October 14, 2014

International Trade

 

CENCOEX presents plan for FOREX use in import requirements in 2015

The National Foreign Trade Center (CENCOEX) has prepared a General FOREX Plan for the Nation, in order to organize and plan FOREX requirements by private companies during 2015. Participants must register a sworn statement on what goods they produce and their FOREX plan for 2015. More in Spanish: (AVN; http://www.avn.info.ve/contenido/plan-divisas-optimirzará-atención-requerimientos-para-importaciones)

 

 

Oil & Energy

 

Oil prices dropping in global markets, analysts believe it could drop a further US$ 10 or more

Brent oil prices dropped yesterday by more than US$ 2 per barrel to their lowest level since 2010, after major Middle East suppliers said they will maintain production levels even if this means lower prices. Prices have dropped around 25% since June. Saudi Arabia has privately said it can accept prices between US$ 80-90 per barrel. Oil ministers from Kuwait and Algeria dismissed possible production cuts as crude’s slump to a four-year low prompted Venezuela to call for an emergency meeting of the Organization of Petroleum Exporting Countries. Kuwait hasn’t received an invitation for any urgent OPEC meeting to discuss a reduction in output, says Oil Minister Ali Al-Omair. His Algerian counterpart Youcef Yousfi said yesterday he knew of no plans for any emergency session and was unconcerned by current price levels. (Bloomberg, http://www.bloomberg.com/news/2014-10-13/oil-bear-market-strains-opec-unity-as-venezuela-seeks-meeting.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2355986&CategoryId=10717; and more in Spanish: El Universal, http://www.eluniversal.com/economia/141013/precios-del-petroleo-caen-en-los-mercados-internacionales)

 

Minimum oil quotas for repayment of Chinese loans were eliminated from the Chinese Fund Agreement in a fourth amendment to the Venezuela Fund Protocol. Minimum oil dispatches will now be made “via the exchange of diplomatic notes in compliance with the laws.” Also, the three-year deadline to honor the loans was eliminated. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41443&idc=4)

 

Central Bank's funding of PDVSA rose 127%

Venezuela's Central Bank has loaned PDVSA VEB 578.025 billion, an increase of 127% over the past year, and analysts say this brings a new distortion into the economy by creating more inflation. According to a JP Morgan report Central Bank loans to PDVSA are now 16% of GDP, more than twice what they were the year before. Although oil prices remain above official budget estimates for the year, PDVSA has continued to seek funding for special programs in housing, subsidies to the general population, labor costs, mining and investment in basic industries as a result of the government's growing fiscal deficit. Economist Richard Obuchi, of ODH Consultants says: "Over the past decade the nature of the Central Bank has changed away from being the monetary authority in charge of preserving the value of our currency...now the government has gained control over both the Central Bank and PDVSA and uses them to maintain a high level of public spending". Credit to the oil company jumped 2,521% between January 2010 and May 2014, and accelerated in 2013 and 2014. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/asistencia-crediticia-del-bcv-a-pdvsa-aumento-127-.aspx#ixzz3G7jMthdx)

 

Legislator says domestic fuel prices could be adjusted before the end of this year

Pro government legislator Fernando Soto Rojas, Chairman of the Energy and Oil Committee at the National Assembly believes there will "probably is a decision" in raising gasoline prices before Christmas. He said the Committee has received many proposals on the matter which are being organized in order to present them to President Nicolás Maduro for a final decision, and added that "there is a majority consensus in Venezuela that we are practically giving gasoline away". More in Spanish: (Noticia al Día, http://noticiaaldia.com/2014/10/soto-rojas-aumento-del-precio-de-la-gasolina-podria-decidirse-antes-que-finalice-el-ano/)

 

ConocoPhillips files new multi-billion dollar arbitration against Venezuela's PDVSA

ConocoPhillips (NYSE: COP) has filed for arbitration under the rules of the International Chamber of Commerce (ICC) against Petroleos de Venezuela (PDVSA), the Venezuela state oil company, for contractual compensation related to the Petrozuata and Hamaca heavy crude oil projects. ICC arbitration is a separate and independent legal action from the investment treaty arbitration against the government of Venezuela, which is pending before an arbitral tribunal under the World Bank's International Centre for Settlement for Investment Disputes (ICSID). In September 2013, the ICSID tribunal ruled that Venezuela unlawfully expropriated ConocoPhillips' significant oil investments. The arbitration process to determine compensation owed by Venezuela under the investment treaty for ConocoPhillips' expropriated investments is progressing as planned. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2356054&CategoryId=10717)

