May 24, 2013

Economics & Finance

Central Bank liquid reserves down to U$D 2.2 billion

At the close of April the Central Bank's balance sheet shows liquid international reserves are down to U$D 2.2 billion. These are reserves available for servicing foreign debt and imports made under the FOREX Committee (CADIVI). At the start of this year liquid reserves stood at U$D 3 billion. More in Spanish: (El Universal, 05-24-2013; http://www.eluniversal.com/economia/130524/las-reservas-liquidas-del-bcv-ascienden-a-22-millardos-de-dolares)

Production shutting down

Some industries that produce plastic containers, wood, paper, cardboard and aluminum have had to shut down production lines due to lack of inputs to FOREX scarcity, according to José Manuel González, President of the Packaging Industry Chamber. More in Spanish: (El Nacional, 05-24-2013;; http://www.el-nacional.com/)

Maduro stresses support for companies that seek to increase production

President Nicolás Maduro has stressed that the government will support businessmen interested in increasing production of goods and services in the country: "We can perfectly well develop a policy to walk together in developing the productive force of the nation. Without developed productive forces there is no socialism or anything else". More in Spanish: (AVN, 05-24-2013;; http://www.avn.info.ve/contenido/maduro-recalca-apoyo-del-gobierno-empresas-interesadas-aumentar-producci%C3%B3n-bienes)

The government will invest over U$D 2.4 billion in Guayana industries, says Venezuelan Guayana Corporation (CVG) President General Carlos Osorio: "Here we are investing over U$D 2.4 billion in order to strengthen the entire CVG system, and we will soon have results." More in Spanish: (AVN, 05-24-2013;; http://www.avn.info.ve/contenido/gobierno-bolivariano-invierte-m%C3%A1s-2400-millones-d%C3%B3lares-industrias-cvg; El Universal, http://www.eluniversal.com/economia/130524/inspeccionan-industrias-en-guayana-en-gobierno-de-calle)

Domestic debt soars 97.5% in three years

Although the Venezuelan oil basket price has stayed above the U$D 100 ceiling, the nation's debt has continued growing. According to data from the Finance Ministry, the government has relied on bonds issued within the local market, thus increasing its obligations by 97.5% in the past three years. By the end of March 2010, domestic debt was U$D 24.6 billion and in March 2013 it stands at U$D 48.6 billion. This total includes bonds issued by the Ministry of Finance, as well as operations by parallel funds. Total direct official domestic debt was U$ 5.2, which did not exist three years ago. (El Universal, 05-23-2013; http://www.eluniversal.com/economia/130523/venezuelas-domestic-debt-soars-975-in-three-years)

Central bank: Economy requires U$D 3 billion per month

The government seems willing to bring order into the foreign exchange administration system after admitting publicly that "ghost firms" have been sold US dollars in recent years at a preferential exchange rate.
Central Bank President Edmée Betancourt has confirmed that the bank has resources available the private sector, but they have to streamline the procedures and stop selling US dollars to the wrong actors.
In a meeting with health sector entrepreneurs, Betancourt estimated that the productive apparatus needs U$D 3-3.5 billion monthly, which is U$D 36-42 billion annually for imports, not the U$D 59 billion reported by the Bank in 2012. (El Universal, 05-23-2013; http://www.eluniversal.com/economia/130523/central-bank-venezuelan-economy-requires-usd-3-billion-monthly)

Business sees dire economy in 2013

Venezuela is slipping into high inflation and economic stagnation this year due to a shortage of hard currency and a decade-long weakening of domestic industry, the head of the country's main business group Fedecamaras said. It's President, Jorge Botti, says Venezuela could see no growth and even shrink as much as 3% with inflation of more than 30% even though the price of oil - Venezuela's main export - is seen steady near $100 per barrel. He said this year's expected "stagflationary" scenario is the result of an economic model built on oil-financed government spending, the backbone of the self-styled socialist revolution. (Reuters, 05-23-2013; http://www.reuters.com/article/2013/05/23/us-latam-summit-venezuela-economy-idUSBRE94M0QD20130523)

Entrepreneurs, gov't seek to streamline US dollar sale procedures

Commerce Minister Alejandro Fleming met with health sector representatives to try to streamline procedures for acquiring US dollars. Fleming said that a comprehensive assessment must be undertaken jointly to determine which steps are necessary and which are not in order to simplify procedures. He added that US dollar sales are under way pending within the Foreign Exchange Administration Commission (CADIVI). (El Universal, 05-22-2013; http://www.eluniversal.com/economia/130522/entrepreneurs-govt-seek-to-streamline-us-dollar-sale-procedures)

