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, February 3, 2015

February 03, 2015

International Trade


Cargo that has arrived at Puerto Cabello:

  • Over 648 tons of beef, chicken and ham from Uruguay for CASA
  • Over 436 tons of transformers from Prolec GE Int. for Corporación Eléctrica Nacional (CORPOELEC)
  • Over 288 tons of chicken from Argentina, Sede América S.A. for CASA
More in Spanish: (Notitarde;



Oil & Energy


Venezuela oil barrel falls to new 5 year low

Venezuela's weekly oil basket fell to its lowest since 2009. 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 January 30 was US$ 38.82, down 70 cents from the previous week's US$ 39.52.  According to official Venezuelan government figures, the average price in 2015 for Venezuela's mix of heavy and medium crude is now US$ 40.30. (Latin American Herald Tribune,; Veneconomy,


PDVSA oil executives arrested on corruption charges

Venezuela has arrested state oil company PDVSA's production boss for the oil-heavy western part of the country on corruption charges, a week after arresting an oil ministry employee, reported to be his sister, on similar suspicions. Jose Luis Parada is suspected of "administrative irregularities in contracting companies for the distribution of gasoline," the prosecutor's office said. The news follows last week's arrest of his sister, oil ministry official Nubia Parada, in charge of overseeing the domestic fuel market, on suspicion of corruption. Intelligence officials arrested Jose Luis Parada earlier on Monday at an air base in the state of Zulia near the Colombian border. Jose Luis Parada previously ran PDVSA Servicios, which provides services to the company's oilfields. (Reuters,


Antigua wants Venezuela to buy stake in Oil Company

Antigua and Barbuda Prime Minister Gaston Browne has held talks with President Nicolas Maduro about Caracas’ becoming a shareholder in the state-owned West Indies Oil Company. Browne “invited Venezuela to take up a stake in WIOC” and to work with Antigua and Barbuda “as majority shareholder in transforming WIOC into a key distribution center for petroleum products in the Eastern Caribbean,” according to a statement released Friday. “I was impressed by the positive reaction of the Venezuelan president to our proposals,” Browne said. (Latin American Herald Tribune,


Ruling in dispute with Venezuela compensates ExxonMobil's losses

Oil company ExxonMobil managed to limit the negative impact of the slump in oil prices in 2014, thanks to higher earnings from chemical business and exceptional revenue from a favorable arbitration ruling for expropriated assets in Venezuela. In the fourth quarter, ExxonMobil's profits dropped 21.3%, totaling US$ 6.5 billion, a decline compared to the same period the previous year. However, the company reported earnings of US$ 1.56 per share against the expected US$ 1.34 per share last year. The drop in oil prices caused losses worth US$ 2 billion, ExxonMobil explained in a communiqué. (El Universal,


Jesse Chacón says government will invest US$ 4.9 billion in electric system

Jesse Chacón, Minister of Electric Energy and President of the National Electric Corporation (CORPOELEC) claims that VEB 4.29 billion (US$ 676.41 million) plus US$ 4.9 billion is to be invested to enhance the National Electric System (SEN), with the addition of more that 1,800 megawatts (Mw) of generating capacity and the expansion of transmission networks. "This year, five large works are expected to be ready," says Chacón. "It is a large investment as part of a constant work the government has been executing, and consolidated efforts," her added. (El Universal,



Economy & Finance


Stock exchanges start testing new FOREX platform

Stock exchanges have started trial runs to launch a new foreign exchange platform with a free floating rate, the third mechanism under the foreign exchange controls currently in force. Ricardo Montilla, president of the National Association of Stock Exchange Operators. He said there will be "no fixed price but free fluctuation of supply and demand which will determine price". Cesar Atencio, President of the Exchange House Association, believes the third market could be operating next week, and that there will be no official controls except that all transactions will be authorized by the Central Bank. Montilla added that 36 stock exchange operators met with Finance Minister General Rodolfo Marco Torres and Central Bank President Nelson Merentes, to discuss the new system's preliminary conditions. Government officials have said that the new mechanism would work like the currency swap market of public securities which operated until 2010, when it was discontinued by the late President Hugo Chávez. (El Universal,; and more in Spanish: El Nacional;; El Universal,;


U.S. companies face billions in Venezuela currency losses

At least 40 major U.S. companies have substantial exposure to Venezuela’s deepening economic crisis, and could collectively be forced to take billions of dollars of write downs, a Reuters analysis shows. The companies, all members of the S&P 500, and including some of the biggest names in Corporate America such as autos giant General Motors and drug maker Merck & Co Inc, together carry at least US$ 11 billion of monetary assets in the Venezuelan currency, the bolivar, on their books. The official rate is at 6.3 bolivars to the dollar and there are two other rates in the government system – known as SICAD 1 and SICAD 2 – at about 12 and 50. The black market rate, though, was at about 190 bolivars to the dollar on Sunday.  The problem is that the dollar value of the assets as disclosed in many of the companies' accounts is based on either the rates at 6.3 or 12 and only a limited number of transactions are allowed at those rates. The assets would be worth a lot fewer dollars at the 50 rate in the government system and the dollar value would almost be wiped out at the black market rate. (Reuters,


