August 16, 2013

Economics & Finance

Maduro names third Central Bank president this year

President Nicolas Maduro appointed the third central bank president this year as his regime seeks to rein in the fastest inflation among the world’s major economies. Eudomar Tovar, a former central bank vice president and head of state currency board, was nominated by Maduro and approved by the National Assembly yesterday, the Information Ministry said in an e-mailed statement. “Tovar will give more coherence to economic decision-making because his vision is very close to that of Finance Minister Nelson Merentes,” Alejandro Grisanti, economist at Barclays Plc, said by phone from New York. (Bloomberg, 08-14-2013; http://www.bloomberg.com/news/2013-08-13/venezuela-names-third-central-bank-president-this-year.html)

BBVA believes Venezuela's economic outlook is the worst in the region

Studies by the BBVA Spanish banking group on the "Venezuela situation" and the "Latin America situation" show this nation has the worst economic outlook in the region. The banking group is projecting that Venezuela's economy will drop by 0.4% this year, and prices will rise by 43.9%, which will lead the nation into a cycle of stagflation which will be hard to overcome. "This poor economic situation is a huge challenge to authorities, and could even become an economic trap". BBVA holds shares in banks throughout the region, and is deeply familiar with it. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130816/para-bbva-venezuela-tiene-las-peores-perspectivas-de-la-region)

Survey shows stagnating industrial activity

According to a survey by the National Council of Industries (CONINDUSTRIA) Industrial production dropped to slightly over 54% in the 2Q 2013. According to their poll, only non-metallic minerals activity grew. The seven remaining areas, including textiles, chemicals and foodstuffs plunged. Political uncertainty, foreign currency in short supply and scarcity of raw materials are the main hurdles for industrialists. "Stocks diminished in all sectors," says CONINDUSTRIA President Eduardo Garmendia. (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/survey-shows-stagnated-industrial-activity-in-venezuela)

Bank of America recommends investment in Caracas stock exchange

In his latest report on Venezuela's economy, Francisco Rodríguez, a Bank of America analyst, says foreign companies should consider investing a portion of the dividends they cannot repatriate in listed shares at Caracas stock exchange. "We think that the Venezuelan exchange system is unsustainable and we believe than sooner or later the government will have to accept a viable mechanism to repatriate dividends." (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/bank-of-america-recommends-investment-in-caracas-stock-exchange)

Commodities

PDVSA has had 15 events at refineries over the last 105 days

A minor fire that hit last Tuesday night a unit of Cardón refinery, located in Paraguaná, is the third major event in the refining circuit within three days and underlines deteriorated maintenance in plants at state-run oil holding Petróleos de Venezuela (PDVSA). The flames at Cardón struck the High Vacuum Unit 3 (AV-3) and caused "slight injuries" to two workers. Refinery workers said the event took place once the AV-3 tower had been fed. The flames appeared on top in the tower. The fire was easily put up by closing the "large residue" input. (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/pdvsa-has-experienced-15-events-in-refineries-in-the-past-105-days; Reuters, http://www.reuters.com/article/2013/08/14/venezuela-refinery-idUSL2N0GF0CA20130814)

Electricity emergency extended for 90 days

The state of emergency within Venezuela's electrical grid was extended by decree for 90 days starting July 21, 2013. The official statement says ""while an outstanding effort has been made by several parties within the national electrical grid to enlarge generation and diminish blackouts, some more work is needed to overcome the state of emergency, taking steps to improve the system reliability." (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/electricity-emergency-in-venezuela-extended-for-90-days)

Over a million tons of food distributed over four months

Manuel Barroso, President of the Corporation for Supplies and Agricultural Services (CASA) says they have sent over a million tons of food to distribution networks and stores over the past four months. He also said two processing plants are currently packaging milk to supply state-run institutions and private companies nationwide. (AVN, 08-14-2013; http://www.avn.info.ve/contenido/one-million-tons-food-distributed-four-months)

Politics

Maduro says he will overhaul government, requests special powers

President Nicolás Maduro has said he will organize a team to overhaul all of the ministries. "We are going to completely overhaul the national government's organization", and asked Cabinet members to point out inefficiencies and corruption. He also insisted on the need to seek special powers from the National Assembly in order to fight corruption. His aim is to reform laws so that "maximum penalties" are applied in such cases. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Maduro will travel to China

President Nicolás Maduro announced he will soon travel to China to meet with Chinese President Xi Jinping and "ratify our complete alliance on all areas of economic, social, cultural, political, technological and diplomatic cooperation". (AVN, 08-16-2013; http://www.avn.info.ve/contenido/maduro-planea-viajar-china-para-ratificar-alianza-estrat%C3%A9gica-e-hist%C3%B3rica)

