September 10, 2013

Economics & Finance

Maduro mulls re-launching of swap FOREX system

Venezuela may re-launch its swap foreign exchange mechanism as it seeks to supply more dollars to local importers who are complaining about lack of access to hard currency, says President Nicolas Maduro. The swap system, which was shuttered by the government in 2010, would run alongside two existing exchange mechanisms: one run by the state currency board called CADIVI, and a second auction-based system, SICAD, run by the central bank. "Most likely we will launch a new system that will compliment CADIVI and SICAD. But we are evaluating it with different economic players, experts and economists," Maduro said during a televised news conference. (Reuters, 09-09-2013; http://www.reuters.com/article/2013/09/09/venezuela-currency-idUSL2N0H524D20130909; El Universal; http://www.eluniversal.com/economia/130909/president-maduro-announces-new-forex-allocation-system)

Maduro asks private sector to "row together"; Merentes says they will promote productivity jointly

President Maduro is calling "all private sectors to align oars, we must grow together" (with the Government). "If there are requirements for rowing more speedily, tell us what must be done to do so, which we are already doing". At the same time, Finance Minister Nelson Merentes points out a number of economic and policy steps that have been arrived at through a consensus with private company representatives in order to increase the production of goods and services as well as exports. "We will soon start to make announcements and put them into practice", he said.  More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/maduro-invita-a-los-empresarios-privados-a--remar-.aspx#ixzz2eUE7YIik and Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/gobierno-adelanta-medidas-sector-privado-para-impulsar-producci%C3%B3n-y-actividad-exportadora; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/merentes-propone-ensamblar-equipos-tecnologicos-en.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/gobierno-adelanta-medidas-con-empresas-privadas-pa.aspx)

Venezuela stock market up 203%

Venezuela’s stock market rose 5.4% during the week ending September 6th with the Caracas Stock Index closing at 1,430,324. The usual advancers led the way with land-developer and paper-maker MANPA gaining 20% to Bs. 13.20, Mercantil Servicios Financieros B gaining 4.7% at Bs. 460, with the class A shares rising 4.55% to the same price. BBVA Banco Provincial rose 4.3% at Bs. 425 and state-owned telephone company CANTV gained 3.3% at Bs. 28. Volume was low with around 100,000 shares traded all week. (Latin American Herald Tribune, 09-08-2013; http://www.laht.com/article.asp?ArticleId=997120&CategoryId=10717)

Commodities

PDVSA claims investigation finds Amuay blast owed to bolts deliberately slackened

Bolts of oil pump 2601 were deliberately slackened, causing an abrupt massive olefins (alkene) leak and an eventual blast at Amuay refinery, Paraguana Complex, on August 25, 2012, according to Rafael Ramírez, President of state-run oil company PDVSA. "Oil pump bolts were deliberately slackened and a suicidal person did not do it, but someone who knew what he was doing," Ramirez claims that after fully investigating the reasons for the explosion at Paraguana Refinery Complex, they found that the failure on oil pump bolts caused the leak. "Pipelines were not oxidized as some media reported." (AVN, 09-09-2013; http://www.avn.info.ve/contenido/investigation-finds-amuay-blast-owed-bolts-deliberately-slackened; El Universal, http://www.eluniversal.com/economia/130909/leak-of-olefins-in-amuay-caused-by-a-manipulated-pump; Reuters; http://www.reuters.com/article/2013/09/09/us-oil-venezuela-refinery-idUSBRE9880Z820130909; The Washington Post, http://www.washingtonpost.com/world/the_americas/sabotage-caused-deadly-refinery-blast-in-venezuela-official-says/2013/09/09/308f3bea-198f-11e3-80ac-96205cacb45a_story.html; Fox News, http://www.foxnews.com/world/2013/09/09/sabotage-caused-deadly-refinery-blast-in-venezuela-official-says/)

