October 23th, 2012

Economics & Finance

World Bank ranks Venezuela among the most difficult nations for business

In its report on "Doing Business 2013: Smart regulations for small and medium business", prepared jointly with the International Finance Corporation (IFC), the World Bank underlines "encouraging" and "important" efforts to improve business regulation in Latin America, headed by Chile, Perú, Colombia, México and Panama, and points to worsened conditions in other countries such as Argentina and Venezuela. Chile is 37th on the global rating, followed by Perú (43), Colombia (45), México (48) and Panama (61). Venezuela ranks 180th out of 185. More in Spanish: (Ultimas Noticias, 10-23-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-entre-los-paises-mas-complicados-para-ha.aspx)

Minister says there are no plans to devalue currency

Venezuela isn’t studying a devaluation of its currency next year and the government will maintain levels of spending similar to those in 2012, El Nacional reported, citing central bank President Nelson Merentes. The central bank is allowing foreign currency reserves to fluctuate between U$D2 billion and U$F 5 billion, the Caracas-based daily cited Merentes as saying. (Bloomberg, 10-19-2012; http://www.bloomberg.com/news/2012-10-19/venezuela-doesn-t-plan-to-devalue-currency-el-nacional-says.html)

2013 budget premises to be presented to National Assembly, oil projections probably unchanged

Planning and Finance Minister Jorge Giordani is to present the premises for the 2013 Annual Budget and the Special Indebtedness Tax, along with the Annual Operational Plan before the National Assembly today, says Finance Committee Chairman Ricardo Sanguino. According to economist Luis Oliveros premises used for the oil industry will remain basically unchanged, estimating average oil prices at U$D 50 per barrel and production around 3.1 million BPD. (Veneconomy, 10-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32489&idc=2 and more in Spanish: El Mundo; http://www.elmundo.com.ve/)

Economist says Venezuela will have no income problems in 2013

Economist Carlos Quenan estimates that due to tension in the Middle East and China's economic recovery oil prices will remain around U$D 100 per barrel and Venezuela will continue to sail untroubled. More in Spanish: (El Mundo, 10-23-2012; http://www.elmundo.com.ve/noticias/economia/mercados/proyectan-un-2013-sin-problemas-de-ingresos-para-l.aspx)

Public spending estimated at VEB 528.8 billion by year end

According to ECOANALÍTICA, public spending will continue to grow and close 2012 around VEB 528.8 billion. Original estimates for 2012 were VEB 297.8 billion, but due to special authorizations it will rise by 77.6%, More in Spanish: (El Universal, 10-23-2012; http://www.eluniversal.com/economia/121023/calculan-que-el-gasto-de-2012-terminara-en-bs-5288-millardos)

Gov't seeks stronger State presence in Venezuelan economy

Just a few months before reelected President Hugo Chávez begins his next term, clear signals are being sent that further steps will be taken to deepen the socialist model in Venezuela. The Government's goal is to reinforce the presence of the State in all sectors of Venezuelan economy. As soon as Juan Carlos Loyo was reappointed as minister of Agriculture and Lands, he stressed that he would continue the lands "recovery" policy currently in place. "Moving forward, continuing the lands recovery policy. Thus, it is not expropriation; it is recovery; it is about going back to the very beginning, to the lands of the people and the indigenous tribes. However, this time we are incorporating efficient production and efficient trade. We do not want to see agriculture products ending up in the hands of speculators but in the hands of Venezuelan families," Loyo said recently after being appointed. (El Universal, 10-22-2012; http://www.eluniversal.com/economia/121022/govt-seeks-stronger-state-presence-in-venezuelan-economy)

Venezuelan bonds are good business

Alexis Mena, f the SOFTLINE economic consultant firm says that at first sight taking a position in Venezuelan bonds appears sensible as the nation has never once defaulted on its debt payments. He says prices have held firm and some are even overvalued. More in Spanish: (Tal Cual, 22-10-2012; http://www.talcualdigital.com/index.html)

Unemployment rate in September at 7.3%

Unemployment rate in September stood at 7.3%, a reduction of 1.0% versus September 2011 (8.3%), according to the monthly report on the workforce issued by the government´s National Statistics Institute (INE). In absolute terms, this means 1,010,510 jobless last month. Out of them, 897,417 were laid off and the other 113,093 unsuccessfully looked for their first job. In September 12,795,897 people were working, most of them in the formal sector of the economy (59%). (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/unemployment-rate-in-september-at-73)

Commodities

CVG BAUXILUM stops operations due to lack of inputs

The shortage of polymers used for alumina refining has forced the shutdown of the last operational stage at CVG BAUXILUM, which is the first link in aluminum industry production process. Workers say this is the first time that the plant has been paralyzed by shortages of any of the inputs. In addition, workers at BAUXILUM mines have gone on strike due to delays in wage payments. More in Spanish: (El Nacional, 10-22-2012; http://www.el-nacional.com/; El Universal, 10-23-2012; http://www.eluniversal.com/economia/121023/trabajadores-de-minas-de-bauxilum-inician-paro)

