October 07, 2014

International Trade

Cargo arrived at Puerto Cabello:

• Over 80,000 tons of yellow corn from Argentina, for Alimentación Balanceada
• 2,500 heads of cattle, weighing over 1,000 tons, from Brazil, for Frigorífico Ind Los Andes, Asesores Int Xw C.A. and Desarrollo Los Cocos Ranch.

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-80-mil-toneladas-de-maiz-amarillo-llegaron-al-puerto-2246551/2014/10/06/358370)

Smuggling, border closing, to center attention of Holguín – Ramírez meeting

Colombian Foreign Minister María Ángela Holguín expects to arrive in Caracas on October 20th for meetings with her Venezuelan counterpart, Rafael Ramírez, which will focus on cross border smuggling and closely evaluate the closing of the border by Venezuela. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/141007/el-contrabando-sera-el-eje-de-cita-holguin-ramirez)

Logistics & Transport

International airlines await government's call

International airlines operating in Venezuela are awaiting the government's call in order to resolve their differences with authorities here over repatriation of funds accrued in US dollars arising from the sale of plane tickets. President Nicolás Maduro last Monday ordered aviation and FOREX authorities to "completely solve" the crisis with international airlines, which dates back to August 2013. However, representatives from international airlines have not yet been called for a meeting. (El Universal, http://www.eluniversal.com/economia/141006/international-airlines-wait-for-venezuelan-governments-call)

Oil & Energy

Venezuela's diluted crude oil shipments to CITGO down by 57%

Diluted crude oil shipments from Venezuela to CITGO Petroleum, a subsidiary of state-run oil holding Petróleos de Venezuela (PDVSA) in the United States, fell by 57% in September. PDVSA had pledged to keep output levels and shipment volumes unchanged; however, DCO shipments fell to 2.13 million barrels in September, from 4.99 million barrels shipped in the previous month after the Venezuelan oil giant froze exports to adjust oil prices. (El Universal, http://www.eluniversal.com/economia/141006/venezuelas-diluted-crude-oil-shipments-to-citgo-down-by-57; Reuters, http://www.reuters.com/article/2014/10/03/oil-citgo-imports-idUSL2N0RU1IH20141003)

Venezuela oil price continues tumbling

Venezuela's weekly oil basket fell to a 3 year low this week. 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 October 3 was US$ 85.89, down US$ 0.76 from the previous week's US$ 86.65. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2354906&CategoryId=10717)

Russia's LUKOIL sells its stake in Venezuela project to ROSNEFT

LUKOIL has sold its 20% stake in a consortium developing a large oil project in Venezuela to its Russian peer ROSNEFT. LUKOIL, Russia's No.2 oil producer, last year said it wanted to sell its stake in the Russian Junin-6 consortium developing heavy oil in the Orinoco basin, in order to focus on other projects. The group is led by Russian state oil major ROSNEFT and also includes GAZPROM NEFT. Kommersant reported that LUKOIL might sell its stake to ROSNEFT for US$150 million, with the deal expected to be completed in November. Lukoil was not immediately available for comment. The newspaper said the company declined comment on a possible deal. The consortium owns 40% in the project, which started production in September 2012. Venezuela's state-run PDVSA holds 60%. (Reuters: http://af.reuters.com/article/energyOilNews/idAFL6N0RY0AC20141003)

Commodities

Local vehicle production down 82.29% in one year

The latest report from Venezuela's Automotive Chamber shows 10,286 vehicles were produced here January-September 2014, an 82.29% drop from 58,073 assembled by 7 companies operating in Venezuela. Chrysler and Mack have stopped operations for the past 2 months. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Economy & Finance

Government starts process US$1.786 billion payment

Venezuela has withdrawn money from its Central Bank reserves to start paying roughly US$1.786 billion in debt, a high-ranking government source told Reuters, allaying fears the country might opt to default. Venezuela has to service roughly US$ 1.498 billion due from its Global 2014 bond on Wednesday and about US$250 million in coupons as of next week. The country has to pay a total of around US$5 billion in sovereign bonds and bonds issued by state oil company PDVSA this month. "Yes, it was for the payment," the source said when asked if international reserves had dropped ahead of the debt service. With the US$1.786 billion drop on Friday, international reserves stand at US$20.012 billion, the lowest level in over a decade. Venezuela has to pay over US$6 billion in debt in 2015; around US$7 billion in 2016; and over US$14 billion in 2017, according to Thomson Reuters data. "I'm not worried about 2014," said Asdrubal Oliveros, an economist with ECOANALITICA in Caracas. "I'm worried about the future," he said, adding the government's maneuvering room is dwindling. (The Daily Mail, http://www.dailymail.co.uk/wires/reuters/article-2782963/Venezuela-starts-process-pay-1-786-bln-debt-source.html#ixzz3FSvTGEIH)  