 

 

Commodities

 

SIDOR's production now projected at 18% capacity this year

Union leader José Luis Alcocer says that by October 6th this year the state owned steel complex Siderúrgica del Orinoco (SIDOR) "will have produced an total of 697,340 tons of liquid steel, which is a mere 29% of the low goal of 2.4 million set for 2014." According to monthly results this year's production will be only 18% of plant capacity. Alcocer says that monthly production has dropped from 360,000 to 77,000 tons between 2007 and 2014, due to lack of investment and inactivity. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/sidor-producira-este-ano-18--de-su-capacidad-insta.aspx#ixzz3G70SyIGw)

 

Workers demand investment in BAUXILUM and CARBONORCA, operating far below capacity

Workers are on strike at CVG BAUXILUM, the first stage in Venezuela's aluminum industry, demanding payment of a special bonus and investments in the industry. Unofficial reports indicate alumina production is at less than half capacity, as is bauxite production at 25% capacity.  The anode carbon plant CVG CARBONORCA has been in operation only two months this year and it no longer exports its products. It is estimated their production this year will be 30,000 tons, one quarter of its installed capacity of 120,000 tons. More in Spanish: (El Universal, http://www.eluniversal.com/economia/141013/exigen-inversiones-para-bauxilum-y-carbonorca)

 

Car sales in Venezuela hit rock bottom

Venezuela's automobile sector is having one of its worst years ever. Between January and September, only 13,419 vehicles have been sold, according to the Venezuelan Automobile Chamber (CAVENEZ), with a monthly average of 1,491 cars. Sources in the automobile sector estimate that barely 20,000 units will be sold by the end of the year, not including state-run car assembling plants or imports by the public sector. A few years ago, such low sales were unimaginable. Back in 2007, the car industry recorded record highs, as it sold almost 500,000 units, including locally-assembled and imported cars. However, two main hurdles have arisen ever since: declining car assembly and virtually frozen imports. Over the first nine months of the year, only 10,286 cars have been assembled, an 82.29% decline from the same period in 2013, according to CAVENEZ. (El Universal, http://www.eluniversal.com/economia/141013/car-sales-in-venezuela-hit-rock-bottom)

 

Local potato growers are in a state of emergency

Potato grower associations in Venezuela have called a state of emergency due to lack of information on yearly seed imports from Canadian suppliers. "Time has run out, we need to have the seeds in Venezuela November 15-20 in order to begin the first planting cycle", says Aldemaro Ortega, Director of the National Potato Growers Federation. He said the group travels each year at the start of October to negotiate with Canada's Potato Board, and adds they have no information whether a contract to acquire seeds has been signed, for what quantity and quality, which signed it, and estimated arrival. Imports are now controlled by the government. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/productores-de-papas-se-declaran-en-emergencia.aspx#ixzz3G1Pf3100)

 

 

Economy & Finance

 

IMF believes Venezuela will continue servicing public debt

Robert Rennhack, Assistant Director of the Western Hemisphere Department at the International Monetary Fund (IMF) says Venezuela will continue servicing its public debt through 2015 despite the difficult economic situation here. "It's hard to predict the ability to honor debt next year", but that "evidence so far is that they will continue paying, but it is a very difficult economic situation". More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Venezuela default almost certain, Harvard economists say

Venezuela should default on its foreign debt as a shortage of dollars makes it impossible for the government to meet its citizens’ basic needs, Harvard University economists Carmen Reinhart and Kenneth Rogoff said. The economy is so badly managed that per-capita gross domestic product is 2% below 1970 levels, the professors wrote in an opinion piece published by Project Syndicate today. A decade of currency controls has made dollars scarce in the country with the world’s biggest oil reserves, causing shortages of everything from deodorant to airplane tickets. (Bloomberg, http://www.bloomberg.com/news/2014-10-13/venezuela-default-almost-certain-harvard-economists-say.html)

 

Venezuelan international reserves are at their lowest level in the last 11 years, at US$ 19.7 billion last week, down over 8% from the start of 2014 when they were around US$ 21 billion. Economist José Guerra claims the reasons are threefold: An increase of imports, a decrease in the price of gold and lower oil prices. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41434&idc=2; More in Spanish: El Nacional; http://www.el-nacional.com/)

