August 01, 2014

International Trade

Incoming cargo at Puerto Cabello:

• Over 25,000 tons of soybean meal from Desa Industries for Agrolucha C.A., Grupo Souto C.A., Alimentos Balanceados and Avícola La Guásima C.A.
• 19,000 tons of fertilizers from Phosagro-Cherepovets for BARIVEN S.A. and PEQUIVEN
• Over 4,000 tons of milk, coffee, beef and beans from Conaprole, Albanisa, Comercial San Martín, Centrolac, Productores de Lácteos La Perfecta, Mataderos Nuevo Carnic for Corporación de Abastecimiento y Servicios Agrícolas (Casa), Café Venezuela and Corporación Venezolana de Alimentos (CASA).
• 56 tons of medicines from FARMACUBA for Fundación Oro Negro
• Over 2,000 tons of clothing, shoes, auto parts, electronics and tires for private importers.
• Toilet paper and sanitary napkins from México for Procter & Gamble Venezuela.

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-4-mil-toneladas-de-alimentos-2206848/2014/07/29/342158; http://www.notitarde.com/La-Costa/Llegaron-mas-de-19-mil-toneladas-de-fertilizantes-2207464/2014/07/30/342455)

Maduro, Santos to discuss border smuggling

Colombian President Juan Manuel Santos is meeting with President Nicolás Maduro in the Colombian city of Cartagena to discuss the issue of border smuggling, which has intensified due to economic crisis in Venezuela. The presidents will discuss the economic agenda between both countries, especially regarding smuggling of goods and staples in the Colombia-Venezuela border. According to the Venezuelan government, smuggling is definitely increasing shortage of basic products in Venezuela, which is already around 29%. (El Universal, http://www.eluniversal.com/nacional-y-politica/140731/maduro-santos-to-discuss-border-smuggling; AVN, http://www.avn.info.ve/contenido/fm-we-view-positive-venezuela039s-relationship-colombian-government)

Logistics & Transport

Venezuela starts clearing debts owed to airlines, several express interest in resuming operations

Venezuela's Minister of Economy, Finance, and Public Banking General Rodolfo Marco Torres says "foreign currency payments due in 2013 and 2014 are being made" to international airlines; but did not reveal amounts. He, and Air and Water Transport Minister, General Luis Graterol, have met with several international airlines over the last two weeks, including COPA, DELTA, LUFTHANSA, Air France, UNITED, Caribbean Airlines, AVIANCA, VARIG, and IBERIA to arrange a plan of repatriation of earnings. ALITALIA and Air Canada have said they hope to resume operations here; and the government reports it has approved FOREX deliveries to DELTA and IBERIA. (El Universal, http://www.eluniversal.com/economia/140731/venezuela-starts-clearing-debts-owed-to-airlines; http://www.eluniversal.com/economia/140730/minister-alitalia-interested-in-resuming-operations-in-venezuela; http://www.eluniversal.com/economia/140731/air-canada-hopes-to-resume-operations-in-venezuela; and Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40392&idc=3)

Oil & Energy

Russia’s ROSNEFT signs bonus agreement for oil-field access in Venezuela

Russian state-owned oil company ROSNEFT has signed a deal with Venezuelan counterpart PDVSA corresponding to a US$440 million partial payment for access to a heavy-oil project here. “We’ve signed... an agreement for the collection of Rosneft’s first payment of US$440 million for access to PetroVictoria’s area on Sept. 1,” Venezuela’s vice president responsible for the economy, Rafael Ramirez, said at a press conference. PetroVictoria, a joint venture in which PDVSA has a 60% stake and Rosneft has the remaining 40%, owns the Carabobo-2 project in eastern Venezuela’s Orinoco Belt. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2345631&CategoryId=10717; Bloomberg, http://www.bloomberg.com/news/2014-07-30/yukos-hunting-rosneft-gazprom-assets-from-venezuela-to-vietnam.html; AVN, http://www.avn.info.ve/contenido/rosneft-pdvsa-signed-major-oil-and-gas-deals-venezuela)

Venezuela weighs sale of CITGO

Venezuela, strapped for cash at home and staring down costly litigation overseas, is considering a deal for its U.S.-based refinery company CITGO Petroleum Corp. as well as a stake in a refinery run with Exxon Mobil Corp. XOM -1.45% , according to a CITGO document and people familiar with the matter. People close to Petroleos de Venezuela SA, or PDVSA, say the state-run oil giant is in the early stages of considering a deal for Houston-based CITGO, which operates three refineries. It is separately shopping its 50% stake in the Chalmette refinery in Louisiana, a process that is further advanced, they said. PDVSA, the principal source of hard currency in Venezuela, is seeking to bolster the country's stumbling economy, redirect more oil exports from the U.S. to its top creditor China and get some protection from the seizure of foreign assets as settlements in disputes before the World Bank draw near, analysts said. Some estimate that the most PDVSA stands to make from a sale of CITGO is between US$8 and US$10 billion. "Venezuela is looking under couch cushions for coins because they need money," said Russ Dallen, head of Caracas Capital Markets. "The Exxon and ConocoPhillips judgments are coming any day now and the easiest place to enforce those judgments will be the United States." (The Wall Street Journal, http://online.wsj.com/articles/cash-poor-venezuela-weighs-sale-of-refinery-company-citgo-1406766897; Bloomberg, http://www.bloomberg.com/news/2014-07-31/venezuela-seeks-buyer-for-citgo-petroleum-refinery-unit.html)

