May 22, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• 13,090 tons of beef and chicken from Brazil for state agency CASA
• 1,768 tons of whole milk powder from Brazil for state agency CASA
• 1,117 tons of margarine from Brazil, also for CASA

Cargo that has arrived at Maracaibo Port

• 23,400 tons of wheat for MONACA

Eight ships are currently offloading, two bulk cargo and another containers. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-15-mil-toneladas-de-alimentos-2419184/2015/05/19/513175/; http://www.notitarde.com/La-Costa/Buques-con-alimentos-esperan-muelle-2420166/2015/05/20/513343/; Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=9535)

 

 

Logistics & Transport

 

Domestic air carriers to increase fares 400%

Captain Jorge Alvarez, head of the Venezuelan Chamber of Air Transport Companies’ (CEVETA). Venezuelan aeronautics officials authorized AVIOR, ASERCA, LASER, VENEZOLANA, RUTACA and ALBATROS an average 15% increase in domestic routes “immediately and gradually.” The National Tourism Council (CONSETURISMO) says the rate increase is 400%. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43967&idc=3; and more in Spanish:

 (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/conseturismo-confirmo-ajuste-de-hasta-400-en-bolet.aspx#ixzz3arIHGGTz)

 

 

Oil & Energy

 

Exxon reports oil find in disputed area in Guyana is "significant", Guyana seeks rapprochement with Venezuela

ExxonMobil reports a "significant" oil find in waters disputed by Venezuela on the Guyana coast. The company says it discovered over 295 feet of sandy oil reserves in the Stabroek area - which is around 120 miles from Guyana in waters claimed by Venezuela. Recently elected Guyanese President David Granger met with the Secretary General of CARICOM and the Brazilian and Venezuelan ambassadors and underlined the importance of PETROCARIBE to Guyana. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/exxon-hallazgo-de-crudo-en-aguas-disputadas-con-gu.aspx#ixzz3alUHTUCA; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/exxon--hallazgo-de-crudo-en-aguas-disputadas-con-g.aspx; Notitarde; http://www.notitarde.com/Economia/Acercamiento-entre-Guyana-y-Venezuela-2419027/2015/05/19/513182/; El Universal, http://www.eluniversal.com/nacional-y-politica/150520/venezuela-solicita-al-presidente-guyanes-tratar-controversia)

 

Blackout hits Falcón, Carabobo, Miranda, and Yaracuy states; El Palito Refinery shut down

Venezuela's state-run National Electric Corporation (CORPOELEC) reported that a failure in Planta Centro power substation has cut electricity supply in Falcón state (northwest Venezuela). El Palito Refinery shut down after the blackout, workers told Reuters - but has started operations again. (El Universal, http://www.eluniversal.com/economia/150520/blackout-hits-falcon-carabobo-miranda-and-yaracuy-states; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43971&idc=4; El Universal, http://www.eluniversal.com/economia/150520/operations-at-el-palito-refinery-come-to-a-halt-due-to-power-outage; and more in Spanish: El Economista, http://eleconomista.com.mx/industria-global/2015/05/20/pdvsa-reinicia-operacion-refineria-tras-apagon; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/falla-en-planta-centro-afecta-refineria-el-palito.aspx; El Nacional; http://www.el-nacional.com/)

 

 

Economy & Finance

 

Venezuelan international reserves dropped 26.2% over the last 45 days, as a result of low oil prices, according to a report from BANCTRUST. Reserves went from US$ 24.2 billion at the end of February to US$ 17.8 billion in mid-May. The investment firm’s analysts estimate the cash flow deficit at US$ 10.7 billion, taking into consideration the average price of the Venezuela’s oil export. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43957&idc=2)

 

Parallel exchange rate is soaring

The parallel exchange rate went from 350 to 392 bolívares to the U$ yesterday, and then went past 400 for the first time. ECOANALÍTICA director Asdrúbal Oliveros predicts "this will continue unless the government takes action" (El Nacional; http://www.el-nacional.com/)

 

