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 27, 2013

September 27, 2013

Economics & Finance

Venezuela seeks help due to drop in reserves
President Maduro and his team went to China so seek financial assistance due to the drop in disposable international reserves, but Chinese authorities did not grant it. Disposable reserves have dropped to U$D 900 million in the last few weeks, which can only cover 6 days worth of imports. This is why the Maduro regime needs a credit that is not tied to infrastructure or agriculture projects, which is the case with the Chinese Fund and all other agreements signed with China. What the need is cash that can be used for imports. Maduro has said economic agreements entered into between Venezuela and China have been reached under the "best financial conditions possible in the market." He added that for five years China has financially supported Caracas with U$D 50 billion for the development of several projects in Venezuela. More in Spanish: (El Nacional;; and El Universal, 09-26-2013;; AVN,

15% GDP deficit is the center of the crisis
A sharp currency devaluation in the parallel market, accelerated inflation, and a scarcity of FOREX for the private sector. What is going on in Venezuela's economy? In the most recent Bank of America report, economist Francisco Rodríguez explains that the center of the crisis is that government expenses are above oil and tax income, and if you consider the entire public sector the deficit now stands at 15% of GDP. He adds that as the Central Bank prints currency it goes into buying FOREX and this pushes the parallel rate up and accelerates inflation since there is no increase in production. He says inflation equals what it would have been if the official rate were devalued to 10 Bolivares to the U$D. More in Spanish: (El Universal,

Bonds-for-chickens barter feeds debt selloff in Venezuela
Venezuela will pay for U$D 600 million of food imports including milk and live chicks from Colombia with dollar-denominated bonds, a sign the nation is running out of money to address the chronic shortages of basic goods fueling the world’s fastest inflation. Venezuela’s borrowing costs, which fell this month on speculation it would start a foreign-exchange system to boost the dollars needed to buy necessities from abroad and alleviate inflation of 45%, surged by the most in three weeks yesterday after El Nacional newspaper said China wouldn’t loan the cash intended to fund the change. (Bloomberg, 09-26-2013;

FOREX board ponders extraordinary allocation of foreign currency
Jose Khan, President of the Foreign Exchange Administration Commission (CADIVI), is saying an "extraordinary" allocation of US dollars could take place in the upcoming months in order to speed up imports. "Such decision is in the hands of the President of the Republic (Nicolás Maduro); there is a proposal and it is up to him to make the announcements," the official stated after a meeting with Vice-president Jorge Arreaza and other members of the Economy Higher Authority. The business sector claims that foreign currency shortage is the main obstacle to boost production and increase supply. (El Universal, 09-26-2013;

Unemployment rate hits 8% in August
Venezuela's unemployment rate in August 2013 stood at 8%, a small increase compared to August 2012, when unemployment hit 7.9%, according to the monthly labor report issued by the National Institute of Statistics (INE). In absolute terms, 1,133,674 people were unemployed in Venezuela last month, either because they lost their jobs, or because they were looking for their first job and did not found one. In addition, 58% of Venezuelans (7,629,436 people work in the formal sector of the economy, and 41.2% (5,342,390 people) work in the informal sector. (El Universal;


Private sector seems anxious to invest if PDVSA builds confidence
PDVSA is scrambling to increase production by enlisting the private sector and by meeting the tough new constraints on loans imposed by Beijing and major foreign oil companies. Several Venezuelans, on condition of not being quoted as they do business with PDVSA, related a consistent picture differing only in amount of detail: PDVSA has had to allow delivery of loans directly to large joint ventures (JVs) with major foreign oil companies, surrendering much operational management.  To guarantee timely payment and repatriation of profits, PDVSA delivers oil produced to a third party for marketing abroad, with proceeds put in offshore accounts with JV partners. (Americas Quarterly, 09-17-2013;

