november 18, 2014

International Trade

 

Cargo that has arrived at Puerto Cabello:

• Over 2200 tons of powdered whole milk from SANCOR Argentina to the CASA government agency.
• Over 1,000 tons of scotch whisky, in 56 containers from Diageo in the United Kingdom to the Venezuelan Foreign Trade Corporation (CORPOVEX)
• Over 612 tons of margarine from Bunge Brazil, for CASA.
• Over 184 tons of milk in 10 containers from NESTLE Argentina to NESTLE Venezuela.

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-mil-toneladas-de-whisky-llegaron-al-puerto-local-2285802/2014/11/17/393869/)

 

 

Oil & Energy

 

Venezuela oil price tumbles to 4 year low

Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending November 14 fell to its lowest price since 2010. According to figures released by the Ministry, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending November 15 was US$ 70.83, down US$ 1.97 from the previous week's US$ 72.80. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2360977&CategoryId=10717; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41887&idc=4; El Universal, http://www.eluniversal.com/economia/141114/venezuelan-oil-basket-down-to-usd-7083-per-barrel)

 

Iran, Venezuela urge oil price support ahead of OPEC meeting

OPEC hawks Iran and Venezuela have called on fellow crude producers to shore up prices that have plunged more than 30% to four-years low ahead of an OPEC meeting later this month. Oil prices have fallen to below US$ 79 on abundant and weak demand from US$ 115 a barrel in June. Skepticism that OPEC will cut supply when it meets on Nov. 27 have also weighed on the prices. So far, only Kuwait and Iran have said a reduction is unlikely, while a Libyan OPEC official, Venezuela and Ecuador have called for OPEC to cut output. (Reuters, http://www.reuters.com/article/2014/11/15/us-iran-venezuela-oil-idUSKCN0IZ0N420141115)

 

OPEC to 'increase coordination' in face of oil price fall, says Ramírez

Foreign Minister Rafael Ramirez said the Organization of the Petroleum Exporting Countries will increase coordination in the face of the fall in oil prices, without elaborating. The oil market is waiting to see whether OPEC will agree a cut in production at its Nov. 27 meeting to stem the roughly 30% drops in oil prices since June. "We will be united in terms of putting forth a common policy," said Ramirez, who until September was both oil minister and head of state oil company PDVSA. (Reuters, http://www.reuters.com/article/2014/11/17/venezuela-opec-idUSL2N0T71SC20141117; El Universal, http://www.eluniversal.com/economia/141117/ramirez-the-fall-in-oil-prices-also-has-political-considerations)

 

Foreign Minister Ramírez to discuss oil decline with Russia, says US$ 100 per barrel is desirable price

Foreign Minister Rafael Ramírez will arrive on Saturday in Moscow in the context of a tour across member countries of the Organization of Petroleum Exporting Countries (OPEC) that has taken him to Algeria and Qatar.
Ramírez will meet with the President of Russian oil giant ROSNEFT, Igor Sechin. "A hundred dollars per barrel is the desirable price for Venezuela," and it stood at US$ 115 in June, said Ramírez during his visit in Iran on Saturday. (El Universal, http://www.eluniversal.com/economia/141114/venezuelan-fm-ramirez-to-discuss-in-russia-oil-decline)

 

PDVSA signs oil supply contract with Russia's ROSNEFT

Russian oil giant ROSNEFT says it has signed a new oil and byproducts supply agreement with Venezuelan state-run oil company Petróleos de Venezuela (PDVSA). Pursuant to the agreement, PDVSA would provide more than 1.6 million tons of oil and nine million tons of byproducts to ROSNEFT for five years. (El Universal, http://www.eluniversal.com/economia/141117/venezuelas-pdvsa-signs-oil-supply-contract-with-russias-rosneft)

 

Paraguaná refining center restarts operations

State-run oil company Petróleos de Venezuela (PDVSA) issued a press release reporting that the main crude oil processing units, and production of blends for gasoline and diesel in the Paraguaná Refining Center (CRP), Falcón, northwest Venezuela, are fully operational, following the power failures registered over the last few days. (El Universal, http://www.eluniversal.com/economia/141114/paraguana-refining-center-restarts-operations)

 

 

Commodities

 

Government expects 18% increase in food production in 2015

José Luis Berroterán, Minister for Agriculture and Land, expects Venezuela to produce 25 million tons of food from agriculture next year, an increase of 18% over 2014. He adds that this will depend on climate conditions and particularly "not having a drought like this year".  More in Spanish: (Infolatam, http://www.infolatam.com/2014/11/17/venezuela-preve-aumentar-en-un-18-su-produccion-de-alimentos-en-2015/)

 

 

Economy & Finance

 

