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, December 16, 2014

December 16, 2014

International Trade


Cargo that has arrived at Puerto Cabello:

  • Over 1,000 tons of black beans from China for state agency Corporación de Abastecimientos y Servicios Agrícolas (CASA)
  • Over 27,000 tons of fireworks from Liuyang Ressing Fireworks for Distribuidora Triki-Traki
  • Over 200 tons of fabric roll from Multi Trade Export for Agata
  • Other arrivals include clothing and footwear, as well as toiletries, cordless phones, accessories for vehicles and motorcycles
More in Spanish: (Notitarde;


Venezuela restricts nighttime border crossings to combat smuggling

Venezuela will further restrict nighttime border crossings to try to stop the widespread smuggling of fuel and food that have contributed to shortages of basic goods in the country's reeling economy. The government has announced it will restrict crossings at Venezuela's land, maritime and air borders with Brazil and Guyana between 10 p.m. and 5 a.m. In addition, delivery trucks must stay off the roads in Venezuelan border towns between 6 p.m. and 5 a.m. as part of a crackdown on contraband. The government had previously ordered the night closure of the country's border with Colombia, where heavily subsidized Venezuelan goods often end up. (Reuters,; El Universal,



Logistics & Transport


Construction of the third bridge over the Orinoco River, located between Bolívar and Guárico states, is currently at 67%, says Surface Transport and Public Works Minister Haiman El Troudi. He pointed out the main south tower of the bridge, 225 meters high and 90 meters deep, has been concluded. (Veneconomy,


Low supply and frequency of flights hits sale of air tickets

After several attempts to bring international flights back to normal, figures show a steady decline in sales here throughout 2014. Venezuelan authorities have held several meetings with representatives from international airlines to find stability in the market. However, to date, unavailability of plane tickets continues, high prices in bolivars persist, and sale of tickets in foreign currency by some airlines is still a requirement. The sale of air tickets in January-November plummeted 41% from 2013. Meanwhile, tickets for national flights have slowed 15% in 2013-2014. (El Universal,



Oil & Energy


Venezuelan crude oil is down to US$ 57,53, and its average price for 2014 is US$ 90.50, which is a 7.7% drop from last year. More in Spanish: (Dinero,


Low oil prices continue to hurt Venezuela

The Venezuelan economy continues its downward spiral as 2015 approaches. Faced with rising domestic expenses that it can no longer meet through dollar income from oil exports alone, Caracas has accelerated measures to increase its money supply since 2012. The central bank has also printed more bolivars to keep up with spending obligations. Caracas will continue making increasingly desperate adjustments to its economic policy throughout 2015, all carried out in the hopes of forestalling social unrest or eventual decisions that could result in regime change. The government could move to devalue the bolivar or cut public spending in 2015. State oil company Petroleos de Venezuela and the Venezuelan government will also likely continue their attempts to restructure US$ 12.5 billion in debt payments that are due in 2016 and 2017 with the goal of reducing its debt burden and likelihood of default. Measures such as selling large sums of gold from the central bank reserves or even defaulting on foreign creditors to continue satisfying domestic constituents would indicate increasing desperation from the government. (Stratfor,


Venezuela wants to expand oil diplomacy despite falling prices

President Nicolas Maduro has told his leftist allies from Latin America that he wants to expand the PETROCARIBE program of providing oil at preferential terms, even as falling oil prices add more stress to the Venezuelan economy. Speaking in Cuba at a summit of the leftist ALBA bloc of nine countries from Latin America and the Caribbean, Maduro did not mention the impact of a 46% decline in oil prices since June. Instead, the leader of the OPEC country spoke of expanding the 18-nation PETROCARIBE, even as PETROCARIBE has struggled to keep up supplies. Shipments fell 11% in 2013 to the lowest level since 2007, forcing beneficiaries to turn to other sources. (Reuters:


