November 25th, 2011

Economics & Finance

Chavez defends China ties as officials sign deals for U$D 6 billion in loans

Chinese officials signed U$D 6 billion in new loans to Venezuela on Thursday aiming to boost the country’s oil industry. After the loans were signed, President Hugo Chavez defended his country’s growing ties with China as vital to his country’s development. He also dismissed criticisms by opponents who question the mounting loans, which are to be paid back in oil shipments. China has swiftly become Venezuela’s biggest foreign lender in recent years, and had previously agreed to more than U$D 32 billion in loans. Energy Minister Rafael Ramirez had said that the new loans would increase oil production involving Chinese and Venezuelan companies from about 100,000 barrels a day to about 330,000 barrels a day. The new loans include U$D 4 billion to increase oil production, as well as U$D 1.5 billion for refinery projects and U$D 500 million for buying oil drills and other equipment, officials said. Chavez accused opposition politicians of siding with U.S. “imperialism” in criticizing his ties with China. The U.S. government, however, hasn’t publicly objected to Venezuela’s growing trade relationship with Beijing. (Washington Post, 11-24-2011; http://www.washingtonpost.com/business/venezuelas-chavez-defends-china-ties-as-officials-sign-agreement-for-4-billion-loan/2011/11/24/gIQAC4c9sN_story.html)

Government claims it gets better terms from China

According to Asdrúbal Chávez, Vice President of Petróleos de Venezuela (PDVSA) a key reason Venezuela sought credit from the China Development Bank is to obtain a lower financing cost than what is required by bond issues or private financing loans. A report by official to President Chávez indicates financing from the China Fund is repaid with oil sales calculated at LIBOR rates in the London marker, plus a 2.85% bonus which comes to a rate around 3.35%, which is about 8 percentage points lower than 11.95% currently paid for sovereign bonds at a longer accrual rate. More in Spanish: (El Nacional, 11-25-2011; http://www.el-nacional.com/)

Chavez activates Price Law to end “capitalist speculation”

President Hugo Chavez stepped up his control of the Venezuelan economy today as a new price regulation law came into effect that allows his government to set price caps on as many as 15,000 goods. The cost of 18 products will immediately be frozen, including soap, toothpaste and diapers, Vice President Elias Jaua said. Transnational corporations such as Colgate-Palmolive Co. (CL), the world’s largest toothpaste maker, Johnson & Johnson (JNJ), HJ Heinz Co (HNZ) and Unilever Plc, will have to report their production costs to enable the government to set prices. (Bloomberg, 11-22-2011; http://www.bloomberg.com/news/2011-11-22/chavez-activates-price-law-to-end-capitalist-speculation-1-.html)

Price controls to accept only costs based on the CADIVI official FOREX rate of BF 4.30 to the U$D

In announcing details in applying the new price control law, Vice President Elías Jaua said: “In Venezuela there is only one way to import which is through CADIVI. There is only one dollar rate, one price, and it is for official use”. More in Spanish:  (El Universal, 11-25-2011; http://www.eluniversal.com/economia/111125/el-ejecutivo-solo-reconocera-costos-calculados-al-dolar-cadivi)

Venezuela agrees to pay U$D 250 million nationalized FertiNitro Bonds to avoid default

Petroquimica de Venezuela, S.A. (PEQUIVEN) announced that it has entered into a Lock-Up Agreement with the holders of approximately 79% in aggregate principal amount of the U$D 250 million of 8.29% Secured Bonds due 2020 issued by FertiNitro Finance Inc. in connection with the FertiNitro fertilizer project, providing for PEQUIVEN (or an affiliate) to launch a tender offer for the Bonds no later than 30 November 2011. (Latin American Herald Tribune, 11-23-2011; http://www.laht.com/article.asp?ArticleId=447024&CategoryId=10717)

ICSID registers new arbitration proceeding against Venezuela

The International Center for Settlement of Investment Disputes (ICSID), the arbitration body of the World Bank based in Washington, has registered new complaint against Venezuela by an individual, in this case by Hortensia Margarita Shortt, a Venezuelan citizen. (El Universal, 11-23-2011; http://www.eluniversal.com/economia/111123/icsid-registers-new-arbitration-proceeding-against-venezuela)

CAF reports Venezuela shows lowest access to personal and small business credit in Latin America