It seems impossible to raise oil production by 522,000 barrels per day (bpd) as planned by PDVSA in its work schedule for the Orinoco Oil Belt for this year, say sources in the local oil industry. Current production is 1.2 million bpd. There is no other known additional pumping besides early production announced last September by joint ventures PETROMIRANDA and PETROMACAREO in the Junín 6 and 2 blocs. (Veneconomy, 10-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32486&idc=4)

Venezuelan oil basket climbs to U$D 102.47

Venezuelan oil prices slightly surged during the week of October 15-19, ending at U$D 102.47 per barrel on average, the Ministry of Petroleum and Mining reported. This means a hike of U$D 0.35 in the value of the Venezuelan oil basket over its price last week. The Ministry explained that "the hikes recorded ending last week allowed the average prices of crude oils to finish this period on the rise, backed by the concern about the supplies due to geopolitical tension in the Middle East and maintenance work in the North Sea." (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/venezuelan-oil-basket-climbs-to-usd-10247)

International Trade

Venezuela-Colombia trade agreement enters info force

Trade relations between Colombia and Venezuela have entered a new stage, following the entry into force of the Partial Scope Agreement (AAP), which will regulate bilateral trade, according to the Colombian Ministry of Trade.

The AAP will allow the entry of Colombian exports into the Venezuelan market free from tariffs, the ministry explained. The Agreement contains about 4,921 product lines for Colombia and 4,713 product lines for Venezuela, AFP cited. However, the Binational Chamber of Commerce says application of the agreement will be delayed at several customs offices that have not yet adapted to the new system. (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/venezuela-colombia-trade-agreement-enters-info-force; and more in Spanish: El Mundo, http://www.elmundo.com.ve/)

Meat imports from Brazil up 25% this year

Venezuela bought 188,000 tons of meat from Brazil for a total of U$D 590 million, as the volume of beef imports rose 25% year to date, above the same period last year. More in Spanish: (El Mundo, 10-22-2012; http://www.elmundo.com.ve/noticias/economia/banca/importacion--de-carne-desde-brasil-sube-25--este-a.aspx)

Rules for Venezuela's adjustment to MERCOSUR will be completed before year-end, according to Isabel Delgado, Executive Secretary of the Presidential Commission for the accession of Venezuela to the Southern Common Market (Mercosur), who announced the new rules "will be largely completed by the end of the year." More in Spanish: (AVN, 10-22-2012; http://www.avn.info.ve/contenido/adecuación-normativa-sobre-ingreso-venezuela-al-mercosur-concluirá-antes-fin-año)

Colombia is an ally in supplying local market, according to statements by the Agriculture and Land Ministers of both nations, Juan Carlos Loyo y Carlos Osorio, who say the doors are open for broader integration. More in Spanish: (Últimas Noticias, 10-22-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/colombia-es-aliada-para-el-abastecimiento-local.aspx)

Logistics & Transport

Venezuela may invest U$D 300 Million to start flights to Beijing and Moscow

Venezuela is considering investments of up to U$D 300 million for the purchase of long-range aircraft to begin intercontinental flights to “allied” countries like China and Russia, according to Elsa Gutiérrez, Minister for Aquatic and Air Transport. She said that after strengthening national and regional connections with the purchase of six Brazilian EMBRAER aircraft at a cost of U$D 270 million, state airline CONVIASA is now working on buying aircraft “to serve different international destinations with direct flights.”“When we say Russia and China, we’re not talking just about Russia and China and nothing else – we want to be able to offer Venezuelans and businessmen access and connection facilities in a competitive but not an unregulated way,” she said in stressing the importance of connecting Caracas with the capitals of those two countries. (Latin American Herald Tribune, 10-19-2012; http://www.laht.com/article.asp?ArticleId=613896&CategoryId=10717)

Politics

Gubernatorial election campaign starts on November 1

Sandra Oblitas, the Vice-President of the National Electoral Council (CNE), reported on Friday that the election campaign for state governors starts on December 16. She explained that the regulations have been endorsed and the whole election process is being assessed.

She informed that the CNE system got a positive score of the "highest turnout" in the presidential election of October 7. The senior officer remembered that around 15 million voters cast their ballots on October 7. (El Universal, 10-19-2012; http://www.eluniversal.com/nacional-y-politica/121019/gubernatorial-election-campaign-starts-on-november-1)

Mitt Romney charges Obama with weakness toward Chavez

During the last of three debates, Republican presidential candidate Mitt Romney charged that President Barack Obama showed weakness internationally by coming closer to Hugo Chávez, Fidel Castro and Mahmud Ahmadinejad. More in Spanish: (El Universal, 10-23-2012; http://www.eluniversal.com/internacional/estados-unidos-2012/121023/mitt-romney-obama-mostro-debilidad-al-acercarse-a-chavez)

