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, November 27, 2012

November 27th, 2012

Economics & Finance

Chavez choking on Bolivars to spur Venezuelan bond sales
The bolivar’s plunge to a record on the black market is pressuring Venezuelan President Hugo Chavez to end the longest drought of dollar-bond sales in five years. Venezuela hasn’t issued bonds denominated in U.S. currency since October last year, after selling a record U$D 7.2 billion in the first 10 months of 2011, according to data compiled by Bloomberg. State-owned Petroleos de Venezuela SA, Latin America’s largest oil producer, last sold dollar-denominated notes in May. The yearlong drought is leaving the central bank without enough dollars for Venezuelans to buy at official fixed rates, sparking the bolivar’s 42% drop this year in the unregulated market. The bolivar declined 6.2% today. (Bloomberg, 11-26-2012;

Devaluation will increase debt cost to the economy
As the Government considers devaluation under growing pressure from the gap between official income and expenditure, it must also deal with the fact that a devaluation will increase the share of indebtedness within the economy. According to a study by José Guerra and Luis Oliveros, economy professors at the Central University, while further devaluation dilutes the domestic debt as fewer dollars are needed to meet it, it also shrinks GDP, FOREX debt remain the same, country risk rises and interest rates shoot up. As standing debt service costs rise, taking up a larger budget share, resources dry up for health, education and infrastructure. More in Spanish: (El Universal, 11-27-2012;

Non-oil exports at the worst level since 1997
Venezuela's entry into the Common Market of the South (MERCOSUR) takes place at the worst time for local industry. Dependence on oil revenues, higher imports, and small export capacity are just some of the features of the nation's current economy. Data from the Central Bank of Venezuela (BCV) shows that non-oil exports in the third quarter accounted for U$D 816 million, 30% below the figure recorded during the same period in 2011. Lower exports were reported at 33.33% and 26.7% in the public and private sectors, respectively. "In the public sector, exports of iron, steel, and aluminum plummeted whereas chemicals increased. Likewise, private sales slumped, particularly those of gold, propylene, hydrogen peroxide, nickel, and ferrosilicon," the BCV explained. (El Universal, 11-26-2012;

Imports spike record consumption
Venezuela's economy has had steady growth over the last eight quarters, and so has consumption, which has skyrocketed over the past five quarters. Yet domestic demand has not been met by domestic production, but by imports. After shrinking for six consecutive quarters (2009-2010), private consumption has increased from 2.7% in the second quarter of 2010 to 7.8% by the end of the third quarter of 2012. In fact, the Central Bank reports the highest consumption in history in July-September this year. (El Universal, 11-26-2012;

Private construction drops by another 10.7% after steadily falling for 11 quarters
Last week, Finance and Planning Minister Jorge Giordani reported a 12.6% growth in construction. However, Central Bank data shows the activity increased due only to public projects as private construction continued to drop an additional 10.7% after an 11 quarter recession. More in Spanish: (El Universal, 11-27-2012;

CADIVI says October US dollar supply 4.5% above 2011
Manuel Barroso, President of Venezuela's Foreign Exchange Administration Commission (CADIVI) reports that U$D 26.9 have been supplied through the end of October, 4.5% above the amount authorized during the same period in 2011. U$D 21.3 billion (79%) went to imports; U$D 1.2 billion to financial operations; U$D 1.8 billion to family-related remittance, students, and special cases; and U$D 2.6 billion to travelers. Regarding imports he said, "There are no requests that may extend the given periods because of specific situations. The system works as usual." (El Universal, 11-26-2012;


EXXON and CONOCO purchase 28% of the crude oil PDVSA ships to the US
Despite arbitration procedures brought against PDVSA by CONOCO PHILLIPS and EXXON MOBIL, trade relations continue to the point that 28% of all oil PDVSA ships to the United States goes to these two companies. Information from the US Energy Department through August shows that PDVSA has been shipping an average 223,830 barrels daily to both companies; far above the 57,000 daily barrels of crude the government oil company is committed to send the Chalmette refinery, where it is an equal partner with EXXON. CONOCO maintains a supply contract for an average 190,000 BPD to the Sweeny refinery, in Texas. More in Spanish:  (El Nacional, 11-27-2012;

