August 13, 2015

International Trade

 

10,000 steer have arrived at Guanta port

Ten thousand heads of cattle from Brazil have arrived at Guanta port for the government Food Corporation (CEVAL). More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=25672)

 

 

Logistics & Transport

 

Truckers are refusing to carry price controlled products due to lootings

Truckers are refusing to carry price controlled products out of fear of lootings, after constant thefts they must undergo: an average 4 cases per week. Giovanni Lupi, President of the Central Venezuela Transportation Chamber, reports that it is usual for trucks stuck in traffic to be assaulted and looted. The problem now ranks ahead of lack of spare parts among obstacles to be overcome. Trucks are now not circulating between 7 PM and 6 AM and must hire escorts to get drivers to carry price controlled products. Spare part costs have increased by 300%, which translates in to 40% of the entire cargo fleet being paralyzed. More in Spanish: (El Carabobeño, http://www.el-carabobeno.com/portada/articulo/110497/transportistas-no-quieren-llevar-productos-regulados-por-temor-a-saqueo)

 

Cargo freightage cost to increase 200%

José Petit, of the Association of Small Business and Drivers of Container Cargo at Puerto Cabello (ASOTRACONTAINER) reports that the group has decided to increase cargo freightage from the port to other cities by 200% starting August 18th, due to the cost increases for spare parts and services. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Precios-de-fletes-de-cargas-aumentaran-200-2480565/2015/08/11/583815/)

 

 

Oil & Energy

 

Venezuela says pushing for OPEC, Russia action to stem oil fall

Cash-strapped Venezuela is pushing for an emergency OPEC meeting and joint coordination with Russia to stem a tumble in oil prices, says President Nicolas Maduro. "We're working towards a special OPEC meeting, in coming days we'll announce .... We're making contacts with OPEC governments," he said - and added "We're evaluating the possibility that a very high ranking OPEC meeting be called, and that in coordination with the Russian Federation, President Vladimir Putin, we can advance in taking a series of actions to defend the oil market in the face of this latest fall". (Reuters, http://www.reuters.com/article/2015/08/12/opec-venezuela-idUSL1N10N02620150812; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45031&idc=4)

 

Crude oil exports expected to drop by US$ 4.9 billion

ODH CONSULTORES warns that oil exports could shrink by US$ 4.9 during the second semester this year due to the drop in prices. It says that if the average price is US$ 43.15 per barrel and if one assumes volume will remain the same, total sales would be US$ 41.5 billion. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

 

Commodities

 

HEINZ ketchup and baby food plants have stopped operations due to lack of raw materials in the latter and to maintenance in the former. A spokesman from the plant’s workers confirmed the plant located in San Joaquín in Carabobo state has been paralyzed for a week. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45028&idc=3)

 

COLGATE PALMOLIVE has also stopped one of its plants

Colgate informed its workers in the Valencia plant -via an internal memorandum- its detergent production line will be stopped indefinitely as of August 10 due to shortages of raw material for packaging. Workers of four of the six production lines at this plant will be relocated to the company’s other lines. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45029&idc=3)

 

Auto and motorcycle assembly at a standstill in Venezuela

The automobile sector in Venezuela continued to be hit by lack of FOREX as a consequence of dwindling oil prices.
The motorcycle sector has not been allocated the foreign currency it requires to import the CKD, a kit with the assembly materials for each unit. Overall production in July declined to 412 units from June, when 1,446 motorcycles were assembled, according to figures from the Association of Motorcycle Industrials, Manufacturers, and Assemblers (AIFEM). Moreover, the sector accrues a US$ 812 million debt to their Chinese suppliers, so credit lines are frozen for the time being. (El Universal, http://www.eluniversal.com/economia/150812/car-and-motorcycle-assembly-at-a-standstill-in-venezuela)

 

Beer maker Polar restarts brewing after shortages

Venezuela's largest beer manufacturer says it will restart operations after shortages of raw materials led it to close some breweries. Cerveceria Polar has announced that it's received the malted barley it needs to manufacture the golden brew that is a favorite here. The company makes more than 70% of Venezuela's beer. Last week, bottles of Polar began to disappear from store shelves in Caracas due to difficulty obtaining ingredients. (Associated Press, http://news.yahoo.com/venezuela-beer-maker-polar-restarts-brewing-shortages-185759591.html)

 

 

Economy & Finance

 

Central Bank of Venezuela has failed to release figures for seven months

The Central Bank of Venezuela (BCV) has not published official data on inflation (national consumer price index), Gross Domestic Product (GDP), and shortage of products in the past seven months. This means the BCV has been breaking its own law, which provides that official economic figures must be published within the first days of each month. Recently, the Supreme Tribunal of Justice (TSJ) dismissed a lawsuit brought against the President of the BCV, Nelson Merentes, by NGO Transparencia Venezuela urging him to publish official figures. (El Universal, http://www.eluniversal.com/economia/150811/central-bank-of-venezuela-fails-to-release-figures-for-seven-months)

 