Venezuela faces ‘revised view’ from Fitch as oil prices sink

Venezuela faces a “revised view” from Fitch Ratings in coming months on concern President Nicolas Maduro isn’t moving fast enough to bolster the nation’s finances amid an oil plunge. Fitch lowered Venezuela’s rating in March to B, or five steps below investment grade, with a negative outlook as accelerating inflation and slowing growth spurred street protests. At the time, oil prices were high and the government could still find funding at low levels, said Erich Arispe, director of sovereign ratings for Latin America at Fitch. (Bloomberg, http://www.bloomberg.com/news/2014-11-14/venezuela-faces-revised-view-from-fitch-as-crude-oil-prices-sink.html)

 

Business warns that inflation will reach 120% unless steps are taken

Jorge Roig, President of Venezuela's main business association, FEDECÁMARAS, warns that 2015 inflation could reach 120% if the government does not take steps including fiscal adjustments. Roig was pessimistic about the economic forecast for next year: "I am amazed that anyone thinks 2015 can be good", he said, and called for "economic rationality". Roig says this was the year for economic decisions since there have been special powers in the hands of President Maduro. "Are you going to take them next year, with a political cost, facing elections?", he said addressing Maduro.  More in Spanish: (Infolatam, http://www.infolatam.com/2014/11/18/patronal-venezolana-advierte-que-si-toman-medidas-inflacion-llegara-120)

 

Maduro approves proposal to adjust gasoline prices

President Nicolás Maduro has "accepted" a proposal by a pro-government workers congress to increase gasoline prices, but warns his government is in no rush to make the adjustment. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/maduro-da-luz-verde-para--sincerar--precio-de-la-g.aspx#ixzz3JPkSWV9f; El Universal, http://www.eluniversal.com/economia/141118/maduro-acepta-la-propuesta-de-sincerar-precio-de-la-gasolina; 2001, http://www.2001.com.ve/en-la-agenda/maduro-firmo-propuesta-para-ajuste-del-precio-de-la-gasolina.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-dijo-que-sinceraran-precio-de-la-gasolina-n.aspx)

 

PDVSA has announced it is now paying out interest on bond maturity, on PETROBONOS due 2021, 2035, 2026 y 2024, for the semester ending November 2014. More in Spanish: (2001, http://www.2001.com.ve/en-la-agenda/pdvsa-anuncio-el-pago-por-vencimiento-de-los-intereses-de-bonos.html; PDVSA, http://www.pdvsa.com/; AVN; http://www.avn.info.ve/contenido/pdvsa-canceló-intereses-tenedores-bonos-2021-2035-2026-y-2024; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-cancelo-intereses-a-tenedores-de-sus-bonos.aspx; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-cancelo-intereses-a-tenedores-de-sus-bonos.aspx)

 

Underemployment stands at 40.5%

The employment rate in the informal sector of economy here has grown this year than in the formal sector, according to the September labor force report prepared by the National Statistics Institute (INE). According to the figures, in September, 13,924,988 million people were employed in Venezuela, with 7,934,988 people working in the formal sector versus 5,384,599 underemployed. The share of the formal sector in the labor market dropped from 60.7% to 59.5% in a year time since September 2013. For its part, the informal sector grew from 39.3% to 40.5%, according to the INE. (El Universal, http://www.eluniversal.com/economia/141117/underemployment-stands-at-405-in-venezuela)

 

 

Politics and International Affairs

 

