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.

Sunday, March 15, 2015

March 13, 2015


International Trade

 

Cargo that has arrived at Puerto Cabello:

  • Over 1,200 tons of paperboard from Tetra Pak for its local subsidiary
  • Over 1,000 tons of oats from Inmobiliaria Bretana Limitada and Avenatop S.A. for Provencesa S.A.
  • 1,000 tons of dried fish meal from Bananitaexport S.A. for Alimentación Balanceada C.A. (Alibalca).
  • 576 tons of monocalcium phosphate from Top Shipping Systems for its local subsidiary
  • Over 300 tons of auto parts from Ford Motor for its local subsidiary
  • Over 72 tons of fresh pears from Exportadora Atlas for the Foreign Trade Corporation (CORPOVEX)
More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-mil-toneladas-de-avena-llegaron-al-puerto-2367314/2015/03/10/494280; Notitarde; http://www.notitarde.com/La-Costa/Mas-de-300-toneladas-de-autopartes-llegaron-al-puerto-2368115/2015/03/11/495501)

 

Port charges will use Tax Units, not dollars

The Aquatic and Air Transport Ministry has published new rates on port services which will be charged in Tax Units, not US dollars as previously announced.  More in Spanish: (Ultimas Noticias: http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/tarifas-portuarias-se-calcularan-en-unidades-tribu.aspx#ixzz3UG55KPtK; El Nacional; http://www.el-nacional.com/)

 

 

Oil & Energy

 

US names Andorra Bank for US$ 2 billion money laundering for Venezuela's PDVSA and criminal organizations

The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) today named Banca Privada d'Andorra (BPA) as a foreign financial institution of primary money laundering concern, based on information indicating that, for several years, high–level managers at BPA have knowingly facilitated transactions on behalf of third–party money launderers acting on behalf of transnational criminal organizations. This includes the activity of a second high–level manager at BPA in Andorra who accepted exorbitant commissions to process transactions related to Venezuelan third–party money launderers. This activity involved the development of shell companies and complex financial products to siphon off funds from Venezuela's public oil company Petróleos de Venezuela (PDVSA). BPA processed approximately US$ 2 billion in transactions related to this money laundering scheme. Spain and Panama promptly intervened BPA affiliates in both nations. (FinCEN: http://www.fincen.gov/news_room/nr/html/20150310.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2377827&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/150312/complaint-related-to-banca-privada-dandorra-involves-pdvsa; and more in Spanish: El Nacional; http://www.el-nacional.com/)

 

John Kerry says Venezuela turmoil threatens humanitarian crisis if PETROCARIBE fails

The US Secretary of State has warned Venezuela that if the political turmoil in the country leads to the suspension of the subsidized PETROCARIBE oil program "we could end up with a serious humanitarian crisis in our region". Venezuela is having to rethink the PETROCARIBE subsidized oil arrangement in order to finance its shrinking imports, rebuild foreign reserves and avoid defaulting on its debt. Last January, the US government held a Summit on Energy Security in the Caribbean, in which it urged regional powers to diversify their energy sources, rely more on private investment and reduce their dependence on PETROCARIBE. (International Business Times: http://www.ibtimes.co.uk/john-kerry-venezuela-turmoil-threatens-humanitarian-crisis-if-petrocaribe-oil-program-fails-1491681)

 

Venezuela's loss is Africa's gain in Latam crude game

Shrinking crude exports from Venezuela to its neighbors has allowed African oil producers to gain a foothold among Latin American buyers, and sales to one of the world's few regions with strong demand will keep growing. Only months ago, African producers were scrambling to find new clients in the Western Hemisphere, having largely been pushed out of the U.S. market by the onshore shale oil revolution. African exports are also growing as Mexico and Brazil lack spare capacity to increase sales to neighbors. U.S. companies, which dominate refined products trade in the Americas, cannot export crude because of a decades-old ban imposed by Washington. (Reuters, http://www.reuters.com/article/2015/03/12/us-oil-latam-africa-analysis-idUSKBN0M81RW20150312; El Universal, http://www.eluniversal.com/economia/150312/africa-displaces-venezuela-as-oil-exporter)