Central Bank claims international reserves rose US$ 1.869 billion in one day

Venezuela's Central Bank is reporting that international reserves went from US$ 20.626 billion on January 28 to US$ 22.495 billion on January 29. (Ultimas Noticias,


15% increase of Venezuelan minimum wage and pensions to Bs.5,634.47 came into effect yesterday February 1, as announced by Nicolás Maduro on January 21. (Veneconomy,


Government expenditures grew 53% in 2014

Both wages and other needs of the official bodies pushed government expenditure here up in 2014.

Figures from the Ministry of Finance reveal that last year the Treasury disbursed VEB 955.9 billion (US$ 150.5 billion), up 53% from 2013, when VEB 624 billion (US$ 98.27 billion) were spent. Due to higher expenditures over the past years, the fiscal gap has soared. In 2013 it was 16.9% of GDP. (El Universal,



Politics and International Affairs


US rejects accusations that Vice President Biden conspired against Venezuela

The United States has rejected as "patently false" the claims made by President Nicolas Maduro that US Vice President Joseph Biden conspired to overthrow him. Maduro had claimed that Biden had tried to incite the overthrow of the Venezuelan government during a Caribbean energy summit hosted by the American vice president in Washington last month. According to Maduro, Biden told to the leaders of Caribbean nations that the government's days were numbered and it was time they abandon their support. “The imperial power of the North has entered a dangerous phase of desperation and they have gone on to speak to governments of the continent to announce the overthrow of my government. I accuse U.S. Vice President Joe Biden of having personally talked with presidents and prime ministers” about it, Maduro said at a rally. He made the same accusation on Friday but had conceded that he was willing to give U.S. President Barack Obama the benefit of the doubt on his involvement in the alleged plot. Biden's office quickly retorted that the accusations made by Maduro "are clearly part of an effort to distract from the concerning situation in Venezuela, which includes repeated violations of freedom of speech, assembly, and due process." (DW,; Latin American Herald Tribune,


US slaps visa restrictions on unnamed Venezuelan officials

The United States has imposed visa restrictions on unnamed current and former Venezuelan officials involved in alleged human rights abuses and on people believed responsible for public corruption in the oil-exporting nation. The move, which was announced by the U.S. State Department and could affect immediate family members of those  targeted, is the latest sign of the strained relations between Washington and Caracas. "We are sending a clear message that human rights abusers, those who profit from public corruption, and their families are not welcome in the United States," the State Department said in a brief statement, saying it would not identify the targets of its action because of U.S. visa confidentiality regulations. President Nicolas Maduro reacted angrily, saying he would write a letter to Obama over what he called an attempt to violate Venezuela's national sovereignty. He argued that U.S. policy toward Venezuela has been kidnapped by "irresponsible, imperial forces that are putting the United States on a dead-end" in its relations with Venezuela and the broader region.  (Reuters,; Latin American Herald Tribune,; El Universal,; Star Tribune,


Regime arrests drugstore chain executives and other businesses,

The government detained executives of the FARMATODO drugstore chain and their 167 stores were “intervened” after being accused by President Nicolás Maduro of reducing the number of employees working on cash tills in order to create queues and "annoy the Venezuelan people" and whip up anger with the socialist government. Barely three days earlier, a letter of intent to guarantee medicine supplies and other products had been signed between Vice President Jorge Arreaza top representatives from FARMATODO, FARMAHORRO and LOCATEL. Maduro later said the company "should remain in the hands of its management". He then personally ordered the intervention of the 39 store DÍA A DÍA market chain operating in poorer neighborhoods and the arrest of its management, as well as of a beef distribution firm in Falcón state, which he asked Captain Diosdado Cabello, President of the National Assembly, to personally supervise. (Reuters,; BBC News;; Veneconomy,;; and More in Spanish: El Universal,; El Mundo,; El Nacional;; Diario 2001,; Ultimas Noticias,;; AVN;ósito-supermercado-día-día;árnica-2005-vendía-carne-pollo-y-pescado-sobreprecios-hasta-1000;árnica-ocupada-falcón-será-transformada-para-estar-al-servicio-del-pueblo)


Maduro announces future actions to solve shortages

Nicolás Maduro claims 1,000 State PDVAL’s grocery stores will be set up in all the slums in the country to “guarantee food for the people.” He says he has already authorized the funds and the construction of said facilities which will have to be ready “this very month.” (Veneconomy,