Brazil's PETROBRAS nixes refinery deal with Venezuela
Brazil's state-run oil giant PETROBRAS has scrapped a proposed partnership with its Venezuelan counterpart in the ongoing construction of a refinery in northeastern Brazil, the economic daily Valor reported Tuesday. As of November 1, the Abreu e Lima refinery will become a PETROBRAS business unit, ending bilateral talks which began more than six years ago between Brazil's ex-president Luiz Inacio Lula da Silva and his now deceased Venezuelan counterpart Hugo Chavez, Valor said. While awaiting a 40% participation by Venezuela's state-owned PVDSA oil company in the project, Brazil began building the refinery south of Recife in 2007. Venezuela's promised investments failed to materialize however. (Global Post;

Ramirez announces meeting of Venezuela-India oil companies
Oil and Petroleum Minister Rafael Ramírez says directors of Venezuelan and Indian oil companies will gather in October in Caracas to discuss the possible participation of India in oil projects at the Orinoco Oil Belt (OOB). The official noted the meeting would be held on October 7-9 in Caracas and in the Orinoco Oil Belt. (El Universal, 09-26-2013;

Land grabs aggravate food scarcities
Ciro Labarca, President of the Cattlemen Association of Colón, in Zulia state, says land grabs make food production worse since invaders sell off whatever is there, and therefore diminish the production of milk, beef, plantains and other items. He explains that those who enter forcibly have taken over 4 highly productive farms in his area, for a total 6900 hectares. "Their modus operandi is to occupy, steal all there is , sell the cattle, and then resell lots at any price". More in Spanish: (Últimas Noticias;; El Mundo,

SIDOR remains paralyzed due to lack of agreement between management and the unions. More in Spanish: (El Mundo,

International Trade

Drop in reserves lead to paying for Colombia food with PDVSA bonds
The drop in disposable reserves is so great that the Maduro regime is getting ready to pay Colombian food exporters with U$D 600 million worth of PDVSA bonds. Colombian Finance Minister Mauricio Cárdenas has explained that "there is an ongoing dialogue between Venezuela's Nutrition Ministry and Colombian businessmen...and there is a pending last discussion on the way to pay, over how PDVSA bonds will operate, as this is the device initially suggested as payment." He added: "we are waiting for a reply to a proposal made by the Colombian government." More in Spanish: (El Universal,

Venezuela promises to cut red tape on imports of essential goods
Vice-President Jorge Arreaza said the government was cutting red tape for companies willing to import food, toiletries and mechanical parts.  Arreaza also announced that the government was giving importers easier access to foreign currency. (BBC;

Logistics & Transport

Puerto Cabello's port has been overwhelmed due to deficit in ground transportation
Over 40 vessels, some of them bearing food and live cattle, have collapsed the most important commercial port in Venezuela due to a chain of events made worse by bureaucracy. The Puerto Cabello maritime terminal in Central Venezuela has a deficit in land transportation which makes it difficult to move 332 tons of backed up cargo, and ships continue to arrive with grain coming out of the harvest season. Tarek Bahsas, President of the Central Venezuela Transportation Chamber, says there is a deficit of some 2000 cargo vehicles, and that some 10% of the fleet is paralyzed due to a lack of spare parts. Offloading is slow and takes an average 8 to 15 days. Delays are extremely costly to the government as each additional day costs between U$D 10-25,000, depending on the type of cargo. Container cargo arrivals have dropped 30-35% from 2012 due to delays in FOREX allocation and other bureaucratic snags. National Assembly member Neidy Rosal called on the government to declare an emergency at this port which received 80% of all imports. She also said there are 200, 000 tons sugar and corn backed up at the port due to the inefficiency of the port authority (BOLIPUERTOS). She says there are 45 ships in the port, 27 of them waiting at bay and 18 in the process of docking. Rosal says ships take an average 72 hours to dock, offload and go through customs at most Latin American ports, and it takes over a month to do so in Venezuela. More in Spanish: (Ultimas Noticias;

Customs agents protest increase in cargo freightage
Antonio Marcano, President of the Puerto Cabello Customs Agents Association says there has been an exaggerated increase in freightage for transporting cargo. He says the increase is not 40%, which is what carriers claim, but approximately 130%. As an example he said the cost of transportation between Puerto Cabello and Valencia went up from 3,000 to 8,000 Bolivars. More in Spanish: (El Carabobeño;; Notitarde;