Venezuela holds the largest gold reserves in Latin America

Venezuela tops the list of Latin American countries with the largest gold reserves, according to the latest report issued by the World Gold Council, headquartered in London. The ranking shows that the United States holds the largest gold reserves in the world, with 8,133.5 tons. Venezuela holds 361 tons of gold, which represent 68% of its reserves. The country ranks 16 worldwide, despite the fact that its gold reserves declined from 367.6 tons in June. The price of gold stands at its lowest level since February 2010, at USD 1,072.30 per ounce. (El Universal, http://www.eluniversal.com/economia/150811/venezuela-holds-the-largest-gold-reserves-in-latin-america)

 

Venezuela appeals for 2nd time to World Bank panel in Conoco dispute

Venezuela has appealed for a second time to the World Bank's arbitration panel against its decision in the country's dispute with ConocoPhillips, linked to the nationalization of the company's assets. In a partial ruling last year, the International Center for Settlement of Investment Disputes (ICSID) said that the 2007 takeover by late socialist leader Hugo Chavez of Conoco's oil projects was unlawful. On Tuesday, Venezuela's Attorney General's Office said it formally requested the previous day that ICSID "reconsider its position with respect to the ruling." The nation has requested various reviews of recent ICSID decisions, which critics see as attempts to stall the payment of fines. (Reuters, http://www.reuters.com/article/2015/08/11/venezuela-arbitration-conocophillips-idUSL1N10M2ES20150811)

 

CONINDUSTRIA: Reactivating industry can substitute imports

Venezuela's industrial sector hopes to present the government its proposal to oxygenate the economy and recover local production. The President of the Venezuelan Confederation of Industries (CONINDUSTRIA), Juan Pablo Olalquiaga, says a plan for import substitution requires urgent implementation of the five measures proposed by the industrial sector: securitization of the debt owed by industries to their suppliers, legalization of the parallel foreign exchange market towards a feasible scheme, lifting price controls, returning expropriated companies to the private sector, and establishing links between education and research centers and the companies. (El Universal, http://www.eluniversal.com/economia/150812/conindustria-reactivating-the-industry-will-substitute-imports)

 

 

Politics and International Affairs

 

Regime frees 2nd prominent opponent in just over 24 hours

A former Chavez defense minister turned staunch government critic was granted early release from jail, making him the second prominent opposition leader to be freed in little more than 24 hours. A military tribunal granted retired Gen. Raul Baduel parole after he completed six of a nearly 8-year sentence on corruption charges. A short video of Baduel embracing loved ones was tweeted by his daughter after he was discharged from the military prison outside Caracas, where he's been held alongside Venezuela's most-recognized jailed opponent, Leopoldo Lopez. Baduel's release comes just 24 hours after Daniel Ceballos, the former mayor of the restive western city of San Cristobal, was granted house arrest on medical grounds while awaiting trial for his alleged role in inciting violence during last year's anti-government protests. Combined, the two surprise releases could signal a greater leniency on the part of President Nicolas Maduro's socialist administration, which has come under sharp fire from the U.S. over the imprisonment of some 50 anti-government activists on what human rights groups say are trumped-up charges meant to silence dissent. Ceballos, hours after being reunited with his family, shouted a statement from a second floor window in Caracas, saying his surprise release represented a hopeful sign "that all political prisoners might be reunited with their families." (The New York Times: http://www.nytimes.com/aponline/2015/08/12/world/americas/ap-lt-venezuela-opposition-leader.htm; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2394338&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=2394332&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/150811/court-grants-home-arrest-to-dissenter-daniel-ceballos)

 

Dissident legislative candidates emerge on both sides

The DELPHOS polling group indicates that some 40% of voters are bent toward a third voting option in the upcoming December 6th parliamentary elections, away from the MUD opposition coalition and pro-government forces, and dissidents could take votes away from both pro-regime candidates and those of the opposition.  Both the MUD coalition and the government's PSUV nominated 334 candidates and 3 representatives of the indigenous tribes for the 167 seats in the National Assembly (including main representatives and alternates), but independents have emerged on both sides. On the opposition splinter groups have emerged in both Lara and Mérida states. On the part of the "chavista" forces, dissident forces headed by Marea Socialista (Socialist Tide) have put forward 99 candidates, and there may be more. They say they will present candidates in 58% of the electoral districts. One "chavista" dissident, labor leader Marcela Máspero, says "Maduro accentuated corruption, political persecution and harassment of labor. Expropriation was a failure and the proof is that 95% of nationalized companies produce nothing". More in Spanish: (El Nacional: http://www.el-nacional.com/politica/Atomizacion-candidatos-signa-comicios_0_682132042.html)

 

US willing to improve relations with Venezuela

US Secretary of State John Kerry says the US is interested in a normal relationship with the Venezuelan government and is talking to Cuban authorities about the matter. He says he spoke to the Cuban regime about "the desire of Washington to increase chances for the Venezuelan people to be protected, respected and represented"; and added that he hopes Venezuela complies with OAS and Human Rights Committee standards on free elections and is accountable to the international community. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

