tie with voters for the first time. Another firm known as HINTERENLACES is claiming that the President leads by over 20%, More in Spanish: (El Universal, 06-29-2012; http://www.eluniversal.com/nacional-y-politica/120629/sondeos-encienden-inicio-de-campana-consultores-21-afirma-que-hay-un-e)

Supreme Tribunal embargoes GLOBOVISION assets

The Supreme Tribunal has decreed an executive embargo of the assets of the GLOBOVISION television network for VEB 24.425 million, which is double the amount of an outstanding fine, plus execution costs estimated at 30% of the total. The fine - which is challenged by the private media operator - was imposed by the government's National Telecommunications Council (CONATEL), for covering prisoner riots at El Rodeo prison in mid 2011. GLOBOVISION has said it will pay the fine, but had appealed. More in Spanish: (AVN, 06-29-2012; http://www.avn.info.ve/contenido/tsj-decretó-embargo-ejecutivo-bienes-globovisión; El Universal, http://www.eluniversal.com/nacional-y-politica/120629/tsj-ordeno-embargar-a-globovision-por-no-pagar-multa)

Chavez and Putin review military agreements

The presidents of Venezuela and Russia, Hugo Chávez and Vladimir Putin, reviewed the economic, trade, and military agreements between the two countries over the phone, according to the Foreign Ministry. "They reviewed various issues on the common agenda of both countries, especially in matters related to energy, agri-business, commercial and residential construction, and most of all, energy and military technology." (El Universal, 06-27-2012, http://www.eluniversal.com/nacional-y-politica/120627/chavez-and-putin-review-military-agreements)

VENAMCHAM calls on government to dialogue

The Venezuelan American Chamber of Commerce and Industry (VENAMCHAM) have called for an "open dialogue" between the government and the private sector. Executive Director Carlos Tejera expressed concern over diminished domestic production and the rise in imports. He said "no one wants scarcity, we all want job creation, so we have to work together". More in Spanish: (El Universal, 06-29-2012; http://www.eluniversal.com/economia/120629/venamcham-llama-al-gobierno-a-mayor-dialogo; El Mundo, http://www.elmundo.com.ve/noticias/negocios/empresas/restricciones-de-repatriacion-de-capital-ahuyentan.aspx)