 

 

Commodities

 

VENALUM forced cut to metal quality

Venezuela's state-controlled smelter VENALUM, the largest primary aluminum smelter in Latin America, will no longer be able to meet purity standards due to its deteriorating financial situation, according to a company document seen by Reuters. VENALUM has installed capacity to produce 430,000 tons of aluminum per year but output in 2014 fell to 100,000 tons, its workers estimate, after a run of labor strife and as under-investment leaves the refinery technologically outdated. Japanese companies Showa Denko, Kobe Steel Ltd , Marubeni Corp, Sumitomo Chemical Co Ltd , Mitsubishi Materials and Mitsubishi Aluminum own a 20% share of the state-run company and have been trying to shed their stake since 2009 due to a dispute with the government over selling prices. It costs around US$ 4,000 to produce a ton of Venezuelan aluminum, double the international market rate. VENALUM once exported 75% of its production to the United States, Europe and Japan. But with output in free-fall since 2009, it has slashed shipments and the country is now a net aluminum importer. (Reuters: http://af.reuters.com/article/idAFL1N0WE2RM20150312?pageNumber=2&virtualBrandChannel=0)

 

 

Economy & Finance

 

Venezuela is facing US$ 3.129 billion debt repayment in March, April and May

The government and PDVSA must make important bond payments for up to US$ 3.129 billion during March, April and May. On March 16, Global 2015 bond comes due for US$ 1.450 billion, plus interests on Global 2018 and PDVSA's 2027 in April. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/venezuela-enfrenta-pagos-de-deuda-en-marzo--abril.aspx#ixzz3UG7P1YPQ)

 

Venezuela’s US$ 5.9 billion cash burn raises bond concerns

Venezuela has already blown through almost of all the US$ 5.9 billion in new financing it managed to scrounge up this year. And while it will probably use US$ 1.3 billion of the money to pay bonds coming due on Monday, the cash-strapped country’s spending underscores why derivatives traders say there’s a better than 50 percent chance it will default within a year. After using up the money it squeezed out of its U.S. oil-refining unit and spending the payment it received from Dominican Republic for crude sales last month, Venezuela’s foreign reserves now stand at US$ 22.1 billion, unchanged from the beginning of 2015. That’s far short of the US$33 billion in financing that Barclays Plc estimates the country needs this year with oil prices around US$ 50 a barrel. (Bloomberg, http://www.bloomberg.com/news/articles/2015-03-11/venezuela-s-5-9-billion-cash-burn-raises-bond-concerns)

 

Owens-Illinois wins US$ 455 million award for Venezuela takeover

Owens-Illinois, Inc., a maker of glass containers, was awarded more than US$ 455 million for the nationalization of two of its plants in Venezuela. A tribunal from the International Center for Settlement of Investment Disputes awarded Owens more than US$ 372 million plus interest at an annual rate of LIBOR plus 4%. Interest since the Oct. 26, 2010 expropriation exceeds US$ 84 million.  As the tribunal found, Venezuela expropriated very valuable assets, which were the result of more than half a century of hard work and commitment by O-I employees and for which the country now has to compensate O-I,” Al Stroucken, O-I’s chairman and chief executive officer, said in the statement. Venezuela says it will challenge the award. (Bloomberg, http://www.bloomberg.com/news/articles/2015-03-12/o-i-awarded-455-million-by-icsid-for-venezuela-expropriation; Reuters, http://www.reuters.com/article/2015/03/12/owensillinois-venezuela-idUSL4N0WE4ON20150312; El Universal, http://www.eluniversal.com/economia/150312/complaint-related-to-banca-privada-dandorra-involves-pdvsa; and more in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-impugnara-sentencia-de-ciadi-a-favor-de-.aspx#ixzz3UG3boISA; El Nacional; http://www.el-nacional.com/)

