July 28, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• 60,000 tons of white corn from Mexico for state agency CASA
• 30,000 tons of raw sugar from Brazil for CASA.
• Over 16,852 tons of soy oil from Aceitera General Deheza and Cargill Saci for ALIBAL and CARGILL Venezuela.
• 12,000 tons of soy oil from Argentina for Consorcio Oleaginoso Portuguesa (COPOSA).  

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Gobierno-Nacional-recibe-mas-de-90-mil-toneladas-de-alimentos-2470610/2015/07/27/565498)

 

Government imports 27,600 tons of coffee to meet scarcity

Víctor Pérez, who heads the coffee section of the national agricultural association FEDEAGRO, reports the government has imported some 27,600 tons of coffee from Nicaragua and Brazil in order to meet scarcities. He says this volume could cover 5 months of consumer demand under norma conditions. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/industrias/importan-600-mil-quintales-de-cafe-para-paliar-las.aspx#ixzz3hBELZzoB; El Nacional; http://www.el-nacional.com/)

 

 

Logistics & Transport

 

AVIOR Airlines launching flights Valencia to Bogota and Medellin in Colombia tomorrow. Its marketing vice president Gibson Preziuso said there will be five weekly flights to each destination. Tickets will be Bs.60,000-80,000. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44799&idc=3)

 

Domestic flights are down 30% in the past 16 months, according to José Antonio Yapur, head of the Tourism Council. He says the number of flights are down to key vacation destinations such as Margarita, Carúpano, Canaima, Coro, Los Roques and Mérida. (El Nacional; http://www.el-nacional.com/)

 

 

Oil & Energy

 

Venezuela seeks light crude contracts to make blends -sources

Petroleos de Venezuela (PDVSA) has asked oil suppliers to submit offers to sell the nation up to 70,000 barrels per day of ultralight sweet crudes through contracts of one to five years. If successful, the move would mark the most definitive step state-owned PDVSA has taken to obtain longer-term supplies of ultralight crude, which it needs to use as a diluent for its growing output of extra heavy oil. PDVSA bought some 4 million barrels of Algeria's Saharan Blend light crude from October 2014 through January of this year under an agreement with state-run Sonatrach. That deal ended after disagreements over prices and delivery terms, forcing PDVSA to resume production of less attractive blends made with imported naphtha. (Reuters, http://www.reuters.com/article/2015/07/27/oil-venezuela-imports-idUSL1N1041K620150727)

 

Venezuelan oil continues to "weaken"

Venezuela's Ministry of Petroleum and Mining reports that the price of Venezuelan oil continues to "weaken" in the international market. The Ministry points out that during the week of July 13-17 Venezuelan oil averaged US$ 49.89 per barrel, while in the week of July 20-24 it ended at US$ 47.89, losing US$ 2 per barrel. "The price of oil continued to weaken during the week amid concerns grounded on oversupply of crude oil on the main markets," the Ministry noted. (El Universal, http://www.eluniversal.com/economia/150727/venezuelan-oil-continues-to-weaken)

 

Guyana considers alternatives as Venezuela oil program wobbles

Guyana is considering energy alternatives to the PETROCARIBE program as Venezuela fails to meet export quotas and tensions flare between the neighboring countries. “We are actively considering other options,” says Guyanese Finance Minister Winston Jordan. The small South American nation receives about half its fuel supply from the PETROCARIBE program, but fears the agreement could be affected by a diplomatic spat with Venezuela over a longstanding border dispute, Jordan said. Guyana currently receives about 5200 barrels of fuel a day under the PETROCARIBE program, though Venezuela has been unable to meet some delivery quotas, he said. (Bloomberg, http://www.bloomberg.com/news/articles/2015-07-24/guyana-considers-alternatives-as-venezuela-oil-program-wobbles)

 

