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.

Tuesday, September 16, 2014

September 16, 2014

International Trade

Cargo arrivals at Puerto Cabello:
  • Over 1,454 tons of chicken and beef from Argentina to state agency CASA.
  • Over 1,214 tons of frozen chicken from Brazil to CASA.
31 ships remain at bay awaiting dock assignment, 12 of them bearing food. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-dos-mil-toneladas-de-pollo-y-carne-llegaron-para-estatal-Casa-2234517/2014/09/15/353314)

Venezuelan fuel sold at US$ 6.36 per liter at the Colombian border, around 100,000 BPD are being smuggled
Illicit gasoline trade near the Venezuela-Colombia border is under no one's control. Purchase and sale of gasoline is carried out in daylight in front of everybody. The difference between the subsidized gasoline prices in Venezuela and the price of gasoline in Colombia encourages resale and fuel smuggling. Border communities practically live out of gasoline and food illegal trade. Gasoline is sold at the border at as much as VEB 400-800 (US$ 63.6-127) per every 20 liters. Those engaged in the sale of fuel pay VEB 1.94 (US$ 0.30) per every 20 liters and earn VEB 40 (US$ 6.36) on average per liter. PDVSA President Eulogio del Pino estimates around 100,000 BPD are being smuggled out of Venezuela. (El Universal, http://www.eluniversal.com/economia/140915/venezuelan-fuel-sold-at-usd-636-per-liter-at-the-border-with-colombia; and more in Spanish: AVN; http://www.avn.info.ve/contenido/estiman-que-cerca-100000-barriles-combustibles-diarios-están-siendo-contrabandeados; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/del-pino-sin-problema-en-que-se-audite-pdvsa.aspx; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/del-pino-no-tiene-rollos-en-que-se-audite-pdvsa.aspx; El Universal, http://www.eluniversal.com/economia/140915/en-la-frontera-compran-el-litro-de-gasolina-en-40-bolivares)


Oil & Energy

Venezuela’s export barrel, down to lowest level in two years, averaged $90.19/bbl., according to official figures published by the Ministry of Mining and Oil this Friday. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41042&idc=3)

Venezuelan oil sales to the US down to 747,000 bpd in June
Venezuelan exports of oil and byproducts to the United States plummeted 17% in June, according to figures disclosed by the US Department of Energy. The numbers showed Venezuelan state-run oil company PDVSA and its partners sold 747,000 barrels per day (bpd) in June, down from 899,000 bpd a year earlier. In May, the drop in oil exports was reported at 3.2%, totaling 772,000 bpd. (El Universal, http://www.eluniversal.com/economia/140915/venezuelan-oil-sales-to-the-us-down-to-747000-bpd-in-june)

CHEVRON weighs the purchase of one of CITGO's refineries
The government has lowered the sale price of CITGO, a US-based subsidiary of Venezuelan oil giant Petróleos de Venezuela (PDVSA), as the nation is faced with repayment of significant debt obligations in the next few months. Sources of the Venezuelan Ministry of Petroleum and Mining told Argus Media that the government expects to receive some US$ 8-10 billion from the sale of the three CITGO-owned refineries located in the US. CITGO's assets have been valued at US$ 15 billion. CHEVRON is one of the international companies that have been evaluating CITGO's assets, and might be interested in buying the Corpus Christi refinery, with a capacity to process 165,000 bpd of crude oil. (El Universal, http://www.eluniversal.com/economia/140915/chevron-weighs-the-purchase-of-one-of-citgos-refineries)


Commodities

TOYOTA renews production at Cumaná plant
TOYOTA has renewed production at its Cumaná plant in Eastern Venezuela, after negotiations were begun with striking workers. More in Spanish: (AVN; http://www.avn.info.ve/contenido/planta-toyota-cumaná-reanudó-operaciones; El Universal, http://www.eluniversal.com/economia/140916/se-reanudaron-actividades-en-la-planta-de-toyota-en-cumana)

Irregular situations reported at the Orinoco Oil Belt by Wills Rangel, head of the Bolivarian Socialist Workers’ Federation (CBST, in Spanish). Rangel said they had detected different irregular situations in oil operations at the Orinoco Oil Belt, as well as in the operational system, shifts, labor structures of drills and violations to the collective bargaining agreement. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41035&idc=4)


Economy & Finance

FEDECÁMARAS says current GDP equals that of 40 years ago
FEDECÁMARAS Vice President Francisco Martínez says Venezuela's current GDP has dropped down to its own levels 40 years ago (1974), due to "lack of productivity". FEDECÁMARAS is the nation's main private business organization. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140916/fedecamaras-senala-que-pib-es-el-mismo-de-hace-40-anos)

Imbalances in government accounts trigger inflation
In July the Central Bank of Venezuela (BCV) issued 41.9 million units of VEB 100 bills, an increase by 153% over the volume of bills issued during the same month in 2013. This is due to the loss of purchasing power of money in circulation, which in turn leads to a need for higher-value bills to be issued. Imbalances eating away at purchasing power - to the extent that the highest-denomination bill is not enough to pay for half a kilo of cheese - arise from asymmetry in government accounts. Efraín Velásquez, the president of the National Economic Council, explains that to cover expenditures that are soaring above oil revenue and tax collection the government creates more debt and seeks the aid of the Central Bank, which responds by creating more bolivars to fund the government. (El Universal, http://www.eluniversal.com/economia/140913/imbalances-in-government-accounts-trigger-inflation)

