August 14th, 2012

Economics & Finance

Central Bank changes gold valuation method

The Central Bank has decided to change the method used to value gold reserves, and lessened the impact of internationally diminished gold prices. Gold accounts for 68% of Venezuela's total reserves, and beginning May this year its price will be measured by an six month average of prices in the London market and not - as before - on an average for the previous two months. This change should lessen the impact of dropping gold prices. More in Spanish: (El Universal, 08-14-2012; http://www.eluniversal.com/economia/120814/banco-central-modifica-metodo-para-valorar-las-reservas-en-oro)

Larger companies have begun using "sucres" for international transactions

Central Bank Vice President Eudomar Tovar announced that large companies such as MAZDA, KIA, and POLAR subsidiaries have begun using the Unified Regional Payment Compensation System (SUCRE), a currency system established by several nations that are part of the ALBA system (Cuba, Ecuador, Nicaragua, Bolivia and Venezuela). Tovar says the SUCRE provides an interesting niche for spare parts and assembled products. More in Spanish: (El Mundo, 08-14-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/empresas-venezolanas-privadas-comenzaron-a-transar.aspx)

Tax revision proposed due to Venezuelan's entry into MERCOSUR

Roberta Nuñez, an attorney with KPMG, says the local private sector requires a deep revision of the tax system in order to "preserve the purchasing power of investors and individuals", and match regulations and other conditions in MERCOSUR nations. Current conditions create a number of surcharges that have become a major concern in recent years. (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/tax-revision-suggested-upon-venezuelan-entry-into-mercosur)

Central government spending slows down in July

Spending by the central government slowed down, falling by 20% in real terms in July, three months ahead of the presidential elections. Data released by the Ministry of Finance reveals that public expenditure was U$D USD 7.2 billion, which is less than last year during the same period. According to ECOANALÍTICA think tank director Asdrúbal Oliveros, this reveals that the government began spending the annual budget early. However he foresees renewed acceleration of expenses in August, due to the number of additional credits recently approved to cover the deficit budget in public agencies. (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/venezuela-central-government-spending-loses-momentum-in-july)

Food sales drop to lowest level in 3 years

According to a report by the national Food Industry Chamber, food sales dropped 4.3% in June, which is the lowest level in three years. It shows tonnage has been falling steadily since March 2011, largely due to price controls and higher production costs. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/)

Commodities

Venezuela officially confirmed holding largest oil reserves in the world

The OPEC annual report has confirmed that Venezuela has larger proven oil reserves than Saudi Arabia. Proven reserves are estimated at 297.6 billion barrels, which is 0.4% more than measured in 2010 and triple the amount certified in 2007. Saudi Arabia comes in second at 265.4 billion barrels. The difference is that Venezuela has heavier crudes which sell at a lower price than Saudi light oil. Venezuela is also seventh globally in national gas, at 5.5 billion cubic feet. More in Spanish: (Ultimas Noticias, 08-14-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-es-primera-en-reservas-petroleras.aspx)

China shows it gets 320,900 barrels per day from Venezuela, at the cheapest price

Data from the Chinese Customs Authority show Venezuela as their sixth largest supplier of oil by the close of the first semester 2012, and also shows Venezuela sells China it´s oil at the lowest price: U$D 99.67 per barrel, which is 7.14% less than the average cost for Venezuelan oil, which was U$D 107.34 per barrel during the same time frame. Saudi Arabia is China's largest provider, holding 22.6% of total imported volume, at U$D 109.72 per barrel; Angola comes in second, at U$D 115 per barrel; and Iran is third at U$D 108 per barrel. Russia takes fourth place, and received U$D 112,63 per barrel; followed by Omán, which gets U$D 117.4 per barrel. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-sube-exportaciones-a-china-a-640-000-bar.aspx)

Oil Minister Rafael Ramírez claims oil is exported at international prices. More in Spanish: (AVN, 08-14-2012; http://www.avn.info.ve/contenido/rafael-ramírez-petróleo-venezolano-se-exporta-precios-internacionales)

OPEC: Venezuelan oil production down 2.4%

The Organization of Petroleum Exporting Countries (OPEC) reports that Venezuelan oil production dropped in July.