According to a study by the Andean Development Corporation (CAF), Venezuela has the lowest level of access to financing by individuals and small business: Only 2% report using a credit instrument from any financial institution, The survey was based on 17 Latin American cities, including Caracas and Maracaibo. More in Spanish: (El Universal; http://www.eluniversal.com/economia/111125/acceso-al-credito-en-el-pais-es-el-mas-bajo-de-la-region)

Commodities

FEDECAMARAS asks Government to import 600,000 tons of steel

Jorge Roig, Vice President of the nation’s largest business association says that lowered steel production is hitting domestic industrial production very hard: “We are lacking the basic commodities, specifically for producing steel plates for public housing”; and added that – for the first time – the national Metal and Mining Industry Association is asking the government to import steel for the next few months. Roig points out that from a production peak of 4.3 million tons of liquid steel production went down to 1.8 million tons in 2010 and will barely reach 2.5 million tons this year. More in Spanish: (Noticiero Venevisión, 11-24-2011; http://www.noticierovenevision.net/economia/2011/noviembre/24/2960=fedecamaras-propuso-al-ejecutivo-importar-600-mil-toneladas-de-acero)

International Trade

Port and customs delays raise product prices and production costs in Venezuela

Ana María D’Andrea, Chairperson of the Foreign Trade Committee at the Carabobo Industrial Chamber reports delays in port and product procedures in Venezuela mean higher prices for products sold in the country. She says we refer to “additional unjustified costs”, and explains that at Puerto Cabello the entire process takes 14 days for normal imports, but for consolidated cargo it can take 21 days and added storage costs. More in Spanish: (El Universal, 11-24-2011; http://www.eluniversal.com/economia/111124/retrasos-en-puertos-aumentan-costos-de-los-productos and El Mundo; http://www.elmundo.com.ve/noticias/economia/empresas/costos-de-produccion-se-incrementan-por-retrasos-e.aspx)

Balance of trade with China totals U$D 17 billion

The balance of trade with China will reach U$D 17 billion in 2011, according to Minister of Planning and Finance Jorge Giordani. The official said the balance of trade in 2001 came to U$D 300 million. Today, China is among Venezuela's major trading partners. (El Universal, 11-23-2011; http://www.eluniversal.com/economia/111123/balance-of-trade-with-china-totals-usd-17-billion)

Uruguay could pay its debt to Venezuela with food

Uruguay is to pay with food a portion of a huge debt owed to Venezuela on account of oil shipments under an agreement to be signed next week during the visit of Uruguayan President José Mujica to Caracas, official sources confirmed on Thursday. Daily newspaper La Republica mentioned that the agreement would allow for exports to Venezuela of about 100,000 tons of wheat, a similar amount of rice and 500,000 tons of chicken. The sale is to be paid with the oil bill: Venezuela has credits on its behalf for the oil sent to Uruguay since 2005. (El Universal, 11-24-2011; http://www.eluniversal.com/economia/111124/uruguay-could-pay-with-food-its-debt-with-venezuela)

U$D 929 million paid to Colombian business

According to the President of the Colombia-Venezuela Chamber of Commerce, Luis Alberto Russian, Venezuelan importers have paid U$D 929 million to Colombian suppliers for purchased made before 2009 which had not been admitted by CADIVI. The Exchange Board has totaled debts up to U$D 1.4 billion, over the U$D 800 which the Venezuelan Government has admitted to. More in Spanish: (El Nacional, 11-24-2011; http://www.el-nacional.com/)

US sanctions against Iran endanger Venezuelan interests

New sanctions approved by the United States and other countries against Iran undermine Venezuelan businesses and investments with the Islamic republic, as sanctions are targeting oil, petrochemicals and the banking sector.

Venezuela and Iran have strengthened their links, as they have entered into more than 200 agreements in areas such as agriculture, finance, housing, oil, and industry. Through the third quarter of 2011, bilateral trade between Venezuela and Iran increased by 182%, according to data provided by the National Statistics Institute (INE). (El Universal, 11-23-2011; http://www.eluniversal.com/nacional-y-politica/111123/us-sanctions-against-iran-endanger-venezuelan-interests)