Supplementary appropriation for hygiene products

The National Assembly has passed a supplementary appropriation for the Ministry of Trade in order to acquire "hygiene products" (toilet paper) (Veneconomy, 05-22-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34838&idc=2; Reuters, http://www.reuters.com/article/2013/05/22/venezuela-shortages-idUSL2N0E219I20130522)

Commodities

Putin confirms Russia's strategic alliance with Venezuela

In a letter to President Maduro, Russian President Vladimir Putin has confirmed his nation's strategic alliance with Venezuela. In recent days this alliance has taken shape in the energy sector. His letter came at the same time ROSNEFT President Igor Sechin visited Venezuela. Joint projects mentioned:

• ROSNEFT will grant CVP (Venezuelan Petroleum Corporation) credit up to U$D 1.5 billion in order to develop such joint ventures as PETROPERIJÁ, PETROMONAGAS, PETROZAMORA, PETROMIRANDA y PETROVICTORIA, with ROSNEFT taking the lead in the two latter ones. Oil Minister and PDVSA President Rafael Ramírez announced a joint venture which will rise to U$D 1.832 billion this year, and the total by 2019 will be U$D 28.489 billion.

• PETROVICTORIA to pump 120,000 BPD in 2016. PETROVICTORIA, a joint venture between state oil company PDVSA and Russia's ROSNEFT, will start production in 2016 and reach 120,000 barrels per day, PDVSA said on Thursday. The joint venture will produce ultra-heavy crude from the vast Orinoco Belt, a large deposit of oil in the Orinoco River basin of southeastern Venezuela. Oil Minister Rafael Ramirez and Rosneft President Igor Sechin signed documents for the official creation of Petrovictoria, which must be approved by Congress.

• ROSNEFT and PDVSA to jointly develop the Róbalo gas field on the Gulf of Venezuela. The agreement signed calls for ROSNEFT to evaluate available geologic and geophysic information on the field, which is part of the Rafael Urdaneta Gas Project.

• PETROMONAGAS will increase crude oil production to 160,000 BPD. The Russo-Venezuelan joint venture will develop plans to expand production, says Minister Rafael Ramírez. He made his statement during a visit to the Jose Industrial Complex near Barcelona, in the Eastern state of Anzoátegui, which he toured along with ROSNEFT President Igor Sechin. Ramírez also said Sechin came with a delegation of industrialists who produce drills, as well as Russian service companies.sp?ids=44&idt=34838&idc=2; Reuters, http://www.reuters.com/article/2013/05/22/venezuela-shortages-idUSL2N0E219I20130522)

Logistics & Transport

Aircraft fleet has shrunk 52.3%

In 2009 Venezuela had a fleet of 130 commercial aircraft, but Julio Arnaldes, President of the Tourism Council says it is now down to 68. He said that the rest of the planes are inoperative and not likely to return to the air. "Therefore, we see the country constantly crowded airports. Not necessarily because of increased ticket demand, but there are very few aircraft to serve the number of passengers," he said, added that sometimes the number of aircraft flying reaches 50 routine screening those who have to submit the equipment or by the lack of spare parts. More in Spanish: (El Nacional, 05-24-2013;; http://www.el-nacional.com/)

Politics

SÚMATE demands speedy decision in election challenge

SUMATE has urged the Elections Chamber of the Supreme Court to render a speedy answer to the challenges brought by the opposition, which seeks to nullify the April 14th Presidential elections. More in Spanish: (El Universal, 05-24-2013; http://www.eluniversal.com/nacional-y-politica/130524/sumate-demanda-celeridad-ante-las-impugnaciones)

Municipal elections likely to be held on November 24

Venezuela is likely to hold municipal elections next November 24. Although the directors of the National Electoral Council (CNE) have not agreed on a firm date yet, CNE executives have been instructed to reschedule the elections using different scenarios, including November 24. This is the fourth time in the past 12 months that the CNE sets a date to elect 335 mayors, 2,835 counselors, 69 municipal representatives for the indigenous people, two mayors for the metropolitan areas, and 20 township counselors. (El Universal, 05-22-2013; http://www.eluniversal.com/nacional-y-politica/130522/local-elections-likely-to-be-held-in-venezuela-on-november-24)

President and Navy review test missile restored by Venezuelan technology

President Nicolas Maduro and members of the military high command attended the test of one of 18 Otomat Mk2 missiles acquired in the 70s and restored by Venezuelan technicians, with Cuban support. Maduro said that this project is part of the recovery of the FANB defense capability. Local media report Maduro took the opportunity to meet with National Assembly Diosdado Cabello, Defense Minister Diego Molero and former Vice President José Vicente Rangel, to review the scandal surrounding tape recordings of former TV anchorman Mario Silva speaking to a Cuban G2 agent, in which he reports conflicts among all four of these men. (AVN, 05-23-2013; http://www.avn.info.ve/contenido/president-and-navy-test-missile-restored-venezuelan-technology; El Universal, http://www.eluniversal.com/nacional-y-politica/130522/maduro-cabello-attend-military-activities-on-orchila-island)