Its data indicates Venezuelan oil output stood at 2.3 million barrels per day (bpd), that is to say 2.4% down if compared with figures recorded in July (2.4 million bpd). (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/opec-venezuelan-oil-production-down-24)

ONGC sees start of Venezuelan project delayed by election

India’s Oil & Natural Gas Corp. (ONGC) expects the start of production at the Carabobo 1 block in Venezuela to be delayed until early next year as the country prepares for presidential elections in October. The project, previously slated to begin output in December, will probably start producing about 10,000 barrels of heavy crude a day in February or March, an executive at ONGC, as the New Delhi-based state-owned company is known, said in a conference call. (Bloomberg, 08-13-2012; http://www.bloomberg.com/news/2012-08-13/ongc-sees-start-of-venezuelan-project-delayed-by-election.html)

PDVSA says it repaired ruptured pipe carrying crude oil

Petróleos de Venezuela SA, the state oil company, said it repaired a ruptured pipe carrying crude oil from the Orinoco Belt to the company’s refineries in Puerto La Cruz, Anzoátegui state. PDVSA, as the company is known, ceased pumping oil after a 26-inch pipe fractured at around 8 a.m. local time, the company said in a statement. It didn’t say when it resumed extraction. (Bloomberg, 08-12-2012; http://www.bloomberg.com/news/2012-08-13/pdvsa-says-it-repaired-ruptured-pipe-carrying-crude-oil.html)

Venezuela gets good sign from REPSOL on YPF dispute, Chavez says

Venezuela has received a “positive” letter from REPSOL SA about its efforts to resolve a dispute with Argentina over the nationalization of its YPF unit, President Hugo Chavez says. Venezuela is “friends” with REPSOL and maintains good relations with the company, Chavez said on state television, adding that he received a letter from REPSOL Chairman Antonio Brufau that contained a “good signal.” (Bloomberg, 08-10-2012; http://www.bloomberg.com/news/2012-08-10/venezuela-gets-good-sign-from-repsol-on-ypf-dispute-chavez-says.html)

Labor leader reports SIDOR thermoelectric plants paralyzed, no gas available for steel production

Both thermoelectric plants ordered by the government for installment at the SIDOR steel plant are paralyzed: one due to fuel supplies logistics and the other because its construction was never finished. The report comes by SIDOR labor leader Junis Hernández, who explains poor road conditions between the Anaco filling facility in Anzoátegui and the SIDOR plant at Matanzas, in Bolivar state, make it difficult to bring some 30 daily tank trunks to the plant. He also said PDVSA does not send gas supplies with regularity. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/)

International Trade

Puerto Cabello holds 26 vessels at bay, some for up to 44 days

The port of Puerto Cabello still reports 26 ships at bay, and vessels such as grain carrier “Nai Chang Hai”, have been waiting to dock with yellow corn for 44 days.  Yesterday there were 12 grain ships undertaking offloading operations. More in Spanish: (El Carabobeño, 08-14-2012; http://www.el-carabobeno.com/impreso/articulo/27783/baha-portea-cierra-el-lunes-con-26-buques-en-fondeo)

Logistics & Transport

Trade between Venezuela and Colombia increased by 32% over last year according to the Venezuela-Colombia Integration Chamber President Luis Alberto Russian, who added volume could be higher if the pending trade agreement is signed. More in Spanish: (El Mundo, 08-14-2012, http://www.elmundo.com.ve/noticias/economia/internacional/intercambio-comercial-entre-venezuela-y-colombia-c.aspx)

Imports from Brazil increased 30%

During the first seven months of the year, the value of Brazilian exports to Venezuela rose 30.2% over the same period of 2011 and exceeded U$D 2.758 billion. By the end of the year, purchases from Brazil should total trade last year, when averaged U$D 4.591 billion. More in Spanish: (El Mundo, 08-13-2012, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/valor-de-importaciones-brasilenas-aumento-30-.aspx)

Politics

Government party says it will defend Chavez victory using all means

Less than two months away from presidential elections, the United Socialist Party of Venezuela is saying that it will defend a victory by President Chavez, "wherever and however". The statement was made by party Vice President Diosdado Cabello, who said votes must be sought in order to avoid any intention on the part of the opposition of not conceding results on October 7th. More in Spanish: (El Universal, 08-14-2012; http://www.eluniversal.com/nacional-y-politica/120814/psuv-el-triunfo-de-chavez-lo-defenderemos-como-sea)