Maiquetía Airport’s security unit has been intervened, says Internal Affairs Minister Major General Miguel Rodríguez Torres, after French authorities reported the major drug seizure at the Parisian airport. Rodríguez Torres said all the necessary changes will be made to make sure this does not occur again. (Veneconomy, 09-26-2013;


Maduro cancels UN speech over alleged New York threats
President Nicolas Maduro canceled a trip to speak at the United National General Assembly’s annual gathering in New York because of what he called threats to his safety. One of the alleged plots could have caused violence in New York and the other could have affected his physical safety, Maduro said in a national address carried on television and radio yesterday. “The clan, the mafia of Otto Reich and Roger Noriega once again had planned a crazy, terrible provocation that can’t be described in any other way,” Maduro said, referring to two former U.S. officials he frequently accuses of plots against Venezuela. Maduro, who returned to Venezuela yesterday from a state visit to China, said he learned of the plots from “various sources” during a stopover in Vancouver and decided to return to Caracas. The State Department in March said claims by Venezuelan officials of U.S.-based plots to destabilize the South American country were “unsubstantiated and outlandish.” Foreign Minister Elías Jaua will speak instead and says "We have prepared a file outlining all ...obstacles and difficulties". (Bloomberg;; El Universal, 09-26-2013;; Latin American herald Tribune, 09-26-2013;; Reuters,; Bloomberg,; CNN,

Maduro says he will sue AIRBUS
President Nicolás Maduro says he is planning legal action against AIRBUS, after his presidential plane developed a fault. "A serious fault appeared in one of the wings of the plane after five months at AIRBUS in France - my God!" said Maduro. "With the help of an international law firm, we're preparing legal actions against AIRBUS of France." (BBC:

Beijing expands presence in Venezuelan Armed Forces
During recent meetings of China-Venezuela authorities and representatives, the Venezuelan Government entered into agreements under which China is to conduct a preliminary study for the construction of two general commands of the Bolivarian National Armed Forces (FANB) and furnish defense supplies to the Venezuelan military. (El Universal, 09-26-2013;

Venezuela, Russia sign electoral cooperation agreement
Tibisay Lucena, head of Venezuela's National Electoral Council, and Stanislav Vavilov, deputy chairman of Russia's Central Election Commission, have signed a bilateral cooperation protocol to exchange experiences relative to election affairs, particularly the alleged cutting-edge technology of the Venezuelan electoral system. (El Universal, 09-26-2013;