Maduro to attend inauguration of his Ecuadorian counterpart

President Nicolás Maduro will attend the swearing-in ceremony of reelected Ecuadorian President Rafael Correa. It is not known when Mr. Maduro will travel to Ecuador. (El Universal, 05-23-2013; http://www.eluniversal.com/nacional-y-politica/130522/maduro-to-attend-inauguration-of-his-ecuadorian-counterpart)

Murder rate in Venezuela increased 13% in 2013, according to Venezuelan Violence Observatory NGO Chief Roberto Briceño León. He explained public policies are evaluated for their results and not for their intentions, and “if after 20 safety plans, what we get is an evolution from 4,500 murders in 1998 to 21,000 in 20012, the plans have been a failure.” (Veneconomy, 05-22-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34839&idc=1)

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.

April 13, 2012

Economics & Finance

Currency Board promises to expedite currency allocations for controlled products

The local Currency Board (CADIVI) has promised to expedite dollar allocations for producing and importing the 19 items controlled by the Cost and Price National Superintendent (SUNDECOP). CADIVI's President

Manuel Barroso met with representatives of companies providing the products. More in Spanish: (El Universal; http://www.eluniversal.com/economia/120413/prometen-facilitar-divisas-para-rubros-controlados)

Exchange controls to continue for political reasons

Aristobulo Isturiz, first Vice President of the National Assembly, says exchange controls are "a political move" and are to continue "until the revolution becomes irreversible. We cannot eliminate exchange controls here because otherwise Chavez would be overthrown". He added controls must remain in place until the strategic goals of the second socialist plan for the nation are achieved. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/control-de-cambio-continuara-como-medida-politica.aspx)

Commodities

Venezuelan government decreed the transfer of exploitation Rights of two oil fields, Bachaquero Tierra and Lagunilla Tierra, in Zulia state, to a joint venture “to be set up between the Venezuelan Oil Corporation (CVP, after its initials in Spanish) and GAZPROMBANK Latin America Ventures". It will be valid for the next 25 years. (Veneconomy, 04-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30096&idc=4; El Universal; http://www.eluniversal.com/economia/120411/two-venezuelan-oil-fields-transferred-to-joint-venture-with-gazprom)

VENALUM shutting down more production cells

The VENALUM aluminum plan has shut down 177 cells in less than two months, while only 336 cells remain connected out of a total 905 which are its total potential. This is only 37.1% of total capacity. Company staff fears that the lack of supplies and operational backlog will lead to the total disincorporation of P-19 cells that account for 1.2 daily tons of aluminum. A long story of disinvestment, neglect by the government and amateur management have led to a huge deficit in available funds, delays in purchasing supplies and labor instability. More in Spanish: (Correo del Orinoco, 04-12-2012; http://www.correodelcaroni.com/index.php?option=com_content&view=article&id=200932:venalum-apago-151-celdas-en-menos-de-dos-meses&catid=75:laboral&Itemid=114; El Universal; http://www.eluniversal.com/economia/120413/siguen-apagando-celdas-de-produccion-en-venalum)

SIDOR improving steel production

Records show 188,000 tons of liquid steel were produced in March, the highest figure in eight months, and 41% above February's production, which was 55,000 tons. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/sidor-levanta-cabeza-en-produccion-de-acero.aspx)

Farmers: Price increase will encourage production

The National Confederation of Agricultural Producers (FEDEAGRO) says that price adjustments on products such as corn, rice, sorghum, soybean and sunflower authorized last week by the Government were positive and that the availability of inputs and the full recognition of costs would contribute to halt declining production. (El Universal, 04-11-2012; http://www.eluniversal.com/economia/120411/farmers-price-increase-will-encourage-sowing-of-cereals; Veneconomy, 04-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30093&idc=3)

International Trade

RUSORO to sue Venezuela at ICSID if there is no "reasonable agreement"

The honeymoon appears to be eroding with the Russians. There is considerable uncertainty about the fate of the assets of the mining company here. According to the president of RUSORO in Venezuela, Andrea Padovani, no agreement has been reached so far on the formation of the joint venture with the Venezuelan Government or on a reasonable amount of compensation for the mining assets that the company has in the country. More in Spanish: (El Mundo, 04-11-2012; http://www.elmundo.com.ve/noticias/petroleo/mineria/rusoro-demandara--a-venezuela-ante-el-ciadi-si-no-.aspx)

Venezuela: Latin America’s most expensive iPhone

Venezuela, not Brazil, can boast of having the most expensive iPhone prices in Latin America, according to a Latin Business Chronicle analysis of prices from Apple and local wireless operators.