Colombia-Venezuela Border Commission has been re-launched and will meet in Bogotá next September 2nd for the first time since 2009. The meeting will allow members to become acquainted with each other and evaluate the possibility of renewing talks on fixing maritime and submarine boundaries and other matters. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/130816/reactivan-la-comision-de-limites-colombo-venezolana)

Venezuela politics soiled by sordid claims, gay slurs

From allegations of gay and transvestite prostitution rings to homophobic slurs flying in the National Assembly, Venezuela's polarized politics has taken a distasteful turn. With tempers fraying as President Nicolas Maduro vows to crack down on corruption, pro-government lawmakers demanded this week that their opposition rivals be investigated for, among other things, money laundering and cocaine trafficking. (Reuters, 08-15-2013; http://www.reuters.com/article/2013/08/15/us-venezuela-sleaze-idUSBRE97E13O20130815; The Washington Post, http://www.washingtonpost.com/world/the_americas/governing-party-legislator-hurls-homophobia-laced-attack-against-venezuelas-opposition/2013/08/14/235a9948-0548-11e3-bfc5-406b928603b2_story.html)

Spanish gov't amenable to dialogue with Venezuela

The Spanish government is insisting on clearing the way for an agreement with the Venezuelan government and says it respects State's right to nationalize businesses, provided that international law is observed and the appropriate fair price is paid. (El Universal, 08-14-2013; http://www.eluniversal.com/nacional-y-politica/130814/spanish-govt-amenable-to-dialogue-with-venezuela)


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 19, 2013

Economics & Finance

Venezuelan bonds do the collapse

It’s been a rough few days for Venezuelan bonds. Since peaking on April 10 ahead of this past weekend’s elections to replace Hugo Chavez as president of that Latin American nation, a 10-year government bond has dropped 5.3% and is down 8.7% since its high on Mar. 5. And now the once popular bonds are also losing their appeal to strategists and investors, as close elections raise questions about the stability of the county. Venezuela’s bonds were once much loved by investors. With their big coupons and the country’s capacity to pay thanks to hefty oil revenues, many bond managers found them more appealing than those of other high-yielding nations like Ukraine and Argentina. (Latin American Herald Tribune, 04-17-2013; http://www.laht.com/article.asp?ArticleId=750431&CategoryId=10717)

Fitch: Close Venezuelan election fails to dispel uncertainty

The unexpectedly close election outcome in Venezuela’s presidential race has created a more dynamic and uncertain political situation, which could influence the new government’s approach to economic policy and its ability to govern effectively, according to Fitch. President-elect Nicolas Maduro’s failure to capture a clear electoral mandate could complicate the task of making policy adjustments to rebalance the Venezuelan economy. This could slow progress toward the reduction of fiscal and external vulnerabilities that could undermine growth and erode sovereign creditworthiness. (Latin American Herald Tribune, 04-17-2013; http://www.laht.com/article.asp?ArticleId=750342&CategoryId=10717)

Commodities

Russian oil giant ROSNEFT to participate in Orinoco Oil Belt development

Russian oil company ROSNEFT will participate in blocks Carabobo 2 north and Carabobo 4 west in the Orinoco Oil Belt, Venezuela. ROSNEFT's share is 40% while PDVSA holds 60%. The agreement is for construction of a refinery with annual total output estimated at ten million tons to enhance the quality of the oil extracted for export 2 oil reserves total 40 billion barrels approximately. (El Universal, 04-18-2013; http://www.eluniversal.com/economia/130418/russian-oil-giant-rosneft-to-participate-in-orinoco-oil-belts-activiti)

Fire lashes refinery in Northwest Venezuela

A fire was reported at Cardón refinery in Northwest Venezuela, after midnight on Wednesday. The incident seems due to a leak in one of the plant's pumps. No one was reported injured but damages extend to a large part of the plant's MEK de-waxing unit (MDU). Iván Freites, Executive Secretary of the United Federation of Venezuelan Oil Workers (FUTPV) explained that a defective seal in pump G-18 caused a leak of oil transferred to furnace A-18 in the MDU. He said fire destroyed nearly 70-80% of the unit which " needs to be rebuilt." (El Universal, 04-18-2013; http://www.eluniversal.com/economia/130418/fire-event-lashes-refinery-in-northwest-venezuela)