Spain’s REPSOL said to weigh sale of assets including Venezuela

REPSOL is considering selling assets in countries including Venezuela as the Spanish oil company seeks to reduce debt after its US$ 13 billion purchase of Talisman Energy Inc. last year, people familiar with the matter said. As part of its plan to reduce peripheral assets, Madrid-based REPSOL may also look at divestments in Alaska, Bolivia and the Gulf of Mexico. No final decision has been made and the company is still deciding which units to sell, or whether to keep the assets, they said. (Bloomberg, http://www.bloomberg.com/news/articles/2015-07-23/spain-s-repsol-said-to-weigh-sale-of-assets-including-venezuela)

 

PETROVIETNAM ponders investments in Orinoco Oil Belt

A delegation from Vietnamese state-run oil company PetroVietnam visited areas of the Ayacucho Division of the Orinoco Oil Belt in Anzoátegui state, northeast Venezuela. The delegation was headed by the Vice-President of PETROVIETNAM, Cao Huu Binh. Part of the board of the Ayacucho Block received the delegation during the visit to the Basic Unit of Production Construction (UBCP) and the PDV-71 drill. (El Universal, http://www.eluniversal.com/economia/150727/petrovietnam-ponders-investments-in-orinoco-oil-belt)

 

 

Economy & Finance

 

Venezuelan currency enters free fall mode

Having tumbled beyond the 500 per dollar mark in the black market at the start of the month, and then the 600 mark just eight days later, the bolivar is now within sight of crashing through the 700 barrier. The so-called bolívar "fuerte" - or strong bolivar - hit a new low of 683.26 per dollar on the black market last week, according to a rate tracking website. This means the bolivar's value on the black market is now less than a hundredth of the main government rate of 6.3 bolivares to the dollar - and underscores the growing inability of Nicolas Maduro, Venezuela's president, to stabilize the country's fast deteriorating economy. The currency has lost 43% of its value over the past month, as a fresh dive in global oil prices squeezes government finances and drains foreign reserves. It is worth a thousandth of what it was in 1999, when Hugo Chávez came to power. Meanwhile, price increases are seen by economists to be approaching hyperinflation territory as the government cranks up the printing press to pay its expenses. Most economists reckon that the inflation rate is already 120% a year (the central bank stopped publishing price data, so no one is sure). Some expect it to reach 200% by the end of 2015. The bolivar's implosion has been wreaking havoc on big multinationals that are still doing business in the country. American Airlines and Coca-Cola FEMSA, the Mexican bottler, became the latest to sound the alarm last week. The US airline, which has already been cutting its service to Venezuela, warned that there's a risk of further losses on the US$ 629 million in cash it has in bolivars. FEMSA meanwhile said a move to reduce the value of its revenue from Venezuela by 95% has wiped out its sales and profit gains for the year to date. (Financial Times, http://www.ft.com/fastft/366271/venezuela-bolivar; The Economist, http://www.economist.com/blogs/freeexchange/2015/07/chinas-wild-stockmarket?fsrc=permar|image1)

 

Harvard Professor now says Venezuela won’t escape default in ’16

Harvard University Professor Ricardo Hausmann last year questioned Venezuela’s decision to keep paying bondholders as the country sank deeper into crisis and suggested it stop honoring the debt. Now, he’s saying Venezuela will have no choice but to default next year. Hausmann’s comments come as a deepening collapse in oil prices and a shortage of dollars stoke concern Venezuela is fast running out of money to stay current on debt. The country’s bonds plunged last year after Hausmann, who served as Venezuelan planning minister in 1992 coup, raised the specter of default, saying he found “no moral grounds” for the government to pay debt at a time when Venezuelans were facing shortages of everything from basic medicine to toilet paper. (Bloomberg, http://www.bloomberg.com/news/articles/2015-07-27/harvard-professor-now-says-venezuela-won-t-escape-default-in-16)

 