Pros and cons of dollarization analyzed

A recent report by ODH Análisis Venezuela indicates that dollarizing the economy would end inflation but would imply a severe drop in personal income that would make Venezuela the second lowest in the region after Cuba. Venezuela would go from being the fifth largest economy in Latin America to the 22nd. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Bonds down after Goldman-Sachs projections on oil

Sovereign and PDVSA bonds dropped an average 2.25 points after a report from Goldman-Sachs on the future price of oil. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/bonos-caen-por-proyecciones-de-goldman-sachs-sobre.aspx#ixzz3afiuIjNK)

 

NOMURA says oil prices are not high enough to cover Venezuelan imports and debt

A report by Asia's NOMURA says current oil prices "are not high enough to finance imports and pay debts". It adds that Venezuela is further hampered by lack of access to financial markets and low foreign direct investment. NOMURA adds - in reference to falling Central Bank reserves - that "the fact that the vaults storing the grandmother's jewels are close to being exhausted does not help". It says the possibility of reform seems remote. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

UN report says Venezuela's economy could grow 1% in 2016

An UN economic report estimates Venezuela's economy could grow 1% next year. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/onu-estima-que-economia-venezolana-crecera-1-en-20.aspx#ixzz3afgmqzFE; El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/onu-estima-que-economia-venezolana-crecera-1--en-2.aspx; http://www.elmundo.com.ve/noticias/economia/banca/onu--empeoran-previsiones-para-la-economia-latinoa.aspx)

 

 

Politics and International Affairs

 

Parliament head Cabello denies drug accusations - is backed by Maduro, the Supreme Tribunal and legislature

The Venezuelan government's second most powerful figure, Captain Diosdado Cabello, has denied any involvement in the drug trade after U.S. media reports that he and other officials were under investigation for trafficking and money laundering. Stories in the Wall Street Journal and New York Times outlined long-simmering accusations from the United States that the governments of President Nicolas Maduro and his predecessor, Hugo Chavez, have facilitated cocaine shipments. In an unprecedented move, Gladys Gutiérrez, head of Venezuela's Supreme Tribunal, called press reports lacking "any credible or possible basis" and says the are "seeking to illegitimately discredit Venezuelan institutions". She opened the way to penalize anyone who repeats the information, saying "as we know, when lacking veracity they bring sanctions within our legal system". Concurrently, pro-government legislators at the National Assembly passed a resolution expressing solidarity with Cabello and will join the suit brought by him against local media that have reflected international reports. Lawyers here call the high court's statement unique in Venezuelan history that was made without considering the facts or following a trial, and believe it is tantamount to an anticipated sentence on Cabello's suit against 22 local newspaper executives for publishing the news. (Reuters, http://www.reuters.com/article/2015/05/20/us-venezuela-usa-probe-idUSKBN0O42O720150520; El Universal, http://www.eluniversal.com/nacional-y-politica/150521/venezuelan-top-court-terms-unfounded-accusations-against-cabello; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/150520/an-aprueba-desagravio-en-solidaridad-con-cabello;  http://www.eluniversal.com/nacional-y-politica/150521/tsj-carece-de-basamento-acusacion-contra-cabello; El Nacional; http://www.el-nacional.com/)

 

Spain's Felipe González calls on Venezuela to investigate Cabello, plans visit in June

Spain's former president Felipe González called the reaction by the Venezuelan regime "logical" and said Cabello must be presumed innocent until proven otherwise, but added that the government here should react by "carrying out its own investigation to find out what is true". He added that the only way out of the "delicate" situation here is "a dialogue to restore all the conditions for democratic tolerance within the constitution". González was expected to travel this week to Caracas, as part of his initiative to defend detained dissenter leaders Leopoldo López and Antonio Ledezma; however, he put off his travel until a new trial hearing against López was re-scheduled. (El Universal, http://www.eluniversal.com/nacional-y-politica/150521/ex-president-felipe-gonzalez-plans-visit-to-venezuela-in-june; and more in Spanish: Infolatam: http://www.infolatam.com/2015/05/21/venezuela-debe-investigar-acusaciones-contra-cabello-dice-felipe-gonzalez/)

 