US denies it is stirring chaos in Venezuela

The United States has denied that the Southern Command, in charge of military operations in Latin America, is plotting against the Venezuelan economy, as President Nicolás Maduro has denounced. A spokesperson for the US Southern Command, emphasized that the Command was neither fostering disturbances in Venezuela nor trying to dynamite the Venezuelan economy or its government. Maduro had claimed that a special committee had been created to produce evidence of an alleged destabilization plan led by the Southern Command he called "Plan Buitre" (Vulture Plan). (El Universal, http://www.eluniversal.com/nacional-y-politica/150812/us-denies-it-is-stirring-chaos-in-venezuela)

 

One out of every four Venezuelans would rather leave the country

A public opinion study by CONSULTORES 21 shows that one out of every 4 Venezuelans would rather leave for another country than stay in Venezuela. 36.4% of those between 18-24 years old would like to migrate. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

 

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

March 1st, 2011

Economics & Finance

Venezuela central bank sees faster growth in 2011

Venezuela's economy should grow more than the 2 percent calculated in the budget this year, the central bank president said on Sunday, in a rosier view of growth prospects than is taken by many private economists. Fourth quarter data published last week showed 0.6 percent growth, signaling a sputtering recovery in the OPEC member after a long recession. "We have entered a phase of growth and we have left the phase of recession," central bank chief Nelson Merentes said in an interview on television station Televen. (Reuters, 02-27-2011;

http://www.reuters.com/article/2011/02/27/venezuela-economy-idUSN2714334920110227)

Siege on industry endangers economic recovery

Venezuelan Executive Office began 2011 focusing on economic recovery in order to break a recession ongoing since 2009. But their expectations seem to clash with reality, at least within the manufacturing sector, which faces multiple obstacles to its development. Starting in 2003, a list of around 200 situations, decisions and policies threaten industrial development in Venezuela. As of the first quarter last year, a qualitative industrial survey conducted by the National Statistics Institute (INE) listed the most serious eight problems for manufacturers: difficulties accessing foreign currency; input scarcities; shrinkage in the domestic market; high costs and import difficulties; world economic recession; unfair competition and electricity rationing. (El Universal, 02-25-2011;

http://english.eluniversal.com/2011/02/25/siege-on-industry-endangers-economic-recovery.shtml)

Could Venezuela really go bankrupt?

Ever since Greece plunged into a sovereign debt crisis in 2009, investors have focused on which European country might be next. According to Capital Economics, a research firm in London, however, the next trouble spot could be Venezuela. "There is a growing risk that the government will default on its obligations in 2012," its analysts wrote on Feb. 17. Some in the markets have taken fright, too: the country’ credit default swaps imply a 50 per cent chance of default by 2015. That may be overblown. Even so, Hugo Chavez, Venezuela’s leftist president, seems to be pulling off a dubious achievement by causing the bond markets to fear for the solvency of the world’s eighth-largest oil producer. (The Economist, The Chronicle Herald, 02-27-2011; http://thechronicleherald.ca/Business/1230431.html)

Government economic policy called contradictory

Parliamentary questioning of cabinet members in charge of the economy revealed contradictions in government policy, according to Noel Álvarez, the president of the Federation of Trade and Industry Chambers (FEDECÁMARAS). "The fact of the matter is that they are contradictory speeches," he said apropos the remarks by Ricardo Menéndez, the Minister of Science, Technology and Basic Industries (MCTII) and of Edmée Betancourt, the Minister of Trade. On the one hand, Menéndez said during his presentation at the National Assembly (AN) that the "new productive model" was intended to leave rent-seeking behind and diversify production. On the other hand, Betancourt backed the import policy as a formula to curb inflation. (El Universal, 02-25-2011; http://english.eluniversal.com/2011/02/25/government-economic-policy-labeled-as-contradictory.shtml)

Trying to survive inflation? Ask Venezuelans!

Having suffered double-digit inflation since Ronald Reagan was in the White House; Venezuelans know a money-stretching trick or two the rest of the world could heed as soaring commodities push up prices. A relatively wealthy country with some of the world's largest crude reserves, Venezuela's reliance on exports of one commodity have produced a string of booms and crashes accompanied by double-digit inflation since 1985. (Reuters, 02-25-2011; http://www.reuters.com/article/2011/02/28/venezuela-inflation-idUSN2527605120110228)

MERCOSUR central bankers see heightened economic risks

Central bank chiefs from South American countries in the MERCOSUR customs union said on Friday there are heightened risks to the global economy in light of higher food prices and turmoil in Middle East, but indicated a broad regional slowdown was unlikely. The joint statement was made after a periodic meeting of central bankers from Brazil, Argentina, Uruguay, Paraguay, Bolivia, Venezuela, Peru and Chile. "The tasks of central banks is looking more complex," said the statement, which warned about the challenge of dealing with the growing risk of external price shocks at a time of red-hot domestic demand. (Reuters, 02-25-2011; http://www.reuters.com/article/2011/02/26/mercosur-economy-idUSN2519309920110226)