It is a remarkable achievement. Amid the longest oil boom in history Venezuela has in many respects the worst-performing economy in the Americas, even though it has (it claims) the world’s biggest reserves of the black stuff and gets 94% of its export earnings from it. That is the legacy of 14 years of “21st-century socialism” under the late Hugo Chávez. Inflation is over 45% a year and supermarket shelves are bare of many staple goods. Even Nelson Merentes, the finance minister, concedes that Chávez’s revolution has yet to achieve economic success. But oil revenues of U$D 90 billion a year allow Nicolás Maduro, Chávez’s successor, the luxury of debating whether or not to change course. After contracting for several months, the economy grew in the second quarter. August inflation of 3% was half the monthly rate in May. But most economists do not believe a sustainable recovery has begun. The growth spurt appears to come from a fiscal splurge; the budget deficit is probably around 10% of GDP. A decade and a half of hyper-regulation, including ever more stringent price and exchange controls, has inflicted “terrible distortions” which will be hard to correct, even given the political will, says José Manuel Puente of IESA, a business school in Caracas. Foreign exchange has been largely allocated by government fiat since 2003. On the black market, the dollar commands more than six times the official exchange rate of 6.3 Bolivares. The government handed out more hard currency in the second quarter, which may have boosted growth. Merentes is more pragmatic than his predecessor Jorge Giordani, a Utopian Marxist. Following a 32% devaluation in January there is talk of another, or even of floating the Bolívar, though Giordani, who is now planning minister, opposes this. Opportunists, who delight in the profits to be made from graft and arbitrage, are happy to go along with him. The government’s main response to the scarcity of food and other staples, such as toilet paper and toothpaste, is a conspiracy theory. It blames an “economic war” waged by the United States and its “fascist” allies in the Venezuelan opposition. On September 20th it sent the national guard to occupy a big toilet-paper factory. Officials said the “temporary” takeover was needed to check for irregularities in production and distribution. Maduro claimed recently that in meetings at the White House earlier this year a plan was hatched to engineer the “total collapse” of the Venezuelan economy in October. A huge power cut affecting 18 (out of 24) states on September 3rd was due to sabotage, he said, as was a refinery explosion last year that killed 49 people. This month he set up an army-backed task-force to tackle the supposed plot, with the help of 0800-SABOTAJE, a hot-line. Maduro has produced not a scrap of evidence for these claims. The private sector wearily promised to collaborate. After all, said one business leader, “we already face 50 to 100 inspections a month of various kinds, so what is one more?” Economists debate how long Venezuela’s foreign-currency reserves can stand the current rate of attrition. They have plummeted by around a quarter this year, thanks in part to the fall in the price of gold, of which they largely consist. Liquid reserves amount to less than a month’s imports. There could be another U$D 20 billion or so in opaque off-budget funds, but up to a third of this may be earmarked for specific projects. This week Maduro was in Beijing, where he confirmed a fresh U$D 5 billion credit line (with strings attached) and U$D 15 billion in long-term oil and mining investments. Pragmatists argue that an adjustment is unavoidable. But Maduro faces local elections on December 8th which are widely viewed as a plebiscite on his rule. IVAD, a pollster, recently found that two-thirds of those it surveyed saw the economy as being in bad shape—and they blamed the government. Less than 4% believed the official line about “sabotage”. Maduro is caught in a trap of his predecessor’s making. If he sticks to the recipes of the radicals, the economy will only worsen. If he abandons them, he risks being labeled a reformist traitor and exacerbating faction-fighting within the regime. For the moment, he is moving cautiously in the direction of reform, even as he bangs the revolutionary drum and cracks down on dissent. For the president, who recently managed to fall off a bicycle on live television, it is a tricky balancing act. (The Economist,

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.

Tuesday, September 24, 2013

September 24, 2013

Economics & Finance

Maduro announces a new U$D 5 billion credit from China
President Nicolas Maduro met with China's President Xi Jinping over the weekend in Beijing and said that China had granted Venezuela another $5 billion credit line -- and all was announced by twitter. "In the meeting we approved projects and resources for the development of energy, housing, agriculture, transportation, among others," he tweeted. Official sources report Venezuela already had 365 cooperation agreements with China in areas including energy, oil, education, health, technology, trade, construction, agro-industry and agriculture, infrastructure, industry, culture and sport, among others. The agreements signed during the trip bring the total to 400. Oil Minister Rafael Ramirez says is supplying China with 626,000 barrels per day of oil, and expects exports to China will reach 1 million barrels per day within 2 years. This is up from 49,000 BPD in 2005. Venezuelan officials, including Foreign Minister Jaua claim oil shipments have helped pay back some U$D 20 billion out of the U$D 46.5 billion that China loaned Venezuela between 2005 and 2012. Maduro also used twitter to announce an agreement between Venezuela and Chinese oil company SINOPEC for the production of 200,000 BPD of crude oil in the Junin 1 oil block in the Orinoco Belt. "In the energy field, we agreed with Sinopec an investment of U$D 14 billion in the block Junin 1 of oil in the Orinoco Belt, for the production of 200,000 barrels per day," Maduro wrote. The U$D 5 billion is basically a credit that will be invested in the country, through a credit from the China Development Bank (BDC) for the financing of strategic projects in the field of health, science road, transport, technology, industry, electricity and mining. The China Development Bank will establish an office in Caracas to oversee the loans. Projects announced include:

  • U$D 391 for construction of a maritime terminal for Pequiven (petrochemical company), through The Export-Import Bank (Eximbank) of China, in order to export Urea and ammonia.

  • Develoment of the Las Cristinas gold mine project.

  • CITIC construction group to build 4,500 homes in the states of Nueva Esparta and Anzoategui.