 

 

Politics and International Affairs

 

Opposition charges harassment against legislators

The opposition Democratic Unity Conference (MUD) has charged that the government "is promoting chaos and conflict" by acting "irresponsibly" toward national institutions, and accused it of "harassment and threats" against National Assembly members Ismael García, Juan Carlos Caldera and Carlos Berrizbeitia through "legal subterfuges to try to deprive them of legislative privileges". MUD Secretary General Jesús Torrealba explained that by doing so the government is seeking to alter the Nominations Committee that should designate members of the National Elections Board and the Supreme Court. "This is a fraudulent way of fabricating a majority they do not have", he said. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/141014/la-mesa-denuncio-acoso-contra-diputados-opositores; El Nacional, http://www.el-nacional.com/politica/MUD-asegura-gobierno-busca-delante_0_500350102.html)

 

84% of the Venezuelans polled believe the country is facing an economic crisis while 81.3% think the crisis is political, according to the most recent poll by IVAD on government management and Venezuela’s political context carried out in September. Only 28.6% is confident Nicolás Maduro and his government can solve the country’s economic problems. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41441&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/141013/poll-75-think-venezuela-goes-in-the-wrong-direction; More in Spanish: El Nacional; http://www.el-nacional.com/)

 

Two arrested over lawmaker Robert Serra murder

Venezuela's Supreme Court says two people have been arrested on suspicion of killing Robert Serra, a lawmaker from the governing PSUV party. The socialist member of the National Assembly and his partner, Maria Herrera, were stabbed to death earlier this month at Serra's home in the capital, Caracas. Serra was a rising star in the party known for his passionate speeches. In a statement, the Supreme Court named the suspects as Eduwin Torres and Carlos Garcia, but did not give any further details about who they were or their possible motive for allegedly killing Serra. The court's statement did not say whether the suspects had denied the allegations. If convicted, they could face up to 30 years in jail. Government officials said evidence suggested the murder had been planned and was not a robbery gone wrong. President Nicolas Maduro has blamed opposition groups in Venezuela and elements in neighboring Colombia for Serra's murder. (BBC News, http://www.bbc.com/news/world-latin-america-29593513?utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief%20War%20Dogs%20PROMO%2010%2014%2014%20FINAL)

 

Second request in less than a week

The United Nations Council on Human Rights’ Work Group on Arbitrary Detention asked the Venezuelan government to immediately release Voluntad Popular leader and former San Cristóbal Mayor Daniel Ceballos, in prison since last March 19. It also asked for comprehensive compensation for the damages caused by his arbitrary detention. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41437&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/141013/opposition-mayor-un-calls-for-release-of-deposed-mayor-daniel-ceballos; More in Spanish: El Nacional; http://www.el-nacional.com/)

 

Venezuelan foreign minister rejects UN "meddling"

"As we have told the Department of State not to meddle with our affairs, we are saying the same to any working group of any organization," says Venezuelan Foreign Minister Rafael Ramírez. He was referring to the communiqué issued by the Working Group on Arbitrary Detention of the United Nations (UN) on Wednesday, urging Venezuela to release opposition leader and founder of the Voluntad Popular party, Leopoldo López, for considering he has been subject to an "arbitrary detention" since February. "The trials related to the violent actions occurred earlier in the year is provided for within our legal framework and under our Constitution," he argued. (El Universal, http://www.eluniversal.com/nacional-y-politica/141013/venezuelan-foreign-minister-rejects-un-meddling)

 

Guyanese FM, Ban Ki-moon hold meeting on Guyana-Venezuela controversy

Guyanese Foreign Minister Carolyn Rodriguez-Birkett and US Secretary General Ban Ki-moon met two weeks ago to hold talks on the Venezuela-Guyana border dispute. The Guyanese Ministry of Foreign Affairs reports the meeting took place on September 26. "Their discussions focused on the continued involvement of the United Nations Secretary General in the solution of the controversy which arose as the result of the Venezuelan contention that the Arbitral Award of 1899 that definitively settled the land boundary between Guyana and Venezuela, is null and void," Georgetown informed. (El Universal, http://www.eluniversal.com/nacional-y-politica/141013/guyanese-fm-ban-ki-moon-hold-meeting-on-guyana-venezuela-controversy)

 

 

 

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.