Chavez's nationalizations worry Asian investors

Asian financial investors expressed interest in Latin America at a seminar in Hong Kong where American entrepreneurs sought to improve the image of their markets, affected by political suspicions. More information in Spanish. (El Mundo, 02-28-2011; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=17&Id_Noticia=48369)

Rise in consumer spending triggered prices

The private final consumption expenditure showed slight signs of recovery between October and December 2010. In that period, the indicator rose 0.4% after six quarters of declines, according to official figures from the Central Bank of Venezuela (BCV). Jesus Casique economist believes that private consumption can be increased at the end of this year if the executive increases spending, but warns that "this strategy will bring higher inflation, because the domestic supply of goods and services do not meet domestic demand". More information in Spanish. (El Mundo, 03-01-2011; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=17&Id_Noticia=48480)

Union agrees to restart operations at Heinz Foods

After 27-day standoff, representatives of Heinz Foods and the union agreed this weekend to restart operations at the company, located in San Joaquín, Carabobo. The union leader Edison Garcia reported that the plant is currently undergoing maintenance, in order to achieve the start of production on Wednesday 2 March. More information in Spanish. (El Universal, 03-01-2011; http://www.eluniversal.com/2011/03/01/acuerdan-reinicio-de-operaciones-en-alimentos-heinz.shtml)

Commodities

Venezuela assigns new exploration area to Gazprom

Venezuela has assigned new gas exploration rights to Russia's Gazprom for $20 million, according to Monday's official government gazette. The continent's biggest crude oil producer is sitting on some of the world's largest offshore gas reserves, experts say, but is yet to begin producing any commercial gas. Gazprom has found nothing in two Gulf of Venezuela blocks where it won exploration rights in 2005, so was being granted a "re-assignment of areas," an Energy Ministry source said. Gazprom could now start new explorations in redrawn boundaries for the Urumaco I area, and also in Urumaco III for the first time, the gazette resolutions said. Both of those concessions are for 3-4 years. (Reuters, 02-28-2011; http://af.reuters.com/article/energyOilNews/idAFN2826224720110228)

Expert says that Venezuelan energy crisis is not over

Guillermo Ovalles, the former president of Venezuelan electricity distribution company ELECENTRO and current president of the Commission on Electric Power of the Venezuelan Federation of Trade and Industry Chambers (FEDECÁMARAS), said that Venezuela's electricity crisis, which started in 2010, is far from over. "The situation has not been overcome. Chaos persists," Ovalles stressed. He recalled that the government promised last year that it would add 5,000 megawatts of energy capacity in 2010, but it only added 1,200 MW, of which 600 MW are related to distributed generation plants. (El Universal, http://english.eluniversal.com/2011/02/28/expert-says-that-venezuelan-energy-crisis-is-not-over.shtml)

Venezuela Net Exports of Crude Rose 13% in January

Venezuela’s oil ministry said the nation’s net exports of crude and refined oil products rose about 13 percent in January to 2.54 million barrels a day. Production of crude oil climbed to 2.8 million barrels a day in December, according to an e-mailed statement today, which cited information from Inspectorate Venezuela SCS, a contractor to Venezuela’s Energy and Petroleum Ministry. (Bloomberg, 03-01-2011;

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aOdxV6sUQoqc)

Venezuela Oil Price Soars to $91.11

According to figures released by the Venezuela Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending February 25 soared to $91.11 from the previous week's $85.02. (Latin American Herald Tribune, 02-25-2011;

http://www.laht.com/article.asp?ArticleId=388019&CategoryId=10717)

Venezuelan oil production fell 7.7% in 2010

Venezuelan crude production averaged 2.78 million barrels per day (bpd) last year, said Tuesday the Department of Energy according to figures audited by an independent firm. Exports from OPEC member country recovered, for his part, averaging 2.59 million bpd in January, up from 2.28 million bpd the previous month. The production achieved in 2010 was 7.7% lower than the 3.01 million bpd a year earlier, according to audited financial statements of PDVSA. On the other hand, exports from the OPEC member was recovered in January, averaging 2.59 million bpd, down from 2.28 million bpd the previous month. The increase followed a rise in conventional crude oil shipments, improved crude Orinoco Belt and products. Heavy rains that lashed the country in the last quarter of the year affected the work of release of oil in the Venezuelan ports to stop the entry and departure of ships for several weeks. More information in Spanish. (El Mundo, 03-01-2011;

http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=13883)

BCV records production increase in food

The production of processed foods rose 7.1% in the last quarter of 2010, according to a report of the Central Bank of Venezuela, who attributed the recovery to a sustained increase in demand for Christmas products. The report indicates that the surge in orders was met by the timely delivery of currency to purchase raw materials and direct imports by the Government. More information in Spanish. (Entorno Inteligente, 03-01-2011;

http://www.entornointeligente.com/articulo/1094560/BCV-registro-alza-en-sector-de-alimentos)

