May 31, 2013

Economics & Finance

Minister says FOREX allocations delays down 70-75%, business says only 12% of pending requests served

Finance Minister Nelson Merentes says information is being shared by the Foreign Exchange Board (CADIVI) and the nation's tax authority (SENIAT) to avoid foreign exchange going to "fake companies". He says delays in FOREX allocations have been reduced by 70-75%, and deliveries will be speeded up to areas such as food, health, the automotive industry and airlines. In turn, FEDECÁMARAS President Jorge Botti, speaking for the business community says there is a backlog of around U$D 8 billion and some 10-12% has been served. He added that "it will take 90-120 days to restore supplies". More in Spanish: (El Mundo, 05-31-2013; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/entre-70--y-75---ha-disminuido-el-retraso-en-la-en.aspx#ixzz2Urphg0dB; El Universal, http://www.eluniversal.com/economia/130531/senalan-que-cadivi-ha-liquidado-12-de-las-divisas-pendientes)

"We do have sufficient reserves" says Central Bank President

Edmée Betancourt, President of the Central Bank says the nation has sufficient international reserves to meet economic needs. "We do have foreign exchange. We must rationalize our foreign exchange; we will not allow them to continue to be wasted". More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/si-tenemos-divisas-asegura-presidenta-del-bcv.aspx)

Merentes to meet investment bankers

Finance Minister Nelson Merentes will travel in June to Europe and the United States for a round of meetings with investment centers and international organizations, in order to "explain first hand and clarify investor doubts" on Venezuela's economy and its potential. He says: "we have made changes here and some people do not understand, the best way is to tell it in person. We have no problem going to these centers, we will go where we must, we will take part in international organizations no matter what their position. We have a model which is being developed and in any case we will go to the markets." More in Spanish: (El Universal, 05-31-2013; http://www.eluniversal.com/economia/130531/merentes-viajara-a-reunirse-con-bancas-de-inversion)

Local industry running at half capacity

The Venezuelan Confederation of Industries (CONINDUSTRIA) reports that the nation's domestic industries are working at 52.82% of their installed capacity, according to a poll conducted by the institution. This is down from 59.5% in the last quarter of 2012 and the lowest first quarter since 2010. Data from the Central Bank (BCV) indicates the slowdown is due to cuts in the sale of foreign currency to the private sector, lack of raw material, customs-related bottlenecks, and delays in the granting of permits. Official statistics indicate food production rose by 2.62% in January. Similar rises in production in January were reported in paper (13%), tires (38%), and common metals (5.7%). (El Universal, 05-30-2013; http://www.eluniversal.com/economia/130530/venezuelan-industries-running-at-half-capacity and http://www.eluniversal.com/economia/130530/official-data-shows-setback-in-venezuelan-manufacturing-sector)

Venezuelans blame Government for widespread shortages

The Government is accountable for shortage in the country, said 93.52% of respondents in a poll conducted by the daily newspaper El Universal. Based on the results of the poll conducted among 2,270 people, some 4.1% blamed shortage on industries, and 2.11% blamed it on shopkeepers. Another 0.26% of respondents attributed shortage to transport companies. According to the latest data disclosed by the Central Bank shortage hit 21.3% in April, the highest level in recent months. In other words, two out of 10 products were not in stock in grocery stores and supermarkets. (El Universal, 05-30-2013; http://www.eluniversal.com/economia/130529/venezuelans-blame-government-for-widespread-shortage)

Stock market up 71%

The local stock market continued its torrid pace as it increased by 5.6% during the week ending May 24, closing at 806,050. Banco Provincial continued rising, up 8.3% this week to close at Bs. 260. At this level, its dividend has dropped to nearly 8%, down from near 30% two years ago. But somehow investors with Bolivars trapped by currency controls continue chasing dividends in all stocks. The biggest gainer for the week was container-maker Envases Venezolanos, up 14.2% at Bs. 120, followed by Mercantil Servicios Financieros, up 2% at Bs. 230 and nationalized telephone company CANTV, up 2% at Bs. 23. Steelmaker SIVENSA lost 33.3% at Bs. 10.02, while paper and property company MANPA dropped 8.7% at Bs. 6.3. (Latin American Herald Tribune, 05-30-2013; http://www.laht.com/article.asp?ArticleId=791039&CategoryId=10717)