Venezuela bonds worth holding to Morgan Stanley as reserves fall

Venezuela is blowing through its reserves at a pace of about US$1.6 billion a month, Morgan Stanley estimates. Even so, the country can probably hold out long enough that investors can still profit from holding the government’s bonds. President Nicolas Maduro needs to start selling assets urgently, writes strategist Robert Tancsa. He thinks the country is unlikely to default this year after local buyers bought up large chunks of the Petroleos de Venezuela bonds coming due in the fourth quarter. Morgan Stanley recommends holding the country’s bonds, especially Petroleos de Venezuela SA’s bonds due in 2022, which yield 34%. Prices are so low that the odds of a default are arguably priced in, Tancsa wrote. The oil company is a better credit than the sovereign, he wrote. (Bloomberg, http://www.bloomberg.com/news/articles/2015-07-24/venezuela-bonds-worth-holding-to-morgan-stanley-as-reserves-fall)

 

Venezuela’s fiscal deficit will be $20.2 billion by the end of 2015 if there are no more cuts in imports and other adjustments are not made, according to estimates from Bank of America Merrill Lynch. The financial institution explained that even if Venezuela can sustain this for two years, this economic course is “clearly unsustainable.” In a year, imports have been cut by 24.1%. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44803&idc=2)

 

Pro-government legislators propose dual FOREX rate

Rodrigo Cabezas, Vice-President for Foreign Relations of the ruling United Socialist Party of Venezuela (PSUV), is the first government ally to suggest the idea of a foreign exchange simplification and a dual foreign exchange rate. Other pro-government legislators have supported the initiative, including José Alfredo Ureña, Jesús Faría, and Alexander Dudamel. Ureña, a member of the National Assembly Finance Committee, says that a dual foreign exchange rate could be adopted in the upcoming days, as the current system in place creates market distortions. (El Universal, http://www.eluniversal.com/economia/150727/pro-government-deputies-propose-dual-forex-rate)

 

Central Bank drains liquidity by VEB 25.90 billion

As part of its monetary policy, the Central Bank of Venezuela (BCV) has been combining liquidity-absorbing operations with the issuance of an investment instrument designed to cut excess liquidity that could put counterproductive pressures on the economy. The amount involved in the operations is VEB 25.90 billion (US$ 4.07 billion at the official exchange rate of 6.30 VEB per US dollar.) (El Universal, http://www.eluniversal.com/economia/150727/venezuelas-central-bank-drains-liquidity-by-veb-2590-billion)

 

 

Politics and International Affairs

 

Capriles meets OAS Secretary General to seek OAS observers in elections, Maduro slams OAS

Henrique Capriles, two-time Venezuelan opposition presidential candidate, has met with OAS Secretary General Luis Almagro, to present a "proposal of an OAS election observation mission in the upcoming parliamentary elections and to also explain the human rights and economic situation”. Almagro reported he met with Capriles "using Venezuela's constitution and institutions as the axis". Venezuela´s electoral authority has invited experts from the Union of South American Nations, or UNASUR, to be part of a so-called “electoral accompaniment” and has not responded to requests to include observers from other organizations. But President Nicolás Maduro later said Almagro must be asked "whether he will work for Latin America and the Caribbean or for Washington". He added that "The OAS is 67 years old and useless" and said there is a "jinx" on the Secretary General's office that "turns it into a den of conspiracy" against popular movements. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2393125&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/150727/oas-observation-requested-in-december-election; and more in Spanish: El Nacional; http://www.el-nacional.com/; Infolatam, http://www.infolatam.com/2015/07/27/maduro-ataca-a-la-oea-y-pide-a-eeuu-colombia-y-al-papa-apoyar-plan-de-alba/)

 

Regime bars foreign lawmakers’ visit to jailed opposition leader

Authorities of the jail near Caracas where Venezuelan opposition leader Leopold Lopez is being held have refused to allow a group of foreign lawmakers to visit him. “I wish to tell the Venezuelan people and above all the political leaders who are unjustly imprisoned that we will not abandon them in this struggle... we will press on,” said Spanish Sen. Ander Gil. The group, which also included Gil’s colleagues Dionisio Garcia, Iñaki Anasagasti and Josep Maldonado, along with Uruguayan Sen. Pablo Mieres, was frustrated in its attempt to see an opposition politician behind bars. The foreign legislators, accompanied by Lopez’s wife, Lilian Tintori, were in possession of a document with the seal of the Interior Ministry allowing them to visit opposition leaders. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2393068&CategoryId=10717)