  • SINOHYDRO to rehabilitate the Las Majaguas irrigation system in Portuguesa state and for road connection in the East-West Kempis - Santa Lucía road in Miranda State.

  • BEIDAHUANG, a leader in China's agricultural industry in China, agreed to plant 60,000 hectares of corn, rice and soybean in Guarico, Barinas, Apure, Delta Amacuro and Portuguesa.

Expected FOREX tender postponed indefinitely
Although authorities had announced a new FOREX to be held last week, the event did not take place. Some sources indicate a decision on FOREX will be taken once the party of officials that went to China with President Maduro return to Venezuela. More in Spanish: (El Mundo,

Central Bank is considering trading gold to increase disposable reserves
The Central Bank has started to consider options to increase disposable reserves available for imports and debt service. One option would be to use gold bullion deposited abroad - worth U$D 2.6 billion - in exchange for credit. Disposable reserves closed at U$D 1.3 billion in August, a record low point, at a time foreign debt service has tripled since 2012, imports remain high and oil exports remain stagnant due to lower production and discount sales to allied nations. More in Spanish: (El Universal,

Inflation could close at 45-48% by the end of the year, according to economist José Guerra. Production is “stagnant” and “incapable” of growing up to capacity, according to the economist who says that added to that, there is “an out of control inflation and a noticeable shortage of products,” that according to the figures from the Central Bank is at “an alarming 20.2%.” (Veneconomy, 09-23-2013;

Venezuelan stock market up 252%
Venezuela’s stock market rose 3% during the week ending September 20th with the Caracas Stock Index closing at 1,660,974, a new all time high. The leading gainers were the shares of Mercantil Servicios Financieros A and B, both closing at Bs. 500 for a gain of 7.8% and 7.3% respectively. MANPA rose 4.2% at Bs. 12.5, before its toilet paper plant was taken over by the government on Saturday; Banco Provincial gained 3.8% to close at Bs. 500. Nationalized phone company CANTV lost 3.1% at Bs. 46. All other stocks were flat or did not trade. The Venezuela Stock Market is now up 252.32% for the year to date in bolivar terms, though only 140.48% in official rate dollar terms because of February devaluation, still making it the best performing stock market in the world. (Latin American Herald Tribune, 09-23-2013;


OVL mulls raising stake in U$D 20 billion Venezuela oil project
ONGC Videsh Ltd and its partners are mulling raising stake in Venezuela's U$D 20 billion Carabobo-I oil project even as India looks at raising crude oil imports from the Latin American country. OVL, which has 11% stake in the project that will produce 400,000 barrels per day of oil (20 million tons) in four years, is looking at buying a similar stake that Malaysia's PETRONAS has decided to give up in the project. On the other hand, Reliance Industries Ltd, which gets about 20% of its oil needs from Venezuela, is looking at raising imports while state-run firms like Indian Oil Corp (IOC) and HPCL-Mittal Energy Limited (HMEL) are keen to start buying oil from the Latin American nation. "Indian companies' representatives will visit Venezuela on October 7 and 8 and have some concrete proposals worked out," Oil Minister M Veerappa Moily told reporters after meeting Oil Minister Rafael Ramirez. (Economic Times,

PDVSA said to lose U$D 111 billion due to lower production
Oil and gas expansion projects have failed to strike targets set for production by official plans, and Venezuela's share in the global oil market is now narrower. The program to expand production called for a U$D 77.3 billion investment, including U$D 54 billion furnished by PDVSA. (El Universal, 09-23-2013;

Most offshore gas production slated for 2017
PDVSA estimates that the bulk of production from Rafael Urdaneta and Mariscal Sucre projects will be achieved as of 2017. The oil giant has calculated gas production in Dragón at 252 million cubic feet per day (mcfd) by 2014, and this will be the only unit starting early production. (El Universal, 09-23-2013;

