September 07th, 2012

Economics & Finance

Inflation at 9.8% by August, nine basic food items rely heavily on imports

The Central Bank of Venezuela (BCV) announced that accumulated inflation from January through August slowed down and stood at 9.8%. BCV's Chairman Nelson Merentes and Finance Minister Jorge Giordani said this was a highly positive result. Last year's accumulated inflation was 18.6% for the same period. "By the end of the fiscal year inflation may be below the estimated levels, 20-22%," Merentes said. Low food prices are the reason for the drop in inflation, and such decline is the result of a "growing (domestic) production, the Law on Cost and Fair Prices, and a better distribution of products," according to the BCV president. The Central Bank also said 30% of the beef and 90% of the powdered milk consumed in Venezuela are imported. 80% of liquid milk is also imported. (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/venezuelan-inflation-at-98-by-august) and more in Spanish: (El Nacional; http://www.el-nacional.com/)

Private banks may participate in "Petrobond" distribution

President Hugo Chávez announced that the private and public banking sectors will work together on national apportionment of Petrorinoco bonds (Petrobonds). He said the government and private banks will sign agreements for private financial institutions to distribute bonds in remote places where Banco de Venezuela (a state-run bank) does not have branch offices. (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/banking-private-sector-participates-in-petrobonds-distribution)

Commodities

PDVSA to invest U$D 18 billion this year

Venezuela’s oil minister announced that state oil company PDVSA plans to invest U$D18 billion this year, primarily in exploration and production. Rafael Ramirez, who also heads PDVSA, says that in 2006 investment in the oil industry totaled U$D 5.83 billion and then climbed to U$D 11 billion in 2007 and U$D 15.44 billion in 2008. He said that U$D 13.54 billion were invested in 2009 and U$D 10.7 billion in 2010, a “bad year” due to the “impact of the entire drop in the price” in 2009, while investment rose to U$D 17.53 billion last year. He confirmed that in 2011 the Venezuelan oil company posted U$D 124.75 billion in revenue. (Latin American Herald Tribune, 09-05-2012; http://www.laht.com/article.asp?ArticleId=570259&CategoryId=10717)

Minister claims processing units undamaged

Venezuelan Minister of Petroleum and Mining Rafael Ramírez claims that processing units (for the output of by-products) reported no damages upon the explosion of the Amuay oil refinery in northwest Venezuela. He also said that a comprehensive revision is in place to ensure no further leaks.  Although the minister did not reveal the cost of overall damages, he stated, "nine out of 680 tanks has been affected (at the Paraguaná Refining Complex). Four out of the nine burnt tanks collapsed, eventually. The other five suffered some damages. We are evaluating everything, including all the systems; we are changing the valves." (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/venezuelan-minister-of-petroleum-processing-units-undamaged; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=570068&CategoryId=10717)

Nation has fuel reserves for 10 days

Oil and Mining Minister and PDVSA Chief Rafael Ramírez says “the country still has fuel reserves for 10 days” after the explosion at the Amuay Refinery a little over a week ago. He also reiterated the country “is not importing gasoline.” (Veneconomy, 09-05-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31946&idc=4)

Perla gas field production at least 15 months away

The start of production at Venezuela's big offshore Perla gas field is still at least 15 months away, said a partner involved in the project, delaying once again the country's plans for domestic production of natural gas. Although Venezuela boasts some of the world's biggest natural gas reserves, and is one of its biggest oil exporters; the country doesn't yet produce gas commercially. The nation hopes the Perla field and other future gas projects will help it rely less on neighboring Colombia for its supplies. The project partners said last year they hoped to have some initial production from Perla by the end of 2012. (Reuters, 09-05-2012;

http://www.reuters.com/article/2012/09/06/venezuela-gas-idUSL2E8K60CT20120906)

PETROPIAR upgrader restarting after maintenance

A maintenance shutdown of the PETROPIAR oil upgrader is over, but a full return to production could still take two weeks, said the senior executive for the Venezuelan unit of Chevron, a partner at the facility. The upgrader, which converts heavy crude from the OPEC nation's Orinoco belt into lighter and more valuable oil, was shut down in July for maintenance and to expand capacity. With maintenance complete, the facility will now gradually resume operations. (Reuters, 09-05-2012; http://www.reuters.com/article/2012/09/06/venezuela-oil-petropiar-idUSL2E8K602O20120906)