Commodities

RPT-Fitch: ROSNEFT'S Venezuela deal important for long-term outlook

ROSNEFT's new joint venture in Venezuela is a step towards strengthening its international upstream operations, which could help improve the company's operating profile in the long-term, Fitch Ratings says. International growth will be important if the group is to offset falling production at its principal brownfield sites in Western Siberia and Central Russia. Joint ventures abroad could also provide Rosneft with valuable technical expertise. ROSNEFT reported a 1.6% quarter-on-quarter fall in oil production in Q113 to 2.35m barrels per day (bpd), excluding equity affiliates and TNK-BP. Virtually all of this production came from Russia, with 56% from one subsidiary in Western Siberia, where output dropped 1.7% on the previous quarter. We therefore consider ROSNEFT's involvement in the oil-rich Orinoco Belt projects, with 195bn tons of estimated oil resources, as an important long-term driver for its upstream operations and expansion abroad. (Reuters, 05-29-2013; http://www.reuters.com/article/2013/05/29/fitch-rosnefts-venezuela-deal-important-idUSFit65963420130529)

Venezuela to sign loan agreement with China's oil company CNPC

Rafael Ramírez, president of state-owned oil company PDVSA, is to travel to Beijing next week to initial a loan agreement amounting to U$D 4,000 with China National Petroleum Corporation (CNPC), a source from the company said on Wednesday, following talks held in mid-May during a visit to Venezuela by Chinese Vice-President Li Yuanchao. PDVSA said the credit will help boost production of heavy and extra-heavy crude oil from 130,000 barrels per day (bpd) to 330,000 bpd at China-Venezuela joint venture Petrolera SINOVENSA, operating in the Carabobo 2 block at the Orinoco Oil Belt. (El Universal, 05-30-2013; http://www.eluniversal.com/economia/130529/venezuela-to-sign-loan-agreement-with-china-oil-company-cnpc)

Bolivian oil company weights proposal to explore in Venezuela

Bolivian state-owned oil company YPFB reported that it is pondering the proposal made by Argentina and Venezuela to effect its first international projects of prospection and production of hydrocarbons. Thus far, YPFB has operated only in Bolivian territory. Now, however, it could start operations in foreign countries thanks to the political agreements reached by President Evo Morales and his counterparts Cristina Kirchner, of Argentina and Nicolás Maduro, of Venezuela. In this way, Argentinean YPF and Venezuelan PDVSA will return the access given by YPFB to the Bolivian market, where they run oil and gas exploration and production projects. (El Universal, 05-29-2013; http://www.eluniversal.com/economia/130529/bolivian-oil-company-weights-proposal-to-explore-in-venezuela)

ICSID ruled in favor of PDVSA in lawsuit by OPIC oil company

The International Center for Settlement of Investment Disputes, or ICSID, ruled in favor of state oil company PDVSA in a case brought by the OPIC KARIMUN Corporation, after the company failed to reach an agreement with the Venezuelan government regarding the request for compensation for the involvement of the conventions to which they had been working. "The plaintiffs are stuck with Article 22 of the Law on the Promotion and Protection of Investments, of October 3, 1999, which provides that disputes arising between an international investor whose home country holds a Bilateral Investment Treaty with the Venezuelan state, may be subjected to international arbitration. In this case there was none that protected them, which is why the judges gave the decision in favor of Venezuela," PDVSA said in a press release. (AVN, 05-29-2013; http://www.avn.info.ve/contenido/icsid-ruled-favor-pdvsa-oil-lawsuit-opic; Latin American Herald Tribune, 05-28-2013; http://www.laht.com/article.asp?ArticleId=789651&CategoryId=10717; Reuters; http://www.reuters.com/article/2013/05/29/venezuela-arbitration-idUSL2N0EA0I420130529)

Venezuela says U.S. shale won’t hurt OPEC’s heavy oil

The rising supply of U.S. shale oil doesn’t affect exporters of medium and heavy crudes such as Venezuela, Oil Minister told reporters before an OPEC meeting tomorrow. “Shale is a production of light crude and that doesn’t affect us as being big producers of medium and heavy crudes,” Rafael Ramirez said in Vienna, where ministers from the Organization of Petroleum Exporting Countries are gathering. “We have a big capacity to place our crudes, including the U.S. market.” (Bloomberg, 05-30-2013; http://www.bloomberg.com/news/2013-05-30/venezuela-says-u-s-shale-won-t-hurt-opec-s-heavy-oil.html)

Fuel market has enough inventories to cover domestic demand, said PDVSA Refining Director and Paraguaná Refining Complex (CRP, in Spanish) General Manager Jesús Luongo. He also informed the gas reformer at the Puerto La Cruz Refinery was subjected to a cleaning process without presenting any irregularities; consequently “the process of starting it was begun on Sunday when one of the engines failed.” (Veneconomy, 05-29-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34916&idc=4; El Universal; http://www.eluniversal.com/economia/130529/naphtha-unit-at-puerto-la-cruz-refinery-comes-to-a-halt)