The analysis compared prices offered through Apple’s Brazil and Mexico stores with prices offered by operators in Bolivia, Chile, Colombia, Costa Rica Ecuador, Guatemala, Peru, and Venezuela. (Latin Business Chronicle; http://www.latinbusinesschronicle.com/app/article.aspx?id=5609)

Politics

Chavez ahead in presidential race even as he fights cancer, prays for life

With less than six months left until Election Day, President Hugo Chavez has hardly hit the campaign trail. Instead, he has been consumed with his fight against cancer, repeatedly traveling to Cuba for treatment and publicly vowing to defeat his illness. Chavez’s struggle against the disease has become his main rallying cry and could serve as a political asset if his health holds through the October vote. So far, what appears to be a serious life-or-death crisis hasn’t dented his political support. To the contrary, one recent poll showed Chavez with a lead of 14% points over rival Gov. Henrique Capriles. The poll by the firm DATANALISIs had a margin of error of 2.5%. Eduardo Gamarra, a Latin American studies professor at Florida International University in Miami, said compassion elicited by Chavez’s illness “has naturally played to his advantage in the electoral process.” (Washington Post, 04-12-2012; http://www.washingtonpost.com/world/the_americas/hugo-chavez-ahead-in-venezuela-presidential-race-even-as-he-fights-cancer-prays-for-life/2012/04/12/gIQArzT7CT_story.html)

Obama says: "we want free and fair elections in Venezuela"

US President Barack Obama says he want to see "elections that are free and fair and that respect the will of the people", in Venezuela; and added that "as all sovereign nations, it must establish its own destiny, but it is the Venezuelan people who must decide their course democratically". More in Spanish: (El Universal; http://www.eluniversal.com/internacional/120413/barack-obama-queremos-elecciones-libres-y-justas-en-venezuela)

Chavez to attend the Cartagena Summit for less than a day

According to the Summit organization, Chavez will arrive in Cartagena this afternoon to attend the VI Summit of the Americas and will return to Caracas tomorrow morning, a day ahead of the end of the meeting. Uruguay's President José Mujica arrived last night in Caracas to meet with President Chavez and may continue on to Cartagena with him. More in Spanish: (El Universal, 04-13-2012; http://www.eluniversal.com/internacional/120413/chavez-va-por-menos-de-un-dia-a-la-reunion-de-cartagena; AVN; http://www.avn.info.ve/contenido/presidente-mujica-llegó-venezuela-para-reunirse-hugo-chávez)

Guyana asks UN to disregard Venezuelan objections on maritime platform

A delegation headed by Guyanese Foreign Minister Carolyn Rodrigues-Birkett travelled to the United Nations to present their case for an extension of the nation's maritime platform for an additional 150 miles. During her presentation the Foreign Minister requested that Venezuela's objections should be disregarded. More in Spanish: (El Universal, 04-13-2012; http://www.eluniversal.com/nacional-y-politica/120413/guyana-niega-en-la-onu-disputa-con-venezuela)

Venezuela kidnapping rate triples Mexico's in 2011

The rate of reported kidnappings in Venezuela was three times that of Mexico in 2011. There were 1150 incidents, which is 3.8 kidnappings per 100,000 people. Mexico reports a rate of 1.1 and neighboring Colombia's rate is 0.7 per 100,000. Only fractions of kidnapping cases are reported. More in Spanish:  (El Universal, 04-13-2012; http://www.eluniversal.com/sucesos/120413/tasa-de-secuestros-en-venezuela-triplico-la-de-mexico-en-2011)





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.

August 26th, 2011

Economics & Finance

Central Bank reports economy grew 2.5% in Q2

Venezuela's economy grew 2.5% during the second quarter of this year compared with the year-ago period, the Central Bank said on Thursday. It said the OPEC member nation's current account surplus widened to U$D 8.3 billion in the second quarter from U$D 2.26 billion in the same quarter of 2010, while its capital account deficit was U$D 6.35 billion compared with a U$D 1.53 billion deficit in the same period last year. The bank also said the economy grew 3.6% in the first six months of the year. (Reuters, 08-25-2011; http://af.reuters.com/article/commoditiesNews/idAFN1E77O1RH20110825)

