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.

Thursday, September 29, 2016

September 29, 2016


International Trade

Argentina’s Macri says Venezuela may be out of MERCOSUR in December

Argentine President Mauricio Macri says he will meet with Brazilian President Michel Temer next week and discuss in depth the need to increase pressure on Venezuela “as much as possible”. He told media that despite having taken clear stands on the matter, results become worse by the day, and said that by not complying with democratic and economic requirements may lead to Venezuela’s exit from MERCOSUR on December 1st. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Macri-aseguro-Venezuela-Mercosur-diciembre_0_929907299.html)

 

Oil & Energy

OPEC agrees in principle to limit oil output, only short term price impact expected

OPEC agreed on Wednesday to reduce its oil output to 32.5 million bpd from the current production levels of around 33.24 million bpd. The producing group will agree concrete levels of production by each country at its next formal meeting in November. And now, if all members of OPEC strictly comply with their new quotas, Goldman is predicting a sizable recovery for the price of a barrel of oil. Oil barrel prices could climb between US$7 and US$10 by the end of the first half of 2017, according to Goldman Sachs analysts.  For this scenario to take place, all other circumstances on oil markets must remain unchanged. In its report, the Goldman analyst team noted that it was skeptical about the chances of success for the freeze deal. The bank pointed out that OPEC members don’t always feel obliged to stay within quotas, which will contribute to the ongoing uncertainty on oil markets. Further killing the buzz of its price forecast in the best-case scenario, the Goldman analysts said that the support that oil prices will see from the freeze is very likely to be limited to the short term. In other words, a year from November, prices could be back to the US$ 40-US$ 50 range. This is probably why Goldman did not revise its average oil price forecast for the rest of this year and the next: the bank still expects the 2016 average to be US$ 43 and the figure for 2017 to be US$ 53.  (Reuters: http://www.reuters.com/article/us-opec-meeting-decision-details-idUSKCN11Y2F2: OILPRICE: http://oilprice.com/Energy/Oil-Prices/Goldman-Sachs-OPEC-Freeze-Could-Add-10-To-Oil-Prices.html)

 

PDVSA sweetens bond swap terms

Venezuelan state oil company PDVSA's bonds rose on Tuesday after the company improved the terms of a swap proposal that had initially met with market misgivings. PDVSA on Monday increased the ratio of new 2020 bonds it will offer in exchange for outstanding paper that matures in 2017, potentially boosting the interest of bondholders that saw the original one-to-one exchange offer as insufficient. The company's 2017N issue that matures in November 2017 was up 1.800 points to a bid price of 80.800. The PDVSA 2017 bond maturing in April was up 1.150 points to bid 77.150%. PDVSA is seeking to swap a maximum of US$ 5.325 billion in 2017 maturities through the plan, helping ease the cash-flow constraints as it struggles with low oil prices and an unraveling socialist economic system. (Reuters, http://www.reuters.com/article/venezuela-pdvsa-debt-idUSL2N1C30R3; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2421844&CategoryId=10717)

 

PDVSA's profits down 63% in first quarter: bond prospectus

State oil company PDVSA's profits were down 63% in the first three months of 2016, compared to the same period last year, according to data published in the company's bond swap prospectus this week. PDVSA made US$ 2.087 billion in the year to March, compared to US$ 5.677 billion in the same period last year, according to the document. Income through oil sales and other products fell 33%, according to the unaudited document. (Reuters, http://www.reuters.com/article/us-venezuela-pdvsa-idUSKCN11X2OM)

 

Economy & Finance

Venezuela remains the least competitive nation in the Hemisphere

According to the 2016-17 Global Competitiveness Report by the World Economic Forum, Venezuela remains as the least competitive nation in the Hemisphere.  In placed 130th out of 138 nations, and is only above Liberia, Sierra Leona, Mozambique, Malawi, Burundi, Chad, Mauritania, and Yemen. The survey is based on 12 categories: institutions, infrastructure, macroeconomic environment, health and grade schools, secondary education and training, market efficiency, labor market efficiency, financial market development, technology, size of market, business sophistication and innovation. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Venezuela-pais-competitivo-America-Latina_0_929907278.html)

 

Venezuela wins US$ 70 million law suit in the United States

Venezuela has won a civil lawsuit filed for US$ 70 million filed in Florida by the Comparellis, an Italian-Venezuelan family, against PEQUIVEN, which is a manufacturer of petrochemicals, subsidiary of state-run oil company Petróleos de Venezuela (PDVSA). Late in 2014, the Comparellis brought a lawsuit seeking compensation from PEQUIVEN and the Republic for damages, arguing that two of their companies had been expropriated in violation of the law, based on the definition of this term under US regulations. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-wins-usd-70m-lawsuit-the-united-states_578792)

 

Politics and International Affairs

Regime escalates attacks on opposition leaders

Julio Borges, head of the Democratic Unity (MUD) opposition caucus in Venezuela’s National Assembly, has warned that the regime will increase attacks and repression as the recall process moves forward: “In the next few weeks, perhaps months, we will face the most repression and fear we may have known for the past years…But the government is mistaken if they think they will hold back the people through fear… Yet I am convinced that the overdose of fear the government is going through and wants to pass on to the nation will turn upon it.” As a part of this fear and harassment campaign, the National Comptroller’s office announced it is calling in Miranda state governor and former presidential candidate Henrique Capriles over state budget practices in 2011-2013, a move Capriles replied that the move as a hoax designed to intimidate him. At the same time, Maduro’s Minister for Women’s Affairs, Gladys Requena, said she would bring action at the Supreme Tribunal against National Assembly President Henry Ramos Allup, for alleged “misogyny”; and Foreign Minister Delcy Rodríguez said she would accuse him of “high treason” for his contact with the Organization of American States. Ramos scoffed at the charges and said he would continue to press ahead. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/politica/2016/septiembre/27/170377=borges-advirtio-que-el-gobierno-arreciara-represion-para-evitar-el-proximo-paso-para-activar-el-rr; El Nacional, http://www.el-nacional.com/politica/Gobierno-TSJ-Ramos-Allup-misoginia_0_929907297.html; http://www.el-nacional.com/politica/Contraloria-cita-Capriles-rinda-cuentas_0_929307348.html; El Universal, http://www.eluniversal.com/noticias/politica/requena-asegura-que-solicitaran-tsj-levantar-inmunidad-ramos-allup_578876)