Sanctioned government officials sue Capriles, Táchira Governor disqualifies imprisoned opposition candidate

Internal Affairs, Justice and Peace Minister Major General Gustavo González-López reports that the seven officials sanctioned by the US are suing Miranda’s Governor Henrique Capriles Radonski over "false accusations", and that Capriles “will have to explain in a court of law why he called seven Venezuelan officials of dignity, corrupt and parasites (enchufados).” He was referring to the seven government officials sanctioned by the US government. At the same time, Táchira Governor José Gregorio Vielma Mora said Daniel Ceballos, former San Cristóbal Mayor and recently elected the MUD candidate to the legislative elections in last Sunday’s opposition primaries would have been banned from holding public office for a year, for failing to submit his sworn declaration of property when he swore in as Mayor of San Cristóbal. Capriles responded by saying "it is an honor for me that a group of those plugged in are evading their responsibilities by attacking me" and added "if telling the truth brings on lawsuits, let there be many". (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43959&idc=1; http://www.veneconomy.com/site/index.asp?ids=44&idt=43969&idc=1; and more in Spanish: More in Spanish: El Nacional; http://www.el-nacional.com/)

 

Opposition favored to win legislature, 87% intend to vote despite distrust of CNE

A study by the Political Studies Center's Electoral Integrity Project shows despair over the nation's situation has increased, as well as mistrust of the National Elections Council, but there is citizens are highly disposed to vote as a way out of the crisis. 87% of those polled plan to vote in parliamentary elections "whatever goes on". 64% distrust the National Elections Council. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Maduro meets with US special envoy to Colombian peace talks

President Nicolás Maduro has met here with Bernard Aronson, US special envoy to Colombian peace talks, according to Venezuela's Foreign Affairs Minister Delcy Rodríguez. US President Barack Obama appointed Aronson first special envoy to Colombian peace talks held in Havana between the government of Colombia and the Colombian Revolutionary Armed Forces (FARC). No statements were made after the meeting. (El Universal, http://www.eluniversal.com/nacional-y-politica/150521/maduro-meets-with-us-special-envoy-to-colombian-peace-talks)

 

STRATFOR: Disbanding the Venezuelan mafia

Festering within the Venezuelan government are a number of powerful individuals who were propelled into positions of influence during the administration of former President Hugo Chavez and who have used that influence to shape the economy into a mangled instrument that suited their personal interests. Shortages are eventually going to reach a critical point as the country's financial cushion deflates, creating the potential for more serious unrest. If Maduro has any chance of carrying the country through this crisis, he will have to start by dislodging those who are distorting critical parts of the economy through their elaborate corruption schemes. Maduro may not be able to purge powerful figures on his own, but there is a possibility they could be sacrificed as part of a bargain with Washington — beginning the process of routing the government and the economy of its most destructive elements and delivering a message that the criminal networks distorting the economy are not impenetrable. The United States is in no way the whole answer to Venezuela's problems or a substitute for the structural reforms needed to repair the economy, but it may be able to offer Maduro a partial solution. (Stratfor: https://www.stratfor.com/geopolitical-diary/disbanding-venezuelan-mafia)

 

Brazil's Rousseff, Uruguay's Vázquez concerned over Venezuela, Insulza decries international inaction

Brazil's President, Dilma Rousseff, and her Uruguayan counterpart, Tabaré Vázquez, have emphasized that the current crisis in Venezuela needs to be overcome in a peaceful, constitutional manner. Both presidents voiced their "concern" over Venezuela's situation in the context of an official visit of President Vázquez in Brasilia. Former OAS Secretary General José Miguel Insulza says that organization has not dealt with the case of Venezuela adequately, called it one of the most difficult and painful situations he has had to deal with "because member nations have not wanted to act on it" in order to more openly promote dialogue. "I very much regret that there has been no will to face the situation directly, that we have not paid attention to a country that is clearly going through a crisis, where the international community is not doing all that it could". (El Universal, http://www.eluniversal.com/nacional-y-politica/150521/brazils-rousseff-uruguays-vazquez-concerned-over-venezuela; and more in Spanish: El Nacional; http://www.el-nacional.com/)

