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, January 27, 2015

January 27, 2015

International Trade


Cargo that has arrived at Puerto Cabello:

  • Over 16,000 tons in 511 containers carrying chicken, beef, margarine, and milk from Brazil for state agency CASA.
  • Over 495 tons of frozen chicken from Argentina for CASA.


Milk imports from Brazil rose more than 1100% in 2014

Milk imports from Brazil rose over 1100% above 2013, according to Brazil's Foreign Trade Secretariat (SECEX). Total milk sent from Brazil to Venezuela rose from 2,474 to 29,156 tons. Payments for milk rose from US$ 2.4 million to US$ 162.1 million, an increase of over 3700%. More in Spanish: (El Mundo,



Logistics & Transport


No progress in talks with airlines

General Giuseppe Yofreda, Minister for Air and Water Transport, has been meeting with representatives of international airlines serving Venezuela to discuss repayment of FOREX pending for the sale of tickets since 2013 at the official exchange rate. Industry spokesmen say there has been no progress on the way to repay an outstanding US$ 3.5 billion due to the airlines. More in Spanish: (Ultimas Noticias,



Oil & Energy


U.S. nudges Caribbean nations to ease their dependence on Venezuelan oil

Fears that falling oil prices could knock the wheels off the already wobbly economy of oil-dependent Venezuela have sparked apparent interest in alternatives to PETROCARIBE, a trade program created by the late President Hugo Chavez that has kept the region dependent on this country for energy. Caribbean leaders have converged in Washington for the first Caribbean Energy Security Summit, hosted by Vice President Joe Biden, who told the meeting: "No country should use their natural resources as a means to coerce" the Caribbean. All the countries of the region, except Cuba, are participating in closed talks that involve U.S. officials and representatives of the European Union, the U.N., and multilateral financing agencies such as the World Bank and Inter-American Development Bank, to explore ways to help Caribbean countries convert diesel-powered energy plants to natural gas and increase use of other alternative energy sources. Such moves would reduce the nearly complete dependence on oil that has made energy expensive in the region and created the opening for Venezuela in the first place. (Fox News Latino,


Venezuela’s export barrel averaged US$ 39.52/bbl. this week, up for the first time in four months, informed the Venezuelan Oil and Mining Ministry on Friday. (Latin American Herald Tribune,; Veneconomy,


Analyst says oil prices will not rebound immediately

Oil analyst and professor Mazhar Al-Shereidah called for calm as he talked about the perspectives in world oil markets. He estimated that oil prices should rise again in no less than 18 months and stabilize at US$ 50-55 per barrel. Al-Shereidah is a researcher at the Faculty of Economic and Social Sciences of the Central University of Venezuela (UCV) since 1967. (El Universal,


....but OPEC hopes oil prices to recover soon

Abdulla al-Badri, Secretary General of the Organization of Petroleum Exporting Countries (OPEC), says oil prices at current levels may have reached a floor and could move higher very soon,: "I think maybe they reached the bottom and will see some rebound very soon". He warned that any oil supply cut would lead to spare production capacity, lack of investment and eventual shortage and price spike. (El Universal,


Where to buy gasoline for US$0.002 a gallon, seriously

President Nicolas Maduro has told lawmakers he’s considering raising gasoline prices. That might be a good idea. It’s been two decades since the government last lifted state-set local prices, the result of politicians’ concern that the move could spark protests like those that swept across the oil-rich nation following an increase in 1989. In the interim, a string of currency devaluations has pushed down the cost in dollar terms to levels that would seem implausible to consumers in other parts of the world, even after the recent oil tumble cut prices at the pump. (Bloomberg,


PDVSA moves to buy shipment of Urals crude oil

State-run oil company PDVSA has moved to purchase a shipment of 700,000 barrels of Russian Urals crude oil to be delivered on February 15-18, 2015 in Curacao, brokers told Reuters. It is the third bidding made by PDVSA to buy Russian Urals crude oil as part of an open market operation. Last month, the firm awarded a division of Russian LUKOIL a shipment of 700,000 barrels of crude oil slated to be received the week of January 26-30. The shipment is to be delivered at Bullenbay port (Curacao) and processed at PDVSA-operated Isla refinery. The move will partially replace the supply of Venezuelan Mesa 30 crude oil that has been used in the plant over the past years. (El Universal,


Cubans began departing the Puerto Cabello dock and the Planta Centro thermo-electric plant - in which they worked for almost four years - since December, according to union leaders and workers from those companies. At Planta Centro, out of the 600 original Cuban workers only 150 remained under contract and these are the ones that began departing back to Cuba. (Veneconomy,