Venezuela says OPEC may hold special meeting

Members of the Organization of Petroleum Exporting Countries are discussing holding a special meeting following the recent drops in international oil prices, Venezuela Oil Minister Rafael Ramirez told reporters Thursday. "We're watching the price of oil, and we're being careful," Mr. Ramirez said at the central office of state energy company Petroleos de Venezuela SA, which is also headed by the minister. "We've been in discussions over whether or not they are going to call a special meeting of OPEC. We've maintained that there is oversupply of oil in the market," said Mr. Ramirez, repeating his government's frequent calls to hold a "floor" of $100 a barrel. (Fox Business, 04-18-2013; http://www.foxbusiness.com/news/2013/04/18/venezuela-says-opec-may-hold-special-meeting/#ixzz2QrBgeN8b)

Politics

Conceding to opposition, election council to audit Venezuela vote

Government supporters began filling the streets of Caracas today to celebrate the inauguration of Nicolás Maduro, even as opponents greeted officials’ surprise announcement they will accept an audit of the disputed vote that handed a narrow margin of victory to the heir of late President Hugo Chavez. Opposition candidate Henrique Capriles said the audit announced late last night will prove he won the presidency, but officials appear to be confident there will be no reversal of the result when the count is finished, long after Nicolas Maduro is legally sworn in for a new term as president. Still, the audit was a sudden reversal for a government that insisted all week that there would be no review of Sunday’s vote and took a hard line against the opposition that included allegedly brutal treatment of protesters. The announcement appeared to be the result of pressure from at least some of the South American leaders who called an emergency meeting in Lima, Peru, Thursday night to discuss Venezuela’s electoral crisis — and wound up endorsing Maduro’s victory. Even if it leaves the vote standing and calms tensions in the country, the recount will strengthen the Venezuelan opposition against a president whose narrow victory left him far weaker than his widely popular predecessor Chavez, analysts said. That will complicate Maduro’s effort to consolidate control of a country struggling with steep inflation, shortages of food and medicines, chronic power outages and one of the world’s highest homicide and kidnapping rates. Venezuela’s National Electoral Council said just before the start of the meeting in Lima that it would audit 46% of the vote not already scrutinized on election night. An electoral official told The Associated Press that the new process, to start next week, would replicate the one from election night. (The Washington Post, 04-18-2013; http://www.washingtonpost.com/world/the_americas/post-election-venezuela-crackdown-deemed-worst-in-years/2013/04/18/df5f153a-a88f-11e2-9e1c-bb0fb0c2edd9_story.html)

JP Morgan: Signs of a negotiated solution

New developments overnight suggest an attempt at a negotiated solution to the political crisis that followed the narrow victory of the government candidate Nicolas Maduro over opposition leader Henrique Capriles. Currently with 99.2% of votes counted the CNE has given Maduro 50.75% of the valid vote, compared to 48.98% for Capriles -- a difference of some 262k votes.  Last evening, in chronological order: 1. Venezuela's electoral authority (CNE) announced that it would grant a full audit of the 46% of ballot boxes that were not audited immediately after April 14.  This does not entail a full vote-by-vote recount; rather a relevant sample of the paper receipts of each ballot box will be compared with the official electronic tabulation.  The CNE said this process will take 30 days and they would provide regular updates every 10 days. 2. Henrique Capriles held a press conference in which he said he was satisfied with the CNE's response and confident that his concerns over irregularities would be revealed in the 46% of remaining ballot boxes. Capriles said he was prepared to go to a regional UNASUR presidential summit last night to discuss the crisis, but he stayed in Caracas to respond to the CNE ruling. He also called for calm and "no anarchy" at today's inauguration, which his supporters should peacefully protest by banging pots and pans (cacerolazo) and blaring salsa music. 3. The UNASUR summit in the early morning hours of Friday issued a declaration recognizing Maduro's election but praising the CNE's audit decision, and calling on all sides to respect the CNE's final conclusions. The summit declaration also deplored the violence that followed the result and agreed to send a commission to follow the investigation into those events. In our view, the way the events unfolded suggest some kind of negotiated solution took place yesterday. In sum, regional leaders agreed to recognize Maduro, but only on the condition of the CNE conceding the vote audit. For his part, Capriles would agree to recognize the CNE results and not disrupt Maduro's inauguration today. The successive timing of these announcements yesterday night (1. CNE, 2. Capriles, 3. UNASUR -- with all the presidents up well after midnight) suggests this agreement was to some degree negotiated beforehand and coordinated, which should help reinforce its goal in easing the crisis. Indeed, barring some unexpected twist we think the immediate crisis should ease, and the immediate risks that the crisis will escalate into outright institutional breakdown are lower. Market focus should gradually shift to analyzing Maduro's relative political strength going forward and his ability to address economic concerns. We think there are still major questions surrounding both issues, and will watch for signals in the coming days to hopefully provide more clarity. (JP Morgan Latin America Emerging Markets Research; https://markets.jpmorgan.com/research/EmailPubServlet?action=open&hashcode=-c9n0tnb&doc=GPS-1099819-0.html)

