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, September 15, 2015

September 15, 2015

International Trade


Cargo that has arrived at Puerto Cabello:

  • Over 40,000 metric tons of cement for state agency Socialist Cement Corporation
  • Over 12,254 tons of beef and chicken from Brazil for state agency CASA
  • Over 4,282 tons of powdered milk, margarine and chicken from Brazil for state agency CASA
    170 containers with material and equipment for oil and gas exploration, production and refining, as well as supplies and accessories for the marine industry and agriculture, for PDVSA
There are 13 ships at bay waiting to offload cargo, 9 of them carrying bulk, 3 with containers and one carrying general cargo.  More in Spanish: (Noticia al Día,; Bolipuertos,; AVN;; El Universal,; Bolipuertos,; AVN;; Notitarde,;;; Ultimas Noticias,



Oil & Energy


Maduro says time for OPEC to convene heads of state summit

President Nicolas Maduro says it is time for OPEC to convene a heads of state meeting and that he would present the country's proposals to shore up oil prices to the group. Middle East producers from OPEC, however, have pledged to maintain high output in a fight to defend market share against rising competition. So far, they have stuck to their decision despite calls by other OPEC members, such as Venezuela, for the Middle East to cut excessive output. (Reuters,; El Universal,


Venezuela detains three vessels for suspected fuel smuggling

Three vessels suspected of smuggling subsidized fuel from Venezuela's refinery-rich Paraguana peninsula were detained this week by the country's navy, a local commander said. Sources told Reuters that seven people have been arrested for allegedly attempting to smuggle diesel in a tanker owned by state oil company PDVSA. Admiral Andres Gomez, commander of a local navy unit, confirmed tanker 'Negra Hipolita' was found with an excess load of 50,000 barrels of diesel fuel at the Cardon refinery. Two additional vessels, both from Panama, were detained this week by the Venezuelan navy, also on smuggling suspicions, Gomez added. It was not immediately clear when they were apprehended. (Reuters,; El Universal,


Gasoline consumption down 7 million liters per day in bordering regions

Venezuela says it will save US$ 2.5 billion a year, as gasoline consumption in the bordering municipalities of Táchira (southwest Venezuela) and Zulia (west) states has decreased by 7 million liters of gasoline per day, according to the President of state-run oil holding Petróleos de Venezuela (PDVSA), Eulogio Del Pino. Del Pino, who is also Minister of Energy and Mines, says President Nicolás Maduro's order to shut down several border crossings with Colombia on August 19 (in Táchira state) and September 7 (in Zulia state) has helped to clarify the real numbers of gasoline consumption in the area. Due to the shutdown of the Colombia-Venezuela border in Táchira state last August 19, a total of 1.5 million liters of gasoline per day have been prevented from being smuggled into Cúcuta, Colombia, the minister explained. The border shutdown prevents over 260,000 gallons of gasoline from being smuggled into Cúcuta from Venezuela, and gasoline represents 80% of Venezuelan products sold in Cúcuta, the Foreign Office added. (El Universal,


Venezuela to appeal judgment giving PDVSA refinery to CONOCO

Responding to a refinery loss, Venezuelan state-owned oil company PDVSA says it intends to appeal the U.S. federal court ruling upholding ConocoPhillips’ acquisition of its stake in a delayed coking unit at a Texas refinery. PDVSA and Conoco formed a 50-50 joint venture in the late 1990s to operate the unit at the refinery. Phillips 66, which was spun off from Conoco in 2012, currently owns and operates the coking unit and the rest of the Sweeny refinery, located in Old Ocean, Texas. The federal court in New York upheld a ruling last year by the Paris-based International Chamber of Commerce, which found in an arbitration case filed in 2010 that Phillips 66 had sole ownership in the refinery because PDVSA had forfeited its stake by failing to supply a contractually agreed amount of crude. PDVSA received no compensation for its 50% stake in the delayed coking unit based on a calculation in which the dividends it had received were subtracted from its capital contributions. Analysts said its portion of the refinery was worth over half-a-billion. PDVSA is represented by Curtis, Mallet-Prevost, Colt & Mosle, who frequently represent Venezuela and its state-owned oil company. (Latin American Herald Tribune,





PDVAL decreases outdoor food market sales operations due to lack of food

Food scarcity nationwide is even hitting government food distribution operations. PDVAL has had to cut down on the outdoor distribution operations, according to sources close to the organization who report: "Operations used to take place 5 times a week, Tuesday to Saturday, but due to shortages they are now taking place only on Saturdays, since last May". The same source reports that PDVAL warehouses used to distribute an average 13 primary products, and are now down to 5-7. More in Spanish: (El Nacional;



Economy & Finance


Monaldi: The impact of the decline in oil prices on the economics, politics and oil industry of Venezuela