Tariff hike will cut Venezuela's income from methanol sales
Exports from Petróleos de Venezuela (Pdvsa) to the European Union, particularly methanol, will be altered in 2014 upon the entry into force of a tariff increase. The decision not only will impact PDVSA but also threatens the domestic market. Until 2010, Venezuela was listed among countries with tariff preferences at a 0% level for exports to Europe, under the Generalized System of Preferences (GSP). This year Venezuela was included in the list of nations that pay a 2% tariff. However, by 2014, Venezuela will pay the full rate at 5.5%. PEQUIVEN and its joint ventures sell Europe some 700,000 tons of methanol a year, for about U$D 252 million. (El Universal, 09-23-2013;

SIDOR paralyzed for six days due to strike
The SIDOR steel combine has been at a standstill for six days due to spontaneous labor protests. More in Spanish: (El Universal,

Toilet paper factory occupied by government officials
The Venezuelan Government has "intervened" into the nation's major paper manufacturer, MANPA, in order to verify production, distribution and sales of toilet paper. No details were given on what the company might have done wrong. MANPA is the nation's best know manufacturer of toilet paper, sanitary towels and disposable diapers. Karin Granadillo, head of the Consumer Protection Agency says, "the team responsible for temporary occupation can take all decisions necessary, even taking over the direction of production, distribution and sales up to 15 days since the date the company was notified". The Maduro regime has been blaming the private sector for scarcities, while business says difficult access to FOREX needed for buying supplies is to blame. More in Spanish: (INFOLATAM and


Independent municipal candidates will be expelled from the United Socialist Party
The pro government United Socialist Party (PSUV) has set forth its official candidates for the upcoming December 8th municipal elections, and the party's Vice President, Diosdado Cabello, has announced that all pro-government candidates running outside the party list will be expelled from the organization. More in Spanish: (El Universal,

U$D 270 million worth of cocaine found on Air France flight
There was something odd about the 30 suitcases that showed up on a flight from Venezuela. The colorful bags weren't registered to any of the passengers on the plane. When French officials opened them up, they discovered why -- 1.3 tons of pure cocaine was stuffed inside the anonymous bags. The street value of the stash? About 200 million Euros, or UD$ 270 million. The catch was made on September 11, but French authorities didn't publicize the find until Saturday. (CNN, 09-23-2013;

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.

Friday, September 20, 2013

September 20, 2013

Economics & Finance

BARCLAYS says Venezuela heads for a balance of payments crisis
A BARCLAYS Capital report says Venezuela is slowly heading for a balance of payments crisis in which a drop in international reserves leads to strong currency devaluation. It says the huge - almost 600% - difference between an official exchange rate of VEB 6.30 to the U$D and the parallel rate is fueling demand for FOREX and generating additional corruption as "the best deal in Venezuela" is to acquire FOREX at the official rate and sell them on the parallel market. International reserves have dropped 26% to date this year, and BARCLAYS's expects them to continue downward. This is because 76% of reserves are in gold bullion at diminished prices, two debt payments for some U$D 4 billion must be serviced in the next two months, and demand for FOREX grows in the last quarter. They expect international reserves to close this year at U$D 21 billion, with FONDEN, PDVSA and the Chinese fund - including the expected new U$D 5 billion loan, adding another U$D 24 billion. This all means total reserves would close 2013 under U$D 50 billion, their lowest level since 2005. BARCLAYS expects the government will devalue again by the end of the year or early 2014, taking the CADIVI exchange to VEB 9.95 to the U$D; and if the attempt to bring the parallel rate down through a new system fails, devaluation would be even greater. More in Spanish:  (El Universal, 09-20-2013;

Venezuela owes U$D 4.6 billion in capital payments and interest that must be paid off before the end of the year at a time in which the reserves are “reduced,” said opposition coalition (the MUD) economic coordinator José Guerra. He pointed out this same reduction of foreign currency has resulted in delays in payments to the pharmaceutical, automotive and food industries, among others. (Veneconomy, 09-18-2013;

Authorities clash over floating foreign currency
Sources within the financial community say senior officials are clashing over plans for a new FOREX system. On one side, Finance Minister Nelson Merentes and Central Bank President Eudomar Tovar, favor a more flexible exchange system; and on the other Planning Minister Jorge Giordani and Petroleum Minister Rafael Ramírez oppose freeing up the exchange market, which has been subject to controls for ten years. (El Universal, 09-19-2013;