CITGO says CONOCO probe may ‘freak out’ potential buyers

ConocoPhillips’s bid for a court order to probe Venezuela’s effort to sell CITGO Petroleum Corp. might scare off any potential investors, CITGO’s lawyer said in urging a judge to reject the request. “I’m not representing one way or the other there’s a sale,” John Zavitsanos, the lawyer, said at a hearing in state court in Houston today. “But if there is, this is going to spook off any potential buyer” because they’d “be totally freaked out about being brought into” the court case. ConocoPhillips claims Venezuela’s state-owned oil company Petroleos de Venezuela is trying to sell CITGO, its primary U.S. holding, as part of a plan to hide the proceeds and avoid paying compensation for assets that were nationalized by former President Hugo Chavez in 2007. (Bloomberg,





Cargill's top prop trader leaves commodities firm

Cargill's head of proprietary trading for emerging and developed markets, Alejandro Russo, left the US commodities giant on December 1. Two market sources who monitor the country's bonds said Cargill was understood to have sold off more than US$ 200 million of bonds issued by Venezuela, and state-owned oil company PDVSA, since Russo's departure. (Reuters,



Economy & Finance


Maduro says that economic adjustments are necessary

President Nicolás Maduro says that "a number of necessary adjustments to economic balance" will be made in 2015 in order to come out of the crisis. He says he will work full time on economic recovery, and leave political and social affairs to others. More in Spanish: (El Mundo,; El Universal,


No official data on inflation for the past 3 months

September 9th was the last time Venezuela's Central Bank updated its consumer price index on its web page, with August data. Neither has it updated the scarcity index, the GDP or the balance of payments. Last Friday it did not publish oil prices for the first time in 50 years. Rather than reassure, the lack of statistics is increasing negative expectations. More in Spanish: (El Nacional;


Venezuela has US$ 21 billion in reserves and owes US$ 21 billion, but Maduro says default is not the strategy

According to a Bloomberg report, Venezuela's FOREX reserves can only cover two years debt service. The government and state owned PDVSA owe US$ 21 billion in bond payments through the end of 2016, and amount that equals total reserves. This explains why market experts say a default is almost certain, probably before a year is up. On the other hand, President Nicolás Maduro continues to deny any possibility that Venezuela will default: "There is no possibility of declaring a default, unless we decide to interrupt payments as a strategy for development - and that is not the strategy", he says. More in Spanish: (El Mundo,;


Maduro in 'no rush' to hike world's cheapest gasoline

Nicolas Maduro says there is "no rush" to hike the world's cheapest gasoline prices, suggesting the increasingly unpopular president has shied away from implementing the risky domestic reform in the near future amid an economic crisis.  "I've considered, as head of state, that the moment has not arrived," he says. "The moment will come, maybe in 2015, there's no rush, we're not going to throw more gasoline on the fire that already exists with speculation and induced inflation."  (Reuters,; Veneconomy,; El Universal,


Venezuela bonds fall below 40 cents as Maduro affirms subsidies

Venezuelan bonds dropped to a 16-year low as President Nicolas Maduro said he has no plans to curb fuel subsidies while not ruling out the possibility of default. The government’s benchmark bonds due in 2027 fell 8.5% to 37.74 cents on the dollar, the lowest on a closing basis since 1998, as of 2:07 p.m. in New York. The extra yield investors demand to hold Venezuela’s overseas notes instead of Treasuries rose the most in the world. Swaps contracts protecting bond investors from non-payment imply a 97% chance of default in the next 12 months, according to CMA data. (Bloomberg,



Politics and International Affairs


Venezuela to face US sanctions over violence against protesters

The US is poised to impose sanctions on Venezuela over the sometimes-violent suppression of anti-government protests which racked the country earlier this year. The US Congress passed a bill this week to punish officials involved in the February-to-May clashes, which resulted in 43 deaths, including victims on both sides of the divide. White House aides said Barack Obama – who had been hesitant to take action during the height of the unrest – was now ready to sign the bill into law. “We have not and will not remain silent in the face of Venezuelan government actions that violate human rights and fundamental freedoms and deviate from well-established democratic norms,” Josh Earnest, the White House press secretary, told a news conference on Thursday. The bill will deny visas and freeze the US assets of current and former Venezuelan officials who ordered “significant acts of violence or serious human rights abuses against persons associated with the anti-government protests”. President Nicolas Maduro responded with defiance, describing the proposed US measure as insolent. “They can stick the sanctions in their ears or wherever else they’ll fit,” he said in a televised speech. “If the crazy path of sanctions is imposed, President Obama, I think you’re going to come out looking very bad.” (The Guardian,