 

Chile's legislature asks Bachelet to withdraw Ambassador to Venezuela

Chile's House of Representatives has passed a resolution asking President Michelle Bachelet to withdraw that country's Ambassador to Venezuela over the situation undergone by several political prisoners here. The vote passed with 66 votes in favor, 26 against and 10 abstentions. More in Spanish: (Diario 2001, http://www.2001.com.ve/en-el-mundo/98022/parlamento-chileno-pide-retirar-a-embajador-en-venezuela-.html)

 

Prosecutor General seeks arrest of those implicated in Bank of Andorra Bank scandal

Venezuela's Prosecutor General Luisa Ortega says her office has ordered the arrest of all those implicated in the Bank of Andorra money laundering scandal, but says she cannot reveal their identity "because they have not yet been caught". Last week Norman Puerta, former head of Venezuela's anti narcotics agency in 2005-2006, turned himself in to local authorities after been sought by INTERPOL for money laundering. More in Spanish: (Infolatam, http://www.infolatam.com/2015/05/20/fiscalia-venezolana-pide-la-captura-de-implicados-en-caso-de-banca-de-andorra/)

 

ILO will investigate violation of labor rights in Venezuela

Venezuela is on the list of countries that will be examined by the International Labor Organization, after it termed the situation of labor rights here "serious" following reports on unjustified firings, penalizing protest and imprisoned workers. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Venezuela, Palestine sign agreements

Venezuela and Palestine have signed important agreements seeking to strengthen ties between both nations, says President Nicolás Maduro. He explained the two countries signed cooperation agreements in areas such as agribusiness. Maduro also called the Palestinian cause the most noble cause humanity could fight for, and said Palestine can always count on Venezuela's solidarity. (El Universal, http://www.eluniversal.com/nacional-y-politica/150521/venezuela-palestine-sign-rapprochement-and-cooperation-agreements)

 

Plane from Venezuela carrying cocaine crashes into Caribbean Sea

A plane that took off from Venezuela loaded with cocaine crashed on Wednesday into the Caribbean Sea, off the Colombian coast, as it tried to avoid military aircraft that tried to force the pilot to land, according to the Colombian Air Force. In the area where the two-engine plane HAWKER 800 crashed, off Puerto Colombia, Atlántico Department, units of the Colombian Armed Forces found the body of a man, a Mexican passport, the wreckage of the aircraft, and cocaine packages, Reuters reported. (El Universal, http://www.eluniversal.com/nacional-y-politica/150520/plane-from-venezuela-carrying-cocaine-crashes-into-caribbean-sea)

 

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.

 

November 27th, 2012

Economics & Finance

Chavez choking on Bolivars to spur Venezuelan bond sales

The bolivar’s plunge to a record on the black market is pressuring Venezuelan President Hugo Chavez to end the longest drought of dollar-bond sales in five years. Venezuela hasn’t issued bonds denominated in U.S. currency since October last year, after selling a record U$D 7.2 billion in the first 10 months of 2011, according to data compiled by Bloomberg. State-owned Petroleos de Venezuela SA, Latin America’s largest oil producer, last sold dollar-denominated notes in May. The yearlong drought is leaving the central bank without enough dollars for Venezuelans to buy at official fixed rates, sparking the bolivar’s 42% drop this year in the unregulated market. The bolivar declined 6.2% today. (Bloomberg, 11-26-2012; http://www.bloomberg.com/news/2012-11-26/chavez-choking-on-bolivars-to-spur-venezuelan-bond-sales.html)

Devaluation will increase debt cost to the economy

As the Government considers devaluation under growing pressure from the gap between official income and expenditure, it must also deal with the fact that a devaluation will increase the share of indebtedness within the economy. According to a study by José Guerra and Luis Oliveros, economy professors at the Central University, while further devaluation dilutes the domestic debt as fewer dollars are needed to meet it, it also shrinks GDP, FOREX debt remain the same, country risk rises and interest rates shoot up. As standing debt service costs rise, taking up a larger budget share, resources dry up for health, education and infrastructure. More in Spanish: (El Universal, 11-27-2012; http://www.eluniversal.com/economia/121127/una-devaluacion-aumentara-el-peso-de-la-deuda-en-la-economia)