The picture does not look pretty for Venezuela. The macroeconomic crisis will likely get worse for lack of adjustment in an election year. There is even a small probability of hyperinflation and a much higher probability of debt default in 2016. There may be more political instability. The legislative elections should produce a majority for the opposition that could intensify the confrontation and might lead to a push to recall the president in a referendum in 2016–17. Street protests are likely to increase as the economy continues to collapse. The numerous problematic trends in the oil industry have been made worse by low oil prices. However, the new pragmatism in oil policy might lead to some improvement in private investment, but above ground risks could limit its impact. Conventional production would continue falling, so total production is most probably going to remain stagnant in the short term and is highly unlikely to grow significantly in the next two to three years. Extra-heavy production could rise at an increased rate if the current investor-friendly attitude remains in place. In a ten-year horizon production is more likely to increase, particularly if there is a transition to a more credible and stable government, but that potential could remain unfulfilled if political instability remains a serious issue. (Columbia,


FORBES: How does Venezuela compare to the world's worst managed economies?

Outside of Venezuela, around the world, controlling inflation is seen as the primary concern of most central bankers. In the economic crises of the 1970s and 1980s inflation soared in as a series of economic shocks rocked Latin America. Looking at the deleterious effects of these periods of hyperinflation, the region’s central bankers have made stamping out inflation and promoting economic stability their number one priority. Latin America, with its longstanding and heavy reliance on natural resource exports, is remarkably vulnerable to boom and bust cycles as commodity prices rise and fall. Today, successful economies in Latin America focus on responsible macroeconomic management and work to promote economic stability. Even revolutionary leaders such as Evo Morales in Bolivia have adopted conservative macroeconomic management policies and eschewed irresponsible, short-term spending binges in favor of programs designed to create sustainable growth. So, looking at the list of the world’s worst performing economies in terms of inflation management a few things stand out. The fact that Venezuela tops the list should come as no surprise. The nation has become a poster child for macroeconomic mismanagement. President Nicolas Maduro, the unfortunate successor to populist icon Hugo Chavez, has inherited a deeply unbalanced economy, and has resorted to desperate PR stunts such as jailing opposition leaders and blaming inflation on business owners rather than working to address the country’s underlying economic problems. Within Latin America, aside from Venezuela, only Argentina stands out for its struggles to control inflation. With double-digit inflation, Argentina is the only other Latin American economy besides Venezuela that sits alongside economies such as North Korea, Sudan, Syria, Ukraine, and the Central African Republic as one of the world’s worst managed economies. If policymakers in Venezuela are looking for a model to follow, they may want to turn their attention to Mexico, which has transformed from being a heavily protected interventionist economy to a much more open country with a strong industrial base. (Forbes,


Venezuela is in last place in world economic freedom report

For the second consecutive year, Canada's Fraser Institute has placed Venezuela last out of 157 countries that comprise its' 2015 World Economic Freedom Annual Report, with 3.23 points against a worldwide average of 6.86. (Fraser Institute:


BofA Merrill Lynch suggests free floating FOREX system for Venezuela

Venezuela needs to lift foreign exchange controls and move forward towards a free floating foreign exchange system, in conjunction with a macroeconomic stabilization plan, says Francisco Rodríguez, director of Bank of America-Merryl Lynch. "It is not a threat for the country, because it does not have to lose international reserves in defending the foreign exchange rate. In that regard, the foreign exchange convertibility within a free floating exchange regime is the best way to defend the country's resources held in the Central Bank. Lifting foreign exchange controls is not something to be afraid of," says Rodríguez. "The Central Bank could hold a transparent auction for US$ 100 million per day at a foreign exchange rate set by the market," he said. (El Universal,



Politics and International Affairs


Harsh sentence for protest leader a gamble for Venezuela

The stiff sentence handed down to Venezuela's most prominent jailed opposition leader brought a cascade of criticism as President Nicolas Maduro's government continued along a combative path despite a crushing economic crisis, feuds with his neighbors and accusations of authoritarianism. Leopoldo Lopez was convicted of inciting violence during a wave of protests against the country's socialist administration in 2014, and was sentenced to the maximum punishment of nearly 14 years in a military prison. Critics at home immediately said the sentence should rally anti-government voters to the polls for crucial December legislative elections. From abroad, the White House said it was "deeply saddened" by the ruling. Amnesty International, the European Union and U.N. human rights officials joined in condemnation. "This case is a complete travesty of justice," said Jose Miguel Vivanco, Americas director at Human Rights Watch. "In a country that lacks judicial independence, a provisional judge convicts four innocent people after a trial in which the prosecution did not present basic evidence". The conviction of Lopez is likely to end, for now, a behind-the-scenes push by the U.S. to normalize relations with the country it declared a national security threat in March. The White House said Maduro's government was using the justice system to attempt to silence critics. Meanwhile, conservative lawmakers, including Florida Sen. Marco Rubio, began calling for a new round of sanctions in response to what the Republican presidential contender called a "show trial." The outrage in Washington contrasted with silence in Latin America, where no sitting president had yet to criticize the ruling. (The New York Times,