PDVSA says six Orinoco projects to begin pumping this year

PDVSA says that six new projects in the Orinoco heavy oil belt are expected to start production by the end of the year, setting yet another target for development of a delay-plagued region vital to increased production in the country. The first project to begin producing, said Rubén Figuera, the PDVSA executive in charge of the Orinoco belt, will be Petromacareo, its joint venture with Vietnamese oil company PETROVIETNAM. After that there will be projects with Italian, Russian, Spanish, and American oil companies. "This year we'll begin early production at all of the new developments in the belt," said Figuera, at an oil industry conference in the coastal city of Puerto la Cruz. "The expectation for the wells is extraordinary." (Reuters, 09-05-2012; http://www.reuters.com/article/2012/09/05/venezuela-oil-production-idUSL2E8K5GMJ20120905)

Venezuela confirms start-up of oil exploration off Cuba

Venezuela – State-owned oil giant Petroleos de Venezuela (PDVSA) has started exploring for oil in deepwater areas off Cuba, Oil and Mining Minister Rafael Ramirez said. “It started and when we have the results, we’ll tell the country,” Ramirez said, without providing further details. State-owned Cubapetroleo, or CUPET, said in early August that PDVSA would continue drilling in deepwater areas despite the fact that other foreign oil companies hit two dry holes. (Latin American Herald Tribune, 09-05-2012; http://www.laht.com/article.asp?ArticleId=570242&CategoryId=10717)

Logistics & Transport

The Mazparro, Boconó and Arauca, are the first vessels to service the Orinoco-Apure river system, setting sail from the Orinoquia Bridge in Bolívar state down to Apure state. The boats, which bear up-to-the-minute technology thanks to the China-Venezuela agreement, are meant to boost national agricultural production. (Veneconomy, 09-05-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31967&idc=3)

Politics

Capriles pledges to end barriers to domestic production

A large part of the Capriles "Made in Venezuela" plan for the economy is based on "stimulating" domestic production, to achieve 6-7% growth annually, "end" scarcity, and promote diversification and exports  His platform adds "In recent years Venezuela has become unattractive for business, due to mistaken policies that threaten those who would invest". More in Spanish: (El Universal, 09-07-2012; http://www.eluniversal.com/economia/120907/capriles-promete-eliminar-trabas-a-la-produccion-local)

Venezuela to appoint envoy to Colombian peace process

Foreign Minister Nicolás Maduro has said President Chávez will in the next few days be appointing an envoy to join the commission leading the Colombian peace process. "The guidelines, activities, and the scope of Venezuela's support in the talks," will be set out by the Colombian Government, said Maduro during an interview. (El Universal, 09-05-2012; http://www.eluniversal.com/nacional-y-politica/120905/venezuela-to-appoint-envoy-to-colombian-peace-process; http://www.eluniversal.com/nacional-y-politica/120905/venezuelas-incorporation-in-colombian-peace-talks-is-a-concession)

August 21th, 2012

Economics & Finance

Central Bank announces 5.4 % GDP growth in the second quarter

The Central Bank of Venezuela (BCV) says Gross Domestic Product (GDP) shows a 5.4% increase in the second quarter of the year as against 2011. The most significant rise was said to be in the construction sector (17.6%). Nelson Merentes, president of the institution, reports that the oil sector grew by 1%, whereas the manufacturing sector, which has a share of 14.1% in GDP calculation, climbed 0.4%. Overall business activity grew 9.8%, while financial institutions and insurance companies attained a 34% growth in the second quarter. (El Universal, 08-17-2012; http://www.eluniversal.com/economia/120817/central-bank-54-gdp-growth-in-the-second-quarter)

Domestic debt breaks 13-year record

The Venezuelan Government has broken all debt records in order to secure funding to cope with growing expenditures. Official economic strategy for the first half of 2012 has been to raise indebtedness in Venezuelan bolivars by selling financial institutions bonds and treasury bills for a total around U$D 16 billion. By discounting due and paid debt, payables amount to U$D 11.6 billion, the highest jump over the past 13 years in liabilities of the central government. The figure does not include state-run oil holding Petróleos de Venezuela (PDVSA), the National Development Fund (FONDEN) and other institutions used by the Chavez administration to generate debt. (El Universal, 08-18-2012; http://www.eluniversal.com/economia/120818/venezuelan-domestic-debt-smashes-13-year-record)