Non-oil exports at the worst level since 1997

Venezuela's entry into the Common Market of the South (MERCOSUR) takes place at the worst time for local industry. Dependence on oil revenues, higher imports, and small export capacity are just some of the features of the nation's current economy. Data from the Central Bank of Venezuela (BCV) shows that non-oil exports in the third quarter accounted for U$D 816 million, 30% below the figure recorded during the same period in 2011. Lower exports were reported at 33.33% and 26.7% in the public and private sectors, respectively. "In the public sector, exports of iron, steel, and aluminum plummeted whereas chemicals increased. Likewise, private sales slumped, particularly those of gold, propylene, hydrogen peroxide, nickel, and ferrosilicon," the BCV explained. (El Universal, 11-26-2012; http://www.eluniversal.com/economia/121126/venezuelan-non-oil-exports-at-the-worst-level-since-1997)

Imports spike record consumption

Venezuela's economy has had steady growth over the last eight quarters, and so has consumption, which has skyrocketed over the past five quarters. Yet domestic demand has not been met by domestic production, but by imports. After shrinking for six consecutive quarters (2009-2010), private consumption has increased from 2.7% in the second quarter of 2010 to 7.8% by the end of the third quarter of 2012. In fact, the Central Bank reports the highest consumption in history in July-September this year. (El Universal, 11-26-2012; http://www.eluniversal.com/economia/121126/venezuelas-imports-may-lead-to-consumption-record-year)

Private construction drops by another 10.7% after steadily falling for 11 quarters

Last week, Finance and Planning Minister Jorge Giordani reported a 12.6% growth in construction. However, Central Bank data shows the activity increased due only to public projects as private construction continued to drop an additional 10.7% after an 11 quarter recession. More in Spanish: (El Universal, 11-27-2012; http://www.eluniversal.com/economia/121127/construccion-privada-cae-107-y-lleva-11-trimestres-de-retroceso)

CADIVI says October US dollar supply 4.5% above 2011

Manuel Barroso, President of Venezuela's Foreign Exchange Administration Commission (CADIVI) reports that U$D 26.9 have been supplied through the end of October, 4.5% above the amount authorized during the same period in 2011. U$D 21.3 billion (79%) went to imports; U$D 1.2 billion to financial operations; U$D 1.8 billion to family-related remittance, students, and special cases; and U$D 2.6 billion to travelers. Regarding imports he said, "There are no requests that may extend the given periods because of specific situations. The system works as usual." (El Universal, 11-26-2012; http://www.eluniversal.com/economia/121126/us-dollar-supply-by-october-45-above-that-in-2011)

Commodities

EXXON and CONOCO purchase 28% of the crude oil PDVSA ships to the US

Despite arbitration procedures brought against PDVSA by CONOCO PHILLIPS and EXXON MOBIL, trade relations continue to the point that 28% of all oil PDVSA ships to the United States goes to these two companies. Information from the US Energy Department through August shows that PDVSA has been shipping an average 223,830 barrels daily to both companies; far above the 57,000 daily barrels of crude the government oil company is committed to send the Chalmette refinery, where it is an equal partner with EXXON. CONOCO maintains a supply contract for an average 190,000 BPD to the Sweeny refinery, in Texas. More in Spanish:  (El Nacional, 11-27-2012; http://www.el-nacional.com/)

Venezuelan oil exports gained $1.29/bbl. driven by persistent concerns over supply disruptions due to tensions in the Middle East and an “unexpected” drop of inventories in the United States, says the Venezuelan Oil Ministry. The crude oil barrel averaged U$D 97.15/bbl. between November 19 and November 23 which took the average price for this year to U$D 104.09/bbl. (Veneconomy, 11-24-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32951&idc=4; El Universal, 11-23-2012; http://www.eluniversal.com/economia/121123/venezuelan-oil-basket-rebounds-ends-at-usd-9715)

