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, March 15, 2013

March 15, 2013

Economics & Finance

Venezuela to create new foreign exchange market, Maduro says - BCV dollar tenders anticipated
Venezuela will create an alternative currency market to crack down on a black market in which the dollar is worth about four times more than the official rate, interim President Nicolas Maduro said. “It’s now ready, we’re missing some details on the mechanisms,” Maduro said in an interview yesterday. “We hope to announce it very soon, activate it, incorporating all the economic sectors.” The new state-run system will replace a central bank- administered currency market known as SITME and would seek to complement the current foreign exchange rate system known as CADIVI, Maduro said. The complementary system will provide sufficient foreign currency for the economy while meeting the country’s “real needs,” Maduro said. According to unofficial sources, experts at PDVSA and the Central Bank have devised a plan for dollar tenders by the Central Bank with support from the state oil company. FOREX would be drained from funding currently going to the National Development Fund, as the Central Bank lacks resources to support the system - and using reserves is not an option as they are used to pay from imports made through the Exchange Board (CADIVI). The base price would be set by the Central Bank (BCV) and would fluctuate according to supply and demand. This would imply an additional devaluation, but the percentage has not yet been established. Finance and Planning Minister Jorge Giordani is reported to be the sole holdout for approving the system. (Bloomberg, 03-14-2013;; El Universal;; and more in Spanish: El Nacional;

Gov't allows exporters to keep 40% of US dollar earnings
Venezuela's new requirements and steps for exports have been enacted allowing both individuals and companies involved in exporting goods and services will be allowed to retain and manage up to 40% of their earnings in US dollars. (El Universal, 03-14-2013;

American intelligence services warn of an economic collapse in Venezuela, pointing out that debt obligations by the Venezuelan government “will use up” any increase of oil revenue even if the prices remain high. (Veneconomy, 03-13-2013;

Official unemployment rate at 9.4% in January
Venezuela's unemployment rate averaged 9.4% in January according to a monthly report compiled by the National Statistics Institute (INE). The report, which examines the state of the workforce, shows 1.27 million people unemployed in the first month of 2013 - a drop compared to 2012, when it hit 10.3%. (El Universal, 03-13-2013;


IEA warns of oil challenges Venezuela faces after President Chávez’ death. The International Energy Agency point out Chávez has left PDVSA under financial pressure, “an aged infrastructure in desperate need of investments (…) and part of its future crude production mortgaged to Chinese leaders.” According to the IEA, Venezuelan oil production has dropped by 700,000 barrels per day in the last 14 years. Oil and Mining Minister Rafael Ramírez's response was to say that the Agency is an imperialist instrument, "anti-OPEC, created to destroy OPEC". (Veneconomy, 03-13-2013;; Reuters,; Bloomberg,; and more in Spanish: AVN;

Lyondell refinery replaces Venezuelan oil with Canadian oil
Lyondell Basell Industries NV is readying its Houston based refinery, which mostly uses Venezuelan oil, to receive new oil supplies, particularly from Canada, according to a presentation made Wednesday to Wall Street analysts. The company has spent U$D 50 million to almost treble its refining capacity of Canadian heavy oil in Houston, from 60,000 barrels per day (bpd) to 175,000 bpd. Revamping a crude oil distiller and a coking unit to refine crude oil from the tar fields of Alberta, Canada, "is being completed," Lyondell CEO Jim Gallogly said. Works began in the middle of February and they are expected to finish in the middle of April, Reuters said.(El Universal, 03-13-2013;

LUKOIL barred from Venezuela
Oil and Mining Minister Rafael Ramirez has announced that unless statements by a LUKOIL executive are clarified, the Russian company will be barred from Venezuela. LUKOIL representatives recently complained about the slow pace of operations and agreements, saying that oil investors need legal certainty. Ramirez has responded: "We are verifying whether statements attributed to Mr. Andrei Kuzyayev, of Lukoil, are true; and if they are this leaves LUKOIL out of our oil business as we will not allow any private foreign company to dictate to us what our policy should be. We have not taken this from US multinationals and we will not take it from anybody." (El Mundo, 03-15-2013;