Unemployment at 7.4% percent in June, according to official sources

Elias Eljuri, President of the National Statistics Institute (INE, in Spanish), claims 4,000,000 jobs have been created since 1999 up to 2012, leading to a decline in the country's unemployment rate, which he said was 7.4% in June. (AVN, 08-17-2012; http://www.avn.info.ve/contenido/unemployment-rate-74-percent-june)

Commodities

PDVSA to sell RELIANCE 400,000 barrels a day

Petroleos de Venezuela SA, the state oil company, will sell as much as 400,000 barrels of oil a day to India’s RELIANCE Industries Ltd., according to statements made by Oil Minister Rafael Ramírez to the El Universal daily newspaper in Caracas. (Bloomberg, 08-20-2012; http://www.bloomberg.com/news/2012-08-20/pdvsa-to-sell-reliance-400-000-barrels-a-day-universal-reports.html; More in Spanish: El Universal; http://www.eluniversal.com/economia/120820/pdvsa-enviara-400-mil-bd-a-la-india-en-el-largo-plazo)

PDVSA to transfer PETROPIAR shares to CVG, Chavez says

President Hugo Chavez said that Petroleos de Venezuela SA, the state oil company, will transfer shares from PETROPIAR, a joint venture with CHEVRON, to state miner Corporacion Venezolana de Guayana to form a new oil company called Petro San Felix. (Bloomberg, 08-19-2012; http://www.bloomberg.com/news/2012-08-19/pdvsa-to-transfer-petropiar-shares-to-cvg-chavez-says.html; More in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/chavez-anuncia-que-creara-una-nueva-empresa-petrol.aspx)

Production of the national iron and steel complex was 117,992 tons in this year’s first quarter whereas 67,000 tons were produced in the same period in 2011, said Ricardo Menéndez, Vice President for the Economic Productive Area this Friday during an inspection of the Turbio Iron and Steel Company (SIDETUR) in Guarenas, Miranda state. This is a 76% increase, said Menéndez. (Veneconomy, 08-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31759&idc=3)

Venezuela, Nigeria raise June oil exports, Iraq cuts, Jodi says

Venezuela, the holder of the world’s largest oil reserves, and Nigeria both increased shipments of crude in June, while Iraq cut exports during the month, according to the Joint Organization Data Initiative. Venezuelan exports rose 10.6% from a month earlier to 1.72 million barrels a day and Nigeria shipped 2.49 million barrels a day, 18% more than May, according to statistics the governments submitted to OPEC and posted on JODI’s website today. Iraq, the second-largest producer in the 12-member Organization of Petroleum Exporting Countries, decreased shipments by 2% to 2.4 million barrels a day, Jodi data showed. (Bloomberg, 08-19-2012; http://www.bloomberg.com/news/2012-08-19/venezuela-nigeria-raise-june-oil-exports-iraq-cuts-jodi-says.html)

Local stock market up 137%

Venezuela’s stocks rose sharply for the week ending August 17, with the Caracas Stock Index up 8.24% to 277,482.

The jump was mostly due to the rise of Banco Provincial shares which rose 8.2% to VEB 98 on no apparent news. CORIMON shares rose 19.9% to VEB 361, while Mercantil Servicios Financieros shares rose 1.2% at VEB 82.50. The only stock losing ground was Banco de Venezuela, down 8.6% at VEB 2.65. Despite the gains, overall volume was low, with only 10,000 shares changing hands all week. (Latin American Herald Tribune, 08-20-2012; http://www.laht.com/article.asp?ArticleId=561554&CategoryId=10717)