Regime organized a march against United States sanctions

Thousands of government supporters in Venezuela have marched through the streets of Caracas to denounce the recent approval of sanctions by the US. Wearing predominantly red, the protesters called on the United States to respect Venezuela. President Nicolas Maduro addressed his supporters at the end of the march and accused the US of trying to intervene in his country's domestic affairs. Addressing thousands of his supporters in Caracas, Maduro denounced the American government as "arrogant imperialist Yankees". He said Venezuela and other countries should set up "a committee of legal experts to investigate all the human rights violations and crimes against humanity carried out by the United States, which have bombed Libya, Iraq and Syria". Correspondents say sanctions could lead to a worsening of relations between the US and Venezuela. (BBC News,


ALBA Summit in Cuba condemns US sanctions against Venezuela

Cuban President Raúl Castro closed the Summit of the Bolivarian Alliance for the Peoples of Our America (ALBA) by condemning the sanctions the United States imposed on Venezuela, in the context of the 10th anniversary of the bloc, created by late President Hugo Chávez and Fidel Castro. The 11 ALBA Heads of State agreed to "strongly condemn the approval by the United States Congress of sanctions against the Bolivarian Republic of Venezuela," in a statement read by President Nicolás Maduro. (El Universal,


Spain terms Maduro's statements on Aznar "unacceptable"

Spanish Foreign Minister José Manuel García Margallo says statements by Venezuelan President Nicolás Maduro, saying former Prime Minister José María Aznar was responsible for the death of 1.2 million Iraquis, are "absolututely and clearly unacceptable". More in Spanish: (El Nacional;


Another “conspirator” to be charged

The Venezuelan Prosecutor General’s Office has subpoenaed student leader Gaby Arellano to be formally charged with “conspiracy” on December 26. This is the same charge the Public Ministry brought against María Corina Machado last December 3. (Veneconomy,


Voluntad Popular was admitted as a full member of the Socialist International (SI), announced its Chief George Papandreou, during its recent Annual Council held in Geneva. Also, on Saturday, the SI unanimously passed a resolution in which they urged the Venezuelan government to release Leopoldo López and all other political prisoners. (Veneconomy,; El Universal,


Machado: Venezuelan opposition is stronger now

Venezuelan opposition leader María Corina Machado does not think that the opposition has been unable to capitalize on the country economic deadlock. "I cannot see any evidence according to which the opposition has not gotten stronger in all this process. To the contrary, surveys, even those of pollsters close to the government, confirm it. The support inherited by (Venezuela's President Nicolás) Maduro has vanished, not only as a result of the economic debacle caused by them, but to a greater extent because of how the opposition has channeled the expectations of those eager for a change in Venezuela," says Machado. (El Universal,


Oil-poor and on the brink of default: Is change imminent in Venezuela?, by Carl Meacham

On Morgan Stanley cut its 2015 forecast, predicting that prices could average as low as $53 per barrel in 2015. Venezuela in particular faces interesting challenges with this price drop, as its national income dwindles and its economy slowly grinds to a halt. These economic challenges are not necessarily new ones for Venezuela—but unprecedented (and unpredicted) fall of oil prices could throw a wrench in the gears. The administration of Venezuelan president Nicolás Maduro has seem largely focused on keeping the country afloat—and little more—but even that becomes more difficult as oil prices continue to drop. The resulting heavy cut in export revenue may force President Maduro to continue economic reforms that will likely receive a lukewarm reception, at best, from a population accustomed to extensive social welfare programs enabled by the country’s vast oil wealth. Conclusions: The country’s economy will likely keep spiraling downward. Scarcity and inflation will continue to drag down standards of living throughout the country—and default is more likely than ever as oil prices continue to plummet. The economy is tanking, dissatisfaction is on the rise, and there’s a long road until the next presidential elections in 2019. So while the form of change remains to be determined, it seems that conditions for political overhaul could be falling into place. (CSIS,


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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