 

Democratic Unity formally requests the Vatican facilitate possible talks here

Venezuela’s Democratic Unity opposition coalition (MUD) has formally delivered a request to the Vatican, asking it to serve as a mediator in government-opposition talks. The request was made in reply to a letter sent by the Vatican Secretary of State Monsignor Pietro Parolín to the Union of South American Nations (UNASUR), voicing willingness to mediate in solutions to the ongoing political, economic and social crisis in Venezuela; and was delivered to the Papal Nuncio in Caracas. (El Universal, http://www.eluniversal.com/noticias/daily-news/mud-asks-the-vaticans-mediation-venezuelan-crisis_578808)

 

Poll shows 67.8% would vote against Maduro in recall

According to a recent poll by VENEBARÓMETRO, 67,8% here would vote against President Nicolas Maduro in the case of a recall referendum. Only 23.5% would vote to keep him in office; and 8.8% refused to answer. His administrative was called negative by 76.4%, and terrible by 50.5%. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/afirman-que-678-los-venezolanos-votaria-contra-maduro-revocatorio_578877)


Elections Council still considering number and location of polling machines for recall signatures

Sources within Venezuela’s National Elections Council (CNE) a final decision has not been made on the number of polling machines to be assigned to the signature collection process, or as to their location. They say they are aware that the number is very low and could lead to disturbances during the procedure. It was unofficially said that members of the Council are also aware that the point was raised in talks between US Secretary of State John Kerry and President Nicolas Maduro. Representatives of the Democratic Unity opposition coalition (MUD) are insisting on an increase and relocation of polling machines and sites, and have confirmed that a final decision has not been made. Juan Carlos Caldera, who represents the MUD at the CNE says they will keep on insisting “through the very last day, difficult as it may be.” More in Spanish: (El Nacional, http://www.el-nacional.com/politica/CNE-establecido-ubicacion-definitiva-recoleccion_0_929907218.html; http://www.el-nacional.com/politica/Discusion-cantidad-ubicacion-maquinas-CNE_0_929907214.html)

 

Senator Marco Rubio asks Obama to impose sanctions on CNE head

Senator Marco Rubio, chairman of the Senate Western Hemisphere Subcommittee has asked President Obama to revoke visas and freeze the US assets of Tibisay Lucena, the head of Venezuela’s National Elections Council (CNE), for abusing human rights. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/marco-rubio-pide-obama-sancionar-presidenta-del-cne_578874)

 

National Assembly launches procedure to replace two out of five CNE members

The Nominations Committee at the National Assembly has approved a timetable – starting next week - for choosing and electing replacements for two out of five National Elections Council (CNE) members whose terms expire on December 1st. It is calling for nominations this week, will publish a list of those who qualify on 26 October, and nominate candidates by 15 November. The two departing members are regime sympathizers. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/octubre-inicia-postulacion-rectores-CNE_0_929307355.html)

 

Regime controls and uses supply of basic items as a political tool

A severe scarcity of basic products here has led to daily scenes of lines in front of grocery stores and markets, a problem the Maduro government is trying to assuage through a community committee system called CLAP, which sells mixed bags of scarce food items solely to its loyal followers. President Maduro launched the program to allegedly fight “hoarders” and speculators, and the program’s coordinator – Freddy Bernal – claims 5.6 million people, 1.345 million families, have benefitted. But many in poor neighborhoods complain they have not seen evidence of the plan, or that supplies arrive irregularly. Members of the community councils say that only PSUV government party members control them because “this is politics”. Venezuela’s Executive Vice President Aristóbulo Istúriz has called the program “an instrument of the Bolivarian revolution”; and Maduro himself says: “What would happen to the revolution, our fatherland and economic stability should we not have the CLAP?”, referring to the local supply community committees.  More in Spanish: (Infolatam: http://www.infolatam.com/2016/09/28/chavistas-controlan-venta-de-alimentos-regulados-en-tiempos-de-escasez/)

 

Maduro talks to Ban Ki-moon about border dispute with Guyana

During a meeting in Cartagena, Colombia, Venezuelan President Nicolás Maduro once again asked United Nations Secretary General Ban Ki-moon to appoint a mediator between the Venezuelan and Guyanese governments to solve the border controversy related to the Essequibo region. The two leaders “exchanged views on good officer candidates within the framework of the Geneva Agreement,” according to Venezuelan Foreign Minister Delcy Rodríguez. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelas-maduro-deals-with-ki-moon-border-dispute-with-guyana_578616)

 

Spain’s Felipe González terms Maduro regime “an arbitrary tyranny

Spain’s former President Felipe González says President Nicolas Maduro’s regime is an “arbitrary tyranny that mocks its own rules”. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Felipe-Gonzalez-Venezuela-tirania-arbitraria_0_929907120.html)

 

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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