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.

Friday, August 24, 2012

August 24th, 2012

Economics & Finance

World Bank: Investing in Venezuela is hazardous
A World Bank study, Doing Business 2012, shows that Venezuela has one of the worst legal environments for investing or starting a business. Out of total 183 countries evaluated, Venezuela comes in 177th, and is perceived as even worse than Haiti, which placed 174th. This runs counter to a world trend toward increasingly favorable conditions for business, as politicians become increasingly aware of the importance of improving their economies in the long term. More in Spanish: (Ultimas Noticias, 08-23-2012;; El Mundo,

Central Bank forecasts inflation under 20%
Nelson Merentes, president of the Central Bank of Venezuela, estimates that this year the inflation will come in below the goal set at 20%-22% in the national budget. He says: "This year we are going to finish below the goal for inflation, it means that it is going to be below the lower limit, but it continues to be a two-digit inflation". (El Universal, 08-23-2012;

Worker protests force SIDOR to sit down and talk
Nicolas Maduro, Minister of Foreign Affairs, and directors of the Venezuelan Corporation of Guayana (CVG) met with trade union leaders, after workers from the state-run iron and steel company Siderúrgica del Orinoco (SIDOR) loudly complained to President Chávez about delays to discuss their collective bargaining agreement, which expired two years ago. (El Universal, 08-22-2012;; More in Spanish: El Nacional, 08-22-2012;

BCV aid to PDVSA is up to VEB 107.7 billion
Although the price of oil continues to average U$D 100, PDVSA needs additional resources to meet the demands made on it by the central government. It then turns to the Central Bank of Venezuela. BCV figures show that by the end of July financial assistance to the oil company reached VEB 107.7 billion. More in Spanish: (El Universal, 08-23-2012;


Venezuela expects to produce 6 million BPD by 2019
Venezuela is expected to produce 6 million oil barrels per day by the year 2019, informed the president of the Republic, Hugo Chavez.
In a visit to platform Cayaurima, at Carabobo Division of the Orinoco Oil Belt, in eastern state of Monagas, President Chavez said it is expected to generate 4 million barrels per day by 2019 only in this area.
Venezuela's field Orinoco Oil Belt counts with 150 "macolla" or platforms through which may be drilled several oil wells and 4,000 oil wells. (AVN, 08-22-2012;

Oil Belt to increase production by 1,350,000 B/D this year
Seeking to continue boosting Venezuela's economic expansion, President Hugo Chavez informed that the Orinoco Oil Belt will increase its production to 1,350,000 crude oil barrels per day (B/D) by the end of 2012.
Meeting with employees at the oil belt in eastern state of Monagas last Tuesday, the Venezuelan president recalled that daily production at the oil strip -the site of the world's largest oil reserves- is 1,200,000 B/D.
In the last five years, Chavez remarked, oil production increased by 33 percent and this "is part of the plan of expansion, plan to recover the oil full independence." (AVN, 08-22-2012;

Chavez Says Venezuela to Invest $130 Billion in Orinoco Oil Fields
Some $130 billion will be invested in Venezuela's Orinoco Oil Belt between 2013 and 2019 to boost national production from 3 million barrels per day to 6 million bpd, President Hugo Chavez said.
The investment program for that heavy oil region, the world's largest petroleum reservoir, is equivalent to roughly a third of the $383 billion the Treasury says it collected in taxes and royalties over the past 10 years. (Latin American Herald Tribune, 08-22-2012;

Domestic steel output down 25.73% in the first half of the year
Venezuelan basic industries output capacity is still facing the impact of low production registered in 2005-2006. Fitful supply of raw materials along with management and labor issues limited the operation of the industries.
Data released by the Central Bank of Venezuela (BCV) on the physical production index at the end of the first half of 2012 show that both primary aluminum and primary steal output went down 29.52% and 25.73%, respectively. (El Universal,08-23-2012;