Opposition legislators to refrain from attending presidential inauguration

Venezuelan opposition legislators announced they will not quit the National Assembly although Speaker Diosdado Cabello has barred from speaking those who have not recognized Nicolás Maduro as newly elected president of Venezuela. Opposition deputy Leomagno Flores says ruling party legislators simply seek the withdrawal of opposition deputies from the National Assembly to freely appoint representatives in the National Electoral Council, judges in the Supreme Tribunal of Justice, the Comptroller, among others. (El Universal, 04-18-2013; http://www.eluniversal.com/nacional-y-politica/130418/opposition-legislators-to-refrain-from-attending-presidential-inaugura)

Maduro trades barbs with U.S. over Venezuela election

Venezuela's opposition leaders feared persecution over post-election protests while the U.S. government backed their calls for a recount and said on Wednesday it was still deciding if it would recognize President-elect Nicolas Maduro.

The narrow victory by Maduro in Sunday's presidential vote has been rejected by his rival, Henrique Capriles, who is alleging thousands of irregularities at polling centers and wants a full audit of the ballots. Washington said it had not decided whether to recognize Maduro, a former bus driver-turned-foreign minister who was picked as successor by the late socialist leader Hugo Chavez. (Reuters, 04-17-2013; http://www.reuters.com/article/2013/04/18/us-venezuela-election-idUSBRE93F0RU20130418)

Kerry Encourages Venezuela Recount

Secretary of State John Kerry said Wednesday that Venezuela should hold a recount of votes cast in its presidential election, which the country’s electoral authorities say was narrowly won by a protégé of former President Hugo Chávez. Mr. Kerry, in comments to a House committee, said, “We think there ought to be a recount.” He added that he had not yet evaluated whether Washington would recognize Mr. Maduro’s victory. (The New York Times, 04-17-2013; http://www.nytimes.com/2013/04/18/world/americas/kerry-encourages-recount-in-venezuela.html?_r=0)

HRF calls for peaceful solution of Venezuela's political crisis

Following the political crisis arising from the results of the presidential election held in Venezuela on April 14, the Human Rights Foundation has called on Venezuelan authorities and opposition leaders to come to terms.

The organization also expressed in its statement its rejection to reported physical aggressions against opposition deputies Julio Borges and William Dávila by Government's supporters. (El Universal, 04-18-2013; http://www.eluniversal.com/nacional-y-politica/130418/hrf-calls-for-peaceful-solution-of-venezuelas-political-crisis)

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.

February 24th, 2012

Economics & Finance

Chavez cancer surgery spurs investors to buy Venezuela debt

Venezuela’s bonds rose, sending yields relative to Treasuries to the lowest in 21 months, after President Hugo Chavez said he’ll travel to Cuba for another cancer operation, spurring speculation he may not be able to run in October elections. The extra yield investors demand to own Venezuelan government bonds instead of U.S. Treasuries fell 30 basis points, or 0.30 percentage point, to 988 at 12:38 p.m. in New York, according to JPMorgan Chase & Co.’s EMBI Global index. That compares to an average four basis-point decline in Latin America. (Bloomberg, 02-22-2012; http://www.bloomberg.com/news/2012-02-22/chavez-cancer-surgery-spurs-investors-to-buy-venezuela-debt-caracas-mover.html; El Universal; http://www.eluniversal.com/economia/120222/venezuelan-debt-rebounds-for-uncertainty-about-chavezs-health)

Spanish companies lose interest in Venezuelan market

The Venezuelan market is becoming less and less attractive for Spanish companies. Such is the conclusion from the report "2012: An Overview of Spanish Investment in Latin America," prepared by the IE Business School, based in Madrid. According to their research, countries like Brazil, Colombia, Mexico and Peru still attract Spanish investment. The opposite happens with Venezuela. (El Universal, 02-23-2012;

http://www.eluniversal.com/economia/120223/spanish-companies-lose-interest-in-venezuelan-market)

Private construction dropped 70% over the past two years

The president of the Venezuelan Construction Chamber, Juan Francisco Jiménez, says private construction has dropped 70% over the last two years. The situation was described as serious by the business leader, who said that the construction industry is necessary for the country's development. (El Universal, 02-23-2012; http://www.eluniversal.com/economia/120223/private-construction-drops-70-in-the-past-two-years)

Commodities

Is Venezuela on the cusp of a post-Chavez oil boom?