August 24th, 2012

Economics & Finance

World Bank: Investing in Venezuela is hazardous

A World Bank study, Doing Business 2012, shows that Venezuela has one of the worst legal environments for investing or starting a business. Out of total 183 countries evaluated, Venezuela comes in 177th, and is perceived as even worse than Haiti, which placed 174th. This runs counter to a world trend toward increasingly favorable conditions for business, as politicians become increasingly aware of the importance of improving their economies in the long term. More in Spanish: (Ultimas Noticias, 08-23-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/banco-mundial--invertir-en-venezuela-es-un-lio.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela--entre-los-peores-paises-para-invertir-o.aspx)

Central Bank forecasts inflation under 20%

Nelson Merentes, president of the Central Bank of Venezuela, estimates that this year the inflation will come in below the goal set at 20%-22% in the national budget. He says: "This year we are going to finish below the goal for inflation, it means that it is going to be below the lower limit, but it continues to be a two-digit inflation". (El Universal, 08-23-2012; http://www.eluniversal.com/economia/120823/venezuelas-central-bank-forecasts-inflation-under-20)

Worker protests force SIDOR to sit down and talk

Nicolas Maduro, Minister of Foreign Affairs, and directors of the Venezuelan Corporation of Guayana (CVG) met with trade union leaders, after workers from the state-run iron and steel company Siderúrgica del Orinoco (SIDOR) loudly complained to President Chávez about delays to discuss their collective bargaining agreement, which expired two years ago. (El Universal, 08-22-2012; http://www.eluniversal.com/economia/120822/workers-claims-constrain-iron-and-steel-company-to-take-a-seat-and-tal; More in Spanish: El Nacional, 08-22-2012; http://www.el-nacional.com/)

BCV aid to PDVSA is up to VEB 107.7 billion

Although the price of oil continues to average U$D 100, PDVSA needs additional resources to meet the demands made on it by the central government. It then turns to the Central Bank of Venezuela. BCV figures show that by the end of July financial assistance to the oil company reached VEB 107.7 billion. More in Spanish: (El Universal, 08-23-2012; http://www.eluniversal.com/economia/120823/asistencia-del-bcv-a-pdvsa-asciende-a-bs-1077-millardos)

Commodities

Venezuela expects to produce 6 million BPD by 2019

Venezuela is expected to produce 6 million oil barrels per day by the year 2019, informed the president of the Republic, Hugo Chavez.

In a visit to platform Cayaurima, at Carabobo Division of the Orinoco Oil Belt, in eastern state of Monagas, President Chavez said it is expected to generate 4 million barrels per day by 2019 only in this area.

Venezuela's field Orinoco Oil Belt counts with 150 "macolla" or platforms through which may be drilled several oil wells and 4,000 oil wells. (AVN, 08-22-2012; http://www.avn.info.ve/contenido/venezuela-expects-produce-6-million-bpd-2019)

Oil Belt to increase production by 1,350,000 B/D this year

Seeking to continue boosting Venezuela's economic expansion, President Hugo Chavez informed that the Orinoco Oil Belt will increase its production to 1,350,000 crude oil barrels per day (B/D) by the end of 2012.

Meeting with employees at the oil belt in eastern state of Monagas last Tuesday, the Venezuelan president recalled that daily production at the oil strip -the site of the world's largest oil reserves- is 1,200,000 B/D.

In the last five years, Chavez remarked, oil production increased by 33 percent and this "is part of the plan of expansion, plan to recover the oil full independence." (AVN, 08-22-2012; http://www.avn.info.ve/contenido/oil-belt-increase-production-1350000-bd-year)

Chavez Says Venezuela to Invest $130 Billion in Orinoco Oil Fields

Some $130 billion will be invested in Venezuela's Orinoco Oil Belt between 2013 and 2019 to boost national production from 3 million barrels per day to 6 million bpd, President Hugo Chavez said.

The investment program for that heavy oil region, the world's largest petroleum reservoir, is equivalent to roughly a third of the $383 billion the Treasury says it collected in taxes and royalties over the past 10 years. (Latin American Herald Tribune, 08-22-2012; http://www.laht.com/article.asp?ArticleId=562565&CategoryId=10717)

Domestic steel output down 25.73% in the first half of the year

Venezuelan basic industries output capacity is still facing the impact of low production registered in 2005-2006. Fitful supply of raw materials along with management and labor issues limited the operation of the industries.