Chavez says: "we are entitled to a larger share of OPEC"
President Hugo Chavez says Venezuela, after the increase in its proven reserves of oil "is entitled a higher quota within OPEC." He explained that Venezuela is working on increasing production capacity, through increased drilling, as part of the strategy to achieve an increase in the share of OPEC production. More in Spanish: (El Universal, 08-23-2012;

International Trade

Venezuelan seaports unready for exports
President Hugo Chavez claims that the recent entry of Venezuela into the Common Market of the South (MERCOSUR) opens the doors to an "era of exports", yet besides a Venezuela's lack of competitiveness, there are infrastructure limitations in seaports and obstacles by authorities. "If seaports do not work well, there will be no exports. In addition to being competitive in production, it is necessary to be competitive in logistics," says a source closely connected to port activities. (El Universal,08-23-2012;

First Venezuelan export to the MERCOSUR
The first export operation within the framework of the recently adhered Common Market of the South (MERCOSUR) agreement corresponds to over 6,200 tons of aluminum containers, produced by ALENTUY, a company in Barquisimeto, Lara state. It went to Puerto Victoria in Brazil. The shipment arrangements were in charge of the Seniat via the main Mid-Western customs. (Veneconomy, 08-22-2012;

Venezuela also shipped almost 56.000 liters of chemicals for agriculture and aluminum containers produced by PEQUIVEN to Brazil and Uruguay, departing from Puerto Cabello aboard a ship owned by the government line VENAVEGA, according to a statement by Industry Minister Ricardo Menéndez. He added that the first million glass bottles are a part of a U$D 345 million agreement which could rise later to U$D 600 million. More in Spanish: (AVN, 08-24-2012;

Logistics & Transport

Slow port activity during the first half of 2012
Venezuelan ports cannot cope with the current volume of imports. Since 2010 ports operations have slowed down as obstacles increase. This is reflected by the length of time freight has spent in ports over the last two years, according to a joint report by the Confederation of Industries (CONINDUSTRIA) and the National Council for Trade and Services (CONSECOMERCIO). For instance, in 2010 the average time for a shipment in the main port, Puerto Cabello, was 18.8 days, and in a year's time the number of days jumped to 20.8. The second major port, La Guaira, improved slightly from 23.3 days in 2010 to 21.3 days in 2011. (El Universal, 08-22-2012;


Venezuela, more deadly than Iraq, wonders why
Some here joke that they might be safer if they lived in Baghdad. The numbers bear them out. In Iraq, a country with about the same population as Venezuela, there were 4,644 civilian deaths from violence in 2009, according to Iraq Body Count; in Venezuela that year, the number of murders climbed above 16,000. Even Mexico’s infamous drug war has claimed fewer lives. Venezuelans have absorbed such grim statistics for years. Those with means have hidden their homes behind walls and hired foreign security experts to advise them on how to avoid kidnappings and killings. And rich and poor alike have resigned themselves to living with a murder rate that the opposition says remains low on the list of the government’s priorities. (The New York Times, 08-22-2012;

Romney plans to stop Venezuelan oil imports
Republican presidential candidate Mitt Romney says that when he arrives at the White House he will make sure the United States does not buy oil from Venezuela and other unfriendly nations in the Middle East. He presented a plan to make the United States energy independent by 2020, through alliances with Canada and Mexico. More in Spanish:  (El Nacional, 08-24-2012;

UN shows Venezuela has the lowest rate of social inequality in the region
In a recent UN study Venezuela comes up with a GINI Index of Economic Inequality rate of 0,41: the lowest in the region, followed by Uruguay. The nations with most unequal income distribution are Guatemala, Honduras, Colombia, Brasil, Dominican Republic and Bolivia, in that order, all of them with a rate above 0,56. More in Spanish: (El Mundo, 08-24-2012;

Agreement signed for UNASUR to attend elections
Peruvian Foreign Affairs Minister Rafael Roncagliolo has signed an electoral “accompaniment” agreement with the head of National Electoral Council (CNE) Chief Tibisay Lucena, in his capacity as pro tempore president of the South American Nations Union (UNASUR). (Veneconomy, 08-22-2012;

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