Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Showing posts with label Las Cristinas Mine. Show all posts
Showing posts with label Las Cristinas Mine. Show all posts

Tuesday, September 24, 2013

September 24, 2013

Economics & Finance

Maduro announces a new U$D 5 billion credit from China
President Nicolas Maduro met with China's President Xi Jinping over the weekend in Beijing and said that China had granted Venezuela another $5 billion credit line -- and all was announced by twitter. "In the meeting we approved projects and resources for the development of energy, housing, agriculture, transportation, among others," he tweeted. Official sources report Venezuela already had 365 cooperation agreements with China in areas including energy, oil, education, health, technology, trade, construction, agro-industry and agriculture, infrastructure, industry, culture and sport, among others. The agreements signed during the trip bring the total to 400. Oil Minister Rafael Ramirez says is supplying China with 626,000 barrels per day of oil, and expects exports to China will reach 1 million barrels per day within 2 years. This is up from 49,000 BPD in 2005. Venezuelan officials, including Foreign Minister Jaua claim oil shipments have helped pay back some U$D 20 billion out of the U$D 46.5 billion that China loaned Venezuela between 2005 and 2012. Maduro also used twitter to announce an agreement between Venezuela and Chinese oil company SINOPEC for the production of 200,000 BPD of crude oil in the Junin 1 oil block in the Orinoco Belt. "In the energy field, we agreed with Sinopec an investment of U$D 14 billion in the block Junin 1 of oil in the Orinoco Belt, for the production of 200,000 barrels per day," Maduro wrote. The U$D 5 billion is basically a credit that will be invested in the country, through a credit from the China Development Bank (BDC) for the financing of strategic projects in the field of health, science road, transport, technology, industry, electricity and mining. The China Development Bank will establish an office in Caracas to oversee the loans. Projects announced include:

  • U$D 391 for construction of a maritime terminal for Pequiven (petrochemical company), through The Export-Import Bank (Eximbank) of China, in order to export Urea and ammonia.

  • Develoment of the Las Cristinas gold mine project.

  • CITIC construction group to build 4,500 homes in the states of Nueva Esparta and Anzoategui.

  • SINOHYDRO to rehabilitate the Las Majaguas irrigation system in Portuguesa state and for road connection in the East-West Kempis - Santa Lucía road in Miranda State.

  • BEIDAHUANG, a leader in China's agricultural industry in China, agreed to plant 60,000 hectares of corn, rice and soybean in Guarico, Barinas, Apure, Delta Amacuro and Portuguesa.


Expected FOREX tender postponed indefinitely
Although authorities had announced a new FOREX to be held last week, the event did not take place. Some sources indicate a decision on FOREX will be taken once the party of officials that went to China with President Maduro return to Venezuela. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/sectores-de-la-economia-se-quedan-a-la-espera-de-n.aspx#ixzz2fnwZYBi8)

Central Bank is considering trading gold to increase disposable reserves
The Central Bank has started to consider options to increase disposable reserves available for imports and debt service. One option would be to use gold bullion deposited abroad - worth U$D 2.6 billion - in exchange for credit. Disposable reserves closed at U$D 1.3 billion in August, a record low point, at a time foreign debt service has tripled since 2012, imports remain high and oil exports remain stagnant due to lower production and discount sales to allied nations. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130924/bcv-analiza-entregar-oro-como-garantia-para-subir-las-reservas)

Inflation could close at 45-48% by the end of the year, according to economist José Guerra. Production is “stagnant” and “incapable” of growing up to capacity, according to the economist who says that added to that, there is “an out of control inflation and a noticeable shortage of products,” that according to the figures from the Central Bank is at “an alarming 20.2%.” (Veneconomy, 09-23-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36416&idc=2)

Venezuelan stock market up 252%
Venezuela’s stock market rose 3% during the week ending September 20th with the Caracas Stock Index closing at 1,660,974, a new all time high. The leading gainers were the shares of Mercantil Servicios Financieros A and B, both closing at Bs. 500 for a gain of 7.8% and 7.3% respectively. MANPA rose 4.2% at Bs. 12.5, before its toilet paper plant was taken over by the government on Saturday; Banco Provincial gained 3.8% to close at Bs. 500. Nationalized phone company CANTV lost 3.1% at Bs. 46. All other stocks were flat or did not trade. The Venezuela Stock Market is now up 252.32% for the year to date in bolivar terms, though only 140.48% in official rate dollar terms because of February devaluation, still making it the best performing stock market in the world. (Latin American Herald Tribune, 09-23-2013; http://www.laht.com/article.asp?ArticleId=1032160&CategoryId=10717)
Commodities