If Venezuelan President Hugo Chavez is forced to drop his bid for re-election for health reasons, will the primary repercussion for the West be the exit of a voluble thorn in the side? Perhaps, but it will also mean the prospect of yet more newly available oil reserves -- on top of the widely projected U.S. shale oil bonanza. The takeaway: If the shale oil projections are accurate, and Chavez leaves politics under whatever scenario, we have the prospect of a geopolitical shakeup analogous to what has accompanied the rise of shale gas. Venezuela has the largest proven oil reserves on the planet -- 296 billion barrels, according to OPEC figures. The number is slightly misleading: Saudi Arabia's 264 billion barrels are higher quality and cheaper to produce than the extremely heavy crude of Venezuela's Orinoco Basin; yet Venezuela's reserves are so massive that such details almost don't matter. (The Oil and Glory, Foreign Policy, 02-22-2012; http://oilandglory.foreignpolicy.com/posts/2012/02/22/is_venezuela_on_the_cusp_of_a_post_chavez_oil_boom)

Catalytic cracking unit starts up at Venezuelan refinery

The catalytic cracking unit at PDVSA's Cardón refinery, Venezuela's second largest oil plant, began a start-up process, according to oil workers. The 89,000 bpd unit shut down last Monday due to a failure in a valve of steam equipments.

"Getting back to normal can take more than six hours," said an oil worker who preferred not to be identified by name, as quoted by Reuters. (El Universal, 02-23-2012; http://www.eluniversal.com/economia/120222/catalytic-cracking-unit-starts-up-in-venezuelan-refinery)

Around 80 CVG Alcasa workers chained themselves to the gates of the company to demand payment of insurance premiums, food tickets and severance, among others. Protestors say their bargaining collective agreement expired four years ago. (Veneconomy, 02-23-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29527&idc=3)

Venezuelan government would need six years to reach the 500,000 barrels a day production increase offered for this year if it continues with the present oil policies. Tax conditions for investment in Venezuelan oil are poorly perceived and the State cannot face the increasing needs for capital to dynamize the industry on its own. (Veneconomy, 02-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29511&idc=4)

HOVENSA: St Croix refinery shutdown completed

HOVENSA LLC completed the shutdown of its 350,000 barrel-a-day refinery on the U.S. Virgin Island of St. Croix, the company said. On Jan. 18, the company announced the refinery shutdown and said the complex will be operated as an oil storage terminal going forward. That plan is subject to the completion of negotiations with the government of the Virgin Islands, the company said. (Fox Business, 02-22-2012; http://www.foxbusiness.com/news/2012/02/22/hovensa-st-croix-refinery-shutdown-completed/)

International Trade

Lack of technology raises shipping costs, according to specialists, who say that as long as there is no modernization costs of shipping to Venezuela will remain above other ports in the region. As an example, shipping a 40 foot container from Shanghai to Colón, in Panama, costs an average U$D 2.600 dollars, yet costs to Puerto Cabello or La Guaira rise to some U$D 4.200 dollars, due to technology shortcomings unloading. More in Spanish: (Notitarde, 02-24-2012; http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1567529&idcat=9849&tipo=2; El Carabobeño, http://www.el-carabobeno.com/litoral/articulo/29471/comunidad-martima-preocupada-por-incremento-de-fletes)

Politics

Chavez surgery rocks Venezuela ahead of election

Venezuelan President Hugo Chavez's imminent departure for more cancer surgery in Cuba has thrown his re-election campaign into uncertainty and once again shaken the socialist leader's passionate supporters.

Though the 57-year-old former soldier looked stoic and played down the dangers of his latest condition, the announcement inevitably raises questions over his ability to stand for the Oct. 7 presidential vote - or rule beyond it. (Reuters, 02-22-2012; http://www.reuters.com/article/2012/02/22/venezuela-chavez-idUSL2E8DM2EM20120222; Fox News, http://www.foxnews.com/world/2012/02/22/chavez-surgery-throws-venezuela-into-uncertainty/; The Wall Street Journal, http://online.wsj.com/article/SB10001424052970203960804577239753236433604.html?KEYWORDS=venezuela; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=472213&CategoryId=10717)