Politics

US is investigating Venezuelan business with Iran

The State Department notified the Venezuela´s charge d'Affaires in Washington about the US law that calls for sanctions against foreign companies that negotiate with Iran. The chief U.S. diplomat for Latin America, Arturo Valenzuela, had told members of the House of Representatives that Federal authorities are closely following alleged violations by Caracas. U.S. sources claimed that one of the reasons is the sale of gasoline to Iran, for which U.S. is investigating the government of Venezuela and PDVSA for allegedly violating US legislation on Comprehensive Sanctions, Accountability and Divestment against Iran, which increases restrictions on trade with the Islamic Republic, designed to impact foreign companies trading with the Asian nation. More information in Spanish. (Noticiero Digital, 03-01-2011; http://www.noticierodigital.com/forum/viewtopic.php?t=744035)

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 25th, 2011

Economics & Finance

Venezuela: Economy shrank 1.4% last year, despite a slight uptick during the last quarter

Venezuela's economy contracted 1.4% in 2010, its second consecutive yearly drop, but the country showed signs of recovery during the final quarter, according to the Central Bank. The drop in gross domestic product, coupled with 27% inflation, made Venezuela end 2010 with Latin America's worst economic indicators. Venezuela has been in recession for two years, and its economic problems have lingered even as other nations in the region have resumed growing. The Venezuelan economy shrank 3.3% in 2009. (AP, 02-22-2011; http://finance.yahoo.com/news/Venezuela-Economy-shrank-14-apf-3058827811.html?x=0&.v=1)

Private sector GDP declines for eight quarters in a row

According to recently released Central Bank figures show that slight economic growth in Q4 2011 is underpinned only by the results of state-run companies and by public spending, as the government increases indebtedness at a rapid pace despite rising oil prices. The country is still far from regaining the ground it lost to recession. In fact, Venezuela's production in the fourth quarter of 2010 declined 5.2% compared with the same period of time in 2008. (El Universal, 02-23-2011; http://english.eluniversal.com/2011/02/23/private-sectors-gdp-declines-for-eight-quarters-in-a-row.shtml)

Overall imports up 33%, and imports by the government rise by 72% in Q4 2010

The Central Bank of Venezuela (BCV) reported that in the fourth quarter of 2010, imports went up 33.1% compared with the same period of time in 2009, to total USD 11 billion. Exports accounted for an income of USD 17 billion, including USD 16.74 billion for oil sales. At the same time, Venezuelan government's imports amounted to USD 3.81 billion in the fourth quarter of 2010, a 72% increase over the same period in 2009. "Imports of food, electrical appliances, machinery and common metals were particularly important," said the BCV report. Public sector's imports, in annual terms, have increased by 42 percent in 2010. (El Universal, 02-23-2011;http://english.eluniversal.com/2011/02/22/imports-up-33-percent-in-fourth-quarter-of-2010.shtml) and http://english.eluniversal.com/2011/02/23/govnt-imports-climb-72-percent-in-q4-2010.shtml)

Venezuela is negotiating a $4 billion financing with China for a joint investment fund, said Venezuelan Planning and Finance Minister Jorge Giordani yesterday. The amount represents the third installment of a financing signed in 2009 in exchange for oil sales in advance. (Veneconomy, 02-25-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25059&idc=2)

Trade Minister claims imports are necessary to bring down inflation

Among the outstanding statements made Economic Sector ministers at their hearings in at the National Assembly, one that stands out is Trade Minister Edmée Betancourt’s testimony that it “is necessary to import” some first-need food staples in order to fight inflation. She added that the measure also allows the government to fight speculation. (Veneconomy, 02-23-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25009&idc=2)

Businessmen decry weakened productive sector in Venezuela

The Venezuelan Federation of Trade and Industry Chambers (FEDECÁMARAS) openly differ with the government on the nation's economic performance. While the Executive Office said that a GDP increase (0.6%) in the fourth quarter of 2010 is an economic recovery and growth, FEDECÁMARAS says the economy continues to shrink. "No one can deny that the private sector continues to decline. It tumbled even in the fourth quarter of 2010," said Noel Álvarez, the president of FEDECÁMARAS. (El Universal, 02-23-2011; http://english.eluniversal.com/2011/02/23/businessmen-decry-fragile-production-apparatus-in-venezuela.shtml)

Venezuelan industrialists forecast drop in sales of six food items

The Venezuelan Chamber of Food Processing Industries (CAVIDEA) predicted a 1.52-10.30% drop in sales of six items of the basic food basket during the first half of 2011. (El Universal, 02-23-2011; http://english.eluniversal.com/2011/02/23/venezuelan-industrialists-forecast-drop-in-sales-of-six-food-items.shtml)

Government claims the growth in agricultural production meets people's needs

According to Agriculture and Land Minister Juan Carlos Loyo, agricultural policies implemented by the Venezuelan Government over the past 12 years have generated a 44% growth in the overall production, which shows an increase of food to satisfy the needs of Venezuelans and guarantee agrifood security and sovereignty. The Minister made the claim during his testimony to the National Assembly upon submitting his annual report. (AVN, 02-23-2011; http://www.avn.info.ve/node/44854)

Heinz announced activities in its San Joaquín plant continue paralyzed by the union, despite a call made by the Labor and Social Security Ministry authorities for a resumption of activities last Wednesday. The plant stopped 24 days ago. (Veneconomy, 02-24-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25033&idc=3)