Politics

Opposition won't rush oil policy change

Venezuela's opposition coalition plans to keep most of Hugo Chavez's oil policies in the short term if the socialist president loses his reelection bid in 2012, according to their economic advisors. A loss for Chavez, who faces his toughest election yet as he recovers from cancer, could open new opportunities for oil companies seeking access to vast heavy crude reserves and help boost the OPEC nation's flagging oil production. Advisors to the Democratic Unity coalition told Reuters that although there would be long-term major changes, they will at first maintain state-focused oil laws created by Chavez, respect investment deals signed under his government, and keep Venezuela's membership in the global producer group. (Reuters, 11-23-2011; http://www.reuters.com/article/2011/11/23/venezuela-election-oil-idUSN1E7AL0TO20111123)

The Economist reports: Latin American integration - Peaks and troughs

The inaugural get-together of the Community of Latin American and Caribbean States, a 33-country outfit known as CELAC from its initials in Spanish, to be held in Caracas on December 2nd and 3rd, reveals how Latin America is changing. For a start the influence of the United States is declining in a region it once called its “backyard”. The new body includes all the countries of the Americas except the United States and Canada. The clout of Spain, once seen as a model by Latin America’s restored democracies, is also receding: only half the heads of state bothered to turn up last month at an Ibero-American summit, a Spanish-inspired annual event. Yet, the proliferation of regional bodies does not necessarily mean that Latin America is any more united.  On paper CELAC will try to co-ordinate among trade blocks, such as MERCOSUR and the Andean Community (but UNASUR is also supposed to do that). It will also try to stimulate regional trade and speak with one voice in international forums. If only. The lesson of ALBA is that regional clubs based on political ideology rather than national interests do not get very far. (The Economist, http://www.economist.com/node/21540319)

Venezuela assumes presidency of GAFIC

Venezuelan Internal Affairs and Justice Minister Tareck El Aissami opened the Caribbean Financial Action Group Ministers’ Council Summit (GAFIC) in Margarita and ratified official will to fight against drug trafficking, terrorism and human traffic. Twenty-nine member countries attend the event which will go on for five days. (Veneconomy, 11-23-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28561&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.

August 12th, 2011

Economics & Finance

Venezuela gets an additional U$D 4 billion loan from China, seeks another U$D 4 billion from Russia

President, Hugo Chavez announced that Venezuela is signing a new agreement with China for U$D4 billion. The vice-president of the state-owned oil company Petróleos de Venezuela (PDVSA), Asdrúbal Chávez, and the Minister for Commerce, Edmee Betancourt, are in China to negotiate the loan. He also said he spoke with Russian Prime Minister Vladimir Putin to “push forward” a U$D 4 billion loan. His remarks came during a telephone conversation broadcast by state television. (Bloomberg, 08-11-2011; http://www.bloomberg.com/news/2011-08-11/venezuela-s-chavez-spoke-with-putin-about-4-billion-loan.html and AVN, 09-11-2011; http://www.avn.info.ve/node/72121)

Venezuelan debt trades down

Venezuelan bonds experienced a negative trend for a third consecutive day as global stock markets continued to fall on fears of a possible downgrade of France, and the problems with Greece and the Euro area. The 2022 Global rose slightly by 0.30 percentage points to your quote and closed at 86.8%, still down from Monday’s 89.25%. The recently issued Global 2031, issued by the Republic last month, was not so lucky and fell short 0.35 points to 78.9%, down from 82.5% at the beginning of this week. More in Spanish. (El Nacional; 08-11-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Exports to the US at U$D 22.62 billion, up 49% from last year

The Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM) reports that the Venezuela-US balance of trade in June 2011 amounted to USD 3.28 billion; 49% over the same term last year. It termed the improvement is "a clear expression of the effect of higher Venezuelan oil prices on the nation's revenues." (El Universal, 08-11-2011; http://www.eluniversal.com/2011/08/11/venezuela-has-exported-usd-2262-billion-to-the-us.shtml)

Trade with Colombia up 16%

Despite uncertainties caused by the absence of a bilateral trade agreement, Venezuela-Colombia trade rose, according to Luis Alberto Russián, CEO of the Colombian-Venezuelan Chamber of Commerce (CAVECOL).  He reported that trade over the first semester this year rose to U$D 1.04 billion, a 16% hike over the same term in 2010; and added that should this pace continue in the second half of the year, operations could end up over U$D 2 billion. (El Universal, 08-11-2011; http://www.eluniversal.com/2011/08/11/upturn-in-venezuela-colombia-trade-at-16.shtml)