US  "deeply concerned" about Lopez sentence in Venezuela

Assistant Secretary of State for Latin America Roberta Jacobson says the United States is "deeply concerned" about the conviction of Leopoldo Lopez", and called upon the government here "to protect democracy and human rights in Venezuela". More in Spanish: (Infolatam,


Latin American governments start to speak out on López case

Costa Rica's President Luis Guillermo Solis has openly criticized Lopez's conviction and that nation's Foreign Ministry indicated it is "concerned about the trial of Leopoldo López and four student leaders". Chile's Foreign Ministry followed suit in a note to the Maduro regime indicated it is "attentively" following the López process and hopes "judicial guarantees for a due process and effective available options so that the parties can appeal a sentence". Their Venezuelan counterpart quickly retorted by asking Chile "not to meddle", either "through direct action or under the influence of foreign powers". Paraguay's Foreign Ministry has said it expects "strict compliance with due process and actual respect for rights". The Peruvian government expressed concern over Venezuela's internal polarization and called for dialogue. OAS Secretary General Luis Almagro asked that the international community have access and expressed hope that due process and human rights standards should be observed during the appeals process. (Infolatam,


What about the Vatican?

Considering that this is an overwhelmingly Catholic country where the Holy See has strong connections (its secretary of state Pietro Parolin was serving there till 2013) and that Leopoldo López himself is Catholic, people might have expected Pope Francis or at least a senior Vatican spokesman to issue an instant condemnation of the verdict. But for better or worse, that is not the current papacy's way; it prefers to make its feelings known more discreetly, and to leave things to local bishops. Archbishop Roberto Luckert, one of the country's most outspoken hierarchs, has roundly condemned President Nicolás Maduro for expelling thousands of Colombians from the country.  But religious leaders, like political ones, have to make hard choices between keeping relationships and channels of dialogue open, and openly telling hard truths. In the course of his travels the pontiff, who has shown real eloquence in condemning the excesses of the capitalist north, can still expect some hard questions about his attitude to excesses of another kind. Will he denounce left-wing authoritarianism as much as he has denounced the right-wing variety? (The Economist,


Colombia protests for military flyover, Venezuela denies charge

Colombia's government will formally protest and seek an explanation from Venezuela after detecting two military airplanes that flew into its airspace, President Juan Manuel Santos said. The two aircraft entered Colombia's northern La Guajira province without permission, flew about 1.8 miles over the border and then circled above a military unit, Colombia's Defense Ministry said in a statement. Venezuelan Foreign Minister Delcy Rodriguez said there was no evidence of any violation of Colombian airspace; and Venezuela's Minister of Defense and Head of the Strategic Operational Command of the Armed Forces (CEOFANB), General Vladimir Padrino López, denied that Venezuelan military aircraft violated the Colombian airspace over the weekend. Padrino López argued that Venezuelan pilots had asserted that they have not violated any foreign airspace whatsoever. (Reuters,; Bloomberg,; El Universal,


Closing the border was the “only way,” Zulia governor says

Zulia state Gov. retired Colonel Francisco Arias Cardenas says that closing the border in this region was “the only way” left for Venezuelan authorities to combat the problems of paramilitaries and the shipping of contraband to Colombia.
The top authority of Zulia, a state that shares more than 600 kilometers (370 miles) of border with Colombia, said in an interview that the government is “absolutely convinced that this can be a way, or perhaps the only way we have left, to deal in depth with these problems.” “This seems to us a strong but necessary measure that forces people, as in the game of dominoes, to shuffle the cards and change things,” said the governor, who stressed the need to “reestablish the border.” (The Latin American Herald Tribune,


US says Venezuela fails to comply with anti-drug efforts

US President Barack Obama has sent a message to Congress indicating that Venezuela and Bolivia, along with Burma, are nations that did not - in the past year - honor their commitments on drug traffic and production control under international antidrug agreements. More in Spanish: .(El Nacional;


Venezuelan Supreme Tribunal balks complying with Human Rights Court decision on RCTV

Venezuela's Supreme Tribunal has declared that a decision by the Inter American Human Rights Court, ordering the Maduro regime to restore operating permits to the RCTV television network is "inapplicable". Other regime spokesmen have openly mocked the decision. More in Spanish: (Ultimas Noticias,; El Nacional,; 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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