Venezuela bond rout
Venezuelan bonds came under pressure this week as talk of a potential default spooked the markets, causing the sovereign's curve to plunge several points before buying interest returned. The country's 2024s fell about 3.5 points to 65.00-66.00 on Monday, marking a five-point drop in four days. It was a similar story for bonds issued by state-owned oil company PDVSA, whose 2024s touched a low of 52.50-53.00 on the same day. The rout was triggered by an article written by two Harvard academics - a former Venezuelan minister and an ex advisor for the opposition - questioning whether the government should service its international bonds when it is not honoring other commitments at home and has left citizens scrambling for basic goods. (Reuters, http://www.reuters.com/article/2014/09/12/emergingmarkets-debt-idUSL1N0RD1D620140912)

Maduro threatens Harvard professor for default comment
President Nicolas Maduro instructed the attorney general and public prosecutor to take “actions” against Harvard Professor Ricardo Hausmann, saying the economist sought to destabilize the country by suggesting the government default on its debt. Maduro lashed out at Hausmann during a televised address last night, calling him a “financial hitman” and “outlaw” who forms part of a campaign “that has been initiated around the world against Venezuela .” He didn’t specify what actions he had asked the attorney general and prosecutor to take. (Bloomberg, http://www.bloomberg.com/news/2014-09-12/venezuela-threatens-harvard-professor-for-default-comment.html)


Politics

US Presidential Determination for major drug producing and transit countries includes Venezuela
Under the Foreign Relations Authorization Act (FRAA), the President is required each year to notify Congress of those countries he determines to be major illicit drug-producing countries or major drug-transit countries that “significantly affect the United States.” This year the President has identified twenty-two countries as major illicit drug-producing or drug-transit countries. Of these twenty-two, the President has determined that three countries, Bolivia, Burma, and Venezuela, “failed demonstrably” during the last twelve months to make sufficient or meaningful efforts to adhere to the obligations they have undertaken under international counternarcotics agreements. In accordance with provisions of the FRAA, the President has determined that support for programs to aid Burma and Venezuela remains vital to the national interests of the United States and therefore grant Burma and Venezuela National Interest Waivers. (State Department, http://www.state.gov/r/pa/prs/ps/2014/09/231658.htm)

Capriles’s party believes anti-Chavistas can win 2015 parliamentary elections
Venezuela’s Primero Justicia (PJ) party of two-time presidential opponent Henrique Capriles has announced that for the first time in 15 years since the first triumph of the late president Hugo Chavez, the opposition could win parliamentary elections scheduled for October 2015. “It will be the first time in 15 years when we will have the opportunity to have the country’s most important institution in service of people, and not the government,” PJ Secretary General Tomas Guanipa said Sunday in reference to in the National Assembly (AN, parliament). The triumph of the opposition will allow “the changes which the country demands,” Guanipa said in statements to journalists. The party must win not less than two-thirds of the seats in the NA single chamber, he explained. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2352079&CategoryId=10717)

TalCual: Where is the Government taking Venezuelans?
What does the Venezuelan government come up with when it deals with a serious issue such as that of general shortages of goods and services? Well, nothing but closing the borders and putting fingerprint scanners in markets, supermarkets and other food retailers. It is impossible stop a hemorrhage with plain Band-Aids. The logical thing to do would be to restructure the nation's debt, renegotiate it with the support of the IMF, and extend the payment deadlines. But the Government is never going to do that, so the fate of Venezuela is unknown. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2352045&CategoryId=10717)

Venezuelan FM: We are heading for a revolutionary State
Rafael Ramírez, recently appointed Vice-President for Political Affairs and Minister of Foreign Affairs, has pledged all of his support to President Nicolás Maduro in making the necessary changes within the so-called "shakeup" including his departure as president of state-run oil holding PDVSA. "I am honored to take on the task of representing our country in the world," says the new Foreign Minister. "I see it (the switchover in jobs) as a natural way, for the oil industry has always been tied to our foreign policy," he added. (El Universal, http://www.eluniversal.com/nacional-y-politica/140915/venezuelan-fm-we-are-heading-for-a-revolutionary-state)

Best and brightest for export
Approximately 90% of those who have emigrated from Venezuela in the last 15 years are highly skilled professionals. More important, according to researcher Tomás Páez, they take away with them their expertise and ability to create jobs and wealth. (El Universal, http://www.eluniversal.com/nacional-y-politica/140913/best-and-brightest-for-export)

Egyptian president thanks Venezuela for its solidarity with Palestine
Egypt's president Abdel Fattah el-Sisi expressed Sunday his gratitude to the Venezuelan people and his counterpart Nicolas Maduro due to their humanist actions and solidarity with Palestine, through medicine and food. (AVN, http://www.avn.info.ve/contenido/egyptian-president-thanks-venezuela-its-solidarity-palestine)

Aragua State Governor denies existence of a fast-acting deadly virus
A Venezuelan governor denied that eight people were killed by a deadly, fast-acting virus at a hospital in the north-central city of Maracay and accused the head of the local medical association of deliberately attempting to sow panic among the local population. “I must start by categorically denying the existence of some virus or bacteria on the premises of the Maracay Central Hospital that is putting the lives of patients at risk,” said Tarek el Aissami, governor of the north-central state of Aragua, whose capital is Maracay. El Aissami refuted reports by the head of Maracay’s medical association, Angel Sarmiento, who on Thursday said an unknown fatal illness at one of the state’s public hospitals was claiming the lives of its victims in as few as 72 hours. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2351964&CategoryId=10717)


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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