Gold production drops 95%

Gold production by state agency MINERVEN shrank for the fifth consecutive year. Gold extracted in 2014 was 867 kilos, a drop of 95% from 2013. More in Spanish: (El Mundo,


Government plans to increase investment for national food production

General Carlos Osorio, Vice President of Food Security and Sovereignty, reports that the  government will increase investments for producing staples and strengthen supply nationwide, noting that the government began the year by making an inventory "of all products, and we have the products the people need for two and a half months." He says that through these inventories they could determine input and raw materials areas. (AVN,; El Universal,


Zuli Milk ransacked

Francisco Della Morte, an advisor to Zuli Milk, has charged that officials from the Food Ministry and the Agribusiness National Superintendent's office ransacked two company plants near Caracas, carrying away all their raw material, freezers and over 8 tons of packaging material, as well as workers uniforms and the keys to 13 trucks. He said that after they legally imported 800 tons of milk, the government seized the cargo that remained at port in 32 containers. Company operations halted on January 8th and they have not been allowed to produce milk, even under government supervision. More in Spanish: (El Nacional;



Economy & Finance


The government offers no solutions to a mounting economic crisis

Shortages are undermining support for the autocratic regime’s “21st-century socialist” experiment, especially among the poor, its intended beneficiaries. The government insists it is the victim of “economic warfare” waged by the opposition. With opinion polls indicating that more than 80% of Venezuelans blame the president for the situation, the opposition Democratic Unity (MUD) alliance senses an opportunity. Signs of greater unity suggest that the opposition may begin to pose a more serious challenge, starting with legislative elections this year. Maduro insists that the solution is more revolution. For the umpteenth time he promised to announce economic measures to alleviate the crisis. His annual speech before the National Assembly on January 21st was characteristically long on rhetoric and short on specifics. (The Economist,


BOFA economist says nation has US$ 70 billion in assets, needs to finance US$ 40 billion

Francisco Rodríguez, Chief Economist for the Andean Region for Bank of America, says Venezuela has enough assets to create "a strategy for stabilization and adjustment". Rodríguez says "we have international reserves, additional deposits of about US$ 20 billion, that allow a margin for maneuvering". He estimates Venezuela has international assets and reserves of about US$ 70 billion, including outstanding oil payables. He adds that "financial needs can be around US$ 40 billion", so an economic recovery strategy must create signals and results needed so the country can face the crisis created by the drop in oil prices. More in Spanish: (El Mundo,


...yet ECLAC reports poverty in Venezuela up 6.7 % in 2012-2013

Reduction of poverty remained flat in Latin America as a result of a slower regional growth, according to a report by the Economic Commission for Latin America and the Caribbean (ECLAC). In Venezuela, poverty rate gained 6.7 percentage points in 2012-2013 (from 25.4% to 32.1%) and the homeless rate heightened 2.7 percentage points (from 7.1% to 9.8%) in the same term, according to the report entitled Latin American Social Outlook 2014. (El Universal,; and more in Spanish: El Mundo,; El Universal,; Ultimas Noticias,


Venezuela's currency woes an increasing threat to U.S. corporate profits

Venezuela's deepening economic troubles, the weakness of the bolivar and restrictive currency controls, have hurt U.S. corporate profits for the fourth quarter of 2014 and are set to inflict further pain this year. Ford Motor Co announced it is taking a pre-tax charge of US$ 800 million for its Venezuela business due to exchange control regulations that have restricted the ability of its operations in the country to pay dividends and obligations in U.S. dollars. Ford also said that it was unable to maintain normal production in Venezuela with the availability of vehicle parts constrained. Kimberly-Clark Corp said it took a fourth-quarter charge of US$ 462 million for its Venezuelan business after it concluded that the appropriate rate at which it should be measuring its bolívar denominated monetary assets should be a Venezuelan government floating exchange rate - currently at around 50 bolivars to the dollar - rather than a fixed official rate of 6.3 to the dollar that it had previously been using. Kimberly-Clark blamed increased uncertainty and lack of liquidity in Venezuela for the move. (Reuters,; Latin American Herald Tribune,


Maduro claims FOREX is guaranteed in Venezuela

President, Nicolas Maduro claims the nation has the dollars needed for production of different goods, as well as all social programs and responsibilities of the Executive branch, and added he will continue making efforts to protect oil prices and OPEC. (AVN,