October 19th, 2012

Economics & Finance

Devaluation inevitable

Ricardo Sanguino, the chairman of the Finance Committee, says there are no plans to make changes in the foreign exchange policy for 2013. However, a number of economists say that the government will be forced to devalue the bolivar in order to cope with the fiscal deficit, which some estimate could reach 19% of GDP by year-end. (Veneconomy, 10-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32450&idc=2)

Imports drop 6.57%

Data from the Foreign Exchange Administration Commission (CADIVI) shows that import permits, not counting operations through ALADI and the Sucre, have plunged 6.57%. Such limitations have had a negative impact on companies that depend on foreign currency to import raw materials and equipment for domestic output. For products regulated by the National Superintendent for Fair Costs and Prices (SUNDECOP), delays can remain for as many as 250 days. (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/venezuelan-regular-imports-drop-657)

Government plans to build housing units on 60,000 hectares

The government plans to acquire up to 60,000 hectares of land in order to meet goals set within the "Great Housing Mission - Venezuela," says Ricardo Molina, Minister of Housing and Habitat. The official explained that, so far, the government has 13,000 hectares of land, where 260,000 dwellings have been built since mid-April. (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/venezuelan-government-plans-to-build-dwellings-in-60000-hectares)

ELECAR bonds due in 2018 rally most since March

Bonds sold by state-owned utility Electricidad de Caracas rallied, pushing yields down the most since March 19, as investors sought the highest yield in Venezuela. Yields on the 8.5% bonds due in 2018 fell 53 basis points, or 0.53 percentage point, to 14.76% at 3:19 p.m. in Caracas, according to data compiled by Bloomberg. The bond’s price rose 1.64 cent to 77.04 cents on the dollar. “ELECAR offers the highest yield in Venezuela and is the farthest outlier on the Venezuela curve at over 14 percent,” says Russ Dallen, the head bond trader at Caracas Capital Markets in Miami. "It is being drawn back down toward the curve.” (Bloomberg, 10-17-2012; http://www.bloomberg.com/news/2012-10-17/elecar-bonds-due-in-2018-rally-most-since-march-caracas-mover.html)

Commodities

PDVSA expects total oil output at 3.13 mln bpd

State oil company PDVSA expects a total oil output at 3.13 million barrels per day (BPD) in 2012, according to Fadi Kabboul, executive director, corporate planning. The company's total oil output in the previous year was 2.975 million bpd. (Reuters, 10-17-2012; http://www.reuters.com/article/2012/10/17/pdvsa-oil-output-idUSI8E8KO01620121017; El Universal; http://www.eluniversal.com/economia/121017/venezuelas-oil-exports-to-asia-to-jump-to-28-million-bdp)

BAUXILUM again turns to GLENCORE for support

Swiss multinational GLENCORE may again come to the rescue of state owned CVB BAUXILIM, which now expects to receive U$D 31.6 million following their decision to establish an addenda to their standing contract or future alumina sales, which currently calls for them to supply GLENCORE with 1 million 400 of alumina through 2018. Industry directors were forced to do so due to lack of resources that has led to a drop in production. More in Spanish: (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/bauxilum-apela-a-nuevo-rescate-de-la-trasnacional-glencore)

SIDOR has had no exports for 4 months

Steel product exports from state owned SIDOR not only plunged 83.4% during the first semester this year, but they went down to zero June to September. More in Spanish: (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/sidor-tiene-cuatro-meses-sin-exportar-productos)

International Trade

Venezuela and Saudi Arabia hold talks on double taxation

Representatives of both governments have begun a second round of talks to review technical and legal issues as they seek to develop a working agenda. More in Spanish: (El Carabobeño, 10-18-2012; http://www.el-carabobeno.com/impreso/articulo/35754/venezuela-y-arabia-saudita-buscan-evitar-doble-tributacin)

Logistics & Transport

New port glitch

Ships are now being submitted to one-to-two day delays prior to leaving port, while the authorities make “sub-aquatic” inspections of departing vessels. (Veneconomy, 10-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32454&idc=3)