Data released by the Central Bank of Venezuela (BCV) on the physical production index at the end of the first half of 2012 show that both primary aluminum and primary steal output went down 29.52% and 25.73%, respectively. (El Universal,08-23-2012; http://www.eluniversal.com/economia/120823/domestic-steel-output-down-2573-in-the-first-half-of-the-year)

Chavez says: "we are entitled to a larger share of OPEC"

President Hugo Chavez says Venezuela, after the increase in its proven reserves of oil "is entitled a higher quota within OPEC." He explained that Venezuela is working on increasing production capacity, through increased drilling, as part of the strategy to achieve an increase in the share of OPEC production. More in Spanish: (El Universal, 08-23-2012; http://www.eluniversal.com/economia/120823/chavez-afirma-que-tenemos-derecho-a-una-mayor-cuota-en-la-opep)

International Trade

Venezuelan seaports unready for exports

President Hugo Chavez claims that the recent entry of Venezuela into the Common Market of the South (MERCOSUR) opens the doors to an "era of exports", yet besides a Venezuela's lack of competitiveness, there are infrastructure limitations in seaports and obstacles by authorities. "If seaports do not work well, there will be no exports. In addition to being competitive in production, it is necessary to be competitive in logistics," says a source closely connected to port activities. (El Universal,08-23-2012; http://www.eluniversal.com/economia/120823/venezuelan-seaports-unable-to-export)

First Venezuelan export to the MERCOSUR

The first export operation within the framework of the recently adhered Common Market of the South (MERCOSUR) agreement corresponds to over 6,200 tons of aluminum containers, produced by ALENTUY, a company in Barquisimeto, Lara state. It went to Puerto Victoria in Brazil. The shipment arrangements were in charge of the Seniat via the main Mid-Western customs. (Veneconomy, 08-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31793&idc=3)

Venezuela also shipped almost 56.000 liters of chemicals for agriculture and aluminum containers produced by PEQUIVEN to Brazil and Uruguay, departing from Puerto Cabello aboard a ship owned by the government line VENAVEGA, according to a statement by Industry Minister Ricardo Menéndez. He added that the first million glass bottles are a part of a U$D 345 million agreement which could rise later to U$D 600 million. More in Spanish: (AVN, 08-24-2012; http://www.avn.info.ve/contenido/este-jueves-parte-primer-cargamento-venezolano-al-mercosur)

Logistics & Transport

Slow port activity during the first half of 2012

Venezuelan ports cannot cope with the current volume of imports. Since 2010 ports operations have slowed down as obstacles increase. This is reflected by the length of time freight has spent in ports over the last two years, according to a joint report by the Confederation of Industries (CONINDUSTRIA) and the National Council for Trade and Services (CONSECOMERCIO). For instance, in 2010 the average time for a shipment in the main port, Puerto Cabello, was 18.8 days, and in a year's time the number of days jumped to 20.8. The second major port, La Guaira, improved slightly from 23.3 days in 2010 to 21.3 days in 2011. (El Universal, 08-22-2012; http://www.eluniversal.com/economia/120822/slow-port-activity-in-the-first-half-of-2012)

Politics

Venezuela, more deadly than Iraq, wonders why

Some here joke that they might be safer if they lived in Baghdad. The numbers bear them out. In Iraq, a country with about the same population as Venezuela, there were 4,644 civilian deaths from violence in 2009, according to Iraq Body Count; in Venezuela that year, the number of murders climbed above 16,000. Even Mexico’s infamous drug war has claimed fewer lives. Venezuelans have absorbed such grim statistics for years. Those with means have hidden their homes behind walls and hired foreign security experts to advise them on how to avoid kidnappings and killings. And rich and poor alike have resigned themselves to living with a murder rate that the opposition says remains low on the list of the government’s priorities. (The New York Times, 08-22-2012; http://www.nytimes.com/2010/08/23/world/americas/23venez.html?_r=1&pagewanted=all)

Romney plans to stop Venezuelan oil imports

Republican presidential candidate Mitt Romney says that when he arrives at the White House he will make sure the United States does not buy oil from Venezuela and other unfriendly nations in the Middle East. He presented a plan to make the United States energy independent by 2020, through alliances with Canada and Mexico. More in Spanish:  (El Nacional, 08-24-2012; http://www.el-nacional.com/)

UN shows Venezuela has the lowest rate of social inequality in the region

In a recent UN study Venezuela comes up with a GINI Index of Economic Inequality rate of 0,41: the lowest in the region, followed by Uruguay. The nations with most unequal income distribution are Guatemala, Honduras, Colombia, Brasil, Dominican Republic and Bolivia, in that order, all of them with a rate above 0,56. More in Spanish: (El Mundo, 08-24-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-es-el-pais-con-menos-desigualdad-social-.aspx)

Agreement signed for UNASUR to attend elections

Peruvian Foreign Affairs Minister Rafael Roncagliolo has signed an electoral “accompaniment” agreement with the head of National Electoral Council (CNE) Chief Tibisay Lucena, in his capacity as pro tempore president of the South American Nations Union (UNASUR). (Veneconomy, 08-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31801&idc=1)