Agriculture downturn confirmed by the Central Bank

Despite efforts to conceal the entire picture, the Central Bank 2010 economic report includes a graph which shows agricultural production trending down since 2008; last year, it barely surpassed 0%. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/crop-loss-at-the-central-bank-of-venezuela.shtml)

Central Bank report shows 5,4% drop in household income by the close of 2010

According to information from the Central Bank (BCV) household income dropped 5,4%, at the close of 2010; at a pace “more accelerated than the previous year” More in Spanish. (El Universal; 08-12-2011; http://www.eluniversal.com/2011/08/12/bcv-reporto-caida-de-54-en-remuneraciones-al-cierre-de-2010.shtml)

Report shows confiscated companies have become a ghost industrial complex

A lengthy report by Madrid’s El País daily shows companies taken over by the Chavez Government have become a “great ghost industrial complex”. Between 2007 and 2009 Venezuela has put more money into paying for expropriations and nationalizations than into oil production. According to official data investment in exploration and production at PDVSA was U$D 21.931 billion; while the amount allocated to buy huge companies such as Siderúrgica del Orinoco (Sidor) or the national telephone company (CANTV), was U$D 23.377 billion. The amount does not include 17 cases (oil, mining, cement) currently subject to international arbitration. Studies show most companies taken over “do not generate income enough to cover their own operating costs”. More in Spanish. (El País, 08-07-2011; http://www.elpais.com/articulo/economia/global/Expropiaciones/fruto/elpepueconeg/20110807elpnegeco_1/Tes)

Venezuela to resolve Koch plant nationalization, Mundo reports

Venezuela is in talks with Koch Industries Inc. over the nationalization of the FERTINITRO plant and plans to resolve the issue by year end, El Mundo reported, citing Saul Ameliach, president of state petrochemical firm PEQUIVEN.

FERTINITRO, 35% owned by Koch when President Hugo Chavez took it over last year, produces ammonia and other chemicals in Anzoátegui state, central east Venezuela. Ameliach didn’t give further details, according to the newspaper. (Bloomberg, 08-11-2011; http://www.bloomberg.com/news/2011-08-11/venezuela-to-resolve-koch-plant-nationalization-mundo-reports.html)

Commodities

PDVSA says electricity supply to upgraders is now restored

State-run oil company Petróleos de Venezuela, S.A. (PDVSA) says on its website that operations were restored at the four heavy oil upgraders in José Antonio Anzoátegui Industrial Complex in northeast Venezuela, after a power failure on Monday. The blackout started in the Yaracuy-El Tablazo 400 KV line of the National Interconnected System, which feeds the transmission substation at the heavy crude oil processing compound. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/pdvsa-announces-restoration-of-electrical-supply-to-upgraders.shtml)

OPEC reports slight increase in Venezuela’s oil production in July

OPEC member Venezuela produced 2.77 million barrels of oil per day (bpd) in June, down from 2.79 million bpd in May, the oil ministry said on Thursday. The South American nation exported 2.41 million bpd of crude and products in June, compared with 2.48 million bpd in May. During July, Venezuela produced 2.42 million bpd, an increase of 5.2% over July 2010, when production averaged 2.3 million barrels a day. Venezuela's July extraction increased by 17,000 bpd, 0.7% up from June. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/opec-reports-increase-in-production-in-venezuela-in-july.shtml and Reuters, 08-11-2011; http://www.reuters.com/article/2011/08/11/venezuela-oil-production-idUSN1E77A0RQ20110811)

Politics

Chavez says he feels well after chemotherapy

President Hugo Chavez told Venezuelans on Thursday he was reacting well to a second round of chemotherapy in Cuba and believed he was winning his battle against cancer. In a telephone call to state television from his hospital bed in Havana, the 57-year-old said he would finish this session of treatment on Friday but gave no date for his return home. "I'm taking well to the treatment, which began Monday and should finish on Friday," he said. (Reuters, 08-11-2011; http://www.reuters.com/article/2011/08/11/venezuela-chavez-idUSN1E77A16M20110811)

According to analyst Michael Rowan there may be 5 million phantom voters on official voting rolls

Rowan writes that serious academic statistical analysis estimates that there may be five million phantom voters on the Venezuelan official voters roll, which has not been independently audited for seven years.