Chávez again threatens to nationalize banks

President Hugo Chávez again threatened to nationalize banks if they do not finance “productive projects”. He publicly instructed Vice-President Elías Jaua to "contact private bankers and schedule some meetings. They must comply with the law, otherwise (...) I have no problem to nationalize those banks (...) Private banks have enough resources to fund projects."  According to Chávez, financial institutions have failed to grant mandatory loans to agricultural projects. "The banking sector holds deposits amounting to VEB 200 billion (U$D 46.5 billion). The banking sector's deposits are virtually the same as the annual domestic budget," Chávez said. (El Universal, 08-23-2011; http://www.eluniversal.com/2011/08/23/chavez-threatens-again-to-nationalize-the-banking-sector.shtml)

Agriculture Minister says: "We will not let supply and demand control agriculture prices"

The Minister of Agriculture and Lands, Juan Carlos Loyo announced there will be no further increases in corn prices, but producers of coffee, milk and other items such as sugar cane can expect an adjustment and review of the costs of production this year. He noted that by using state controls the government will not allow the free supply and demand control the agricultural sector and the production and distribution of vegetables. He added that there is no plan now for massive imports, but that they will fight cartels and middlemen who monopolize trading these items. More in Spanish: (El Nacional; 08-24-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Venezuelan operating reserves have declined by U$D 26 billion, further devaluation predicted.

Economists Jesús Rojas, a former chief financial officer at the Central Bank of Venezuela (BCV); Angel García Banchs, and José Guerra, ex manager of economic research at the BCV; and the CEO of private bank Banco Venezolano de Crédito, Oscar García Mendoza, all have said that operating reserves, that is, the liquid funds that a country has available to pay for imports and debt are now at U$D 6.2 billion, and have dropped U$D 26 billion since 2008. These analysts say the sharp decline in international reserves has not been fully noticed because the price of gold has skyrocketed, and gold ingots are valued at a higher price. The group of economists agree that the nation has entered a cycle of high inflation that will inevitable bring another devaluation (El Universal, 08-25-2011; http://www.eluniversal.com/2011/08/25/venezuelan-operating-reserves-have-declined-usd-26-billion.shtml; more in Spanish: El Universal, 08-26-2011; http://www.eluniversal.com/2011/08/26/advierten-que-el-pais-se-aproxima-a-otra-devaluacion.shtml)

Venezuela to add 7 tons of gold to reserves

Central Bank President Nelson Merentes says Venezuela will certify an additional 7 tons of gold, to add to the country's reserves. He said the technical process is underway and that these 7 000 kilos will add U$D 44 million to reserves. He added 9 tons were certified in 2009. More in Spanish: (Agencia Venezolana de Noticias, 08-24-2011; http://www.avn.info.ve/node/73808)

Central Bank monetary policy paves way for added indebtedness

The Central Bank of Venezuela (BCV) has implemented a strategy that paves the way for the Ministry of Finance to sell large amounts of bonds and treasury notes. The Central Bank prevents the bonds it uses to drain money from economy from competing with the bonds and notes that are issued by the Ministry of Finance to increase government revenue. In order to open more space to the bonds issued by the Ministry of Finance, a BCV regulation prevents financial institutions from having an amount of BCV bonds higher than the total reported in November 2009. (El Universal, 08-25-2011; http://www.eluniversal.com/2011/08/25/central-bank-monetary-policy-facilitates-the-issuance-of-debt.shtml)

TENARIS Seeks Tribunal's help in obtaining compensation from Venezuela

Argentine steel company TENARIS (TS) said Wednesday it will ask a tribunal at the International Center for Settlement of Investment Disputes for help obtaining fair compensation for Venezuela's 2009 expropriation of its subsidiary, MATESI Materiales Siderurgicos SA. In 2009, Venezuela's government took operational control of MATESI, a hot-briquetted iron unit that was majority-owned by TENARIS, and pledged to compensate TENARIS appropriately. Despite this action, plant manager Daniel Rodríguez believes negotiations can still end positively and says “there hasn’t been an agreement because the company has sought indemnity about the real cost of the plant, so they are reviewing numbers”. (Fox Business, 08-25-2011; http://www.foxbusiness.com/markets/2011/08/24/tenaris-seeks-tribunals-help-in-obtaining-compensation-from-venzuela/ and more in Spanish: El Universal, 08-26-2011; http://www.eluniversal.com/2011/08/26/diferencias-sobre-costo-de-matesi-retrasan-negociacion.shtml)

Commodities

US DOE: Venezuelan first semester 2011 oil revenues were U$D 34 billion

Venezuelan revenues related to sales of oil and oil products came up to U$D 34 billion between January and July 2011, according to estimates of the US Department of Energy (DOE), based on export data from the member countries of the Organization of the Petroleum Exporting Countries (OPEC). The report states that during 2010 Venezuelan revenues from oil exports were U$D 41 billion. This amount indicates that oil income in 2011 will exceed total revenues obtained in 2010. (El Universal, 08-24-2011; http://www.eluniversal.com/2011/08/24/us-doe-venezuelan-oil-revenues-amount-to-usd-34-billion.shtml)