April 20, 2012

Economics & Finance

IMF: Venezuelan economy to grow 3.2% in 2012

The International Monetary Fund (IMF) revised its growth forecast for Latin America and the Caribbean slightly upward for this year and 2013, in the IMF's World Economic Outlook released this Tuesday in Washington. Overall, the region's GDP will grow 3.7% in 2012 and pick up to 4.1% next year, 0.2 and 0.1 percentage points above estimates reported in the revision presented in January. Venezuela should grow 4.7% in 2013 and 3.2% in 2012. (El Universal, 04-17-2012; http://www.eluniversal.com/economia/120417/imf-venezuelan-economy-to-grow-32-in-2012)

Chavez battles re-election hurdle: Venezuela inflation

President Hugo Chavez is so determined to contain one of the world's highest inflation rates in an election year that his price control officials are sticking signs outside stores to enforce compliance. The red-yellow-green traffic light notices tell shoppers whether a store is obeying new price caps. Businesses that don't comply face fines, temporary closure or outright expropriation by his socialist government. (Reuters, 04-17-2012; http://www.reuters.com/article/2012/04/17/us-venezuela-inflation-idUSBRE83F16N20120417)

Unemployment in Venezuela down to 7.9% in March

The unemployment rate in Venezuela fell to 7.9% in March, according to the official National Statistics Institute (INE), which says the unemployment rate in 1999 was 14.6%. (AVN, 04-17-2012; http://www.avn.info.ve/node/108405)

Government plans to tax idle lands

Three official agencies, the National Lands Institute (INTI), the National Customs and Tax Administration Service (SENIAT) and the Supreme Court (TSJ) are sharpening details on a bill designed to tax private and public rural landowners for idle lands or lands that used against regulations. INTI President Luis Motta Domínguez says meetings toward this end are being held with the president of the Supreme Tribunal of Justice, Luisa Estella Morales and with SENIAT's superintendent, José David Cabello. (El Universal, 04-18-2012; http://www.eluniversal.com/economia/120418/government-agencies-draft-tax-on-idle-lands)

Commodities

PDVSA sends oil to Asia to fetch better price

PDVSA gets a higher oil price by selling crude to Asia rather than the U.S. and will continue to diversify its export markets, said company president Rafael Ramirez. Venezuela’s growing exports to Asia accounts for the country’s export basket price being above U.S. benchmark West Texas Intermediate crude, Ramirez said today at an event in Caracas. West Texas Intermediate crude on the New York Mercantile Exchange currently sells for about 11% less than Brent oil, according to data compiled by Bloomberg. (Bloomberg, 04-17-2012; http://www.bloomberg.com/news/2012-04-17/venezuela-s-pdvsa-sends-oil-to-asia-to-fetch-better-price.html)

... and rules out problems with REPSOL in Venezuela

"There should be no problem," with the investments by Spanish oil company REPSOL in Venezuela, because the firm is fulfilling its obligations, Minister Rafael Ramírez told EFE. "Our relationship with REPSOL here is crystal clear. The Spanish oil company is subject to our majority stake. There should be no problem. At least, I have heard no word from REPSOL", said Ramírez when asked about the nationalization of REPSOL-owned 51% of the shares of Argentinean oil company YPF. (El Universal, 04-18-2012; http://www.eluniversal.com/economia/120418/pdvsas-president-rules-out-problems-with-repsol-in-venezuela)

PDVSA's 2011 net profit rises 42%

Net profit at state oil company PDVSA leaped 42% to U$D 4.49 billion last year, helping to double its funding of President Hugo Chavez's government programs to almost U$D 50 billion, the company said on Tuesday. Chavez is seeking a new six-year term in the country's Oct. 7 elections and has been increasingly leaning on PDVSA, one of the world's biggest energy companies, to serve as the financial motor of his socialist "revolution". PDVSA funds everything from free health clinics to sports and cultural projects, and is leading an ambitious government plan to build hundreds of thousands of new homes. (Reuters, 04-17-2012;

http://www.reuters.com/article/2012/04/17/venezuela-pdvsa-idUSL2E8FH4QI20120417; http://www.google.com/hostednews/afp/article/ALeqM5gSnOB1ha3UrCwVQBzb3Mei0QaTmw?docId=CNG.491ee958a2dcdbb637261fe55eb6d494.421; Bloomberg, http://www.bloomberg.com/news/2012-04-17/pdvsa-profit-surges-42-in-2011-on-record-export-oil-price-3-.html)

and yet ... Treasury provided U$D 18.5 billion assistance to PDVSA in 2011

PDVSA's income grew 31% in 2011 to U$D 124.7 billion based on increasing oil prices. At the same time the state-run company expanded its debt and sought financial assistance from state banks and government agencies. PDVSA's financial statements show that the company issued promissory notes amounting to U$D 18.5 billion to the National Treasury (ONT) with maturities between 2011 and 2013. The ONT provided funds to Pdvsa to meet the oil company's commitments. PDVSA's balance sheet for the end of June 2011 shows that the Treasury had received U$D 2.6 billion in promissory notes issued by PDVSA up to that moment. The oil company had paid 50% of that amount in June. (El Universal, 04-18-2012; http://www.eluniversal.com/economia/120418/treasury-provides-usd-185-billion-assistance-to-pdvsa-in-2011; AVN, http://www.avn.info.ve/node/108445)