Infrastructure plans exceed USD 5 billion

Elías Jaua, Vice-President for Territorial Socialism, says the so-called Infrastructure Plan announced by President Nicolás Maduro last week, involves US$ 5 billion and VEB 264 billion (US$ 41.5 billion) in investments. He remarked that the plan seeks to create 734,000 direct jobs and 1.1 million indirect jobs. Moreover, Jaua said that more than VEB 204.8 billion (US$ 32.5 billion) and over US$ 3 billion would be spent on housing during 2015 creating 650,000 direct jobs. (El Universal,



Politics and International Affairs


Diosdado Cabello fingered as head of the "Cartel of the Suns"

Navy Captain Leamsy Salazar, who headed security for the late President Hugo Chávez, has arrived in Washington to work with US authorities on links between "chavismo" and drug traffic. He is a protected witness that can supply the most devastating details known so far. According to sources close to the investigation, Salazar charges that the drug organization known as the "Cartel of the Suns" is led by Venezuela's National Assembly President Diosdado Cabello. They say: "This is the hardest blow ever given to "chavismo". Salazar became chief aide and head of security for Cabello after the death of Chavez. He arrived in the US in the company of agents from the US Drug Enforcement Agency (DEA) as a protected witness for New York's District Attorney for the Southern District. He has also linked Cuba to drug shipments on behalf of the Cartel. Salazar was a direct witness in acts compromising Cabello and drug traffic, but never took a direct role in operations. Salazar is reported to have also implicated Tareck El Aissami, Aragua State Governor, who is linked to Islamic networks; as well as Cabello´s brother, José David, who holds the offices of Minister of Industries and Tax Superintendent. Salazar has also apparently pointed to the state oil company, PDVSA is the key unit for money laundering. More in Spanish: (El Nuevo Herald,; ABC Spain,


NYT: Maduro in his labyrinth

President Nicolás Maduro has become increasingly erratic and despotic in a quest for political survival that seems more daunting by the day. The International Monetary Fund has predicted that Venezuela’s economy would contract 7% in 2015. Far from acknowledging responsibility for the crisis, he and his loyalists have blamed the revenue shortfalls on political opponents they accuse of enabling an international conspiracy. The crackdown on the opposition, unobstructed by a weak and compromised press, appears to be an effort to divert attention from Venezuelans’ deteriorating quality of life. (The New York Times,


Arreaza denies Piñera and Pastrana access to prisoners, leaders amazed at food lines

Vice President Jorge Arreaza barred two former Latin American presidents, Chile’s Sebastian Pinera and Colombia’s Andres Pastrana, from visiting jailed opposition leader Leopoldo Lopez. The two leaders called for the release of Lopez, who was arrested nearly a year ago. President Nicolas Maduro accused them of taking part in a coup plot against him and being financed by drug money. Pastrana criticized the decision, saying: "This confirms he (López) is a political prisoner." Arreaza accused the former Presidents of "seeking a media show", saying he told the Chilean and Colombian ambassadors that permits had not been requested. Chile's Piñera said: "I hope this situation changes in Venezuela". Former Mexican President Felipe Calderón joined them for a seminar on "Citizen power and democracy today", organized by Venezuela's opposition. The former Presidents also expressed they were amazed to see "a country as rich as Venezuela undergoing this difficult situation" as they witnessed the long lines to buy food.  Jesús Torrealba, Executive Secretary of the opposition Democratic Unity Conference, is in Brussels to denounce restrictions on access to political prisoners at the European Parliament. (El Universal,; Bloomberg,; BBC News,; and more in Spanish: El Nacional;; Infolatam,;


Capriles calls for opposition unity, says 80% of Venezuelans “Want change

Two-time presidential candidate for Venezuela’s opposition alliance MUD, Henrique Capriles, has called for a “common agenda” against President Nicolas Maduro, and said that 80% of the 30 million Venezuelans “want change.... and we have to unite to present that common agenda for change”. He admitted that at the heart of the alliance there are “differences” about how to combat Maduro, but insisted that it is essential to minimize them and define a common agenda. (Latin American Herald Tribune,


Spain's PODEMOS questioned about €1 million transfer from Venezuela

Juan Carlos Monedero, a spokesman for PODEMOS, a new Spanish leftist political party, was asked to explain two alleged transfers totaling € 1 million from Venezuela.  He received "another million" euros from Venezuela, through the Foundation of the Center of Political and Social Studies. Leaders of the Spanish Socialist Party (PSOE) have demanded an explanation. (El Universal,


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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