President Chavez is fully fit to govern the country

Executive Vice-President Elias Jaua says that President Hugo Chavez, has full capacity to continue heading the National Government, and denied that there would be a temporary absence which would make him assume the presidency. (AVN, 02-23-2012; http://www.avn.info.ve/node/100444; Bloomberg, http://www.bloomberg.com/news/2012-02-23/venezuela-s-jaua-says-won-t-hold-presidency-in-chavez-s-absence.html; El Universal, http://www.eluniversal.com/nacional-y-politica/120223/vp-jaua-no-need-to-act-in-president-chavezs-stead))

PSUV ratifies Chávez as its presidential candidate

National Assembly President and PSUV Vice President Diosdado Cabello has announced that President Chávez has been ratified as their presidential candidate. “Chávez is and will continue being our candidate,” he said. He announced the National Assembly approved President Chávez’ request to travel to Cuba to undergo surgery. (Veneconomy, 02-23-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29524&idc=1)

"Telling the truth is a democratic duty"

In a short statement, Venezuela's opposition umbrella group Unified Democratic Panel (MUD) lashed out at Hugo Chávez's administration for the "secrecy, lack of accurate, clear and reliable medical information" about the president's health. The MUD commented that due to the government's attitude lots of rumors have spread about the president's health. "The harmful consequences of the lack of transparency in reporting this information can be substantially blunted with responsible, clear and timely reporting," the text cited. (El Universal, 02-23-2012; http://www.eluniversal.com/nacional-y-politica/120223/telling-the-truth-is-a-democratic-duty)

Supreme Court fines opposition for burning voter registries

The Supreme Court fined the head of the opposition coalition’s election body 15,200 bolivars ($3,500) for defying an order to hand over voter lists compiled during a Feb. 12 primary and instead burning the register to preserve voter anonymity. The Supreme Court ruled that Teresa Albanes allowed the registry books to be burned in spite of the ruling that followed a candidate’s complaint, according to a statement. The attorney general’s office is studying whether Albanes could be imprisoned, the court said in the statement. (Bloomberg, 02-23-2012; http://www.bloomberg.com/news/2012-02-23/venezuela-court-fines-opposition-for-burning-voter-registries.html)

As others isolate Syria, Chávez ships fuel to It

A day before the United Nations General Assembly voted overwhelmingly to condemn President Bashar al-Assad of Syria this month for his bloody crackdown on the uprising in his country, President Hugo Chávez of Venezuela was conducting a very different kind of diplomacy on his own. A ship owned by the Venezuelan state oil company sailed into the Syrian port of Baniyas, its location captured by a satellite system that tracks ship movements. The ship, making its second trip to Baniyas since December, appeared to be carrying fuel to help prop up the embattled Mr. Assad. The Venezuelan shipment flies in the face of international efforts to isolate Mr. Assad and pressure him to step down, but Mr. Chávez is no stranger to such controversy. Last month, he played host to another Middle Eastern ally, President Mahmoud Ahmadinejad of Iran, ridiculing Western claims that Iran was seeking to be able to produce nuclear weapons. (The New York Times, 02-23-2012; http://www.nytimes.com/2012/02/23/world/americas/chavez-appears-to-use-venezuelan-fuel-to-help-syrias-assad.html?_r=1; UPI; http://www.upi.com/Business_News/Energy-Resources/2012/02/23/Caracas-defends-Syrian-oil-shipment/UPI-39191330002676/)

Census: preliminary count at 27.150.095

Venezuela has a population of 27.150.095 habitants, according to preliminary results from the latest census, and adjusted results could come to 28.800.000, which would be 1.6% annual growth since 2001. 66.6% of the population is calculated to be at working age, between 15 y 64 years old; 27.6% under 14 years of age; and 5.8% over 65 years old. More in Spanish: (AVN, 02-24-2012; http://www.avn.info.ve/node/100456)

December 09th, 2011

Economics & Finance

Inflation rises above 27%

The Central Bank says the country's annual inflation has risen to 27.6%. Monthly inflation was 2.2% in November, up from 1.8% in October. Annual inflation rose slightly from the 26.9% rate recorded in October. The country has had Latin America's highest inflation for the past six years. Increasing government economic controls, heavy reliance on imports and an expanding money supply have contributed to the problem; and the government is attempting to fight inflation through a new law that expands price controls to a wider range of goods and gives the government more enforcement authority. (CBS News, 12-06-2011; http://www.cbsnews.com/8301-505245_162-57338099/venezuela-inflation-rises-above-27-percent/)