PDVSA plans to invest U$D 236 billion to increase oil production to 6 MBD by 2019

State oil company PDVSA plans to invest U$D 236 billion to increase crude production of 3 million barrels per day (MBD) in 2012 to 6 MBD by 2019. Petroleum and Mining Minister Rafael Ramírez says that "thanks to an increase in production at the Orinoco Oil Belt, we will reach 4 million barrels in 2014 and 6 million oil barrels in 2019. Based on these resources, we have petroleum for 300 years at the current pace of production (3 MBD) or for 150 years, when we produce 6 million barrels". (AVN, 04-17-2012; http://www.avn.info.ve/node/108387)

VENALUM operations were in critical conditions even before latest conflict

Workers are collecting signatures to demand the replacement of company President Rada Gamluch, and a published document by the Plant General Manager at CVG VENALUM confirms in detail that the operating crisis in the state owned aluminum plant existed prior to the protests begun in March. The labor movement has withdrawn its support from management at the plant. At noon last Tuesday only 252 cells out of 905 remained connected, which is 27.8% capacity. Operating conditions contradict statements by Mr. Gamluch, who has claims the decrease in production is due to "sabotage"; while labor leaders say all due to mismanagement. (Policloruro Aluminio, 04-18-2012; http://policloruroaluminio.com/2012/04/operaciones-de-venalum-ya-eran-criticas-antes-del-ultimo-conflicto-correo-del-caroni.html)

Demonstrators at the CVG ALCASA aluminum plant left their blood on the walls and doors of the state run industry to seek incorporation as full workers as opposed to contract labor. ALCASA operates at 35% capacity, has liabilities three times higher than assets according to its own records, and employed over 1000 coop workers in 2010 and 2011. More in Spanish: (Correo del Caroní, http://www.correodelcaroni.com/index.php?option=com_wrapper&view=wrapper&Itemid=174&id_articulo=201380&catid=75)

International Trade

Venezuela and Vietnam have signed joint agreements for technical assistance and equipment for the development of industry, energy, communications and agriculture, and grant PETROVIETNAM drilling rights in the PETROMACAREO mixed company, to increase crude oil production in the Orinoco Oil Belt. More in Spanish: (AVN, 04-20-2012; http://www.avn.info.ve/contenido/venezuela-y-vietnam-suscribieron-acuerdos-industriales-petroleros-y-agrícolas)

Venezuela supports Argentina in the defense of its natural resources

A statement released by the Foreign Ministry says the Venezuelan Government welcomes and supports the decision by President Cristina Fernandez to nationalize Argentina's main oil company YPF. (AVN, 04-17-2012; http://www.avn.info.ve/node/108414)

Logistics & Transport

The national port authority (BOLIPUERTOS) is launching a plan to replace and install fiber optics in all harbors in the country. According to Aquatic and Air Transport Minister Elsa Gutierrez-Graffe they have begun working in the Maracaibo and El Guamache ports. (Veneconomy,04-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30171&idc=3)

Politics

"No one in PSUV can fill the President's leadership "

Jesse Chacon, director of the GIS XXI polling firm says that "within the PSUV (United Socialist Party of Venezuela) there is no one who can fill he full leadership held by Chavez ". Chacon said he is speaking "for the future, when the President decides to retire, as anyone at some point". He also said his statement "bears no relation" to the elections for next October 7th as "no one will think of replacing a candidate with a 30 point lead". Chacon explains that "within the "chavista" movement there is no one who occupies the entire space, but there are emerging leaderships in some areas and would in the future need a much more collective message to cover the area today filled by Hugo Chávez". A former military officer involved in the 1992 coup attempt, Chacon held the posts of Minister of the Interior and Justice, Communications and Information, and Secretary of the Presidency under President Chavez up to the time he set up his own polling firm in 2009. More in Spanish: (El Universal, 04-20-2012; http://www.eluniversal.com/nacional-y-politica/120420/en-el-psuv-no-hay-quien-llene-liderazgo-del-presidente)

"The Vice President directs justice in Venezuela"

Former Supreme Tribunal judge and military prosecutor Eladio Aponte Aponte says his situation boils down to "the paradox of the persecuted persecutor." "Knowing the system from inside, and how it works and how it's handled... I don't think I'd have any rights at all -not in my case at least." He recounted that he had received calls "from the President on down" to tamper with the justice system. He left the country because he fears for his safety. "Considering how many hired assassins there are, I wouldn't dare walk the streets in Venezuela," he said in an interview broadcast on Wednesday night on SoiTV (Interactive Opinion System) channel, owned by Venezuelan banker Eligio Cedeño and serving the US Hispanic community. The network released a transcript in advance of the interview, which is summarized in this article. (El Universal, 04-19-2012; http://www.eluniversal.com/nacional-y-politica/120419/the-vice-president-manages-justice-in-venezuela)