OVL mulls raising stake in U$D 20 billion Venezuela oil project
ONGC Videsh Ltd and its partners are mulling raising stake in Venezuela's U$D 20 billion Carabobo-I oil project even as India looks at raising crude oil imports from the Latin American country. OVL, which has 11% stake in the project that will produce 400,000 barrels per day of oil (20 million tons) in four years, is looking at buying a similar stake that Malaysia's PETRONAS has decided to give up in the project. On the other hand, Reliance Industries Ltd, which gets about 20% of its oil needs from Venezuela, is looking at raising imports while state-run firms like Indian Oil Corp (IOC) and HPCL-Mittal Energy Limited (HMEL) are keen to start buying oil from the Latin American nation. "Indian companies' representatives will visit Venezuela on October 7 and 8 and have some concrete proposals worked out," Oil Minister M Veerappa Moily told reporters after meeting Oil Minister Rafael Ramirez. (Economic Times, http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/ovl-mulls-raising-stake-in-20-billion-venezuela-oil-project/articleshow/22992242.cms)

PDVSA said to lose U$D 111 billion due to lower production
Oil and gas expansion projects have failed to strike targets set for production by official plans, and Venezuela's share in the global oil market is now narrower. The program to expand production called for a U$D 77.3 billion investment, including U$D 54 billion furnished by PDVSA. (El Universal, 09-23-2013;http://www.eluniversal.com/economia/130923/pdvsa-said-to-lose-usd-111-billion-out-of-less-production)

Most offshore gas production slated for 2017
PDVSA estimates that the bulk of production from Rafael Urdaneta and Mariscal Sucre projects will be achieved as of 2017. The oil giant has calculated gas production in Dragón at 252 million cubic feet per day (mcfd) by 2014, and this will be the only unit starting early production. (El Universal, 09-23-2013; http://www.eluniversal.com/economia/130923/most-offshore-gas-production-expected-in-2017)

Tariff hike will cut Venezuela's income from methanol sales
Exports from Petróleos de Venezuela (Pdvsa) to the European Union, particularly methanol, will be altered in 2014 upon the entry into force of a tariff increase. The decision not only will impact PDVSA but also threatens the domestic market. Until 2010, Venezuela was listed among countries with tariff preferences at a 0% level for exports to Europe, under the Generalized System of Preferences (GSP). This year Venezuela was included in the list of nations that pay a 2% tariff. However, by 2014, Venezuela will pay the full rate at 5.5%. PEQUIVEN and its joint ventures sell Europe some 700,000 tons of methanol a year, for about U$D 252 million. (El Universal, 09-23-2013; http://www.eluniversal.com/economia/130923/tariff-hike-cuts-venezuelas-income-from-methanol-sale)

SIDOR paralyzed for six days due to strike
The SIDOR steel combine has been at a standstill for six days due to spontaneous labor protests. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130924/sidor-acumula-seis-dias-de-paralizacion-por-protesta-laboral)

Toilet paper factory occupied by government officials
The Venezuelan Government has "intervened" into the nation's major paper manufacturer, MANPA, in order to verify production, distribution and sales of toilet paper. No details were given on what the company might have done wrong. MANPA is the nation's best know manufacturer of toilet paper, sanitary towels and disposable diapers. Karin Granadillo, head of the Consumer Protection Agency says, "the team responsible for temporary occupation can take all decisions necessary, even taking over the direction of production, distribution and sales up to 15 days since the date the company was notified". The Maduro regime has been blaming the private sector for scarcities, while business says difficult access to FOREX needed for buying supplies is to blame. More in Spanish: (INFOLATAM and
AVN, http://www.avn.info.ve/contenido/revisan-estructura-producci%C3%B3n-distribuci%C3%B3n-y-comercializaci%C3%B3n-manpa)
Politics

Independent municipal candidates will be expelled from the United Socialist Party
The pro government United Socialist Party (PSUV) has set forth its official candidates for the upcoming December 8th municipal elections, and the party's Vice President, Diosdado Cabello, has announced that all pro-government candidates running outside the party list will be expelled from the organization. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/130924/sacan-del-psuv-a-los-que-se-lanzaron-solos-para-el-8d)

U$D 270 million worth of cocaine found on Air France flight
There was something odd about the 30 suitcases that showed up on a flight from Venezuela. The colorful bags weren't registered to any of the passengers on the plane. When French officials opened them up, they discovered why -- 1.3 tons of pure cocaine was stuffed inside the anonymous bags. The street value of the stash? About 200 million Euros, or UD$ 270 million. The catch was made on September 11, but French authorities didn't publicize the find until Saturday. (CNN, 09-23-2013; http://edition.cnn.com/2013/09/22/world/europe/air-france-cocaine-found/index.html?iref=allsearch)
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.