Chavez: Venezuela willing to talk with EXXON MOBIL

President Chavez says his government would be open to negotiating with EXXON MOBIL Corp. in a dispute over the nationalization of an oil project in the country. Venezuelan officials have previously said EXXON MOBIL's compensation demands are excessive. The Irving, Texas-based oil company turned to international arbitration after refusing to accept the terms of the nationalization in 2007. Chavez says he would be willing to "sit down with them and seek a friendly settlement, but that's up to them and not to us." Exxon Mobil declined to comment. (Google - AP, 12-07-2011; http://www.google.com/hostednews/ap/article/ALeqM5ictWfIOK_vp3bxboW7sRC3hDeyIg?docId=1219462a05ea4558850ca349e9734c5f)

PDVSA triples contributions to state

State oil company PDVSA more than tripled contributions to President Hugo Chavez's social programs and development fund in the first half of 2011 compared to the same period last year, company results show. PDVSA's first-half figures show a massive, ten-fold hike in contribution to Chavez's off-budget special development fund FONDEN to U$D 7.3 billion, compared with U$D 691 million during the same period of 2010. Transfers to existing "missions" -- the social projects in slums and other poor areas that have assured Chavez's popularity among the poor in a 13-year rule -- nearly doubled to U$D 8.5 billion from U$D 4.5 billion. A new "Great Housing Mission", under which Chavez hopes to solve Venezuela's two million housing unit deficit in coming years, took another U$D 2.4 billion, the results showed. The total increase in contributions to the state over the period -- from U$D 5.2 billion to U$D 18.2 billion -- was in keeping with an accelerating spending spree by the government ahead of a 2012 presidential vote. (Reuters, 12-07-2011; http://uk.reuters.com/article/2011/12/07/venezuela-pdvsa-idUKN1E7B60GE20111207)

PDVSA Social is announced for investments from retirees

President Chavez announced the organization of another subsidiary of state-run oil holding Petróleos de Venezuela, C.A. (PDVSA), in which retirees may invest their funds in order to strengthen the social security system. "We have been working on this idea for quite a while and time has come to launch it in order to provide financial and economic sustainability to universal social security for everyone," he said; adding that this new subsidiary will have assets, goods and probably some oil fields within the Orinoco Oil Belt. (El Universal, 12-07-2011; http://www.eluniversal.com/economia/111207/pdvsa-social-is-established-for-retirees-to-invest)

PETROBOND issue reaches U$D 9.32 billion

Félix Franco, president of the Venezuelan Public Stock Exchange, says PETROBONDS to be issued for payment of labor liabilities will come to U$D 9.32 billion. The issue was announced by President Chavez on Tuesday evening.

Franco, based on the performance of VEBONDS, has estimated the coupon for PETROBONDS around 17%. (El Universal, 12-07-2011; http://www.eluniversal.com/economia/111207/issue-of-petrobond-reaches-usd-932-billion)

Commodities

Work stoppage ended at SIDOR

Operations at steel maker Siderúrgica del Orinoco (SIDOR) are again running. After contractual operators and SIDOR president Carlos D'Oliveira agreed to set up round tables to negotiate their incorporation as into staff. "Yesterday (Tuesday) night, the stoppage was lifted and the furnace got started. In the meantime, in the early hours of this Wednesday, the production of rebars began. Therefore, 60 trucks loaded with 1,750 tons of rebars are to be dispatched on a daily basis," says Néstor Astudillo, corporate marketing manager. (El Universal, 12-07-2011; http://www.eluniversal.com/economia/111207/stoppage-at-sidor-is-over)

Failure at Cardón refinery hits production

One day after PDVSA officials reported a shutdown in a unit at Amuay refinery, in Northwestern Venezuela, inside sources reported another failure in Cardón refinery. The two crude oil refineries are within the Paraguaná Refinery Complex (CRP). Iván Freites, Secretary General of the Falcón State industry union says there was a shutdown at the delayed coking unit of Cardón refinery. (El Universal, 12-07-2011;  http://www.eluniversal.com/economia/111207/failure-at-cardon-refinery-hits-production)

Businessmen fear another downturn in construction

Juan Francisco Jiménez, president of the Venezuelan Construction Chamber, says construction activity will plunge in the fourth quarter of the year due to a shortage of supplies and legal uncertainty. He specified that the supply of cement is irregular. "If building grows, the production of cement must rise, but it has not reached the levels attained in 2008 and 2009."  (El Universal, 12-07-2011; http://www.eluniversal.com/economia/111207/businessmen-fear-another-downturn-in-construction)

PDVSA profits up to U$D4.1 billion in the semester 2011

The profits of the State oil company were up around an inter-annual 60% to U$D 4.1 billion in the first half of this year due to higher oil prices, according to local daily El Universal. Revenues for oil exports and food sales went up around 37% to U$D 64.1 billion from January to June, in proportion with the 37.3% increase in the Venezuelan oil basket. (Veneconomy, 12-07-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28768&idc=4)