"Aponte has evidence and documents outside Venezuela", according to former US Ambassador to the OAS Roger Noriega, who believes the retired coronel will be a key witness in trials against high Chavez regime officials. Noriega was the first to publicly report that the former Supreme Court Justice was in conversations with DEA officials in Costa Rica, and says "Aponte was interviewed by the DEA and since he is now cooperating with US authorities it would be normal for him to be available to other law enforcement agencies working on cases related to Venezuelan authorities and others Venezuelans suspected of involvement with criminal activity." David Weinstein, former head of the Narcotics Division at the US Department of Justice says the former justice is a "gold mine"; and Thomas Raffanello, former head of DEA in Miami concurs, saying "they are not bringing in another drug cartel member; they are bringing in a judge from another country". More in Spanish: (El Nacional, 04-20-2012; 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.

February 17th, 2012

Economics & Finance

Nation’s economy grew 4,2% in 2011

Venezuela’s GDP registered 4,2% growth in 2011, according to a Central Bank report which says the result doubled the 2% estimate it had placed in the budget. Last year’s GDP growth was driven by a 4,9% rise in the fourth quater. More in Spanish: (Agencia Venezolana de Noticias, 02-17-2012; http://www.avn.info.ve/node/99679)

Post-election hangover looms for Venezuela economy

From new homes in slums to cash for struggling mothers, Venezuela's Hugo Chavez is unleashing a flood of state spending to try to tip the balance in what looks like the toughest presidential election of his political career. The spending campaign may help win over wavering supporters and overwhelm the good looks and yes-we-can optimism of opposition candidate Henrique Capriles. Yet Chavez's cash-driven push ahead of the vote in October will come with a heavy post-election hangover for the OPEC nation's economy. Inflation could hit 35%, the debt burden looks set to rise, and a third currency devaluation in as many years is looking inevitable. All of that would force Venezuela to slam on the monetary and fiscal brakes in 2013. (Reuters, 02-14-2012; http://www.reuters.com/article/2012/02/14/us-venezuela-economy-election-idUSTRE81D0RA20120214)

Forex board increases foreign currency allocations for food imports

In light of persistent shortages, the Foreign Exchange Administration Board (CADIVI) has escalated allocations of US dollars to import basic food items in order to fight the lack of products in supermarkets and grocery stores.

Cadivi allocated U$D 600 million in January for food imports, a large amount for the first month of the year, which is 43% of the total authorized for this sector in the first quarter of 2011. (El Universal, 02-15-2012; http://www.eluniversal.com/economia/120215/forex-board-increases-foreign-currency-allocations-for-food-imports)

Government to begin presenting regulated price caps to companies

Venezuela will begin to present regulated prices to about 385 companies that produce personal care and cleaning products including Colgate-Palmolive Co. (CL), Procter & Gamble Co. and Unilever NV (UNA) today. The government’s price regulation agency, which froze the price of 19 goods ranging from deodorant to toilet paper in November, said in a statement late yesterday that the companies can retrieve documents detailing the new regulated price and the government calculations for profit margins on the goods beginning today until Feb. 18. (Bloomberg, 02-15-2012; http://www.bloomberg.com/news/2012-02-15/venezuela-to-begin-presenting-regulated-price-caps-to-companies.html)

Top local firm files arbitration against Chavez

A Barbados-based holding company led by executives of Venezuelan food and beer maker Empresas Polar has filed an international arbitration claim against President Hugo Chavez's government over its nationalization of a fertilizer project, documents show. The move may set a precedent for Venezuelan companies seeking access to international courts to settle disputes with the socialist government that otherwise would be litigated by local judges, who critics say are controlled by Chavez. The case is highly delicate as Chavez has repeatedly threatened to nationalize Polar, the South American nation's largest private employer. Its products range from beer to corn flour and reach nearly all of Venezuela's 29 million people. (Reuters, 02-16-2012; http://www.reuters.com/article/2012/02/16/us-venezuela-arbitration-idUSTRE81F0SO20120216)

"There is no policy to reduce country risk"

Alejandro Grisanti, director for Latin America at Barclays Capital: "During the government of President Hugo Chavez, the country risk has been below 200 basis points (2 percentage points) and more recently has come to be almost 1,500 basis points. This increase has not been precisely due to international crises, but rather to neglect", referring to the financial benchmark, which is based on the difference between the interest rate paid by the Venezuelan debt bonds and that offered by US Treasury bills. (El Nacional, 02-15-2012; http://www.el-nacional.com/)

"Our system is not based on free competition"

"The road to socialism has no place free competition," said Rep. Jesus Faria, Vice President of the Finance Committee of the National Assembly, which replaced the Law to Promote and Protect Free Competition, a text that was enacted in 1992, the government of Carlos Andres Perez. (El Mundo, 02-15-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/-nuestro-sistema-no-se-basa-en-la-libre-competenci.aspx)