Venezuela has electricity supply problems, Chavez admits

Venezuela continues to suffer from electricity supply problems, President Hugo Chavez said, claiming that the situation would be worse if he had never been elected. “I know that still here in the state of Bolivar, and above all in Ciudad Bolivar, there are serious problems, serious flaws in electrical energy. I know it, and also here, in San Felix ... Well, and in almost all of Venezuela!” Chavez said at a campaign rally Saturday in Sal Felix, a town in the southeastern part of the country. “Despite the gigantic efforts the government has made ... we still have not finished recovering, building a national electrical system,” Chavez said. (Latin American Herald Tribune, 08-19-2012; http://www.laht.com/article.asp?ArticleId=561236&CategoryId=10717)

International Trade

Southern agribusiness powerhouses pose threat to Venezuela's agricultural sector

Venezuela's business partners in the Common Market of the South (MERCOSUR) include two large producers of agricultural raw materials for export: Brazil and Argentina. Those two nations are also Venezuela's leading suppliers of food products. Agriculture is the most important economic activity of this South American bloc. Nevertheless, the largest concentration of agricultural land is found in Argentina and Brazil, which account for 61% of MERCOSUR's agricultural area whereas Venezuela's ratio of land for cereal production, for example, is merely 3.99%. Venezuela's entry into this market has set off a series of warnings from the local productive sector as a result of the country's unfavorable agricultural position with regards to its business partners. (El Universal, 08-18-2012; http://www.eluniversal.com/economia/120818/southern-powerhouses-pose-threat-to-venezuelas-agricultural-sector)

Logistics & Transport

Carabobo Governor charges port administration by Cubans is "bleeding the nation"

Governor Henrique Salas of Carabobo state is charging that scarcities and the high cost of living are largely due to corruption and Cuban mismanagement of port facilities at Puerto Cabello since President Chavez turned over key functions in the food distribution system to Cuba. The Castro regime now acts as Venezuela's purchasing agent abroad and also port administrator, which is "fabulous deal" for the Castro brothers. "Puerto Cabello handles 80% of cargo incoming to Venezuela and things have gone from bad to worse since the Cubans took over", says Governor Salas, who manages the state in which the port is located. Salas made his remarks during an interview with Miami daily "El Nuevo Herald". More in Spanish: (Notitarde; http://www.notitarde.com/La%20Costa/Administración-cubana-de-puertos-desangra-al-país/2012/08/20/127237; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/28643/gobernador-salas-los-puertos-venezolanos-son-un-fabuloso-negocio-para-los-castro-)

80% of roads said to lack cargo weight controls

Giovanni Bianco, an expert on roads at Carabobo University, says that around 80% of the roads and bridges in Venezuela fail to comply with heavy cargo weight controls, and charges centralization by the national government ended all supervision of structures that have been used for over 50 years. More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/120821/estiman-que-80-de-las-vias-no-cuentan-con-control-de-carga)

Politics

Chavez lead shrinks in latest DATANALISIS poll in Venezuela

President Hugo Chavez’s lead narrowed in the latest poll from Caracas-based DATANALISIS seven weeks ahead of October’s national election, according to Jefferies Group Inc. Chavez had 46.8% support compared with 34.2% for opposition candidate Henrique Capriles Radonski, showing that his lead narrowed to 12.5 points from 15.3 percentage points in June, Siobhan Morden, head of Latin American fixed- income strategy at Jefferies in New York wrote today in a note to clients. The poll showed that 18.8% of those surveyed were undecided, according to the note. (Bloomberg, 08-20-2012; http://www.bloomberg.com/news/2012-08-20/chavez-lead-narrows-in-latest-datanalisis-poll-in-venezuela-1-.html)

July 06th, 2012

Economics & Finance

MERCOSUR entry translates into more imports, more government weight in the economy

Industry Minister Ricardo Menéndez has stressed that one of the advantages of joining the South American trading area was to have cheaper food imports, at zero tariffs; but Ismael Pérez Vigil, Executive President of the National Industrial Council (CONINDUSTRIA) warns that joining "21st Century Socialism" and the MERCOSUR will increase strengthen an economy based on imports, which is what Venezuelan industrialists fear the. Perez Vigil added that it will also increase the government's weight within the economy. Minister Menéndez said MERCOSUR entry: "will bring tariffs down to zero and, certainly, make those goods cheaper."He noted that 52% of Venezuela's purchases from Mercosur Member States are tied to foodstuff (El Universal, 07-05-2012; http://www.eluniversal.com/economia/120705/mercosur-means-higher-venezuelan-state-weight-on-economy and http://www.eluniversal.com/economia/120704/venezuelan-govt-underscores-cheaper-imports-through-mercosur)