International Trade

Food imports in Colombia could be suspended

Nutrition Minister Felix Osorio says the government is considering suspending food imports from Colombia after that nation's President Juan Manuel Santos met with Venezuelan opposition leader Henrique Capriles. He said negotiations had begun to bring in certain staples, but added "after yesterday's situation we can hardly establish any commercial relationship with Colombia beyond what already exists." More in Spanish: (Notitarde, http://www.notitarde.com/La-Costa/Importacion-de-productos-alimenticios-desde-Colombia-podria-suspenderse/2013/05/30/194555)

Logistics & Transport

Talks held on speeding up port processing

Major General Herbert García Plaza, President of the Port Authority and head of aquatic and air transport has met with representatives of the various government institutions to speed up dispatching cargo that arrives in Puerto Cabello. More in Spanish: (Bolipuertos, 05-31-2013; http://www.bolipuertos.gob.ve/noticia.aspx?id=7249)

Politics

Venezuela furious at Colombia's meeting with opposition leader

Venezuela reacted with fury to Wednesday's talks between Colombian President Juan Manuel Santos and Venezuelan opposition leader Henrique Capriles. President Nicolás Maduro said Santos had "stabbed Venezuela", and pointed out that the late President Hugo Chavez had unconditionally supported the peace process in Colombia. He added that "as we work toward peace in Venezuela, we cannot accept a conspiracy from Bogota", and doubted the sincerity of President Santos "as he stabs Venezuela in the back and contributes to wash the face of the conspiracy against Venezuela. I say so with pain". Capriles met Santos in Bogota at the start of a tour around Latin America to press his case that last month's presidential poll in Venezuela was fraudulent and President Nicolas Maduro's government is therefore illegitimate. (Reuters, 05-29-2013; http://www.reuters.com/article/2013/05/29/us-venezuela-colombia-idUSBRE94S1GH20130529; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuela-angrily-scolds-colombia-for-having-president-meet-with-opposition-leader-capriles/2013/05/29/965a349e-c8d5-11e2-9cd9-3b9a22a4000a_story.html; Fox News, http://www.foxnews.com/world/2013/05/29/venezuela-angrily-scolds-colombia-for-having-president-meet-with-opposition/; Bloomberg, http://www.foxnews.com/world/2013/05/29/venezuela-angrily-scolds-colombia-for-having-president-meet-with-opposition/ and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/130531/maduro-el-presidente-santos-le-metio-una-punalada-a-venezuela)

Capriles condemns blackmailing Colombian peace talks, calls for support of UNASUR agreement

Venezuela's opposition leader Henrique Capriles has said the Venezuelan government's reaction on his visit to Colombia is "unacceptable". "Peace can never be subjected to blackmail. Either you want peace and work for peace or you do not want peace. There is no in between", he said. His statements came after Venezuelan Foreign Minister Elías Jaua said Venezuela would "re-evaluate" Venezuela's role in Colombia's peace process saying "it is very difficult to work toward peace in a neighboring country, when that country's highest authorities support and feed destabilization in Venezuela." Jaua spoke after Colombian President Juan Manuel Santos met with Capriles in Bogotá. Capriles says ti is "unacceptable to try to condition Colombia and tell them who to meet with and who it cannot meet with". Capriles also met with the heads of Colombia's Senate and House of Representatives. At a subsequent press conference he said he had asked Santos to help make Venezuela comply with the UNASUR resolution calling for a full audit of the April 14th Presidential election. More in Spanish: (Infolatam)

Colombian Vice President says Colombia recognizes Venezuela's elected government

Colombian Vice President Angelino Garzón says his nation wants to strengthen bilateral relations with Venezuela and stressed that "we recognize Venezuela's legitimate elected government headed by President Nicolás Maduro, and the proof is that President Juan Manuel Santos and Foreign Minister María Ángela Holguín attended his swearing in ceremony in Caracas."  Garzón also said Santos "is free to meet with whomever he considers", and said the Colombian government would reject any plot or conspiracy against a democratically elected government in Latin America or the Caribbean".  More in Spanish: (AVN; http://www.avn.info.ve/contenido/vicepresidente-colombiano-nosotros-reconocemos-al-gobierno-leg%C3%ADtimamente-elegido-venezuela)

Elections Council calls municipal elections for December 8th

The Elections Council has announced that municipal elections will be held on December 8th, so that voters can elect mayors and other municipal authorities. Voter registration will be held up to 21 June, and nominations should take place between August 5-9. 40,000 people are expected to run for 2791 offices, including 335 mayors. More in Spanish: (AVN; http://www.avn.info.ve/contenido/cne-convoca-para-pr%C3%B3ximo-8-diciembre-elecciones-municipales; El Universal, http://www.eluniversal.com/nacional-y-politica/130531/cne-aprobo-realizar-las-municipales-el-8-de-diciembre)


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.