Miranda Satellite to register 350 images per day

A total 350 daily images may be registered by the Miranda Satellite on Venezuela's strategic areas, which would be used to speed up planning for agricultural, urban, industrial, environmental, hydrological, climate and frontier matters. (AVN, 10-18-2012; http://www.avn.info.ve/contenido/satellite-miranda-report-350-images-day)

Politics

Chavez should prepare for succession: Lula

According to former two-time Brazilian President Luiz Inacio Lula da Silva, Venezuela's newly re-elected president, Hugo Chavez, should start preparing to hand over powe. Lula made the statement in a newspaper interview published Thursday. Chavez, who says he has fully recovered from cancer, beat opposition challenger Henrique Capriles by 11 percentage points on October 7, giving him a third term. "There was an election in Venezuela, where two people ran, and I thought Chavez would be best for Venezuela. I also think that comrade Chavez should start preparing his succession," Lula, a close Chavez ally, was quoted as telling Argentine daily La Nacion. (Reuters, 10-18-2012; http://www.reuters.com/article/2012/10/18/us-venezuela-chavez-lula-idUSBRE89H12620121018; El Universal; http://www.eluniversal.com/nacional-y-politica/121018/brazils-ex-president-lula-chavez-should-be-working-on-his-succession; Bloomberg, http://www.bloomberg.com/news/2012-10-18/lula-urges-venezuela-s-chavez-to-groom-successor-la-nacion-says.html)

Venezuela reverses credentials of Paraguayan diplomats "in reciprocity"

The Venezuelan government reversed the "credentials and visas" of the Paraguayan diplomatic staff in reciprocity for the departure of Venezuelan diplomats from Paraguay, according to a source in the Venezuelan Foreign Office.

The same source confirmed that the reversal of the credentials is "just an administrative step" grandingfor the Paraguayan diplomatic staff " reasonable term" to leave the country after the departure of Venezuelan diplomats from Paraguay. (El Universal, 10-17-2012; http://www.eluniversal.com/nacional-y-politica/121017/venezuela-reverses-credentials-of-paraguayan-diplomats-in-reciprocity; http://www.eluniversal.com/nacional-y-politica/121017/venezuelan-dissent-eviction-of-paraguayans-disregards-diplomatic-pract; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-government-is-expelling-the-last-of-paraguays-diplomats-in-caracas-envoy-says/2012/10/17/57cbeab8-18ab-11e2-a346-f24efc680b8d_story.html; Fox News, http://www.foxnews.com/world/2012/10/17/venezuela-government-is-expelling-last-paraguay-diplomats-in-caracas-envoy-says/)

9,357 nominations for regional elections

The National Elections Board (CNE) has received 9,357 nominations of candidates running for governor and state assemblymen in the upcoming December 16th elections. 135 nominees were registered as candidates for 23 Governnorships. (AVN, 10-18-2012; http://www.avn.info.ve/contenido/9357-nominations-regional-elections)

NGO Director: no fraud, but "electoral corruption" on October 7

"There was no fraud on October 7, but electoral corruption by military officers," says Rocio San Miguel, Director of the Control Ciudadano NGO. She says that a document leaked by the Ministry of Defense shows tasks performed by National Guard officers in mobilizing the pro-government activists on Election Day, and includes testimony from grassroots activists, drivers, and motorcycle riders which should provide sufficient grounds for the Attorney General to conduct an inquiry into the matter. (El Universal, 10-16-2012; http://www.eluniversal.com/nacional-y-politica/121016/ngo-director-no-fraud-but-electoral-corruption-on-o-7)

July 31th, 2012

Economics & Finance

Market points to Venezuela as riskier than Spain

Although Spain is the epicenter of the euro zone, the market considers Venezuela more likely to default.
CDS (Credit Default Swap) is the thermometer that measures the risk of insolvency and operates as insurance in global financial markets which bondholders purchase to shield themselves from noncompliance at maturity. Based on the price of the CDS, Venezuela is now placed as the third riskiest country in the world, only after Cyprus and Argentina, while Spain ranks fifth. (El Universal, 07-30-2012; http://www.eluniversal.com/economia/120730/for-the-market-venezuela-is-at-more-risk-of-default-than-spain)

Finance Ministry plans VEB 18.2 bond issues this quarter

The Planning and Finance Ministry plans to issue VEB 18.2 billion in bonds during this quarter. According to a press release they say the strategy "will further propel financial markets and support the Central Bank in managing monetary policy". More in Spanish: (El Universal, 07-31-2012; http://www.eluniversal.com/economia/120731/finanzas-preve-colocar-bonos-por-bs-182-millardos-en-este-trimestre)

Experts anticipate higher inflation

Inflation has being contained so far through controls on the economy, but they have failed to eliminate the problem.