Questions raised on Venezuela joining MERCOSUR

More than six years after Hugo Chavez said that joining MERCOSUR was Venezuela's destiny, the presidents of Argentina, Brazil and Uruguay have decided that his oil-rich nation will finally become the fifth full member of the common market. Venezuela holds the world's largest crude oil reserves and the move potentially links the region's top energy and agricultural suppliers. But the decision at last week's summit to welcome Venezuela into Mercosur after the leaders temporarily suspended Paraguay has brought questions about the move's timing and legality. Such decisions must be unanimous under Mercosur rules, and Paraguay's senate has long objected to Venezuela's membership. Uruguay's President José Mujica has taken "full responsibility" for allowing Venezuela's entry after his Foreign Minister criticized the manner in which the decision was taken. (Fox News, 07-04-2012; http://www.foxnews.com/world/2012/07/04/questions-raised-on-venezuela-joining-mercosur/ and more in Spanish: El Universal; http://www.eluniversal.com/economia/120706/uruguay-comprometido-con-el-petroleo-venezolano)

ECONOMÉTRICA alerts of quick increase in foreign debt service

The Government's aggressive use of foreign debt since 2007 will translate into a higher exposure by the national and state owned Petróleos de Venezuela (PDVSA) over the next five years, says the ECONOMÉTRICA analysis firm. Their report adds that there is a worrisome increase in the rate of debt service payments to hard currency income for oil exports. More in Spanish: (El Universal, 07-06-2012; http://www.eluniversal.com/economia/120706/alertan-sobre-veloz-crecimiento-del-servicio-de-deuda-en-divisas)

Year-end inflation may close at 20%

Eudomar Tovar, First Vice President at the Central Bank believes inflation could close the year between 20-22%, under budget projections. He based his statement on the Consumer Price Index for June, saying "there is a significant decrease in the trend to accelerated inflationary increase...which indicates to us we will close the year below the budgeted target...in this sense it is necessary to continue working on productivity". More in Spanish: (Últimas Noticias, 07-06-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/inflacion-podria-cerrar-el-ano-en-20-.aspx)

Commodities

PDVSA sends 2.3% of production to MERCOSUR

After seven years of trying to diversify export destinations, PDVSA has raised remittances to China, but not to the four nations within the MERCOSUR trade bloc. Exports to Argentina, Brazil, Paraguay and Uruguay were 2.3% of total volume last year, with a tendency to diminish as Argentina and Brazil spur exploration in order to reduce imports. More in Spanish: (El Nacional, 07-06-2012; http://www.el-nacional.com/)

Paraguay opens bid to replace PDVSA as a fuel source

A decision by Venezuela to paralyze fuel shipments to Paraguay has led the latter to seek other sources, according to PETROPAR President Sergio Escobar. More in Spanish: (El Universal, 07-06-2012; http://www.eluniversal.com/economia/120706/paraguay-abre-licitacion-para-reemplazar-a-pdvsa-como-proveedor)

Maintenance shutdown at PETROPIAR

PETROPIAR, a heavy crude oil upgrader jointly operated by state-run oil holding Petróleos de Venezuela (PDVSA) and US CHEVRON, will stop operating for 46 days for maintenance and also to expand its processing capacity by 17% to 210,000 barrels per day (bpd).  PDVSA promised that the downtime scheduled from July 8 through August 23 would not impact production. (El Universal, 07-04-2012; http://www.eluniversal.com/economia/120704/maintenance-shutdown-at-petropiar)

Venezuelan Construction Chamber (CVC, after its initials in Spanish) reports there are 107,000 ongoing housing construction developments paralyzed at by the end of this year’s first quarter, up 18.8% from the same period in 2011 (80,000 housing units). CVC Chief Gilbert Dao pointed out that in addition, some 90,000 projects (up 12.5% from the 80,000 in the first quarter of 2011) which have not even begun work. (Veneconomy, 07-04-2012)