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Friday, January 18, 2013

Caracas, January 18th, 2013


Economics & Finance

Moody's downgraded Venezuela’s Ratings Outlook to negative, from stable and affirmed the B1 local currency and B2 foreign currency government bond ratings, citing increased political uncertainty and associated risks to the Venezuelan economy and government finances, informed Reuters. (Veneconomy, 01-16-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33350&idc=2; El Universal, 01-17-2013; http://www.eluniversal.com/economia/130117/moodys-changes-forecast-on-venezuelas-pdvsa-bonds)

UN forecasts economic Venezuela's growth at 2.5% in 2013
A "modest acceleration of economic growth" is expected in the next two years in Latin America and the Caribbean with growth rates at 3.9% in 2013 and 4.4% in 2014, according to a United Nations report entitled, "World Economic Situation and Prospects 2013." Countries in the region reporting below average growth (3.9%) are: El Salvador, 2.2%; Venezuela, 2.5%; Argentina, 3.2%%; Cuba, 3.5%; Honduras, 3.5; %; Guatemala, 3.7% and Mexico, 3.8. (El Universal, 01-17-2013; http://www.eluniversal.com/economia/130117/un-forecasts-economic-growth-in-venezuela-at-25-in-2013)

Venezuela registers highest inflation in the region
According to official figures from Argentina's National Statistics and Census Institute (INDEC), inflation there 2012 was the second in South America (10.8%), after Venezuela with 20.1%, and followed by Uruguay (8.6%), Brazil (5.8%) and Bolivia (4.5%). (Veneconomy, 01-16-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33348&idc=2)

Public spending rose 6.7% in 2012
According to Finance Ministry data, public expenditure was U$D 96.27 billion in 2012, up 6.7% in real terms (after inflation) from 2011, when public spending was U$D 75.81 billion. Increased spending was mainly in construction, government services, and trade, underlining the economy's growing dependence on public expenditure showing. (El Universal, 01-17-2013; http://www.eluniversal.com/economia/130117/venezuelas-public-expenditure-climbs-67-in-2012)

Chinese loans to Venezuela were U$D 46 billion in four years
According to a comparative analysis by the Economics Faculty of Mexico's National Autonomous University, twelve Latin American countries received U$D 85.8 billion in credits from China from 2005-2012. The amount exceeds the credits granted by the World Bank (U$D 53.3 billion) and the Inter-American Development Bank (U$D 66.9 billion) during the same period. The study shows that Venezuela has received U$D 46.5 billion, which is 55% of the total loans granted to the region. These funds were mainly directed to government projects, and programs in state-owned oil company PDVSA. (El Universal, 01-16-2013; http://www.eluniversal.com/economia/130116/chinese-loans-to-venezuela-amount-to-usd-46-billion-in-four-years)

Banco Mercantil was the financial institution best rated by Venezuelans according to a study by IZO marketing consulting firm. The study is designed to analyze client experience through strategic indicators, sectors’ and countries’ positioning (BCX Index). Venezuela’s general average ranked second after Colombian companies. (Veneconomy, 01-16-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33349&idc=2)
Commodities

OPEC is keeping its global crude demand outlook unchanged for 2013 up barely 0.85% from last year in line with a global economy that, despite starting with a slight recovery, will continue to be threatened by uncertainty. The Vienna based group foresees world economy growing 3.2% in 2013, slightly up from last year’s 3%. (Veneconomy, 01-16-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33357&idc=4)

Central Bank reports severe shortages at the close of 2012
The Bank reports high shortage indexes in 6 key products: precooked corn (43.3% - which means the same percentage of establishments visited did not have the product); wheat flour (76.8% in December, up from 10.8% in January); sunflower oil (86.1%); corn oil (56.8%); vegetable based oil (67.1%); and sugar (78.1%). More in Spanish: (El Universal, 01-18-2013; http://www.eluniversal.com/economia/130118/bcv-reporto-que-seis-rubros-cerraron-2012-con-escasez-grave)

Official claims production levels and product distribution are normal
Karlin Granadillo, National Superintendent of Fair Costs and Prices, says production and shipment of products remains at normal levels and dismissed the idea of shortages. She says there is normal decrease in production during January, due to collective vacations in December; and claimed that toilet paper-producing companies are 100% operational and toothpaste companies are at about 80% of their output level. (AVN, 01-17-2013; http://www.avn.info.ve/contenido/production-levels-and-shipment-products-are-normal)