Experts say the scenario in which the private sector agrees under pressure to keep prices down suppresses is merely a temporary situation which hides real inflation. More in Spanish: (Tal Cual, 07-30-2012; http://www.talcualdigital.com/index.html)

Industrial production slows to 1.3% growth rate

Public spending has accelerated economic growth rates, but private industry is showing very weak signs. According to Central Bank numbers industrial production for the first third of this year has grown only by 1.3%, which is down from 5.24% for the same period last year. Experts say this is due to difficulties in accessing foreign exchange, unfair competition from cheap imports bought through an overvalued currency and a hostile environment. More in Spanish: (El Universal, 07-31-2012; http://www.eluniversal.com/economia/120731/la-produccion-industrial-se-desacelera-y-solo-crece-13)

Basic industries are operating in the red

Deputy Julio Borges says production at basic industries has fallen by 25% and warns that the information is based on figures published by the Central Bank of Venezuela and released this year by the Planning and Finance Ministry. He says SIDOR's production has dropped by 40%, VENALUM by 17% and BAUXILUM by 14%, among others. More in Spanish: (Tal Cual, 07-30-2012; http://www.talcualdigital.com/index.html)

Expropriations have created a vast government industrial infrastructure

It is a government priority to establish state control over the means of production, particularly in the food production area. Over the past 10 years it has developed a considerable agribusiness infrastructure, in some areas as important as the private sector. This structure has been developed mainly through interventions, expropriations and direct acquisition of processing plants, storage centers and distribution networks. The government now controls 62.2% of the food supply, including 119 agribusiness industries, 52% of the gathering and storage of raw material, and over 22,000 outlets throughout the country, although distribution depends mainly on imports. More in Spanish: (El Universal, 07-31-2012; http://www.eluniversal.com/economia/120731/estado-creo-su-infraestructura-industrial-con-expropiaciones)

Commodities

PDVSA-YPF pact announced

Upon his arrival at Brasilia, President Hugo Chavez said the Venezuelan state oil company PDVSA will sign an agreement with its Argentine counterpart YPF. He claimed alliances with state oil companies in Brazil and Argentina "will lead to the creation of a PETROSUR". More in Spanish: (AVN, 07-31-2012; http://www.avn.info.ve/contenido/presidente-chávez-anuncia-firma-convenio-energético-estatal-argentina-ypf)

PDVSA increases US fuel purchases by 65%, crude sales to US drop by 12.8%

According to numbers from the US Department of Energy, fuel exports to Venezuela in January-May 2012 increased by 65% over the same period last year, for a total 37,600 BPD. The report also shows PDVSA dispatches to the US, basically crude oil. Fell by 12.8% PDVSA imports over 1.9 million liters of gasoline per day. More in Spanish: (El Nacional, 07-31-2012; http://www.el-nacional.com/)

El Palito refinery expansion project will take 3.5 years to complete

PDVSA has signed engineering, procurement and construction contract to expand the El Palito refinery, with the TFY&V group, which is made up by Japan's Toyo Engineering Construction, Foster Wheeler Italy, Spanish partners and Venezuela's Y&V. The project aims to reach international quality standards and optimize crude oil from the Orinoco oil belt. The project will take almost 50 months to complete and would increase crude oil processing capacity from 140,000 to 280,000 BPD. More in Spanish: (El Nacional, 07-31-2012; http://www.el-nacional.com/)

China Fund to finance new SIDOR plant

The Orinoco Iron and Steel Industry (SIDOR) plans to build a new plant to process 870,000 of semi prepared material for he oil industry and housing construction, thanks to a U$D 250 million investment from the China-Venezuela Fund. The project is due for completion by the end of 2014. More in Spanish: (AVN, 07-31-2012; http://www.avn.info.ve/contenido/sidor-instalará-nueva-planta-recursos-del-fondo-pesado-chino-venezolano; El Universal, http://www.eluniversal.com/economia/120731/sidor-espera-invertir-250-millones-en-nueva-maquina-de-colada)

