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, September 7, 2012

September 07th, 2012


Economics & Finance

Inflation at 9.8% by August, nine basic food items rely heavily on imports
The Central Bank of Venezuela (BCV) announced that accumulated inflation from January through August slowed down and stood at 9.8%. BCV's Chairman Nelson Merentes and Finance Minister Jorge Giordani said this was a highly positive result. Last year's accumulated inflation was 18.6% for the same period. "By the end of the fiscal year inflation may be below the estimated levels, 20-22%," Merentes said. Low food prices are the reason for the drop in inflation, and such decline is the result of a "growing (domestic) production, the Law on Cost and Fair Prices, and a better distribution of products," according to the BCV president. The Central Bank also said 30% of the beef and 90% of the powdered milk consumed in Venezuela are imported. 80% of liquid milk is also imported. (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/venezuelan-inflation-at-98-by-august) and more in Spanish: (El Nacional; http://www.el-nacional.com/)

Private banks may participate in "Petrobond" distribution
President Hugo Chávez announced that the private and public banking sectors will work together on national apportionment of Petrorinoco bonds (Petrobonds). He said the government and private banks will sign agreements for private financial institutions to distribute bonds in remote places where Banco de Venezuela (a state-run bank) does not have branch offices. (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/banking-private-sector-participates-in-petrobonds-distribution)



Commodities

PDVSA to invest U$D 18 billion this year
Venezuela’s oil minister announced that state oil company PDVSA plans to invest U$D18 billion this year, primarily in exploration and production. Rafael Ramirez, who also heads PDVSA, says that in 2006 investment in the oil industry totaled U$D 5.83 billion and then climbed to U$D 11 billion in 2007 and U$D 15.44 billion in 2008. He said that U$D 13.54 billion were invested in 2009 and U$D 10.7 billion in 2010, a “bad year” due to the “impact of the entire drop in the price” in 2009, while investment rose to U$D 17.53 billion last year. He confirmed that in 2011 the Venezuelan oil company posted U$D 124.75 billion in revenue. (Latin American Herald Tribune, 09-05-2012; http://www.laht.com/article.asp?ArticleId=570259&CategoryId=10717)

Minister claims processing units undamaged
Venezuelan Minister of Petroleum and Mining Rafael Ramírez claims that processing units (for the output of by-products) reported no damages upon the explosion of the Amuay oil refinery in northwest Venezuela. He also said that a comprehensive revision is in place to ensure no further leaks.  Although the minister did not reveal the cost of overall damages, he stated, "nine out of 680 tanks has been affected (at the Paraguaná Refining Complex). Four out of the nine burnt tanks collapsed, eventually. The other five suffered some damages. We are evaluating everything, including all the systems; we are changing the valves." (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/venezuelan-minister-of-petroleum-processing-units-undamaged; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=570068&CategoryId=10717)

Nation has fuel reserves for 10 days
Oil and Mining Minister and PDVSA Chief Rafael Ramírez says “the country still has fuel reserves for 10 days” after the explosion at the Amuay Refinery a little over a week ago. He also reiterated the country “is not importing gasoline.” (Veneconomy, 09-05-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31946&idc=4)

Perla gas field production at least 15 months away
The start of production at Venezuela's big offshore Perla gas field is still at least 15 months away, said a partner involved in the project, delaying once again the country's plans for domestic production of natural gas. Although Venezuela boasts some of the world's biggest natural gas reserves, and is one of its biggest oil exporters; the country doesn't yet produce gas commercially. The nation hopes the Perla field and other future gas projects will help it rely less on neighboring Colombia for its supplies. The project partners said last year they hoped to have some initial production from Perla by the end of 2012. (Reuters, 09-05-2012;

PETROPIAR upgrader restarting after maintenance
A maintenance shutdown of the PETROPIAR oil upgrader is over, but a full return to production could still take two weeks, said the senior executive for the Venezuelan unit of Chevron, a partner at the facility. The upgrader, which converts heavy crude from the OPEC nation's Orinoco belt into lighter and more valuable oil, was shut down in July for maintenance and to expand capacity. With maintenance complete, the facility will now gradually resume operations. (Reuters, 09-05-2012; http://www.reuters.com/article/2012/09/06/venezuela-oil-petropiar-idUSL2E8K602O20120906)

PDVSA says six Orinoco projects to begin pumping this year
PDVSA says that six new projects in the Orinoco heavy oil belt are expected to start production by the end of the year, setting yet another target for development of a delay-plagued region vital to increased production in the country. The first project to begin producing, said Rubén Figuera, the PDVSA executive in charge of the Orinoco belt, will be Petromacareo, its joint venture with Vietnamese oil company PETROVIETNAM. After that there will be projects with Italian, Russian, Spanish, and American oil companies. "This year we'll begin early production at all of the new developments in the belt," said Figuera, at an oil industry conference in the coastal city of Puerto la Cruz. "The expectation for the wells is extraordinary." (Reuters, 09-05-2012; http://www.reuters.com/article/2012/09/05/venezuela-oil-production-idUSL2E8K5GMJ20120905)

Venezuela confirms start-up of oil exploration off Cuba
Venezuela – State-owned oil giant Petroleos de Venezuela (PDVSA) has started exploring for oil in deepwater areas off Cuba, Oil and Mining Minister Rafael Ramirez said. “It started and when we have the results, we’ll tell the country,” Ramirez said, without providing further details. State-owned Cubapetroleo, or CUPET, said in early August that PDVSA would continue drilling in deepwater areas despite the fact that other foreign oil companies hit two dry holes. (Latin American Herald Tribune, 09-05-2012; http://www.laht.com/article.asp?ArticleId=570242&CategoryId=10717)



Logistics & Transport

The Mazparro, Boconó and Arauca, are the first vessels to service the Orinoco-Apure river system, setting sail from the Orinoquia Bridge in Bolívar state down to Apure state. The boats, which bear up-to-the-minute technology thanks to the China-Venezuela agreement, are meant to boost national agricultural production. (Veneconomy, 09-05-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31967&idc=3)



Politics

Capriles pledges to end barriers to domestic production
A large part of the Capriles "Made in Venezuela" plan for the economy is based on "stimulating" domestic production, to achieve 6-7% growth annually, "end" scarcity, and promote diversification and exports  His platform adds "In recent years Venezuela has become unattractive for business, due to mistaken policies that threaten those who would invest". More in Spanish: (El Universal, 09-07-2012; http://www.eluniversal.com/economia/120907/capriles-promete-eliminar-trabas-a-la-produccion-local)

Venezuela to appoint envoy to Colombian peace process
Foreign Minister Nicolás Maduro has said President Chávez will in the next few days be appointing an envoy to join the commission leading the Colombian peace process. "The guidelines, activities, and the scope of Venezuela's support in the talks," will be set out by the Colombian Government, said Maduro during an interview. (El Universal, 09-05-2012; http://www.eluniversal.com/nacional-y-politica/120905/venezuela-to-appoint-envoy-to-colombian-peace-process; http://www.eluniversal.com/nacional-y-politica/120905/venezuelas-incorporation-in-colombian-peace-talks-is-a-concession)



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