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 12, 2012

June 12th, 2012

Economics & Finance

Drop in oil price calls for cutting expenses or creating more debt
A 19% drop in the price of Venezuela's oil, down to U$D 94.05 per barrel last week, marks it's the lowest level since August 2011. Oil furnishes 95 out of every 100 U$D the country receives, and backs the Chavez administration´s spending spree, which grows around 28% in real terms and is behind 5.6% economic growth in Q1 2012. Efrain Velasquez, President of the National Economic Council says "although we are not speaking of traumatic situations, since oil over U$D 90 provides an important income, it is clear that spending over 30% of GDP demands a more expensive barrel". More in Spanish: (El Universal;


Venezuela seeks lower oil production by Gulf nations, Chavez decries OPEC division
Venezuela´s Oil Minister Rafael Ramirez is calling for OPEC to keep oil production at 30 million BPD and asking Gulf nations to reduce excess production. He made his call as President Hugo Chavez says OPEC is "again" threatened by "the empire", as he calls the United States; and by "divisions within the Arab world". OPEC Chairman Abdul Kareem Luaibi has ruled out setting quotas for specific nations at the next regular meeting of the organization; and Saudi Arabia's Oil Minister Ali al-Naimi, says that "analysis suggest we will need a higher ceiling than that currently established". Experts point to two groups within OPEC, one led by Saudi Arabia, the Gulf States and Irak; and another headed by Venezuela and Iran. Energy Intelligence reports that "beyond exchanges, not much commotion or action is expected at the upcoming meeting". (The Washington Post, 06-09-2012;; Reuters, 06-11-2012; More in Spanish: (Ultimas Noticias;; El Mundo,; AVN; and El Universal;

PDVSA's productivity drops as payroll swells
Petróleos de Venezuela's payroll has steadily swollen as oil production stagnates. The situation has hurt productivity of the state-owned company in terms of the ratio between the number of workers and the volume of crude oil barrels extracted. This circumstance could aggravate if the number of workers increases as a result of the enactment of the new Labor Organic Law (LOTTT), without this translating into a substantial increase in oil production. (El Universal, 06-09-2012;

New power substations cannot be built as a result of steel shortages of steel and financial problems since CORPOELEC owes contractors a lot of money. However, Electric Energy Minister Héctor Navarro blamed delays on Maracaibo Mayor Eveling Trejo Rosales for not authorizing works. Trejo denied the Minister’s statements. (Veneconomy, 06-11-2012;

PDVSA’s off-shore Division is to have three Japanese-technology gas powered generators to cover its operational needs at the Dragón-Patao platform the State oil company is building as part of the Mariscal Sucre gas project. The three Kawasaki turbo-generators have a 1,500 KW power output capacity each at a 480 volts tension. (Veneconomy, 06-10-2012;

International Trade

USA, China and Brazil are Venezuela's top trading partners, according to the National Statistics Institute. During the first quarter of 2012, 50% of all imports came from these three nations. The report shows that U$D 5.155 billion out of U$D 10.101 billion imports came from the three countries. According to the US Department of Commerce, Venezuelan imports from the US reached a new record in April, coming up to U$D 1.385 billion, the highest amount in history. Imports from the US from January to April were U$D 5.101 billion, an increase of 44% over last year. At the same time, Venezuela's exports to the US dropped U$D 300 million over four months, mainly due to reduced oil exports. More in Spanish: (El Mundo;;; and,-china-y-brasil--primeros-socios-comerciales-.aspx#)

Venezuela takes 12.56% of Nicaragua exports
The United States remains the largest destination for exports from Nicaragua, followed by Venezuela and Canada. As a whole, the three countries buy more than half of all products sold by the Central American country. Venezuela buys 12.56% of Nicaragua exports, as shown by the latest Nicaraguan statistics.  State-run Center for Exports (CETREX) said that Nicaragua exports amounted to U$D 1.19 billion in products in the first five months of this year, up 11% from U$D 1.07 billion in the same period in 2011. (AVN, 06-11-2012;

Logistics & Transport

Bureaucratic problems delay shipments
The lack of effectiveness in loading and unloading ships has resulted in a backlog of more than 30 vessels awaiting admission to the docks of the port of Puerto Cabello. Customs experts say that officials from SENIAT, BOLIPUERTOS and CADIVI create conditions that hinder a better performance in loading and unloading ships at the nation's main port. More in Spanish: (Notitarde;; El Carabobeño;


Chavez calls for unity to achieve victory
Hugo Chavez arrived at the National Elections Board perched upon a truck leading a caravan from Miraflores Palace, alongside his daughters. Cabinet members arrived in other vehicles. After crossing O'Leary Square, he arrived at the Elections Board. TV showed the President coming down the steps of the truck, but not his entrance and exit from Board headquarters, nor how he got on top of the dais from which he made a fiery two hour speech, which included singing. While inside the Board office he was allowed to make a statement in which he vowed to respect election results and praised the National Elections Board. He had previously said he came out "absolutely fine" from his latest cancer tests. (The Washington Post, 06-09-2012; More in Spanish: (El Nacional;; AVN;ávez-fue-al-cne-ratificar-su-compromiso-hacer-patria; El Universal,

Opposition leader marches through Venezuela capital before registering candidacy
Opposition leader Henrique Capriles marched through Venezuela’s capital Sunday accompanied by hundreds of thousands of supporters as he formally launched his candidacy to run against President Hugo Chavez. Surrounded by supporters waving red, yellow and blue Venezuelans flags, Capriles marched and jogged from a park in eastern Caracas toward the headquarters of the National Elections Council, 6 miles (10 kilometers) away, where he formally registered. (The Washington Post, 06-10-2012;; El Universal, 06-11-2012;

Venezuela assumed Unasur secretariat
This Monday, former Venezuelan Electricity Minister Ali Rodriguez Araque took his oath as secretary general of the Union of South American Nations (UNASUR). The organization's pro tempore president Fernando Lugo, of Paraguay, administered the oath to Ali Rodriguez Araque in an event in Bogota, Colombia. (AVN, 06-11-2012;

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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