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.

Tuesday, June 5, 2012

June 05th, 2012

Economics & Finance

Gold and oil slump batters Venezuelan reserves
The global financial crisis is undermining oil and gold prices, and Venezuela depends on these two columns to sustain rising imports at their highest peak in over 16 years. Gold bullion accounts for 73% of international reserves and are part of the foreign currency pool available for the Central Bank (BCV) to meet demands for foreign currency at the official exchange rate. The pool, however, is running out. Last May, gold prices averaged U$D 1,585 per troy ounce, a 9% drop from U$D 1,743 in February and the lowest since July 2011. (El Universal, 06-04-2012;

Currency allocations to the private sector up 4.67%
According to figures from the Currency Board (CADIVI) and the Foreign Currency Transaction System (SITME), approvals for private sector foreign currency transactions rose 4.67% to U$D 9.2 billion during the first quarter of 2012. Although CADIVI approvals dropped 3% against 1Q 2011, SITME transactions through the Central Bank rose 35%. More in Spanish: (El Nacional, 06-05-2012;

Speculation on possible Chavez departure spurs markets
According to New York broker Auerback Grayson the price of sovereign debt has taken off and the Caracas Stock Exchange has doubled its value, making it the best performing exchange in the world. The JP Morgan index shows Venezuelan dollar bonds up 9.5% since December, which is twice the JP Morgan 3.67% average for emerging market bonds. More in Spanish: (El Nacional06-05-2012;


OPEC oil down 3.58% to U$D 97.44, SHELL predicts prices will trend down this year
The price of a barrel of crude oil from the Organization of Petroleum Exporting Countries (OPEC) dropped U$D 3.62 (3.58%) from U$D 101.06 to U$D 97.44, which is the first time this year it has been under U$D 100 per barrel.... and Peter Voser, Executive President of Royal Dutch Shell prices will continue down this year due to lower demand, but will pull back in 2012. More in Spanish: (AVN, 06-05-2012;ó-358-y-se-ubicó-9744-dólares-barril, El Mundo,

Guyana confirms oil exploration in maritime areas claimed by Venezuela
The Guyanese government has confirmed that it is planning on a "2D seismic data acquisition" in Exxon Mobil's Stabroek concession, which is located in the Orinoco Delta maritime area within an area claimed by Venezuela. More in Spanish: (El Universal, 06-05-2012;

SIDOR steel production down to 2010 levels at 1.8 million tons
Statistics from SIDOR reflect a dramatic downturn in operations and results, and rule out any possibility of reaching the 3.5 ton liquid steel ton goal set for the close of this year. Monthly production ranging between 133,000 and 188,000 tons add up to a total year's production of no more than 1.8 million tons. More in Spanish: (El Mundo, 06-05-2012;

International Trade

Turkey Preparing Housing-for-Oil Deal With Venezuela, Vatan Says
Turkey is negotiating to build low- cost housing in Venezuela in exchange for oil, Vatan newspaper said citing Bulent Gedikli, chief of economic affairs for the ruling Justice and Development Party. Venezuela may pay 650 barrels of oil for every 100 square meters of housing built, the Istanbul-based paper cited Gedikli as saying. Venezuelan President Hugo Chavez has said the country needs to build around 2 million homes, Vatan said. (Bloomberg, 06-04-2012;

Logistics and Transport

Unplanned imports clog local ports, food reported stored in military installations
The increase in imports is reflected in port activity. At Puerto Cabello the amount of cargo is such that efforts to speed up offloading and processing are insufficient. Last Friday 29 ships were at port - 14 of them bearing bulk foodstuff - and Carabobo State Fedecámaras business federation Chairman Antonio Landaeta says "this shows we are producing nothing and imports are unplanned". Local sources in Puerto Cabello say that a significant number of vans - an overflow from the state owned storage companies - have been stored in the Central Region's Division for Storing and Controlling Chemicals and Explosives. More in Spanish: (El Universal, 06-05-2012;, El Carabobeño;


ABC: Chávez takes an opiate stronger than morphine
President Hugo Chávez withstands the pain out of his cancer extended to his bones with an opiate "one hundred-fold stronger than morphine," Spanish daily newspaper ABC reported on Sunday. The article signed by ABC correspondent in Washington Emili J. Blasco claims that Chávez "is taking fentanyl to ease the heavy pain caused by the persistent progression of bone cancer." (El Universal, 06-04-2012;; Bloomberg, 06-02-2012;; CNN, 06-03-2012;

President calls for making the "revolution irreversible" in the October 7 elections, in a telephone call to the state television station. More in Spanish: (El Universal, 06-05-2012;

Santos thanks Chávez for nabbing drug lord
Colombian President Juan Manuel Santos has thanked President Chávez, for capturing Diego Pérez, a Colombian citizen accused of leading a paramilitary gang, on Venezuelan soil. Santos said Chavez told him the criminal would be sent back to Colombia in the coming days. More in Spanish: (El Universal, 06-05-2012;

155.788 murders reported in Venezuela since 1999
The war in Iraq war has 162.000 dead since 2003; Venezuela reported 76% casualties in the same period. Despite having announced at least 20 security plans in this period, homicides increased 223% over the past 14 years. Fermín Mármol García, a specialist in crime prevention, warns that it is not enough to position the military at certain points. More in Spanish: (El Universal, 06-03-2012;

Venezuela, oil and Chavismo without Chavez: column
Hugo Chavez's picture is everywhere in Venezuela and may remain ubiquitous for some time, despite the president's serious illness. But soon the image may only be a Mao-like symbol of regime continuity. Chavismo, Hugo Chavez's unique and malleable blend of militarism, historical revisionism, command economics, and knee-jerk anti-Americanism, is a movement intimately tied to the leader and his almost messianic bond with Venezuela's poor.
But Chavez's cancer, which, by all accounts seems to have taken a turn for the worse, poses a dilemma for the movement. Column by Reuters market analyst Robert Campbell. (Reuters, 06-04-2012;

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.

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