PDVSA seeks gasoline on the open market

State owned PDVSA oil company is offering to buy 4 500,000 barrel shipments of heavy gasoline on the open market, for shipment to any of its ports in September-December. In a document seen by Reuters, the company states it could buy up to 3 additional shipments of heavy naphta. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-ofrece-comprar-gasolina-en-el-mercado-abiert.aspx#ixzz38x2KsUT5)

Italy's ENI gets Venezuelan jet fuel cargo in June

State-run PDVSA has sent Italy's ENI a 240,000 barrel jet fuel cargo tendered in May on the open market. The jet cargo, was sent to Rotterdam from Guaraguao, one of PDVSA's main terminals, on the tanker Tverskoy Bridge. (Reuters, http://www.reuters.com/article/2014/07/31/oil-venezuela-exports-idUSL2N0Q61O020140731)

Commodities

Alimentos Polar has warned that future production of pre-cooked corn flour will be seriously at risk in the next few months due to a reduction of the domestic crop and government controlled prices which makes it impossible to cover production costs. According to the Central Bank (BCV), shortage of corn flour exceeds 25%. Nutrition Minister General Hebert García Plaza says he has been meeting with Polar representatives to seek a solution to the problem, (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40393&idc=3; and more in Spanish: AVN; http://www.avn.info.ve/contenido/ministro-garc%C3%ADa-plaza-explora-propuestas-para-incrementar-producci%C3%B3n-polar; El Universal, http://www.eluniversal.com/economia/140801/gobierno-y-polar-revisaron-problemas-de-produccion)

Economy & Finance

BARCLAYS sees only partial adjustments, few benefits, as Ramírez again delays trip to NYC

In their latest report on Venezuela, BARCLAY's Capital analysts say everything indicated the Maduro regime will carry out a late and incomplete economic adjustment. They say this reveals that the so-called "pragmatic" wing is weak and their influence has been overestimated. Pending steps include additional devaluation, narrowing the list of products under price controls, raising interest rates and lowering Central Bank subsidies to PDVSA, extending foreign debt service payments, and consolidating FOREX funds currently held in FONDEN, BANDES and Treasury accounts into international reserves. It is reported that Economic Affairs Vice President Rafael Ramírez once again postponed his trip to New York, to meet with financial markets, due to the lack of decisions on economic policy. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140731/barclays-espera-un-ajuste-parcial-con-pocos-beneficios; and http://www.eluniversal.com/economia/140730/definicion-de-medidas-atrasa-reunion-con-inversionistas)

ECOANALÍTICA estimates 3% drop in GDP in the first semester

ECOANALÍTICA Director Asdrúbal Oliveros says their numbers point to a recession and an accelerated increase in prices that his hurting purchasing power in Venezuela. Their estimates are a 3% drop in GDP during the first semester, for a 2.5% contraction during all of 2014, along with 75% inflation, and buying power would plummet 14% this year. The think tank says the most probable scenario is for the government to eliminate SICAD II and establish a single exchange rate at VEB 25/US$. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140801/ecoanalitica-calcula-que-pib-cayo-3-en-el-primer-trimestre)

Ramírez claims that Venezuela has all the FOREX it needs, admits hurdles for private sector

Addressing the 3rd Congress of the pro-government United Socialist Party (PSUV), Economic Affairs Vice President Rafael Ramírez claimed the nation has "all the FOREX needed to meet international obligations and carry out its development plans." At the same time he admitted the non-oil sector "has serious problems that we must address and overcome". (El Universal, http://www.eluniversal.com/economia/140731/venezuelan-economy-vp-admits-hurdles-in-non-oil-sector; and more in Spanish: AVN; http://www.avn.info.ve/contenido/ram%C3%ADrez-venezuela-tiene-todas-divisas-para-sus-compromisos-y-planes-desarrollo; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ramirez-en-este-pais-no-hay-ningun-problema-de-div.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/ramirez--en-venezuela-no-hay-problemas-de-divisas.aspx)

Maduro calls for national debate on setting fair domestic fuel prices

President Nicolás Maduro says he is opening a national debate "with the people" for discussing domestic gasoline prices, and says he has 70% nationwide support for charging a fair price on fuel consumed here. More in Spanish: (PDVSA, http://www.pdvsa.com/; AVN; http://www.avn.info.ve/contenido/maduro-convoca-debate-nacional-sobre-aumento-combustibles; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-convoca-debate-nacional-para-aumentar-el-.aspx; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/datos-claves-sobre-el-precio-de-la-gasolina-en-ven.aspx; http://www.elmundo.com.ve/noticias/petroleo/pdvsa/el-subsidio-a-la-gasolina-en-el-pais-hace-68-anos.aspx; El Universal, http://www.eluniversal.com/nacional-y-politica/140801/maduro-llama-a-debate-nacional-sobre-aumento-de-combustibles; El Nacional, http://www.el-nacional.com/economia/Maduro-llama-debatir-precios-combustibles_0_455954522.html)

World Bank's ICSID Arbitration Panel says Gold Reserve US$2.1 billion Venezuela expropriation case closed

The World Bank's arbitration tribunal, the International Center for Settlement of Investment Disputes (ICSID), has declared the proceedings brought by Gold Reserve Inc. against Venezuela closed, meaning that a decision is imminent.