International Trade

RENAULT considering Venezuela plant

French automaker RENAULT is considering the possibility of creating a factory in Venezuela to increase its production capacity outside struggling Europe. RENAULT already has three plants in Latin America - in Argentina, Brazil and Colombia - as well as six factories in France. Venezuela's Industry Ministry and RENAULT have signed a "letter of intent for the installation of a vehicle assembly plant", the carmaker said in a statement on Monday. "Which will lead to a feasibility study for local production of vehicles," Renault said. (Reuters, 11-26-2012; http://www.reuters.com/article/2012/11/26/renault-venezuela-idUSL5E8MQD5W20121126; El Universal, 11-26-2012; http://www.eluniversal.com/economia/121126/venezuela-france-enter-into-agreement-on-automobiles-and-tourism)

Logistics & Transport

Containers at bay increased by 223.3%

Cipriana Ramos, Chairperson of the FEDECÁMARAS Committee on Customs and Port Services, reports containers waiting at bay for Christmas season imports rose 223.3%, from 3,356 in 2011 to 10,853 through mid November this year. The number of refrigerated containers stalled at ports rose from 101 last year to 468 this November 16th, and empty containers rose from 3,500 to 8,731. The Government itself admits that 80% of all products are imported. Some economists estimate that this year's imports - largely Government funded - will close the year at U$D 50-54 billion. Exports, on the other hand, have dropped from 365 containers in 2011 to a mere 45 this year. To make matters worse, current work on port remodeling, now scheduled for completion by December 2014, has reduced port capacity by 30%, and the SIDUNEA automatic customs system, designed to process a container through the port in 2 hours, now takes an approximate 30 days to process. More in Spanish: (El Carabobeño, 11-26-2012; http://www.el-carabobeno.com/litoral/articulo/46713/en-223,3-ha-aumentado-cantidad-de-contendores-en-baha)

"Only 4 out of 20 docks are operating", says Rusval Gutierrez, President of the Shipping Agents Association, and adds that the emergency is due to failures by the Port Authority and by the "inability to operate and deliver incoming freight to both customs and importers" More in Spanish: (Tal Cual, 11-27-2012; http://www.talcualdigital.com/index.html)

Politics

Chavez public profile dropping drastically since August

According to a special July-November study obtained by El Universal daily, President Chavez has drastically lowered his public profile after his reelection on October 7th. From a high of 3730 minutes of public appearances and speeches in August; his public showings since his reelection are down to 495 minutes in November, all of them in purely official ceremonies: No campaign activity, telephone calls, press conferences or interviews: And the President has sent only 4 Tweets in November, all of them calls for unity during the upcoming gubernatorial elections - down from 56 Tweets in July. More in Spanish: (El Universal, 11-27-2012; http://www.eluniversal.com/nacional-y-politica/121127/desde-agosto-viene-en-caida-presencia-publica-de-chavez)

No human rights in Venezuela

Each day, 53 Venezuelans, 11 of them within the Caracas Metropolitan, will not be lucky enough to get back home or will be killed in their own homes. Daily reports of accidents and crime show the variety of scenarios in which Venezuelans are killed. The stories seem to be accepted as some kind of unknown unstoppable force that overrides people's choices. At a distance, the phenomenon is accepted as some kind of misfortune which Venezuela cannot escape from. Last year stood out as the most violent year of all times, the criminal death toll rose to 19,336. (El Universal, 11-24-2012; http://www.eluniversal.com/nacional-y-politica/121124/no-human-rights-in-venezuela)

Government agents raid opposition printing plant in Venezuela ahead of election

Government intelligence agents have raided a business printing opposition political pamphlets ahead of next month’s state elections in Venezuela. Zulia state Gov. Pablo Perez says the raid by the Bolivarian National Intelligence Service in the western city of Maracaibo is an attempt to intimidate opponents of President Hugo Chavez’s government. He told reporters that such actions are “abuses of power.” (The Washington Post, 11-24-2012; http://www.washingtonpost.com/world/the_americas/government-agents-raid-opposition-printing-plant-in-venezuela-ahead-of-election/2012/11/24/055a8e92-366a-11e2-92f0-496af208bf23_story.html; Fox News, http://www.foxnews.com/world/2012/11/24/government-agents-raid-opposition-printing-plant-in-venezuela-ahead-el)