Defense Minister accuses local media of "causing uneasiness"

Defense Minister General Vladimir Padrino López, has defended his resolution to allow troops to use firearms to control protests in the event of "deadly risk situations." Padrino questioned the work of "some media outlets," which have been "taking out of context" excerpts of the resolution to "cause uneasiness among the Venezuelan population."
(El Universal,


Capriles asks army not to use firearms in demonstrations

Opposition leader and governor of Miranda state Henrique Capriles has urged the military to ignore a government resolution allowing them to use firearms to suppress demonstrations in the country. "Demonstrations must not be broken up with bullets, but with water, tear gas. I request the military to ignore the resolution and I ask: do you want to become unpopular and be linked to such a disaster?" says Capriles. He said the resolution is a maneuver by President Nicolás Maduro's government to divert attention away from the problems of Venezuela. (El Universal,


Machado warns that Venezuela risks a humanitarian crisis

Ousted opposition legislator María Corina Machado believes that if Venezuela continues in the direction it is going "we are running the risk of a humanitarian crisis, because the people are hungry, public health has collapsed and income is not sufficient. We must react and face the fact that a change of government is the only way to recover". More in Spanish: (El Universal,; El Nacional;


Nine out of ten Venezuelans oppose devaluation, six out of ten support adjusting gasoline prices

According to polls taken by HINTERENLACES - which some consider pro government - nine out of every ten Venezuelans oppose another "devaluation", six out of ten agree the government should "freeze the price of food", eight out of ten support raising wages, and six out of ten support an increase in the price of domestic gasoline. More in Spanish:  (El Universal,; El Mundo,; Ultimas Noticias,


Running out of time: Dimming prospects for reform in Venezuela

In the absence of new loans from new sources, Venezuela’s government is rapidly running out of resources. A Wall Street investment bank recently calculated that, even under extremely generous assumptions about revenues and one-time sales of government assets such as CITGO, Venezuela would still be short US$ 7 to 8 billion in foreign exchange in 2015. With almost no savings to fall back on during the present crisis and little access to new loans, Venezuela will have to look to cut spending and increase revenues. If oil prices remain at low levels during 2015, there are really only two options for Venezuela: seek a traditional bailout with the assistance of international financial institutions or undertake some form of default. President Maduro has so far ruled out going to the IMF for support. The alternative is that he will eventually be forced to default on Venezuela’s international debt obligations. To minimize the amount of international assets that might be seized by creditors in the event of a default, Venezuela would be likely to shift its exports onto leased tankers. It would also be likely to require buyers to take delivery of product while it is still in its home ports. CITGO, which is wholly owned by the Venezuelan government, would be at risk in this scenario. Even a partial default, though, would mean further economic hardship for Venezuelans, greater scarcity and deeper economic contraction. Any successful reform will require that Venezuelans achieve a degree of political and social consensus that they do not presently possess. This means dim prospects for pulling back from the abyss, and an increased likelihood of further political and social turmoil in this troubled nation. (Brookings,


Nisman notes allege Venezuelan hand in Iran's Buenos Aires bombing cover-up

The ongoing investigations and fast-paced developments surrounding the death of Argentinean prosecutor Alberto Nisman have brought forth the alleged involvement of a Venezuelan official. In the accusation Nisman filed before his death — an alleged draft of which was published in Argentinean daily Clarín — the prosecutor wrote that Venezuela’s then-ambassador to Argentina, Roger Capella, had in 2006 contributed to the cover-up of the 1994 AMIA terrorist attack. According to Nisman’s evidence, the diplomat helped foment protests against the arrest of Iranian suspects ordered by the Argentinean judiciary. Argentinean government chief of staff Jorge Capitanich departed from usual procedure during a morning press conference on January 2, when he shredded several pages of local newspaper Clarín, claiming that its coverage of Nisman’s accusations was “not truthful.” (Panampost,


The Caribbean faces the challenge of oil independence

Energy independence in the Caribbean could take a decade. In the worst scenario, however, it could not consolidate in some nations. In fact, oil provides 90% of the energy consumed in the region, and Venezuela's subsidy remains of the essence. Cuba, for instance, has embarked on getting offshore oil and gas. For this reason China, with the help of Venezuela, has invested US$ 5 billion in the initiative. For its part, Antigua and Barbuda is willing to upgrade its terminal of oil byproducts in West Indies Oil Company for re-export in the Caribbean. While some Caribbean nations are the recipients of investments for refineries and welfare (in 2013, Pdvsa had 13 joint ventures in 10 Caribbean countries), some others open their markets to the business of renewable energy. (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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