In a July 29 TV address, President Chávez claimed that the US government is conspiring with the united opposition to defraud the actual winner of the 2012 presidential election, which Chávez knows is going to be him, Chávez. "They will claim electoral fraud," Chávez mused, "and then say they won and that the tyrant does not deliver. They will then threaten violence. That is the scenario that they are preparing." (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/election-fraud.shtml)

National Assembly to investigate purchase of Colombian news channel by former director of Globovisión

Venezuela's National Assembly (AN) today agreed to investigate the former director of the news channel Globovisión Alberto Ravell to determine the origin of the "large amount" in dollars paid for the purchase of a Colombian television news channel. "We would like to know how this man has ten million dollars when we have had seven years of foreign exchange controls in Venezuela”, says the chairman of the Standing Committee on Finance, Ricardo Sanguino. Ravell replied that he is "a promoter" and not a businessman or entrepreneur. "I managed to get a group of businessmen who deal with American media to agree, I sold the project, they liked my idea and embarked on this project with me". (Google News, 08-10-2011; http://www.google.com/hostednews/epa/article/ALeqM5jyRhh0-SF6Ipp0M89xd6Hj5-psVw?docId=1585064)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

October 21th, 2010

Economics, Trade & Business

A total of 195 businesses have been seized in 2010

The Venezuelan Confederation of Industries (Conindustria) rejected recent expropriations by the Venezuelan government.  Upon the seizure of the motor lubricants company Venoco and Fertinitro, a producer of nitrogen fertilizer, the number of confiscated companies rose to 195 in 2010. In addition Conindustria stated that "strongly rejects new threats of expropriation.” (El Universal, 10-20-2010; http://english.eluniversal.com/2010/10/20/en_eco_art_a-total-of-195-busin_20A4631291.shtml)

Venezuela central bank lowers reserve deposit requirement

Venezuela's central bank said on Wednesday it had lowered bank reserve requirements to increase liquidity after a bond issue last week aimed at local banks. The central bank dropped the minimum reserve requirement for bolivar deposits to 20 percent from 23 percent, the bank said on its website. Analysts say the measure is aimed at bolstering the banking system's liquidity at a time when the government is seeking local buyers for a $3 billion bond issued by state oil company PDVSA on Monday. (Reuters, 10-20-2010; http://www.reuters.com/article/idUSN2022302720101020)

Venezuelan inflation, as measured by the basic goods basket, is up 26% year on year

The basic goods basket -the cost of providing foods, goods and services for an average Venezuelan household- amounted to VEB 4,730.05 (USD 1,100, at the official exchange rate of VEB 4.30 per US dollar) in September, a 26.3 percent increase from September 2009, said the Workers' Center for Documentation and Social Analysis (Cenda). Between January and September 2010, the basic household basket soared 19 percent. (El Universal, 10-20-2010; http://english.eluniversal.com/2010/10/20/en_eco_art_venezuelas-basic-ba_20A4630417.shtml)

Second stage of expropriation of Empresa Polar’s lots in the Barquisimeto Industrial Zone began today with a formal inspection by a commission from the Prosecutor’s Office in the plant today. The inspection is expected to conclude on Friday. President Chávez announced the lots would be expropriated last February. (Veneconomy, 10-21-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23571&idc=3)

Some thrive, others sink on land "rescued" by Chavez

With red harvesters shearing rice and tall corn across the vast farm it should be a happy day in this young community, but Idelmaro Ceteno looks decidedly grumpy as the machines circle his land. Ceteno, 61, is one of nearly a thousand farmers given land five years ago by the government of President Hugo Chavez on the El Charcote farm, a vast cattle ranch that until then belonged to one of Britain's wealthiest families, the Vesteys. (Reuters, 10-20-2010; http://www.reuters.com/article/idUSN2019699920101020)

Four banks in Venezuela have been authorized to carry out good imports or exports for public or private companies through the Regional Compensation Payment Single System (SUCRE, after its initials in Spanish). These are: Banco de Venezuela, Banco del Tesoro, The Venezuelan office of the Cuban Banco de Comercio Exterior and Banco de Comercio Exterior (Bancoex). (Veneconomy, 10-21-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23568&idc=2)

Trade between Alba nations rises to $ 8,000 million

Trade between the nations of the Bolivarian Alternative for the Peoples of Our Americas (ALBA) increased from $ 700 million, which was the average between 1996 and 2003, to a present sum of $ 8 billion. This was announced on Wednesday by the president of the Regional Monetary Sucre, Eudomar Tovar.  This economic union was aimed at reducing the effects of the global economic crisis -and those of dependence on the dollar as the currency for international transactions- on its member nations. (AVN, 10-20-2010; http://www.avn.info.ve/node/24014)