Commodities

Venezuela does not anticipate an OPEC meeting on Arab unrest

Venezuela does not expect an emergency OPEC meeting in the short term because ample supplies in consuming nations can absorb any disruption from turmoil in the Middle East, a local paper said on Wednesday. Venezuela, which has not diversified from a decades-old reliance on crude as the backbone of its economy, routinely calls for higher prices and says $100 per barrel is fair. Oil Minister Rafael Ramirez said he was consulting his counterpart at top OPEC exporter Saudi Arabia, Ali al-Naimi, and neither of them expected any disruption to global supplies due to the large reserves held by major consuming nations. (Reuters, 02-23-2011; http://www.reuters.com/article/2011/02/23/venezuela-mideast-oil-idUSN2320853820110223)

Venezuela evaluating options for working the Las Cristinas gold mine

Government sources say Venezuela is evaluating the possibility that foreign companies involved in the massive Las Cristinas gold deposit, just weeks after it canceled the contract with the Canadian miner Crystallex. Crystallex (KRY) reported in early February that Venezuela decided to unilaterally terminate its contract to develop Las Cristinas. Immediately afterward, the Russian-Canadian company Rusoro (RML) said it was interested in exploiting the huge gold deposit. (VHeadline, 02-22-2011; http://www.vheadline.com/readnews.asp?id=101272)

Union members hold Chavez responsible for ALCASA aluminum's uncertain future

President Chavez has been held of being responsible for the state of affairs at Alcasa aluminum. Uncertainty seems to be the overriding sentiment at the plant after the government brokered an agreement with the trade unions at the nearby Venalum aluminum plant last week. Members of the Unidad Alcasiana labor group complained that neither Alcasa trade unions nor Basic Industries & Mining Minister, Jose Khan Salamat are coming up with solutions to end the current conflict. (VHeadline, 02-22-2011; http://www.vheadline.com/readnews.asp?id=101265)

Billions of dollars required to expand oil production in Venezuela

Venezuela’s state-owned oil industry must begin an ambitious investment program in oil exploration and production in order to expand its capacity to extract oil throughout the next decade. According to Asdrúbal Baptista, an economist and professor at the Institute of Higher Education in Business Administration (IESA), Venezuelan’s premier management school, the ratio of oil extraction volume to capital allocated for oil exploration and production projects suggest that Venezuela should invest USD 215 billion from 2011 to 2020 to expand production capacity to 4 million barrels a day. This means that Venezuela should be investing approximately USD 20 billion a year. (El Universal, 02-24-2011; http://english.eluniversal.com/2011/02/24/billions-of-dollars-needed-to-expand-oil-production-in-venezuela.shtml)

Construction declines amid lowered investment and input scarcities

Venezuela's construction activity has declined for five quarters in a row, yet during the past three months of 2010 the fall was sharper (-8.6%), according to data published by the Central Bank of Venezuela (BCV). This decrease was due to a slower execution of Venezuelan public spending in the infrastructure sector, lower private investments and failures in the provision of inputs such as cement, rebar’s and aggregates. (El Universal, 02-24-2011;  http://english.eluniversal.com/2011/02/24/construction-declines-amidst-poor-investments-and-scarce-inputs.shtml)

ENI’s appraisal well in Venezuela is successful

Success in the Perla 4 appraisal well in the Cardón IV block in the Gulf of Venezuela brings the Perla gas in place estimate to over 16 tcf. The well is in 60 m (~200 ft) of water and showed 17 MMcf/d of gas and 560 b/d of condensate during a production test. Cardón IV is operated by a joint company owned 50% by ENI and 50% by REPSOL. The venture has concluded the front-end engineering and design for early production of 300 MMcf/d of gas I 2013. (Offshore, 02-24-2011; http://www.offshore-mag.com/index/article-display/1095911294/articles/offshore/field-development/latin-america0/2011/February/eni-appraisal_well.html)

Politics

Venezuela protesters end 3-week hunger strike

Protesting students ended a three-week hunger strike Tuesday, saying they stopped because the Organization of American States is discussing their allegations of human rights abuses by Venezuela's government. Student activist Lorent Saleh said that Venezuelan authorities also agreed to review the cases of people considered political prisoners by the protesters."The government responded to our demands," Saleh said at a news conference. (Americas msnbc, 02-22-2011; http://www.msnbc.msn.com/id/41721815/ns/world_news-americas/)

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 18th, 2011

Economics & Finance

Former BCV leading economist says Government uses reserves to finance current expense

According to economist José Guerra, the Central Bank has suffered a loss of 64.3 billion Bolivars, according to its latest balance, where – he points out – liabilities are accounted for as assets. “Venezuela does not guarantee monetary stability because the Central Bank is an appendix the Government uses to finance its expenditures by creating valueless currency in order to finance fiscal deficits.” Guerra says that from 2005 to date U$ 38.8 billion dollars have been transferred by PDVSA to the National, upon which the Central Bank has printed bolivars using these dollars as a reserve. These reserves are later depleted without reimbursement to the Bank, thus weakening its position. More information in Spanish. (Entorno Inteligente, 02-14-2011; http://www.entornointeligente.com/articulo/1090904/Gobierno-dispone-de-los-recursos-del-BCV-para-financiar-gastos)