SPECIAL REPORT: Falling oil prices put Nicolás Maduro in a vice

Venezuelan oil, the lifeblood of the leftist revolution entrusted to Maduro by the late Hugo Chávez, was worth US$ 97 a barrel then. Now it’s middling around US$ 70, and with every dollar it dips, Venezuela’s export-dependent, popularity-challenged government loses US$ 700 million a year. With the money pot shrinking, Maduro’s approval rating has slumped to 30%, according to recent surveys, down from 55% in April 2013. The supermarket scarcities and unchecked crime that fueled the protests earlier this year are as bad as ever. Loath to adopt austerity measures that would hit his softening support base, Maduro has been borrowing money from Wall Street at usurious rates, with the country’s plunging benchmark bonds hitting a six-year low last week. All of this has left friends and enemies alike wondering how long the government can go on until something snaps, especially if oil prices slip further. Venezuela’s desperate attempts to get fellow OPEC states to cut production have failed to sway the mighty Saudis. The cliff seems closer than ever. “It’s as if Maduro is playing one of those zombie video games,” said analyst Luis Vicente Leon, director of the leading polling firm DATANALISIS. “As the zombies come at him, he shoots one here, another there, but more and more keep arriving until they’re on top of him.” Stalking Maduro are Venezuela’s long-festering core problems — collapsing productivity and Chávez-era currency controls that have pushed inflation to 63%, one of the world’s highest rates. New lines of credit from the world’s other big lender, Beijing, aren’t likely, with China growing frustrated with Venezuelan mismanagement, said Francisco Monaldi, a Venezuelan economist who is a visiting professor at Harvard’s Kennedy School of Government. Maduro can still keep fiscal calamity at bay, analysts say, but he’s shown little appetite for the unpalatable political moves that it will require. His government could sell off valuable assets, particularly the U.S. gasoline retailer CITGO and its affiliated network of refineries and pipelines. He could also further cut subsidized oil shipments to key allies such as Cuba and Nicaragua. The most obvious measures for Maduro to take, and those likely to have the most meaningful fiscal impact, would fall hardest on the poor Venezuelans who revered Chávez but have grown skeptical of his understudy. Maduro has refused to devalue Venezuela’s currency, the bolivar, instead setting up a complex exchange system with three separate rates for U.S. dollars. The base rate is 6.3 to the dollar. The tourist rate is 12. Then there’s a third rate meant for importers and other businesses that trades at 50 bolivars to the dollar. But on the black market, where most of the money moves, a dollar is now worth 120 bolivars, double its value from earlier this year. When Venezuela’s finance minister said last week that the government had no plans to devalue the bolivar, the currency dropped 20% almost overnight. There’s no painless fix. Adjusting Venezuela’s currency controls to bring the bolivar in line with the black market value of the U.S. dollar could be politically disastrous for Maduro, since it would further slash the wages of Venezuelans who don’t have their savings stockpiled in U.S. bank notes. A more palatable move may be a long-deferred hike of the world’s lowest gas prices — equivalent to less than a penny per gallon. The giveaway costs the government approximately US$ 7 billion a year, and amounts to a huge subsidy for the wealthier Venezuelans who favor gas-gulping SUVs. Yet Maduro has shown little inclination to ask his supporters for sacrifices. “With Chávez they were willing to do it because they thought the future would be better,” said Leon, the DATANALISIS president. “With Maduro, it’s not clear that’s the case.” Instead, Maduro is channeling Santa. He announced a new “Happy Holidays” campaign this month, ordering retailers to sell Barbie dolls at huge discounts and set up a military-run appliance sale where shoppers line up for 80 percent markdowns on microwaves, computer tablets and other big-ticket items. Such fire sales have become a magnet for “re-sellers” who can easily flip the goods on the black market. The government’s fiscal profligacy is compounded by a kind of paralysis at the top levels, where internal battles are said to rage between those urging greater discipline and more radical Chávez followers who want the government and the military to take over more of the economy. “The top leaders of the government are more like a collective,” said Dimitris Pantoulas, a Caracas-based political analyst who is close to current and former government insiders.“It’s not like before when it was only Chávez.” At the top with Maduro is National Assembly President Diosdado Cabello, a powerful figure with closer ties to the military. With a Jacobean touch, the dour Cabello and other top government figures this month have taken to the airwaves to denounce anti-Chávez “infiltrators” within the ruling United Socialist party. “The enemy who most harms us is the enemy within our ranks,” said Francisco Ameliach, a high-ranking socialist party member and state governor. He tweeted a hotline number and a Gmail address for reporting any traitorous activity. (The Washington Post, http://www.washingtonpost.com/world/falling-oil-prices-put-venezuelas-nicolas-maduro-in-a-vice/2014/11/16/5c157066-6602-11e4-ab86-46000e1d0035_story.html)

 

Occupied businesses to be placed under one authority, militias in companies to be expanded

President Nicolás Maduro has approved a proposal by a pro-government workers congress, to put all occupied and nationalized companies under a single system directed by economist Juan Arias. He also approved the creation of a "workers militia" as a part of the Bolivarian Militia, and orders an expansion of militias in companies. More in Spanish:
(El Mundo, http://www.elmundo.com.ve/noticias/economia/laboral/claves---las-propuestas-aprobadas-por-maduro-en-el.aspx#ixzz3JPiDmicY, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-anuncia-medidas-economicas-de-cara-al-210.aspx, http://www.elmundo.com.ve/noticias/economia/banca/gobierno-crea-el-banco-bicentenario-del-pueblo.aspx; AVN; http://www.avn.info.ve/contenido/crean-banco-bicentenario-clase-obrera-mujer-y-comunas)

 

Spain's PODEMOS leader Pablo Iglesias says López case may harm the party

Pablo Iglesias, leader of Spanish political party PODEMOS, believes that the request for his help made by Lilian Tintori, wife of imprisoned Venezuelan opposition leader Leopoldo López, could be a political maneuver to harm the new Spanish leftist political organization. "I believe the aim of that request is to harm PODEMOS," Iglesias said, and also commented that Tintori could have been manipulated, DPA reported. (El Universal, http://www.eluniversal.com/nacional-y-politica/141117/podemos-leader-pablo-iglesias-lopezs-case-may-harm-the-party)

 

Venezuelan migration is constrained in MERCOSUR

The Venezuelan government has not endorsed the "Agreement on residence for nationals of the Member States of the Common Market of the South – Mercosur, Bolivia and Chile." As a result, Venezuelans cannot benefit from the special migration regulations within the regional bloc, which provide for provisional residence of up to two years, or permanent residence, upon presentment of the passport and a confirmation of the lack of criminal records. (El Universal, http://www.eluniversal.com/nacional-y-politica/141115/venezuelan-migration-is-constrained-in-mercosur)

 

 

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.