"The closure of the proceedings by the ICSID tribunal signals the end of the parties' presentation of their case and the tribunal's determination that it does not require any further information from the parties," said Doug Belanger, President of Gold Reserve. "Typically, ICSID tribunals issue the final award soon after declaring the proceedings closed."

"The closure of the proceedings is a welcome development. It marks the end of a five-year effort by counsel, technical, legal and financial experts and Company personnel to present Gold Reserve's claim against Venezuela. Gold Reserve now looks forward to receiving the tribunal's award," Belanger concluded. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2345514&CategoryId=10717)

Overseas insurance repayment at SICAD 2

Venezuela's Supreme Court has ruled that if any individual with a Venezuelan insurance policy has a contingency overseas, the firm must pay in bolivars at the SICAD 2 rate (around Bs.50) in the event it cannot pay in dollars. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40404&idc=2)

Politics

U.S. revokes visas for Venezuelan officials

The U.S. government has announced that it has revoked the visas of several top Venezuelan officials allegedly involved in human rights violations. “Venezuela in recent months has witnessed large-scale protests by demonstrators concerned about deteriorating economic, social, and political conditions. Government security forces have responded to these protests in many instances with arbitrary detentions and excessive use of force,” the State Department said. “While we will not publicly identify these individuals because of visa record confidentiality, our message is clear: those who commit such abuses will not be welcome in the United States,” the department’s deputy spokesperson, Marie Harf, said in a statement. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2345788&CategoryId=10717; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40405&idc=1; http://www.veneconomy.com/site/index.asp?ids=44&idt=40395&idc=1)

Venezuelan opposition coalition Secretary Executive Ramón Guillermo Aveledo has resigned, saying he was stepping aside “without leaving the group.” Aveledo’s resignation seems to be the first result of a meeting in which representatives of all the Democratic Unity’s (MUD) parties met to air their differences. Major parties within the MUD roundly criticized attacks that have been made on the Democratic Unity and Aveledo, and pointed to the achievements it has consolidated over the past two years. Miranda Governor and former Presidential candidate Henrique Capriles says the group has entered into a process of "debate and decision-making." He remarked that "regrouping of forces of those of us who are building a change is not ruled out." Capriles added: "It is very easy to criticize and destroy. The difficult thing is to build, and Ramón Guillermo Aveledo made an unselfish effort to consolidate unity". One critic, former legislator María Corina Machado the resignation "closing a cycle" in order to conduct deep restructuring inside the opposition coalition "not to divide it, but to strengthen it, along with increasing sectors of national life that understand that it is necessary to go beyond electoral matters". Aveledo’s deputy, legislator Ramón José Medina, also resigned, calling anything that divides the opposition "criminal". Primero Justicia leader Julio Borges said those who proposed a quick fix called "La Salida" (The Way Out) last February "sold people a hope that has been deflated". (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40407&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140731/machado-muds-overhaul-seeks-strength-rather-than-division; http://www.eluniversal.com/nacional-y-politica/140731/dissenting-leader-capriles-regrouping-of-forces-is-not-ruled-out; http://www.eluniversal.com/nacional-y-politica/140801/medina-renuncia-a-la-mud-y-llama-a-cesar-el-inmediatismo; http://www.eluniversal.com/nacional-y-politica/140801/toda-persona-que-rompa-la-unidad-se-autoexcluye)

Aruba says Venezuelan warships surrounded the island; Cabello denies it

Aruba's Attorney General Peter Blanken charged Venezuela pressured the island military and economically in order to get the Netherlands to free former Venezuelan intelligence chief general Hugo Carvajal. He says Venezuelan warships surrounded Aruba during the discussions over Carvajal - who is charged with drug trafficking by the US. Captain Diosdado Cabello, President of Venezuela's National Assembly denied the charged. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140730/aruba-dice-que-buques-venezolanos-rodearon-la-isla; and El Nacional; http://www.el-nacional.com/)

Prosecutor General refuses to identify dummy companies involved in FOREX frauds

Venezuela's Prosecutor General, Luisa Ortega Díaz, says she will not publish the names of dummy companies that are under investigation for fraud in FOREX transactions with the former Currency Board (CADIVI). She did say they are investigating high officials, including governors, mayors, military officers and legislators. More in Spanish: (Noticiero Digital, http://www.noticierodigital.com/2014/07/fiscal-general-no-vamos-a-publicar-la-lista-de-las-empresas-de-maletin/)

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.