Two PDVSA's barges damaged in Zulia state

PDVSA reports that "bad weather in the early morning Saturday in Zulia state (west Venezuela) damaged two barges property of the West Executive Management operating in Lake Maracaibo". One of the barges, LV-402, capsized and the crew was rescued. "The meteorological event made barge LV-402 sink and caused a failure in the steam generation and drive (SGG) barge," the state-run oil company added, and claimed oil and gas operations were not hindered. "Rescue works of the capsized barge will start at the earliest. For its part, the SGG vessel was tugged to Dock Zulima, where it will be repaired by workers and taken back to production works." (El Universal, 09-09-2013; http://www.eluniversal.com/economia/130909/two-pdvsas-barges-damaged-in-zulia-state)

Venezuela oil steady at U$D 107.03

Venezuela's weekly oil basket stayed above U$D 107 a barrel for the second week in a row as worries over Syria and tensions in the Middle East continued keep oil prices higher around the world. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending September 6 was U$D 107.03, just sightly below the previous week's UD $107.21. (Latin American Herald Tribune, 09-07-2013; http://www.laht.com/article.asp?ArticleId=994390&CategoryId=10717)

Malaysia's PETRONAS exiting Venezuela crude project

Malaysian oil company Petronas is exiting one of the biggest petroleum projects in Venezuela's Orinoco belt after disagreements with state-run PDVSA, sources close to the venture told Reuters. The flagship project, called PETROCARABOBO, has planned investments of about U$D 20 billion over 25 years and calls for building a 200,000 barrel per day upgrader to convert heavy crude into light crude oil. When the venture was formed in 2010, Venezuela touted it as a sign that oil companies were willing to put up with demanding fiscal conditions in exchange for access to the world's largest oil reserves. PDVSA has 60% of the project. PETRONAS belongs to a consortium that holds 40%. Its other partners are Spain's REPSOL, India's ONGC and two small Indian firms. Petronas holds an 11% stake. (Reuters, 09-09-2013; http://www.reuters.com/article/2013/09/09/us-oil-venezuela-malaysia-idUSBRE9880TU20130909; El Universal; http://www.eluniversal.com/economia/130909/petronas-walks-out-of-the-orinoco-oil-belt)

International Trade

Some 232 million barrels of oil sent under Petrocaribe agreement

Rafael Ramírez, Minister of Petroleum and Mining and President of PDVSA, says PETROCARIBE has provided some 232 million barrels of oil to the signatories of the agreement ever since it came into force eight years ago.

This means 80,000 barrels per day have been delivered under special financing conditions.

Ramírez explained that this "has turned the mechanism into a fundamental means to ensure over 40% of the energy needs of the Caribbean region." (El Universal, 09-09-2013; http://www.eluniversal.com/economia/130909/some-232-million-barrels-of-oil-sent-under-petrocaribe-agreement)

Venezuela, Colombia trade down 9% from 2012

Luis Alberto Russian, President of the Venezuelan-Colombian Economic Integration Chamber (CAVECOL), reports that Colombia-Venezuela trade declined 9% in January-July 2013 with respect to the same period in 2012.

Russián informed that bilateral trade was U$D 1.5 billion in the first half of the year; and added that Venezuelan exports to Colombia plunged 26% while imports fell 6%. (El Universal, 09-09-2013; http://www.eluniversal.com/economia/130909/venezuela-colombia-trade-down-9-as-against-2012)

Politics

Venezuela exits Inter American Human Rights Court, as Capriles brings fraud charges there

Venezuela is exiting the Inter American Human Rights Court as of today, just as opposition Presidential candidate Henrique Capriles Radonski and the Democratic Unity Conference (MUD) bring charges to the Court and the Organization of American States over irregularities in Presidential elections last April 14th. President Maduro defends the decision to leave the Court - originally announced by the late President Hugo Chávez - saying "it is an instrument of persecution against progressive governments". Capriles and the MUD have impugned the April 14th elections which were awarded to Maduro on a very narrow margin. MUD Executive Secretary Ramón Guillermo Aveledo says: "Maduro has the Constitutional duty to rectify (withdrawal from the IAHRC)", saying this decision endangers Venezuela´s position with the UN and other international organizations.  Foreign Minister Elías Jaua has said the decision will not be reviewed "until there is a full transformation" within the system. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/130910/maduro-se-le-acabo-el-tiempo-a-la-corte-idh; INFOLATAM)


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.