Iron ore imports on the up

The World Steel Association’s August reports shows how some of the large steel producers are recovering, while others are struggling to get back to production levels recorded a couple of years ago. Indian steel production has recovered from the low production in the early part of 2009, and posted over a 6% increase year-on-year from August last year, from 5.3m tonnes to 5.7m tonnes, which is one of the highest output recorded. This is in stark contrast to the USA that has seen steel production decline for several years. (Dry Bulk Review, 10-21-2010; http://drybulkreview.msgfocus.com/q/18CbvS0aNjkhxcX/wv)

Politics

Chavez: Pluripolar world is the alternative to imperialist hegemony

Venezuela’s President Hugo Chavez emphasized that his visit to the Syrian Arab Republic is a manifestation of desired strategic alliances in the Middle East which aim to catalyze the construction of a new pluripolar world as an alternative to the “imperialist hegemony”. “Syria is like the core of a new world, the pluripolar world. We are obliged to recognize that world, which is an alternative to the imperialist hegemony,” he said at his arrival to (AVN, 10-21-2010; http://www.avn.info.ve/node/24169)

Transport & Logistics

La Guaira port traffic fell 6.9%

Traffic at the La Guaira port continues in full retreat. Very few vessels are trying to reach the state of Vargas. According to numbers obtained from the state-owned Central Coast Ports (PLC), vessel traffic for September 2010 was 6.9% lower than that for the same period in 2009. The port’s container throughput, as measured in TEU’s was 229,790 for the month of September.  A significant decrease from a September 2009 throughput of 291,077 TEUs. (Tal Cual, 10-21-2010; http://www.talcualdigital.com/index.html)

Petroleum & Energy

Venezuela and Syria to sign agreement to build a refinery

Following negotiations between Syria and Venezuela, it is expected that the two nations will endorse an agreement to build a refinery in Syria with the capacity to refine 140,000 barrel per day.  Iran and Malaysia are expected to co-invest. The information was released by the Energy and Oil Minister Rafael Ramirez while detailing the agenda that for the visit of President Chavez to Damascus, Syria. (AVN, 10-21-2010; http://www.avn.info.ve/node/24180)

Pdvsa's revenue up 47 percent while net profit down 14 percent

In the context of the company's bond issue, state-run oil company Petróleos de Venezuela presented its financial statements at the end of the first half of 2010. The report showed increased revenue on higher global crude oil prices, but also mirrored higher payments which ultimately undermined net profits. According to data issued by the state-run oil company, revenue from sales of crude oil and oil byproducts amounted to USD 46.7 billion, which means a 47.2 percent increase versus the same period a year earlier, when revenue stood at USD 37.8 billion. This increase was partly due to the fact that oil prices recovered to USD 70 in the first half of 2010, from USD 46 in the first six months of 2009. (El Universal, 10-20-2010; http://english.eluniversal.com/2010/10/20/en_eco_esp_pdvsas-revenue-up-4_20A4630333.shtml)

Venezuela says Exxon drops demand to $7 billion

Exxon Mobil Corp has reduced to $7 billion from $12 billion a compensation claim against Venezuelan state oil company PDVSA, which nationalized assets belonging to the U.S. major three years ago, according to a PDVSA document seen by Reuters on Wednesday. In 2007, Venezuela's socialist President Hugo Chavez pushed foreign oil companies into minority partnerships with PDVSA at multibillion dollar projects in the Orinoco Belt crude region, home to some of the world's largest oil reserves. Exxon and ConocoPhillips rejected the new terms and began international legal proceedings for compensation. (Reuters, 10-20-2010; http://www.reuters.com/article/idUSN2024579720101020)

Venezuela draft oil law would make takeovers easier

Venezuelan President Hugo Chavez's government is studying a draft law that would make it easier to nationalize the assets of oil field service companies working in South America's biggest crude exporter. Big service companies including Schlumberger Ltd, Halliburton Co and Baker Hughes have avoided public spats with the Caracas authorities, while resisting calls to create joint ventures with state oil company PDVSA. They have declined to comment in the past on nationalizations that put most of the OPEC member's oil sector under Chavez's control. If the proposed legislation is passed, it could make their position in the country less secure. (Reuters, 10-19-2010; http://www.reuters.com/article/idUSTRE69I44W20101019)

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.