Venezuela won Las Cristinas arbitral case
Attorney General Cilia Flores announced that a case brought against Venezuela by Canada's Vannessa Ventures Ltd. over a exploration and mining contract for the Las Cristinas Mine in Bolivar state was decided in favor of Venezuela. In an official publication she states "the decision to rescind the contract....was not expropriation" and therefore did not violate the Bilateral Investment Protection Treaty between Canada and Venezuela. More in Spanish: (AVN, 01-18-2013; http://www.avn.info.ve/contenido/venezuela-gan%C3%B3-juicio-internacional-sobre-mina-cristinas-del-estado-bol%C3%ADvar; El Universal, http://www.eluniversal.com/economia/130118/ciadi-fallo-a-favor-de-venezuela-en-juicio-por-las-cristinas)
International Trade

Government will import U$D 180 million in food from Argentina
Argentina's Federal Planning Minister Julio De Vido and Venezuela's Nutrition Minister Carlos Osorio have met in Caracas and reached an agreement for Venezuela to import "rice, milk, chicken and cattle beef, and all products needed to guarantee nutrition". More in Spanish: (El Nacional, 01-18-2013; http://www.el-nacional.com/)
Politics

Maduro says Chavez is serene and conscious
After a three day visit, Vice President Nicolás Maduro is reporting that "in general terms I see him very quiet, very serene, and very conscious of all phases he has gone through after his operation". More in Spanish: (AVN, 01-18-2013; http://www.avn.info.ve/contenido/maduro-ch%C3%A1vez-est%C3%A1-sereno-y-consciente-del-proceso-post-operatorio; El Universal, http://www.eluniversal.com/nacional-y-politica/130118/maduro-dice-que-evaluan-escenarios-pero-chavez-sigue-al-mando)

VP did not deliver annual report speech to Congress to avoid violating the Constitution
Vice President Nicolás Maduro says the Government, including himself, is fully aware that it was not up to him as vice-president to address the National Assembly (AN) to present the Government's Annual Report, as it would have been a violation of the Constitution. He said: "The President instructed me to show up at Congress to submit the Yearly Report in writing as I am not entitled as vice-president to do it in his stead. We were always aware of this." (El Universal, 01-16-2013; http://www.eluniversal.com/nacional-y-politica/130116/vp-refrains-from-addressing-congress-to-avoid-violating-the-constituti)

Venezuela's military presented their proposal for the 2013-19 plan, to Vice President Maduro and Defense Minister General Diego Molano said they would obey and enforce the Supreme Court's decision “allowing the President to return to the country when his health improves.” He also ratified their loyalty, endorsement and solidarity to Hugo Chávez. (Veneconomy, 01-16-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33361&idc=1)

Government publishes decree with Chavez signature
Venezuela's government has published a decree signed by President Hugo Chavez, while his vice president said Wednesday that the ailing leader also sent a message of gratitude to the military for its loyalty. It was the first time the president's signature has appeared in the Official Gazette since his latest cancer surgery in Cuba more than five weeks ago. The decree issued Tuesday and published in the government newspaper on Wednesday names former vice president Elias Jaua as Venezuela's new foreign minister. The signature is printed along with the presidential stamp. (Fox News, 01-16-2013; http://www.foxnews.com/world/2013/01/16/venezuela-publishes-decree-with-chavez-signature/)

Foreign Minister´s appointment termed a forgery
Perkins Rocha, an expert in public law and former Justice in the Administrative Court, has filed a Supreme Court case claiming a decree purportedly signed by President Chavez appointing Elías Jaua as Foreign Minister is false and says all action by Jaua should be considered null and void.
The decree's text indicates it was signed in Caracas while Chavez remains in Havana, and Rocha points out that the law states all such appointments must be made in Venezuela. More in Spanish: (Tal Cual, 01-18-2013; http://www.talcualdigital.com/index.html)

15 daily public protests registered during 2012 in Venezuela
The Social Conflict Observatory's annual report shows there were 5483 public demonstrations against the government during 2012, a 3% increase over 2011. This new record surpasses the total number of protests registered in 1999-2002, the first four years of Mr. Chavez's rule. Protests included marches, demonstrations and the closing of public roads. More in Spanish: (El Universal, 01-18-2013; http://www.eluniversal.com/nacional-y-politica/130118/en-2012-se-registraron-en-venezuela-15-protestas-diarias)

Panama fired its' OAS Ambassador Guillermo Cochez for an unauthorized speech on Venezuela's democracy which Venezuela's OAS Ambassador termed an "open interference" into internal affairs.  Panamanian President Martinelli had previously disavowed statements by Cochez saying they do not reflect Panama's position. More in Spanish: (AVN, 01-18-2013; http://www.avn.info.ve/contenido/gobierno-panam%C3%A1-destituye-embajador-cochez-oea; El Universal, http://www.eluniversal.com/nacional-y-politica/130118/panama-destituye-a-embajador-por-sus-criticas-hacia-venezuela)
The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group. 
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