November 09th, 2012

Economics & Finance

Venezuela repays nearly half of U$D36 billion in Chinese loans

Venezuela has repaid close to half of U$D 36 billion borrowed from China through oil-for-financing agreements, says Oil Minister Rafael Ramirez. The government of President Hugo Chavez has increasingly relied on China for financing because its borrowing costs in international capital markets are among the highest in the world. "We've received U$D 36 billion through credits with China ... and of that, we've paid U$D 17.9 billion," Ramirez said during a congressional hearing. (Reuters, 11-07-2012; http://www.reuters.com/article/2012/11/07/venezuela-china-loans-idUSL1E8M7J9E20121107)

Exxon, Conoco arbitration rulings expected in late 2013

Venezuela expects international arbitration rulings by late 2013 in multi-billion-dollar claims by Exxon Mobil and ConocoPhillips over nationalizations by President Hugo Chavez's government, the oil minister said. Of more than 20 cases against Venezuela at the World Bank and the International Chamber of Commerce's panels, the biggest involve Conoco (COP.N) and Exxon Mobil Corp (XOM.N), which are seeking some U$D40 billion between them. Both companies filed for arbitration after Chavez ordered foreign firms to slash their stakes in production and upgrading projects for heavy crude oil in the Orinoco Belt as part of a 2007 wave of state takeovers. "We don't expect resolutions this year. Probably the biggest cases (Conoco and Exxon) will be resolved in the second half of 2013," Oil Minister Rafael Ramirez told Reuters. (Reuters, 11-08-2012; http://www.reuters.com/article/2012/11/08/us-venezuela-arbitrations-idUSBRE8A712620121108)

Inflation down for the 10th consecutive month

The annual rate of the National Consumer Price Index (NCPI) was 17.9% in October, far below the 2012 target of 20-22% set by the government. The Central Bank and National Statistics Institutes report that "this annual rate maintains the downward trend observed for 10 consecutive months, which began in December 2011 at 27.6%". (AVN, 11-07-2012; http://www.avn.info.ve/contenido/inflation-declines-tenth-consecutive-month-bcv-says; El Universal, http://www.eluniversal.com/economia/121107/central-bank-president-cherishes-inflation-at-14-16-in-2013; http://www.eluniversal.com/economia/121107/shortage-in-october-near-its-peak-in-53-months; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=32728&idc=2)

Central Bank says gold sale ensures profits

The Central Bank sold 4.9 tons of gold out of its reserves, and Nelson Merentes, president of the institution, says such operations yield profit to the bank. He stressed that the gold price has been on the rise since 2006. Today it is worth U$D 1,720 per ounce, an upward trend that favors transactions. He added that the institution buys gold in local currency (bolívares) at U$D 900 and then it sells it at U$D 1,700. "They all do the same; all banks must generate profits." (El Universal, 11-08-2012; http://www.eluniversal.com/economia/121108/central-banks-president-gold-sale-ensures-profits)

Central bank aid to PDVSA at U$D 29 billion

Financial assistance to state-owned oil company PDVSA by the Central Bank (BCV) continues to rise. BCV data shows that by the end of October, the financial institution's aid to the oil company increased by 79% over the last 12 months. By October 26, the BCV had allocated U$D 29 billion to Pdvsa, compared to only U$D 16.2 billion during the same period in 2011. (El Universal, 11-07-2012; http://www.eluniversal.com/economia/121107/central-bank-assistance-to-state-run-pdvsa-stands-at-usd-29-billion)

PDVSA to contribute U$D 60 billion in taxes and to social programs this year

PDVSA says its contributions to the tax authority and to social programs will reach U$D 60.3 billion this year. Oil and Mining Minister, and also PDVSA President Rafael Ramirez also told the National Assembly that 26% of the funds it turns over to the government are going to the National Development Fund (FONDEN), which is 11% above contributions made last year. More in Spanish: (El Universal, 11-09-2012; http://www.eluniversal.com/economia/121109/60-millardos-dara-pdvsa-al-fisco-y-a-misiones-este-ano)