Central Bank announces new US$ auction sale
Central Bank Board member Armando León says a new US$ auction sale through the Supplementary Foreign Currency Administration System (SICAD) will be called on Thursday. He explains that this new auction will focus on imports of goods and services demanded by strategic sectors of the manufacturing industries. León added that the auction would be carried out offering PDVSA bonds and cash. (El Universal, 09-19-2013;; and more in Spanish: Ultimas Noticias,

Ramirez says China will provide more money
PDVSA Chief and Oil and Mining Minister Rafael Ramírez says terms for a new loan from the Chinese-Venezuelan Fund for some $5 billion have been agreed to, but did not provide any details. (Veneconomy, 09-18-2013;; El Universal,

....while government team seeks even more loans from China
According to a government source, officials from the Finance Ministry, Central Bank, the Economic and Social Development Bank (BANDES) and the National Development Fund (FONDEN) have traveled to China to open negotiations for a new loan in addition to the China Fund. They traveled ahead of the upcoming visit by President Nicolás Maduro, and their purpose is to seek a cash loan - in addition to the U$D 5 billion deal announced by Oil Minister Rafael Ramírez - in order to pay for imports during the last quarter of 2013 and support the new FOREX system that is in the works. More in Spanish: (El Nacional;

Central Bank funding fuels inflation
Efraín Velásquez, president of the National Council on the Economy says Venezuela's inflation is mainly rooted in the mistaken government fiscal policies. He says "the fiscal strategy encourages inflation due to financial needs" of the public sector, which relies on the Central Bank of Venezuela (BCV) to obtain funds. Velásquez explains that the fiscal issue is not just in the Government's account, but also in non-financial public companies, such as oil giant PDVSA or the basic industries. (El Universal, 09-18-2013;


SINOPEC and PDVSA to invest U$D 14 billion in the Junín 1 oilfield. Rafael Ramírez, Minister for Petroleum and Mining has announced that state-run oil company Petroleos de Venezuela (PDVSA) and Chinese oil company SINOPEC reached an agreement to develop oilfield Junín 1, located in the Orinoco Oil Belt. The investment will be U$D 14 billion. SINOPEC is also expected to drill oil from block Junín 8, in the Orinoco Oil Belt, according to the agreements previously signed with the Venezuelan Government. The Chinese investment in the Junín 1 and Junín 8 oil blocks is projected for a total U$D 40 billion; and about 200,000 bpd will be drilled in each block. He also said China would provide a U$D390 million loan for the construction of a new dock for PEQUIVEN in Morón. Ramírez is in China preparing for the upcoming visit by President Nicolás Maduro. (EL UNIVERSAL:; Veneconomy, 09-18-2013;; Reuters, 09-18-2013;

PDVSA adds 170 million barrels to oil reserves
Petróleos de Venezuela (PDVSA) is reporting successful drilling in southern Lake Maracaibo-Trujillo, which will add about 170 million barrels of crude oil of 24 API degrees and 0.1 trillion cubic feet (TCF) of associated gas. Production is projected at over 5,000 BPD, thus increasing production potential in the Southern Division of Lake Trujillo. (El Universal, 09-19-2013;

CITGO to pay penalty for environmental violations
CITGO Petroleum Corp has agreed to reduce air pollution and pay a penalty to resolve environmental violations at refineries in Louisiana and Illinois, the U.S. Environmental Protection Agency said on Thursday. The company would pay U$D 737,000 as a civil penalty and implement projects designed to reduce toxic emissions over the next five years at its 427,800 barrel per day (bpd) refinery in Lake Charles, Louisiana, and 174,500 barrel per day (bpd) refinery in Lemont, Illinois. (Reuters, 09-19-2013;

Pdvsa starts drilling Timboy-X2 in Bolivia. Bolivia's President Evo Morales has inaugurated the first bi-national project jointly with Venezuela, during his visit to the site of the well Timboy-X2. He said this project, to be developed by joint venture YPFB PETROANDINA S.A.M., arose from a decision made with the late President Hugo Chávez. (El Universal, 09-19-2013;