Sales fell 28.4% in the fourth quarter of 2010, according to CONSECOMERCIO president, Fernando Morgado. A survey carried out by the National Trade Council shows commercial increased by 38% during the last three months of last year. The same period reveals a job loss of 20.4%. (Veneconomy, 02-16-2011;  http://www.veneconomy.com/site/index.asp?ids=44&idt=24937&idc=3)

Likely shortage of products in the absence of price increases

The manufacturing sector has requested the Venezuelan government to allow price increases for regulated products, in order to prevent shortage of goods in the domestic market, said Carlos Larrazábal, the President of the Venezuelan Confederation of Industry (CONINDUSTRIA). "We are very concerned about the fact that the Venezuelan government has not taken any decisions so far about the impact of the devaluation" of the bolivar, said the business leader at a press conference. (El Universal, 02-17-2011; http://english.eluniversal.com/2011/02/17/en_eco_esp_likely-shortage-of-p_17A5177651.shtml)

2022 PDVSA Bonds soaked up by health and food sectors

Within this group, all orders between $3,000 and $20 million were assigned in full while the remaining orders which were over this amount were assigned at $20 million. In the case of individuals, the top assignment was of $10,000. (Veneconomy, 02-15-2011; http://www.veneconomy.com/site/index.asp?idt=24908&idc=2&ids=44&Var_Send=1&mmD=02&ddD=15&mmH=02&aaD=2011&ddH=16&aaH=2011&Send=Buscar)

The basic goods basket rose 1,5% to Bs.F.5,051.36 in January, according to the most recent report from The Union’ Documentation and Analysis Center (CENDA). The CENDA pointed out hygiene and toiletries were the items that experienced the greatest increase (2.2%) compared to December 2010. (Veneconomy, 02-16-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24925&idc=2)

Agriculture and Food Ministries have issued no import licenses so far this year

The National Council of Industries CONINDUSTRIA noted that ministries of Food (Minal) and Agriculture and Lands (MAT) have not granted import licenses so far this year, which heightens uncertainty about the lack of decisions on price adjustments after the devaluation implicit December past. "There are firms that are not receiving licenses, which together with strong delays in the delivery of certificates of non-production to suggest that the supply situation is getting complicated," said Carlos Larrazabal, president of CONINDUSTRIA. More information in Spanish. (El Mundo, 02-17-2011; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=17&Id_Noticia=47278

State-run bank provides USD 2 billion to Pdvsa

The financial needs of state-run oil company Petróleos de Venezuela (PDVSA) have been on the rise in the last three years, thus pushing the oil holding to resort to public entities, including state-run bank Banco del Tesoro. In a report published upon the offering of USD 3 billion in PDVSA bonds expiring in 2022, the Venezuelan oil giant said that it issued two investment certificates in December 2010 to Banco del Tesoro for a total of USD 2 billion, thus paving the way for the state-run bank to pump funds into the Venezuelan oil company. (El Universal, 02-17-2011;

http://english.eluniversal.com/2011/02/17/en_eco_art_state-run-bank-provi_17A5178653.shtml)

Heinz ready to resume discussion of collective bargaining agreement

According to a statement released by the US food company, a total of 167 companies and some 2,000 workers are hurt by the strike at a plant run by Heinz in San Joaquín, state of Carabobo, north central Venezuela. The companies that have been affected include sugar mills, glass containers manufacturers, cardboard industries, manufacturers of metal lids for bottles, fruit pulp processors, producers of tomatoes and tomato paste and manufacturers of spare parts for industrial equipment maintenance. (El Universal, 02-17-2011; http://english.eluniversal.com/2011/02/17/en_eco_esp_heinz-ready-to-resum_17A5179857.shtml)

Commodities

Venezuela's oil reserves rose to 296.5 billion barrels

Venezuela's proven oil reserves total 296.5 billion barrels, according to figures updated and officially announced by the Ministry of Energy and Petroleum (Menpet) in a statement. The new proven oil reserves come from traditional and offshore areas which total 242.41 billion barrels, while crude oil from the Orinoco Oil Belt amounts to 86.16 billion barrels. The Menpet said that in February "Minister of Energy and Petroleum Rafael Ramírez announced that Venezuela was in a position to certify the data, and now it can confirm it has become the nation with the largest proven crude oil reserves in the world." (El Universal, 02-15-2011; http://english.eluniversal.com/2011/02/15/en_eco_esp_venezuelas-oil-rese_15A5167373.shtml)

Suggested gasoline rationing may hide a drop in Venezuelan oil production, former PDVSA president Humberto Calderón Berti told Globovisión on Wednesday. He said the possibility of enforcing a rationing of gas consumption would be absurd since it would not solve the high consumption and would rather generate “corruption.” (Veneconomy, 02-16-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24933&idc=4)