Oil prices will determine the exchange rate adjustment in 2013, says ECOANALÍTICA Director Asdrúbal Oliveros, who says the "impending reality" is that the CADIVI rate should adjust from U$D4.30 a U$D 6,30; and SITME'S up to U$D 7.50. He says an alternate way would be to leave the CADIVI rate as is and raise SITME'S to U$D 9. In either case it would be an average devaluation of 46% for a net impact of VEB 84.6 billion, which would give the Government added funds for public spending. More in Spanish: (El Universal, 11-09-2012; http://www.eluniversal.com/economia/121109/precio-del-crudo-condicionara-magnitud-del-ajuste-cambiario; El Nacional; http://www.el-nacional.com/)

Commodities

A Russian company  in the consortium working the Orinoco Belt abandons project

The board of directors of the fourth greatest oil producer in Russia, SURGUTNEFTEGAZ, voted for pulling out of the Russian consortium that operates in the Orinoco Oil Belt, its last project abroad, said the company on Wednesday. The Russian consortium has a 40% stake in the PETROMIRANDA joint venture. (Veneconomy, 11-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32721&idc=4)

Amuay refinery operations seen normal by year-end

The 645,000 barrel per day (bpd) Amuay refinery should be operating normally at about 500,000 bpd by year-end once it finishes repairs to a distillation unit damaged by an explosion in August, the country's energy minister said.

State oil company PDVSA had initially said the August 25 blast that killed more than 40 people had only affected storage tanks of its largest refinery. Amuay has been operating at around 50% capacity since then. Rafael Ramirez, who is also PDVSA president, told Reuters that Amuay's management determined that the explosion had damaged a furnace at an 180,000 bpd facility, one of five distillation units at Amuay. "The (replacement parts) arrive in December, and about three weeks after that we should have that unit in service, so we can reach the operational level the refinery was at before the incident, which was about 500,000 barrels per day," he said. (Reuters, 11-08-2012; http://www.reuters.com/article/2012/11/08/us-refinery-operations-pdvsa-amuay-idUSBRE8A710V20121108)

SIDOR losses around U$D 580 million; steel rod production down 29.4%

The SIDOR government steel complex is registering around U$D 580 million in losses to date, and year end production is expected to be at 1.8 million tons of liquid steel - down from a 4.3 million ton capacity - according to company director Pedro Acuña Grahan, who represents class B stockholders. Acuña called for an audit and assigning responsibilities for losses. He says when the government took over the company its assets were above U$D 3.4 billion and it now is in debt for more than U$D 900 million and decay is such that capacity is down 50%, and the technology infrastructure has been partially destroyed.  In the meantime, steel rod production - essential for public and private housing construction plans - is reported down 29.4% in October. SIDOR has a 50% share of the steel market. More in Spanish: (El Universal, 11-09-2012; http://www.eluniversal.com/economia/121109/advierten-que-las-perdidas-de-sidor-llegan-a-580-millones, http://www.eluniversal.com/economia/121109/la-produccion-de-cabillas-tuvo-una-caida-de-294-en-octubre)

International Trade

Venezuela imports from the US steadily rising

The US Department of Commerce reports Venezuela's imports from the US rose 71.6% during the last year, with U$D 2025 billion in September, up from U$D 1179 billion during the same month last year. January to September totals U$D 12.869 billion, which is above the amount for all of 2011. More in Spanish: (Últimas Noticias, 11-09-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-le-compra-cada-vez-mas-a-eeuu.aspx)

Politics

521 public protests in October nationwide

The Venezuelan Watch Group on Social Conflict (OVCS) reports in October alone there were 521 protest demonstrations and 11 strikes, which make it the most conflict ridden month to date this year. 204 protests were about labor rights, 197 over housing, 106 over crime and justice; and 14 over education problems. More in Spanish: (El Universal, 11-09-2012; http://www.eluniversal.com/nacional-y-politica/121109/octubre-cerro-con-521-protestas-en-todo-el-pais)