International Trade

Chavez says China could soon surpass US as Venezuela’s top trade partner

President Chavez says that China could surpass U.S. as Venezuela’s No. 1 trade partner due to a strategic alliance between the two countries. He says trade between Venezuela and China has reached U$D 20 billion this year, up from U$D 600 million just over a decade ago. It is growing at a rate of U$D 2 billion a year. Trade between the United States and Venezuela has reached U$D 33.5 billion so far this year, according to the U.S. Census Bureau.  Last month, Chinese officials signed $6 billion in new loans to Venezuela aiming to boost the South American country’s oil industry. China has swiftly become Venezuela’s biggest foreign lender in recent years. The Asian giant had previously agreed to more than $32 billion in loans. Venezuela, in turn, is increasing oil shipments to China. (Washington Post, 12-06-2011; http://www.washingtonpost.com/world/americas/hugo-chavez-says-china-could-soon-surpass-us-as-venezuelas-top-trade-partner/2011/12/06/gIQAQkZRaO_story.html)

Venezuela signs agreements with Russia for housing, agriculture

The governments of Venezuela and Russia set up 10 working groups to continue developing agreements in housing, energy, mines, agriculture, sports, culture, foreign policy, industries, science and information technology.

The groups will monitor agreements signed between Venezuela and Russia. Executive Vice-President Elias Jaua says it was agreed to build 30 thousand new housing units in Venezuela with Russia's cooperation. (AVN, 12-08-2011; http://www.avn.info.ve/contenido/venezuela-settles-accords-russia-housing-agriculture; El Universal; http://www.eluniversal.com/nacional-y-politica/111207/venezuelan-vp-in-moscow-to-sign-agriculture-and-oil-agreements)

Vladimir Putin says Venezuela-Russia trade has increased 10 fold

After a meeting in Moscow with Venezuela´s Executive Vice President Elías Jaua, Russian Prime Minister Vladimir Putin remarked: “I would like to mention one fact: From January to September this year bilateral trade has increased 10 times”. More in Spanish: (AVN, 12-09-2011; http://www.avn.info.ve/contenido/putin-intercambio-comercial-venezuela-rusia-ha-aumentado-10-veces)

Venezuela receives third ocean patrol vessel from Spain

Spain has delivered to the Venezuelan Army the third of four ocean patrol vessels contracted with the naval builder NAVANTIA. The Yekuana (PC-23) will join surveillance of Venezuelan coasts. The commander general of the Army, Admiral Diego Alfredo Molero Bellavia, presided over the ceremony at NAVANTIA's shipyard, in Cádiz Bay. A Venezuelan crew will bring the Yekuana to Venezuela. (AVN, 12-08-2011; http://www.avn.info.ve/contenido/venezuela-receives-third-ocean-patrol-vessel-spain)

Politics

Chavez tells international media he would concede an eventual opposition win

At a press conference marking the 13th anniversary of his first election, President Chavez told foreign correspondents “We will recognize election results, and always have, whether in favor or against”; he predicted his own victory by a 4 million vote margin and said that the opposition should be asked whether they would recognize his own victory. He also said he is “on the lookout” about the accession of Mariano Rajoy as head of the Spanish Government and added he will not tolerate any intervention into Venezuelan affairs on the part of Spain. More in Spanish: (El Universal, 12-07-2011; http://www.eluniversal.com/nacional-y-politica/111207/chavez-dijo-que-reconoceria-una-eventual-victoria-opositora#.Tt_m243mESU.twitter)

An email saying Hugo Chavez was dead grew Venezuelan bond prices

If Venezuelan and PDVSA bonds are worth some $60 billion, then yesterday a computer virus made them gain about $1.2 billion, just like that, as the virus was embedded in an email with a headline mourning the death of none other than Hugo Chavez. The whole thing was bizarre. An email purportedly showing a page from Panama’s La Prensa was circulating, saying “All of Venezuela in Mourning” because of Chavez’ death. But the whole thing turned out to be a virus, as if you clicked in the video of Chavez, it would download a virus which supposedly takes over your PC. Some people did not even click, they believed the news and it spread all the way to debt markets, where it had a not-insignificant effect. The underlying truth is that debt markets would have an incredible rally if there was the possibility of political change in Venezuela. (The Christian Science Monitor, 12-08-2011; http://www.csmonitor.com/World/Americas/Latin-America-Monitor/2011/1208/How-an-email-saying-Hugo-Chavez-was-dead-grew-Venezuelan-bond-prices)

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.