Venezuelan weekly oil exports to the US decline

Venezuela's oil exports to the US have declined by nearly 160,000 barrels a day over the past six weeks, according to weekly reports issued by the US Department of Energy. In mid August, Venezuela's oil shipments to the US averaged 793,000 bpd, a decline of 120,000 barrels a day compared to June (916,000 barrels per day). If compared to data from August 2010, the decline is 210,000 barrels a day, averaging 29%. Although Venezuelan oil exports to the US averaged 916,000 bpd during the first five months this year and 912,000 barrels per day in 2010, there has been a decline over the last 10 years, according to the US government audited figures. (El Universal, 08-25-2011; http://www.eluniversal.com/2011/08/25/fall-in-venezuelan-weekly-oil-exports-to-the-us.shtml)

CVP and MINERVEN to create joint ventures to develop gold

Venezuelan state mining company MINERVEN and Venezuelan Oil Corporation (CVP), a subsidiary of state-run oil company PDVSA, will create two joint ventures to produced the nation's gold. Venezuelan Minister of Energy and Petroleum Rafael Ramírez said that the companies will be created after nationalization of gold resources. The Venezuelan oil company Petro Anzoátegui will support gold extraction; and MINERVEN will support the oil sector. (El Universal, 08-25-2011; http://www.eluniversal.com/2011/08/25/cvp-and-minerven-to-create-joint-ventures-to-develop-gold.shtml)

S&P cuts Electricidad de Caracas to B- after Venezuela downgrade

Standard & Poor's Ratings Services (S&P) lowered its ratings on Venezuela's electrical utility C.A. La Electricidad De Caracas (EDC) to 'B-' from 'B'. The outlook is stable, according to S&P. The ratings cut on EDC followed the August 19th cut of the Bolivarian Republic of Venezuela credit rating to 'B+' from 'BB-'. (Latin American Herald Tribune, 08-24-2011; http://www.laht.com/article.asp?ArticleId=419194&CategoryId=10717)

Politics

Venezuela’s Chavez says he may undergo more chemotherapy, calls treatment ‘preventive’

Venezuelan President Hugo Chavez said Wednesday that he may undergo another round of chemotherapy next week.

Chavez said he feels he is overcoming his illness. When he mentioned cancer, he described it in the past tense saying: “I had it.” (The Washington Post, 08-24-2011; http://www.washingtonpost.com/world/americas/venezuelas-chavez-says-he-may-undergo-more-chemotherapy-calls-treatment-preventive/2011/08/24/gIQA9BMwbJ_story.html)

Chavez says Libya’s tragedy just beginning with the fall of Gadhafi’s government

Venezuelan President Hugo Chavez said Wednesday that Libya’s crisis is just beginning with the fall of Moammar Gadhafi’s government. Chavez has been a staunch defender of Gadhafi throughout the conflict, and he condemned NATO airstrikes and killings of civilians. “The drama of Libya isn’t ending with the fall of Gadhafi’s government. It’s beginning,” Chavez said. “The tragedy in Libya is just beginning.” (The Washington Post, 08-24-2011; http://www.washingtonpost.com/world/middle-east/venezuelas-chavez-libyas-tragedy-just-beginning-with-the-fall-of-gadhafis-government/2011/08/24/gIQAljEjbJ_story.html)

Russia, Venezuela strengthen ties through new agreements

Venezuelan Foreign Minister Nicolás Maduro and his Russian counterpart, Sergei Lavrov, have signed three agreements to promote scientific, cultural and diplomatic relations. One of the agreements provides for the creation of a Russian scientific and cultural center in Caracas, in order to bring the people of both countries closer together. (El Universal, 08-24-2011; http://www.eluniversal.com/2011/08/24/russia-venezuela-strengthen-ties-through-new-agreements.shtml)

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.