Venezuelan oil exports gained $1.29/bbl. driven by persistent concerns over supply disruptions due to tensions in the Middle East and an “unexpected” drop of inventories in the United States, says the Venezuelan Oil Ministry. The crude oil barrel averaged U$D 97.15/bbl. between November 19 and November 23 which took the average price for this year to U$D 104.09/bbl. (Veneconomy, 11-24-2012;; El Universal, 11-23-2012;

International Trade

RENAULT considering Venezuela plant
French automaker RENAULT is considering the possibility of creating a factory in Venezuela to increase its production capacity outside struggling Europe. RENAULT already has three plants in Latin America - in Argentina, Brazil and Colombia - as well as six factories in France. Venezuela's Industry Ministry and RENAULT have signed a "letter of intent for the installation of a vehicle assembly plant", the carmaker said in a statement on Monday. "Which will lead to a feasibility study for local production of vehicles," Renault said. (Reuters, 11-26-2012;; El Universal, 11-26-2012;

Logistics & Transport

Containers at bay increased by 223.3%
Cipriana Ramos, Chairperson of the FEDECÁMARAS Committee on Customs and Port Services, reports containers waiting at bay for Christmas season imports rose 223.3%, from 3,356 in 2011 to 10,853 through mid November this year. The number of refrigerated containers stalled at ports rose from 101 last year to 468 this November 16th, and empty containers rose from 3,500 to 8,731. The Government itself admits that 80% of all products are imported. Some economists estimate that this year's imports - largely Government funded - will close the year at U$D 50-54 billion. Exports, on the other hand, have dropped from 365 containers in 2011 to a mere 45 this year. To make matters worse, current work on port remodeling, now scheduled for completion by December 2014, has reduced port capacity by 30%, and the SIDUNEA automatic customs system, designed to process a container through the port in 2 hours, now takes an approximate 30 days to process. More in Spanish: (El Carabobeño, 11-26-2012;,3-ha-aumentado-cantidad-de-contendores-en-baha)

"Only 4 out of 20 docks are operating", says Rusval Gutierrez, President of the Shipping Agents Association, and adds that the emergency is due to failures by the Port Authority and by the "inability to operate and deliver incoming freight to both customs and importers" More in Spanish: (Tal Cual, 11-27-2012;


Chavez public profile dropping drastically since August
According to a special July-November study obtained by El Universal daily, President Chavez has drastically lowered his public profile after his reelection on October 7th. From a high of 3730 minutes of public appearances and speeches in August; his public showings since his reelection are down to 495 minutes in November, all of them in purely official ceremonies: No campaign activity, telephone calls, press conferences or interviews: And the President has sent only 4 Tweets in November, all of them calls for unity during the upcoming gubernatorial elections - down from 56 Tweets in July. More in Spanish: (El Universal, 11-27-2012;

No human rights in Venezuela
Each day, 53 Venezuelans, 11 of them within the Caracas Metropolitan, will not be lucky enough to get back home or will be killed in their own homes. Daily reports of accidents and crime show the variety of scenarios in which Venezuelans are killed. The stories seem to be accepted as some kind of unknown unstoppable force that overrides people's choices. At a distance, the phenomenon is accepted as some kind of misfortune which Venezuela cannot escape from. Last year stood out as the most violent year of all times, the criminal death toll rose to 19,336. (El Universal, 11-24-2012;

Government agents raid opposition printing plant in Venezuela ahead of election
Government intelligence agents have raided a business printing opposition political pamphlets ahead of next month’s state elections in Venezuela. Zulia state Gov. Pablo Perez says the raid by the Bolivarian National Intelligence Service in the western city of Maracaibo is an attempt to intimidate opponents of President Hugo Chavez’s government. He told reporters that such actions are “abuses of power.” (The Washington Post, 11-24-2012;; Fox News,

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