SIDOR totally paralyzed by strike
José Luis Hernández, head of the Steel Workers Union (SUTISS), has taken charge of a strike that has totally paralyzed the nation's main steel combine. (El Mundo, 09-20-2013;

INDIA URQUÍA thermoelectric plant was inaugurated in Miranda state by Electric Energy Minister Jesse Chacón, who said once the two combined cycles are done, the plant will generate 1,080 megawatts and together with the La Raiza Plant system, they will “stabilize and break free the entire capital region and jointly with the Tacoa Plant, will generate enough power to export to the National Interconnected System". (Veneconomy, 09-18-2013;

International Trade

Food and beverage imports rose 37% in the first 4 months of 2013
Food, beverage and tobacco imports grew 37.3% January through April 2013, from U$D 823 million to U$D 1.13 billion, according to the National Statistics Institute. More in Spanish: (El Nacional, 09-20-2013;

Logistics & Transport

Cargo ships with 353 tons of food stuck at Puerto Cabello
There are currently 17 cargo ships loaded with 353,787 tons of bulk food awaiting clearance at the Puerto Cabello docks. Some of the products in those cargo ships are in short supply in local markets. Five of the ships are bearing corn, three carry wheat, four are bringing in sugar, three more bear soy; one, rice and another, barley. Sources within the port system say the situation is due to lack of planning by the state Corporation for Supplies and Agricultural Services (CASA). "There is no specific development plan, only a reaction to scarcity". (El Universal, 09-19-2013;

Maduro promises to improve customs and FOREX systems. President Nicolás Maduro has said that "a new system of FOREX allocation and a new system for import procedures has been approved: It is to be simple, speedy and modern". He said it will be announced after he returns from China. At the same time Land Transport Minister Haiman El Troudi visited the Puerto Cabello port installations and demanded that state institutions such as SENIAT. CADIVI and the National Guard expedite procedures to process cargo.  More in Spanish: (AVN;; El Universal,; Ultimas Noticias,; El Mundo,; and El Carabobeño;


Venezuela claims U.S. denied airspace permission to presidential plane. Venezuela has accused the United States of denying President Nicolas Maduro's plane permission to enter U.S. airspace -- a claim that a State Department official denied. Foreign Minister Elias Jaua said U.S. officials have blocked plans for Maduro's presidential plane to fly through Puerto Rican airspace on the way to China. He described the move as an aggression and called for an explanation from the U.S. State Department. A senior State Department official told CNN that Jaua's claim was untrue, saying that the Venezuelans have, in fact, been approved to clear U.S. airspace. Maduro called the situation "a serious offense", adding that the United States had also denied visas for several members of his country's delegation scheduled to attend the U.N. General Assembly in New York. "If I have to take diplomatic measures against the U.S. government, I will take them to the most drastic level if it is necessary, but I am not going to accept any type of aggression," he said. The State Department official also called the visa issue untrue, saying the United States had approved them. (CNN;

Maduro says companies that hoard food will be expropriated
President Nicolás Maduro says all companies and stores that hoard food will be taken over by the government and expropriated. He said the move would be made in view of the "economic warfare" currently under way. More in Spanish: (AVN;; El Nacional;

Sixteen killed in Venezuela Sabaneta prison violence
At least 16 prisoners have been killed in violence inside a jail in the western city of Maracaibo. Fifteen inmates died in fights between rival gangs, Prisons Minister Iris Varela said. The other victim was killed in a separate incident. Some of the inmates were beheaded and others dismembered pressure group Venezuelan Prison Observatory told AFP news agency. Varela said the incident at Sabaneta prison had been "the result of an internal war within the prison". Director of the Venezuelan Prison Observatory Humberto Prado said this latest incident made Sabaneta the most violent jail in the country, with 69 people killed behind its bars so far this year. It was also the site of one of Venezuela's biggest prison tragedies, when more than 100 inmates died in a 1994 fire believed to have been caused by inmates seeking revenge on a rival gang. About 3,700 inmates are imprisoned in Sabaneta, which was built to house 700. Prado said 80% of prisons in Venezuela were run by armed inmates, with the security forces having little or no control. (BBC,

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.