 

 

Politics and International Affairs

 

Maduro seeks decree powers to face U.S. 'imperialism', blames López for US decision

President Nicolas Maduro is seeking special decree powers for six months from Venezuela's parliament in response to new U.S. sanctions, drawing opposition protests of a power-grab. If as expected the government-controlled National Assembly approves his request for an "Enabling Law", it would be the second time he has gained these expanded powers since winning election in 2013. Maduro didn’t specify the powers that the law would grant him or say exactly how he would apply them. He also announced that the military would stage exercises around Venezuela on Saturday to ensure that the “Yankee boot” can never touch the country. In a speech to followers, Maduro pointed to Leopoldo López as one of those responsible for US sanctions: "For their fault Venezuela has been called a threat to the United States..They declare a nation a threat to save one of their agents who is a repeated murderer". Opponents said Maduro will surely use any additional powers to quash dissent. Several opposition leaders said they worried the expanded powers would allow Maduro to override the results of legislative elections expected late this year. Opposition leaders slammed Maduro, saying he was using the worst flare-up with Washington of his nearly two-year rule to justify autocratic governance, sidetrack parliament and distract attention from Venezuela's grave economic crisis. "Nicolas, are you requesting the Enabling Law to make soap, nappies and medicines appear, to lower inflation?" satirized opposition leader Henrique Capriles. "It's another smokescreen."  Maduro may be calculating that nationalist sentiment will rally strained support among the traditional "Chavista" power-base of Venezuela's poor, and unite ruling Socialist Party factions ahead of a parliamentary election later this year. The National Assembly requires two thirds votes to approve the Enabling Law once a formal request is received. In the past, both Maduro and Chavez have received speedy approval of the Enabling Law. Some analysts say the U.S. sanctions could be a gift to Maduro in the short term, providing him with an excuse to dwell on his conflict with Washington. (The Washington Post: http://www.washingtonpost.com/world/the_americas/venezuela-president-seeks-increased-power-after-us-sanctions/; Reuters: http://www.reuters.com/article/2015/03/10/us-venezuela-usa-idUSKBN0M61JK20150310; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2378139&CategoryId=10717; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43081&idc=1; and more in Spanish:  (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-responsabiliza-a-leopoldo-lopez-por-sancion.aspx#ixzz3UGB9vWq4

 

US Southern Command chief says Venezuela is close to economic "collapse and implosion"

General John Kelly, chief of the US Southern Command, has told the US Senate that Venezuela is near to economic "collapse and implosion". He said President Nicolás Maduro "doesn't need any help" in bringing about his own government's overthrow, and added: "I don't know anyone who wants to take charge of that disaster, but I am certainly not involved in planning any coup". Kelly went on to say: "If (Venezuela) cuts back on social programs and scarcity continues, something that seems inevitable, that could lead to higher tension and protest, which could lead President Maduro to take more repressive action against demonstrators and the opposition." He added that is Venezuela has to cut its support of PETROCARIBE that could "unleash a regional collapse", and added that the US is concerned over Russian intentions of placing ships or bombers in countries such as Cuba, Venezuela and Nicaragua, but sees the as "more a bother than a threat." More in Spanish: (El Universal: http://www.eluniversal.com/nacional-y-politica/150312/comando-sur-de-eeuu-dice-que-venezuela-se-acerca-al-colapso-economico; El Nacional, http://www.el-nacional.com/mundo/Pentagono-rechazo-acusacion-Maduro-golpe_0_590341122.html)

 