March 28th, 2011

Economics & Finance

Venezuela ranks lowest in growth among oil producing nations

In its recent report on the global economy a leading British investment bank, Barclays Capital, compared growth in 1999-2010 for Latin American countries and members of the Organization of the Petroleum Exporting Countries (OPEC). The report showed that despite high revenues, Venezuela performed badly over the past 12 years. The numbers show that OPEC Member States, except for Iraq, grow 6.1% annually. Latin American countries, with Venezuela joining the bigger economies in the region -Brazil, Argentina, Colombia, Mexico and Peru- grew by 3.4%. In contrast, Venezuela barely reached an average annual growth of 2.3%, despite skyrocketing oil prices that injected USD$ 529 billion into the government vaults. (El Universal, 03-25-2011; http://english.eluniversal.com/2011/03/25/venezuela-is-the-oil-producing-state-with-the-lowest-growth.shtml)

Private exports fell by 32, 4% during Chávez’s second term in office

The collapse of this economic indicator over the past few years has been highest for the private sector and in non-petroleum exports. Sales for products other than oil were USD$ 3,39 billion in 2009 and USD$ 3,47 billion in 2010, according to the Central Bank. This is a 54,9% drop from 2006 when such exports were a record USD$ 7,61 billion, and the lowest level since 1992. More information in Spanish: (El Nacional; http://impresodigital.el-nacional.com/ediciones/2011/03/28/default.asp?cfg=4498CLKC4084&iu=4626)

Local banks face losses with excess idle funds in their vaults

With a feeble credit demand and a government that uses oil income to inject more local currency into the domestic economy, Venezuelan financial organizations have plenty of cash in their vaults. The mismatch translates into losses. In 2010, banks kept a monthly average of USD$ 3.72 billion above the requisite for legal reserves with the Venezuelan Central Bank (BCV). By¿ February 2011, this average doubled up to USD$ 7.45 billion. Deposits are used to extend loans or buy bonds but local banks have not succeeded in placing funds in an economy where the private sector has been in recession for two years. (El Universal, 03-25-2011; http://english.eluniversal.com/2011/03/25/local-currency-overage-triggers-idle-money-at-banks.shtml)

Venezuelan stock market up 9.57%

Caracas stocks rose on low volume, as the Caracas Stock Exchange Index rose 2.25% to close at 71,587 for the week. Only one stock, Banco Provincial, changed in price, closing at Bs. 30. With many of the largest brokerage firms shut down last year by President Chavez’s government, volume was low all week, with 25,000 shares changing hands over five days of trading ending March 25. (Latin American Herald Tribune, 03-28-2011; http://www.laht.com/article.asp?ArticleId=390338&CategoryId=10717)

Government considers increased price for food staples such as rice, oil, powdered milk, pre-cooked corn flour, sugar, chicken and cheese, informed Venezuelan Food Minister Carlos Osorio. He explained the prices of products at MERCAL will not be increased as the official subsidy will rise from Bs.F.5.2 billion to Bs.F.7 billion. (Veneconomy, 03-25-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25408&idc=1)

Oil expert Gustavo Coronel asks for the immediate dismissal of PDVSA board of directors and an in-depth investigation of its true operational, financial and managerial situation.  After reviewing the 2010 Annual Report from State to the National Assembly. Coronel concludes that PDVSA is a bankrupt company, led to failure by inept management and by the president of the Republic who uses it for its personal goals. (Veneconomy, 03-25-2011;

http://www.veneconomy.com/site/index.asp?ids=44&idt=25404&idc=4)

Commodities

Venezuela projects an oil output of 4.5-5.0 mln BPD by 2014

Venezuela aims to boost oil production by two-thirds to 4.5 million or 5.0 million barrels per day (BPD) over the next three years, according to Energy Minister Rafael Ramirez. Ramirez routinely announces high output figures for this OPEC member's main export, which actually has fallen over the past two years. Industry experts point to figures from his ministry, certified by an independent auditor, which show production down to 2.78 million BPD in 2010, from 3.01 million BPD the year before. Ramirez claims current output is some 3.1 million BPD. (Reuters, 03-27-2011; http://in.reuters.com/article/2011/03/27/venezuela-oil-idINN2713051820110327)

Venezuelan oil climbs back to USD$ 100

The Venezuelan oil basket of crude oil and products ended the week at USD 100.15 per barrel, according to the Venezuelan Ministry of Energy and Petroleum. The Venezuelan oil basket returned to the USD 100 level amid an upward trend in oil prices driven by the Libyan conflict and demonstrations in oil-producing countries in the Middle East and North Africa. (El Universal, 03-25-2011; http://english.eluniversal.com/2011/03/25/venezuelan-oil-climbs-again-to-usd-100.shtml)

Ramírez says attacks on Libya are a serious crime against petroleum exporting countries

Venezuela’s Oil Minister and President of the state oil company PDVSA, Rafael Ramirez, said Sunday that the military aggression against Libya represents a serious crime against the petroleum exporting countries. During an interview withe a local TV show, Ramirez said Libya is one of the main producing nations in Africa and a founding member of the Organization of Petroleum Exporting Countries (OPEC). He also claimed that Venezuela has the world’s largest oil reserves and a production of close to 3.16 million barrels per day BPD. (AVN, 03-28-2011; http://www.avn.info.ve/node/50383)