Venezuela yield curve signals rally to Goldman

Venezuela’s shorter-term notes yield more than its longer-dated bonds, a signal to Goldman Sachs Group Inc. that debt coming due in the next few years is poised to rally as concern eases about the country’s ability to pay. The Chart Of The Day shows that speculation Venezuela could default has driven yields on its shorter-term debt above those on its longer-term securities in the past month, forming a so-called inverted curve. (Bloomberg, http://www.bloomberg.com/news/2014-10-06/venezuela-yield-curve-signals-rally-to-goldman-chart-of-the-day.html)

Swiss HOLCIM cement group claims the government still owes US$ 97.5 million, as part of compensation Venezuela had to pay for the nationalization of one of its plants here. The amount should have been paid on September 10 at the latest, said HOLCIM in a press release. Venezuela granted HOLCIM $650 million in 2010 as total compensation for its nationalization plan. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41332&idc=3; El Universal, http://www.eluniversal.com/economia/141006/venezuelan-govt-yet-to-pay-holcim-usd-975-million-compensation; Reuters, http://www.reuters.com/article/2014/10/06/holcim-brief-idUSFWN0S000820141006)

Politics and International Affairs

Opposition leader looks to legislative elections

The new leader of Venezuela's opposition is betting on next year's legislative elections as a springboard to end over 15 years of socialist rule amid discontent over economic woes. Journalist Jesús Torrealba says he wants "to live with Norway's quality of life, but with a Venezuelan taste", in reference to Norway's development and welfare. He believes the united opposition can gain an "ample majority" based on growing discontent with Maduro among 'chavistas'. "The chavista glacier is starting to melt", he says. Torrealba faces the challenge of keeping a united opposition in view of differences between the more radical group led by Leopoldo López and moderates headed by two time presidential candidate Henrique Capriles. "I am sure both are to be presidents of this country", says Torrealba, who also wants to make sure the opposition has a strong imprint in Venezuela's barrios: "One must reach a public we did not reach before, the social and political segment that has been growing explosively over the past 15 months: the disaffected 'chavistas'". He says Maduro - who recently called Torrealba "garbage" when the opposition leader sent condolences over the murder of pro-government legislator Robert Serra - "is the main obstacle to dialogue at this time". More in Spanish: (Infolatam)

Maduro says legislator's killers have been identified, points to Uribe

President Nicolás Maduro has accused former Colombian President Álvaro Uribe and "criminals" protected by the US Government of masterminding the murder of pro government legislator Robert Serra and his assistant, and says those implicated have been identified and security forces are after them. "I am more than sure that the masterminds are outside the country, from information I have, they point to Colombia and the criminal band which former President Álvaro Uribe has always led ..they point to Miami and the gang of criminals that is protected by the US Government". Uribe quickly denied the allegations made by Maduro. Government supporters have begun to seek the "connections" with opposition members such as dissenter Lorent Saleh, and opposition legislator Carlos Berrizbeitia. The Democratic Unity Conference (MUD) rejected groundless accusations and innuendo in the case. (El Universal, http://www.eluniversal.com/nacional-y-politica/141006/call-for-inquiry-into-links-between-dissenters-and-deputys-murder; http://www.eluniversal.com/nacional-y-politica/141006/alvaro-uribe-denies-any-connection-with-murder-of-venezuelan-deputy; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2355067&CategoryId=10717; and more in Spanish: Infolatam)

Venezuela, China sign deal to build third satellite

Manuel Fernández, Minister of University Education, Science and Technology, has signed an agreement with China for the construction of the third satellite called Sucre. (AVN, http://www.avn.info.ve/contenido/venezuela-china-sign-deal-build-third-satellite; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41331&idc=3)

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.