 

Chavismo comes in third place in poll

A recent poll by IVAD'S VENEBARÓMETRO shows the opposition holding first place in voter preference, with 32.6%, independents taking 27.6%, and pro regime "chavistas" coming in third with 20.8% support. The remaining voters said they were undecided. Given a choice between two options, opposition support rises to 41.8%, "chavistas" to 22.1% and undecided voters show at 20.6%. The remaining 15.6% say they will not vote. (El Nacional; http://www.el-nacional.com/)

 

MUD: This is the best electoral structure we have had in 16 years

Jesús Torrealba, Secretary General of Venezuelan opposition coalition Unified Democratic Conference (MUD), says the opposition alliance has the best electoral structure in the last 16 years for the upcoming parliament vote in December "not only to protect the votes where it is clear that we are a majority" but also in rural balloting centers with few polling stations "because there is where tricks are focused, there is where, statistically speaking, we have seen balloting stations with an irregular behavior." Torrealba stressed the MUD had enough poll workers to accomplish that, and that, since work is being done five months ahead of the election, opposition electoral witnesses will be supported by the residents of rural areas. He remarked that people who voted for late president Hugo Chávez in the past would not vote for the current government. (El Universal, http://www.eluniversal.com/nacional-y-politica/150727/mud-this-is-the-best-electoral-structure-we-have-had-in-16-years)

 

Spanish government summons Venezuelan ambassador to Madrid

The Spanish Ministry of Foreign Affairs has called in Venezuela´s ambassador to Spain Mario Ricardo Isea to present a formal complaint over recent remarks by President Nicolás Maduro against Spanish Head of Government Mariano Rajoy, whom Maduro "has labeled by publicly and repeatedly as an assassin". Back in April, Madrid also summoned Ambassador Isea following President Maduro's statements accusing Rajoy of being a "racist." Spain described those remarks as "intolerable." (El Universal, http://www.eluniversal.com/nacional-y-politica/150727/spanish-govt-summons-venezuelan-ambassador-to-madrid)

 

US blacklists Venezuela for human trafficking for the second time

For the second year in a row, the United States Department of State kept Venezuela on its blacklist of trafficking in persons, by considering that Caracas has no met the minimal standards and does not engage in "significant efforts" to fight this crime. Venezuela joins Russia, Thailand, Libya, Algeria, Syria, Yemen, North Korea, and other 16 countries on the lowest ranking, "tier 3," according to the assessment conducted by the US Department of State. (El Universal, http://www.eluniversal.com/nacional-y-politica/150727/us-blacklists-venezuela-for-human-trafficking-for-the-second-time)

 

The US calls for peaceful settlement of Venezuela-Guyana dispute

The United States government says it is "imperative" that the territorial dispute between Venezuela and Guyana be settled in a "peaceful" manner and in compliance with international law. A US Department of State spokesperson, who asked not to be named, explained that any effort to solve that border dispute had to be undertaken through peaceful measures consistent with international law, either through the United Nation process or any other mechanisms. (El Universal, http://www.eluniversal.com/nacional-y-politica/150727/the-us-calls-for-peaceful-settlement-of-venezuela-guyana-dispute)

 

Maduro to meet with UN Secretary General Ban Ki Moon over Guyana dispute

President Nicolás Maduro plans to travel to New York to meet with UN Secretary General Ban Ki Moon over what his government calls Guyanese "aggressions" in the Essequibo disputed territory. More in Spanish: (AVN; http://www.avn.info.ve/contenido/presidente-maduro-sostendr%C3%A1-reuni%C3%B3n-especial-secretario-general-onu; El Universal, http://www.eluniversal.com/nacional-y-politica/150728/maduro-viaja-a-la-onu-para-exponer-litigio-con-guyana)

 

 

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.