Venezuelan Government to boost campaign on proper use of gasoline, denies rationing

“There is not rationing of gasoline in Venezuela. The Energy and Petroleum Ministry seeks to begin a campaign to teach the proper use of gasoline”, explained on Wednesday the chairman of the National Federation of Hydrocarbons Businesses (FENEGAS), Giuseppe Gherardi. Gherardi said to the official Venezuelan News Agency (AVN) that the campaign to be boosted by the Ministry seeks to prevent the waste of gasoline, which is sometimes used for purposes different to supply vehicles, such as cleaning floors. “As gasoline is so cheap, we are wasting it”, affirmed the representative of the association, which joins more than 1,200 gasoline pump stations out of 1,820 existing in the country. (AVN, 02-16-2011; http://www.avn.info.ve/node/43617)

Venezuela choses firms for 15 tcf gas project-sources

Venezuela has picked at least four companies from China, Malaysia, Russia and Algeria for a long-delayed offshore natural gas project in the South American OPEC member, sources at the companies said on Tuesday. The continent's biggest crude oil producer is sitting on some of the world's largest offshore gas reserves, experts say, but it has yet to begin producing any commercial gas. Venezuelan state oil company PDVSA has spent more than a decade searching for partners to develop its Mariscal Sucre project, which is estimated to hold 14.7 trillion cubic feet. (Reuters, 02-15-2011; http://www.reuters.com/article/2011/02/15/venezuela-gas-idUSN1518067920110215)

Simon Bolivar gold mine 70% paralyzed

Trade unions representing workers at the Simon Bolivar gold mine in south-eastern Venezuela held a special meeting to protest against Central Bank´s (BCV) red tape creating obstacles in carrying out a 50-50 export agreement with private mining companies. SUTRAMIOCS union general secretary, Manuel Montiel declared that the mine is currently at a 70% standstill because of a lack of tools and supplies. He charged the Central Bank has not released the necessary cash for the company to purchase tools and manage a necessary cash flow. (VHeadline, 02-15-2011;

http://www.vheadline.com/readnews.asp?id=101080)

Yarmouth industries urged to link-up with Venezuela

A representative from UK Trade and Investment visited the seaside town to discuss developing links with the the South American country. "They can win business and that will help save jobs in the region," said Haden Spicer, a representative from the British Embassy in Caracas. Venezuela has one of the world's largest oil reserves. "There's a big push in the UK to try and export our way out of the current economic downturn," said Mr. Spicer. (BBC News, 02-17-2011;

http://www.bbc.co.uk/news/uk-england-norfolk-12494206)

Crystallex seeks USD 3.8 billion compensation from Venezuela

Under terms of the treaty between Canada and Venezuela for the Promotion and Protection of Investments, Canadian mining company Crystallex International Corp. has filed a request for arbitration against the Venezuelan government. The Toronto-based company decided to file the request before the World Bank's International Centre for Settlement of Investment Disputes ("Icsid"), seeking a full compensation in excess of USD 3.8 billion. (El Universal, 02-17-2011; http://english.eluniversal.com/2011/02/17/en_eco_esp_crystallex-seeks-usd_17A5177931.shtml)

Logistics & Transport

Chinese will take part in building a new container terminal

Representatives of the Asian company Chec visited the port of Puerto Cabello, to join the team responsible for building the new container terminal, agreed action, under an agreement between Venezuela and the Republic of China. The new company technicians from China Harbour Engineering Company Limited, together with staff from Bolivariana de Puertos, will undertake geological and geotechnical studies, including topography and hydrography, prior to starting construction. (El Carabobeño, 02-18-2011; http://www.el-carabobeno.com/impreso/articulo/t180211-sl05/chinos-incorporados-a-construccin-de-nuevo-terminal-de-contenedores)

Politics

Colombia, Venezuela foreign ministers review bilateral accords

Venezuelan Foreign Minister Nicolas Maduro and Colombia’s Maria Angela Holguin met in Caracas this week to focus basically on politics, frontier security and commerce. In a statement before his encounter with his Colombian counterpart, and Colombian National Defense Minister Rodrigo Rivera and Minister of Commerce, Industry and Tourism, Sergio Diaz Granados, Maduro said they do not expect to sign any agreements because the meeting aims at reviewing those already signed. “We will specially tackle with the debt, illicit acts in commercial matters, the accord to substitute the Andean Community of Nations (CAN) and joint ventures in matters of production.” (AVN, 02-16-2011;

 http://www.avn.info.ve/node/43657)

US examining whether Venezuela violates Iran sanctions

A top US official said Tuesday that Washington is closely examining whether Venezuela's cooperation with Iran on energy issues violates international sanctions on the Tehran regime. Arturo Valenzuela, the top State Department diplomat for Latin America, told a congressional panel that "we are looking at that issue" and that the US administration is "trying to determine if in fact there is a violation." (AFP, 02-15-2011;

 http://news.yahoo.com/s/afp/20110216/pl_afp/usvenezuelairansanctionenergy_20110216000657)

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.