Commodities

Venezuela says payment to Exxon Mobil puts an end to arbitration dispute

Venezuela’s state-run oil company announced Wednesday that an arbitration dispute with Exxon Mobil Corp. has been settled because the U.S. oil giant has received a payment topping U$D 250 million. Exxon Mobil sought arbitration after the government of President Hugo Chavez nationalized an oil project in the South American nation’s oil-rich Orinoco region in 2007. The International Chamber of Commerce awarded Exxon more than U$D 907 million in compensation for its nationalized assets. But PDVSA said Wednesday the dispute had been settled following a payment of U$D 250,897,799. (Washington Post, 02-15-2012; http://www.washingtonpost.com/business/venezuela-says-payment-to-exxon-mobil-puts-an-end-to-arbitration-dispute/2012/02/15/gIQApJrpGR_story.html; AVN, 02-16-2012; http://www.avn.info.ve/node/99581; Bloomberg, http://www.bloomberg.com/news/2012-02-15/pdvsa-says-it-paid-exxon-compensation-for-seized-assets.html; and Reuters, http://www.reuters.com/article/2012/02/16/venezuela-exxonmobil-idUSL2E8DG07520120216)

PDVSA delaying investments in oil production

President Hugo Chavez’s reliance on state oil company Petroleos de Venezuela SA to finance government budgets and social spending is forcing the company to delay investments and lose billions of dollars of export revenue. PDVSA, as the Caracas-based company is called, planned to produce 5.8 million barrels a day this year, according to a 2007 bond prospectus. Since then, output has remained little changed at around 2.5 million barrels a day, according to the International Energy Agency. The 3.3 million barrel-a-day gap between the five-year business plan and actual result costs the company around U$D10 billion a month in unrealized revenue at current oil prices. (Bloomberg, 02-15-2012; http://www.bloomberg.com/news/2012-02-15/chavez-missing-10-billion-a-month-by-curbing-state-oil-investment-energy.html)

Politics

Hugo Chavez calls opposition candidate a 'low-life pig'

President Hugo Chavez on Thursday called the opposition's presidential candidate a "low-life pig", signaling a caustic start to Venezuela's election campaign. The socialist leader vowed to crush Henrique Capriles in October's vote, branding him an agent of imperialism and oligarchy hiding behind a mask of moderation. "Now we have the loser, welcome! We're going to pulverize you," he told an audience of medical students. "You have a pig's tail, a pig's ears, you snort like a pig, you're a low-life pig. You're a pig, don't try and hide it." He avoided calling Capriles by name, referring instead to "el majunche", slang for "the crappy one". Hollywood actor and activist Sean Penn also spoke at the president's event. (The Guardian, 02-16-2012; http://m.guardian.co.uk/world/2012/feb/16/hugo-chavez-opposition-low-life-pig?cat=world&type=article)

Credit Suisse: Chavez Could Win

Despite the economic problems, one of the world’s highest inflation rates and soaring crime, Venezuelan President Hugo Chavez will more likely win re-election in October than not, according to Credit Suisse, the second- biggest Swiss bank. “We think there is a greater than 50 percent chance that President Chavez will be reelected,” it says in a research paper today. The reason? Massive fiscal and monetary expansion, which should increase economic growth. However, that same expansion is expected to result in higher inflation and a wider fiscal deficit in 2012. Credit Suisse believes that the gap “should be comfortably covered with bolivar and dollar denominated debt sales and accumulated fiscal assets.” (Latin Business Chronicle, http://www.latinbusinesschronicle.com/app/article.aspx?id=5469)

Venezuela ships fuel to war-torn Syria

The government of Venezuela's Hugo Chavez is emerging as a rare supplier of diesel to Syria, potentially undermining Western sanctions and helping the Syrian government fuel its military in the middle of a bloody crackdown on civilian protests. A cargo of diesel, which can be used to fuel army tanks or as heating fuel, was expected to arrive at Syria's Mediterranean port of Banias this week, according to two traders and shipping data. The cargo could be worth up to U$D 50 million. The Venezuelan tanker was last seen off the coast of Cyprus with a destination of Banias and the estimated arrival date of Wednesday, AIS ship tracking on Reuters showed. (Chicago Tribune, 02-16-2012; http://www.chicagotribune.com/news/sns-rt-us-venezuela-syriatre81f2au-20120216,0,6027063.story)

Venezuela on money laundering watch list

According to Rick McDonell, of the International Financial Action Group, Venezuela, Argentina, Nicaragua and Ecuador are the countries in the region most deficient in strategies when it comes to complying with Money laundering procedures. He said these nations are on a “grey list” among nations that have adapted legislation to international standards. In the case of Venezuela he said that the government has made an effort to comply since October 2010, but it has been insufficient. More in Spanish: (El Nacional, 02-17-2012; http://www.el-nacional.com/)