PETROANDINA to invest USD 240 million in exploration

PETROANDINA, a joint venture between Bolivian and Venezuelan state-owned energy companies, plans to invest USD$ 240 million this year in exploration for new oil and gas reserves, according to Bolivian officials. The Bolivian company, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), noted that it has a 40% interest in exploration activities in traditional and non-traditional areas. (El Universal, 03-25-2011; http://english.eluniversal.com/2011/03/25/petroandina-to-invest-usd-240-million-in-exploration.shtml)

PDVSA plans on revamping exploration units to raise output

Petróleos de Venezuela, S.A., Venezuela’s state-owned oil company, is planning to restructure its exploration and production division to increase output and boost efficiency. The exploration and production division of PDVSA, as the Caracas-based company is known, will create a new unit to oversee projects in the heavy crude Orinoco Belt, a Venezuelan newspaper reported today, without identifying its sources. PDVSA’s oil output declined by 3.9% last year, after disputes with oil service providers and refinery power outages. Eulogio Del Pino, a vice president at PDVSA, will continue to head the exploration and production division, which will absorb PDVSA’s unit that oversees international joint ventures with private oil firms known as CVP. (Bloomberg, 03-28-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aEnbBP5cJe9g)

Briquette production at 28% capacity

Briquette production has collapsed in less than two years. The "Giordani Plan" to create a completely state-owned enclave, using Guayana for the experiment, is a glaring failure. The "Plan for a Socialist Guayana 2019, calls for the "the disappearance of dissolved companies and stifling centralism of "corporate social iron-steel and aluminum." MATESI COMSIGUA, VENPRECAR, and FERROMINERA produced one million 739 thousand tons of product in 2010. Production is now a mere 28% of that figure. More information in Spanish. (Tal Cual, 03-28-2011; http://www.talcualdigital.com/index.html)

Politics

Venezuela seeks commercial pact with Colombia in view of its own imminent departure from the Andean Community

According to diplomatic sources in both countries, Venezuela’s Government presented Colombia´s a draft bilateral trade agreement in order to fill a void left by its own exit from the Andean Community. According to Colombian Foreign Minister María Ángela Holguín, the initiative was left with Colombia last week, as it´s government has been negotiating a similar agreement since last November with their Venezuelan counterparts. The proposal will be discussed by President Juan Manuel Santos and Hugo Chávez during their forthcoming meeting in Cartagena. The Minister made the announcement at a joint press conference with her Venezuelan counterpart, Nicolás Maduro, in Bogotá; adding that the expect further progress during the Presidential meeting next Friday. (More information in Spanish: La República/ Bogotá) - http://www.noticieroindustrial.com/site/comercio/562-acuerdo-comercial-con-colombia-busca-venezuela-ante-su-salida-de-la-can

Chávez visits Argentina, Uruguay, Bolivia, Colombia

Venezuelan President Hugo Chavez will be on tour beginning March 27, to 4 South American countries to strengthen integration and review the progress of agreements made with countries of the region. He reaffirmed that he will travel to Argentina, Uruguay, Bolivia and Colombia to strengthen regional integration. (AVN, 03-27-2011; http://www.avn.info.ve/node/50295)

Venezuela poll: Preferences split, many undecided

A poll suggests Venezuelans are split between President Hugo Chavez and the opposition, although a sizable one third is undecided about whom they would vote for if elections were held soon. Luis Vicente Leon, director of the polling firm DATANALISIS, said Thursday that results of a survey last month said 26% of those questioned were sure they would vote for Chavez if elections were held within a week. Support for all the opposition's potential candidates reached 28%, while 34% of those surveyed said they were undecided. More than 13% said they would not vote for anybody. (Boston, 03-24-2011; http://www.boston.com/news/world/latinamerica/articles/2011/03/24/venezuela_poll_preferences_split_many_undecided/)

Venezuela’s Chavez supports Syrian leader amid protests, blames US for unrest

Venezuelan President Hugo Chavez expressed support for Syria’s president on Saturday, calling him a “humanist” and a “brother” facing a wave of violent protests backed by the United States and its allies. Chavez’s support for President Bashar Assad follows his defense of Libyan leader Moammar Gadhafi, who is fighting rebels backed by international airstrikes. Venezuela’s socialist leader accused Washington of fomenting the protests in Syria as a pretext for Libya-style airstrikes. (The Washington Post, 03-26-2011;

http://www.washingtonpost.com/world/venezuelas_chavez_offers_supports_to_syrian_leader_amid_protests_blames_us_for_unrest/2011/03/26/AFFCkteB_story.html?wprss=rss_world)

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.