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, November 9, 2012

November 09th, 2012

Economics & Finance

Venezuela repays nearly half of U$D36 billion in Chinese loans
Venezuela has repaid close to half of U$D 36 billion borrowed from China through oil-for-financing agreements, says Oil Minister Rafael Ramirez. The government of President Hugo Chavez has increasingly relied on China for financing because its borrowing costs in international capital markets are among the highest in the world. "We've received U$D 36 billion through credits with China ... and of that, we've paid U$D 17.9 billion," Ramirez said during a congressional hearing. (Reuters, 11-07-2012;

Exxon, Conoco arbitration rulings expected in late 2013
Venezuela expects international arbitration rulings by late 2013 in multi-billion-dollar claims by Exxon Mobil and ConocoPhillips over nationalizations by President Hugo Chavez's government, the oil minister said. Of more than 20 cases against Venezuela at the World Bank and the International Chamber of Commerce's panels, the biggest involve Conoco (COP.N) and Exxon Mobil Corp (XOM.N), which are seeking some U$D40 billion between them. Both companies filed for arbitration after Chavez ordered foreign firms to slash their stakes in production and upgrading projects for heavy crude oil in the Orinoco Belt as part of a 2007 wave of state takeovers. "We don't expect resolutions this year. Probably the biggest cases (Conoco and Exxon) will be resolved in the second half of 2013," Oil Minister Rafael Ramirez told Reuters. (Reuters, 11-08-2012;

Inflation down for the 10th consecutive month
The annual rate of the National Consumer Price Index (NCPI) was 17.9% in October, far below the 2012 target of 20-22% set by the government. The Central Bank and National Statistics Institutes report that "this annual rate maintains the downward trend observed for 10 consecutive months, which began in December 2011 at 27.6%". (AVN, 11-07-2012;; El Universal,;; Veneconomy,

Central Bank says gold sale ensures profits
The Central Bank sold 4.9 tons of gold out of its reserves, and Nelson Merentes, president of the institution, says such operations yield profit to the bank. He stressed that the gold price has been on the rise since 2006. Today it is worth U$D 1,720 per ounce, an upward trend that favors transactions. He added that the institution buys gold in local currency (bolívares) at U$D 900 and then it sells it at U$D 1,700. "They all do the same; all banks must generate profits." (El Universal, 11-08-2012;

Central bank aid to PDVSA at U$D 29 billion
Financial assistance to state-owned oil company PDVSA by the Central Bank (BCV) continues to rise. BCV data shows that by the end of October, the financial institution's aid to the oil company increased by 79% over the last 12 months. By October 26, the BCV had allocated U$D 29 billion to Pdvsa, compared to only U$D 16.2 billion during the same period in 2011. (El Universal, 11-07-2012;

PDVSA to contribute U$D 60 billion in taxes and to social programs this year
PDVSA says its contributions to the tax authority and to social programs will reach U$D 60.3 billion this year. Oil and Mining Minister, and also PDVSA President Rafael Ramirez also told the National Assembly that 26% of the funds it turns over to the government are going to the National Development Fund (FONDEN), which is 11% above contributions made last year. More in Spanish: (El Universal, 11-09-2012;

Oil prices will determine the exchange rate adjustment in 2013, says ECOANALÍTICA Director Asdrúbal Oliveros, who says the "impending reality" is that the CADIVI rate should adjust from U$D4.30 a U$D 6,30; and SITME'S up to U$D 7.50. He says an alternate way would be to leave the CADIVI rate as is and raise SITME'S to U$D 9. In either case it would be an average devaluation of 46% for a net impact of VEB 84.6 billion, which would give the Government added funds for public spending. More in Spanish: (El Universal, 11-09-2012;; El Nacional;


A Russian company  in the consortium working the Orinoco Belt abandons project
The board of directors of the fourth greatest oil producer in Russia, SURGUTNEFTEGAZ, voted for pulling out of the Russian consortium that operates in the Orinoco Oil Belt, its last project abroad, said the company on Wednesday. The Russian consortium has a 40% stake in the PETROMIRANDA joint venture. (Veneconomy, 11-07-2012;

Amuay refinery operations seen normal by year-end
The 645,000 barrel per day (bpd) Amuay refinery should be operating normally at about 500,000 bpd by year-end once it finishes repairs to a distillation unit damaged by an explosion in August, the country's energy minister said.
State oil company PDVSA had initially said the August 25 blast that killed more than 40 people had only affected storage tanks of its largest refinery. Amuay has been operating at around 50% capacity since then. Rafael Ramirez, who is also PDVSA president, told Reuters that Amuay's management determined that the explosion had damaged a furnace at an 180,000 bpd facility, one of five distillation units at Amuay. "The (replacement parts) arrive in December, and about three weeks after that we should have that unit in service, so we can reach the operational level the refinery was at before the incident, which was about 500,000 barrels per day," he said. (Reuters, 11-08-2012;

SIDOR losses around U$D 580 million; steel rod production down 29.4%
The SIDOR government steel complex is registering around U$D 580 million in losses to date, and year end production is expected to be at 1.8 million tons of liquid steel - down from a 4.3 million ton capacity - according to company director Pedro Acuña Grahan, who represents class B stockholders. Acuña called for an audit and assigning responsibilities for losses. He says when the government took over the company its assets were above U$D 3.4 billion and it now is in debt for more than U$D 900 million and decay is such that capacity is down 50%, and the technology infrastructure has been partially destroyed.  In the meantime, steel rod production - essential for public and private housing construction plans - is reported down 29.4% in October. SIDOR has a 50% share of the steel market. More in Spanish: (El Universal, 11-09-2012;,

International Trade

Venezuela imports from the US steadily rising
The US Department of Commerce reports Venezuela's imports from the US rose 71.6% during the last year, with U$D 2025 billion in September, up from U$D 1179 billion during the same month last year. January to September totals U$D 12.869 billion, which is above the amount for all of 2011. More in Spanish: (Últimas Noticias, 11-09-2012;


521 public protests in October nationwide
The Venezuelan Watch Group on Social Conflict (OVCS) reports in October alone there were 521 protest demonstrations and 11 strikes, which make it the most conflict ridden month to date this year. 204 protests were about labor rights, 197 over housing, 106 over crime and justice; and 14 over education problems. More in Spanish: (El Universal, 11-09-2012;

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