Allies throw weight behind Venezuela in row with US

Cuba rallied behind Venezuela, offering its closest ally "unconditional support" after US President Barack Obama authorized new sanctions against officials of the Maduro regime. Ecuador's President Rafael Correa described them as a “a bad joke.”  Bolivian President Evo Morales suggested South American leaders hold an emergency meeting to address the U.S. move. A statement from Argentina’s Foreign Affairs Ministry late on Wednesday condemned the language in Obama’s Executive Order stepping up sanctions on Venezuela. Argentina said the language caused “consternation” and “stupor.” And the 12 foreign affairs ministers of the Union of South American Nations (UNASUR) will meet on Saturday in Ecuador to address the set of measures imposed by the United States on Venezuelan officials. The ministers and Executive Secretary Samper will present a report on the visit the foreign affairs ministers of Brazil, Colombia and Ecuador paid to Caracas last 6 March and the Venezuela's situation. In the meantime, State Department spokeswoman Jen Psaki has denied that the U.S. was working to destabilize Maduro’s government and noted that the U.S. is Venezuela’s largest trading partner. Asked about Maduro’s request for additional powers, she said he “needs to spend more time listening to the views of the Venezuelan people.” U.S. officials have characterized the wording of the Executive Order, specifically labeling the “situation in Venezuela” as a “threat to the national security” of the U.S., as a formality when imposing sanctions. (News Yahoo: http://news.yahoo.com/cuba-gives-unconditional-support-venezuela-against-us-000646002.html; El Universal, http://www.eluniversal.com/nacional-y-politica/150312/ex-president-mujica-says-us-calling-venezuela-a-threat-is-crazy; http://www.eluniversal.com/nacional-y-politica/150312/unasur-ministers-to-discuss-us-sanctions-against-venezuelan-officials)

 

UN says Venezuela has violated international law by not taking measures to prevent mistreatment to protestors and detained Venezuelans", especially Voluntad Popular’s national coordinator Leopoldo López, said part of the report UN Special Rapporteur on Torture Juan Méndez submitted to the UN Human Rights Council in Geneva on Wednesday. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43084&idc=1)

 

European Parliament asks Maduro to free Ledezma and other peaceful opponents

The joint resolution - which received 384 votes in favor, 75 against and 45 abstentions - was backed by popular parties, social democrats, conservatives, reformists and liberals, and calls for "putting an end to political persecution and repression of democratic opposition" and urges Venezuela to cease "censure of media". Leftist legislators voted against. The resolution also asks the European Union to closely follow events in Venezuela. (Infolatam, http://www.infolatam.com/2015/03/13/eurocamara-pide-a-maduro-que-libere-a-ledezma-y-resto-de-opositores-pacificos/)

 

Uruguay called in Venezuelan Ambassador there because of Nicolás Maduro’s “unfriendly” statements in which he criticized Vice President Raúl Sendic, without mentioning him. Sendic had said he had no evidence to back Maduro’s accusations of US meddling in Venezuela. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43076&idc=19

 

US legislators are demanding Ambassador Chaderton's visa should be revoked over comments

A group of US Congress members, headed by Rep. Ileana Ros-Lehtinen, Chair of the Foreign Relations Committee, have asked US Secretary of State John Kerry to revoke the visa of Venezuela's ambassador to the Organization of American States (OAS) Roy Chaderton, following his recent violent comments about his country's opposition. In a Venezuelan TV interview Chaderton compared the "sound" of a bullet going through the "empty" head of an opponent, with that going through the head of a "chavista". He later said his comments were taken out of context: "There is a scandal, with some people even asking (OAS Secretary-General José Miguel) Insulza to dismiss me, something he cannot do," said Chaderton. He explained that his comment about dissenters was marked by "black humor," which he termed "a mistake." (El Universal, http://www.eluniversal.com/nacional-y-politica/150312/roy-chaderton-apologizes-for-remarks-against-the-opposition; and more in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/mundo/introducen-documento-para-pedir-a-kerry-que-revoqu.aspx#ixzz3UGAr2czo; El Nacional; http://www.el-nacional.com/)
 
 
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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