Orinoco output with Italy's ENI launched
Venezuela started production with Italy's ENI at a joint venture in its vast Orinoco belt on Wednesday, and officials expect output to begin soon at projects with Chevron and the China National Petroleum Corporation (CNPC). In addition, Oil Minister Rafael Ramirez said Venezuela's state oil company PDVSA will sign a long-awaited U$D2 billion credit agreement with Chevron at the end of this month. Ramirez has said that Venezuela will maintain its oil industry tax and legal framework under acting President Nicolas Maduro, seeking to reassure foreign investors after last week's death of Hugo Chavez. "Today begins early production at our PETROJUNIN joint venture (with ENI)," Ramirez told reporters. "We're symbolically starting with 700 barrels per day (bpd). It will reach 15,000 bpd by the end of the year, and 75,000 bpd en 2015." (Reuters, 03-13-2013;; El Universal,

CORPOELEC denies its own sale to China. In a press release, the National Electric Corporation CORPOELEC has denied rumors of an alleged sale of the company to the Peoples Republic of China. The company is headed by a brother of the late President Chavez. More in Spanish: (AVN, 03-15-2013;; Ultimas Noticias,


Capriles: Nicolás Maduro is the Castro brothers presidential candidate

Opposition presidential candidate Henrique Capriles has challenged the way Nicolás Maduro was made acting president and presidential candidate of the ruling United Socialist Party of Venezuela.
"How did Nicolás come into play? Well, Nicolás is the candidate of (Cuban President) Raúl Castro. Therefore, he means giving Venezuela away to the interests of Raúl Castro. I would like the followers of (late) President (Hugo Chávez) to tell me if they want Venezuelans' resources to be given to the Castro brothers (...) That's what Nicolás will do," Capriles said. (El Universal, 03-14-2013;

Cuba is said to have sent 2,000 agents to support Maduro
Cuba bet hard on the political management of President Hugo Chávez's illness. Now, it is committed to make the election favor acting President Nicolás Maduro. Some 46,000 Cuban "cooperators" who officially reside in Venezuela, have the mission of safeguarding the "Chavista" revolution. In addition, Havana has commissioned a detachment for election monitoring, estimated at 2,500 troops, according to intelligence reports from Cuba. As Cuban units in Venezuela paid tribute to the body of President Chavez, their leader, Roberto López said: "We are here to ratify our dedication; yes, so far we have given it all; now, we are ready to give even our lives, our blood, if necessary, for this revolution". (El Universal, 03-14-2013;

FARC grateful for Venezuela's support in Colombian peace talks
The Colombian Revolutionary Armed Forces (FARC) have expressed their gratitude to Venezuelan acting President Nicolás Maduro for his support in the peace talks held in Havana, which seek to put an end to the Colombian armed conflict that has last more than fifty years. "Thank you, President Maduro. We will work hard here in Havana to make progress in the roundtable (discussions), seeking to reach an agreement with the Colombian Government," based on peace, said FARC's chief negotiator Iván Márquez, AFP reported. (El Universal, 03-14-2013;

Maduro now says it will probably not be possible to embalm Chavez
Acting Venezuelan President Nicolas Maduro said Wednesday that it would be “rather difficult” to embalm the body of Hugo Chavez because the decision to do so was made too late and the procedure was not started in time. Maduro said that Russian and German experts arrived in Venezuela to help with the embalming process but that “the scientific news and the opinions” among the group were that “it’s going to be rather difficult for it to be that way, because the preparations needed to be started and the decision (to do so) should have been made much sooner.” (Latin American herald Tribune, 03-13-2013;; El Universal, 03-14-2013;; Bloomberg,; Fox News,

Jaua speaks of improved relations with the US
Foreign Minister Jaua told CNN that Venezuela has established communication with the US Government through its OAS Representative Roy Chaderton, and says bilateral relations can be strengthened "as long as the US has the good will to understand that we can only have better relations on a basis of mutual respect". More in Spanish: (AVN, 03-15-2013;

Chavez legacy lauded at UN
During a United Nations tribute to Hugo Chavez, Foreign Minister Elias Jaua said Venezuela will to continue to promote the ideas that marked the actions of the Bolivarian Revolution's leader in international policy, in search for other possible world and "raise with greater strength flags of the Bolivarian Socialism." (AVN, 03-14-2013;

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

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