International Trade

MERCOSUR experts meet to discuss Venezuela's accession dates

MERCOSUR technicians are meeting in working groups in Brasilia to define dates for Venezuela's gradual accession, by adopting the Common Foreign Tariff and the Common Nomenclature. Venezuela still uses the system of the Community of Andean Nations, from which pulled out in April 2011. According to the protocol of adhesion, adopting the regulations will be carried out "gradually within four months since the date of the entry into force." (AVN, 07-30-2012; http://www.avn.info.ve/contenido/mercosur-experts-meet-brazil-discuss-venezuela039s-accession-dates)

Venezuela's auto industry seeks exclusion from MERCOSUR

Local business has alerted the government of the risks of entering MERCOSUR, and the auto industry is the most highly concerned. The association of auto parts manufacturers (FAVENPA) has written to Foreign Minister Nicolas Maduro, asking that the auto industry be excluded from Venezuela's entry as a full member of MERCOSUR. They also urged the government not to negotiate rules of origin and tariff advantages in this area. The automotive industry argues that Venezuela has a plan in place since 2007 to increase production and reach 50% locally supplied parts in auto assembly by 2013. They say there is no way the Venezuelan auto industry can compete or avoid being displaced by industries in Argentina and Brazil because of the enormous differences in scale. The domestic auto industry argues it will require a transition of five to ten years to increase local competitiveness. More in Spanish: (El Universal, 07-31-2012; http://playball.eluniversal.com/economia/120731/solicitan-excluir-a-la-industria-automotriz-de-reglas-mercosur)

Expert says MERCOSUR entry will favor foreign companies

Eduardo Porcarelli says "there will be an increase in the variety and prices of products available to consumers". He warns this will have a serious impact on domestic production which could lose domestic markets due to higher production and distribution costs internally, as well as price regulations. More in Spanish: (El Nacional, 07-31-2012; http://www.el-nacional.com/)

Venezuela purchases 20 aircraft from Brazil

Government sources say Venezuela's official airline CONVIASA will purchase 20 EMBRAER Model E190 aircraft this week. The contract will be signed this week, during President Chavez's visit to Brasilia. More in Spanish: (Ultimas Noticias, 07-31-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-firmara-en-brasil-la-compra-de-20-avione.aspx)

Logistics & Transport

More scales needed at Puerto Cabello

Puerto Cabello, the country's main sea terminal, has only two scales for weighing at the entrance and two for the output process, which results in delays in processing bulk products. Durvelle Jonathan, second vice president of the government CASA Transportation Center, says there should be at least five for entry and the same number for output, especially at least 80% of bulk cargo comes to this port. More in Spanish: (Notitarde, 07-30-2012; http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1708633&idcat=9849&tipo=2)

Politics

Chavez in Brazil for MERCOSUR summit

President Hugo Chavez is in Brasilia to attend a meeting of the Common Market of the South (MERCOSUR), where Venezuela's accession to the bloc will come into effect. He is also expected to meet with his counterparts from Argentina, Cristina Fernandez, Uruguay's Jose Mujica and Brazil's Dilma Rousseff. (AVN, 07-30-2012; http://www.avn.info.ve/contenido/chavez-travels-brazil-mercosur-summit; El Universal, http://www.eluniversal.com/economia/120730/president-chavez-heads-for-brazil-apropos-mercosur)

Formation of the Bolivarian Militia speeds up

According to experts consulted and documents obtained by El Nuevo Herald reveal the important role the militias would have under the political-economic model leading to a totalitarian regime President Chávez has designed for Venezuela and whose implementation would take full force as of next year if he is re-elected in the October 7 presidential elections. His militia would have some 125,000 troops already. (Veneconomy, 07-30-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31476&idc=1)

Israeli Ambassador says Venezuela's should be of concern to MERCOSUR

Israel's ambassador to Uruguay, Dori Goren says the entry of Venezuela into MERCOSUR "should be a major concern for member countries" because "there are plenty of Iranian agents operating terror networks on the continent with coverage provided by Venezuela." More in Spanish: (El Mundo, 07-30-2012; http://www.elmundo.com.ve/noticias/economia/internacional/embajador-de-israel-afirma-que-ingreso-de-venezuel.aspx; El Universal, http://www.eluniversal.com/internacional/120730/israel-rechaza-comercio-binacional-con-venezuela)