International Trade

Belarus to develop a space station in Venezuela

Belarus is to take part in the construction of a space station for satellite launching in Aragua state (central-northern Venezuela), says Venezuelan Ambassador to Minsk Américo Díaz Núñez, adding that the space station will be just one of the projects to be jointly executed by Venezuela, China and Belarus. "The satellites are currently manufactured in China, but an agreement has been reached to assemble them in Venezuela," he added. (El Universal, 07-04-2012; http://www.eluniversal.com/nacional-y-politica/120704/belarus-takes-part-in-construction-of-space-station-in-venezuela; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=532397&CategoryId=10717)

And also a thermo-electric plant

China, Belarus and Venezuela will build a thermo-electric plant in the Santa Inés industrial zone in Barinas state, a project estimated at U$D 900 million. It will be financed by China while Belarus offers the technology. It is expected to be ready in three years. (Veneconomy, 07-04-2012)

Logistics & Transport

Delays at customs have increased in the last two weeks, said CONSECOMERCIO Customs Committee chief Cipriana Ramos. She pointed out an increase of imports has resulted in a collapse of communication systems and that the merchandise could be subjected to up to five inspections in light of the number of agencies and requirements at local ports. (Veneconomy, 07-04-2012)

27 ships idle at port, waiting docking and two ships have remained at dock, waiting to be unloaded, for almost three weeks, according to a confidential report from the Puerto Cabello harbor made public by Carabobo state Legislative Council Deputy Neidy Rosal. Eleven of the 27 ships carry grain. (Veneconomy, 07-04-2012)

Politics

Global leftists close ranks with Chavez

120 leftist parties from all over the world and 400 international delegates within the so-called Sao Paulo Forum are meeting for the first time in Caracas, in support of President Hugo Chávez for his third reelection. Their master document reads: "US meddling and influence can be felt in the Bolivarian Republic of Venezuela through several attempts at influencing the Venezuelan election, promoting undemocratic clues ahead of the election of October 2012. For the Venezuelan and hemispheric left, the reelection of Commander Hugo Chávez is of the essence," they admonished. (El Universal, 07-04-2012; http://www.eluniversal.com/nacional-y-politica/120704/world-leftwing-closes-ranks-with-venezuelan-leader; AVN, 07-04-2012; http://www.avn.info.ve/contenido/sao-paulo-forum-give-proposals-face-world-capitalist-crisis)

Paraguay accuses Chavez of meddling, withdraws envoy

Paraguay's new government ordered home its ambassador in Venezuela on Wednesday after accusing President Hugo Chavez's government of meddling in an attempt avert the impeachment of the leftist Paraguayan president's last month. The swift impeachment of Paraguay's former President Fernando Lugo drew strong criticism from left-leaning governments in South America. Chavez ordered Venezuela's ambassador to leave Paraguay and halted oil shipments in protest. (Reuters, 07-04-2012; http://www.reuters.com/article/2012/07/04/us-paraguay-venezuela-idUSBRE8630R520120704; El Universal; http://www.eluniversal.com/nacional-y-politica/120704/paraguay-recalls-ambassador-to-venezuela)

January 10th, 2012

Economics & Finance

Chavez vows to reject arbitration in EXXON case

President Hugo Chavez says that Venezuela would not recognize a ruling by a World Bank panel in a multibillion-dollar arbitration case with the EXXON MOBIL Corporation. “I tell you now, we will not recognize any decision” by the center, Mr. Chavez said during a televised speech. “They are trying the impossible: to get us to pay them,” he said. “We are not going to pay them anything.” It was not immediately clear whether Mr. Chavez was also referring to about 20 other cases that Venezuela faces before the World Bank’s arbitration panel that were prompted by a wave of state takeovers in recent years. They include separate multibillion-dollar proceedings brought by ConocoPhillips, another major American oil company. (The New York Times, 01-09-2012; http://www.nytimes.com/2012/01/09/business/venezuela-will-not-recognize-world-bank-ruling-in-exxon-case.html?_r=2)

Leaving ICSID to hit foreign investment

Arbitration specialist Luis Alfredo Araque predicts Venezuela’s withdrawal from the World Bank’s International Center for Settlement of Investment Disputes (ICSID) will scare away foreign investment. “No one in their right mind will invest in a country that is not in ICSID”, says Araque, who considers the President’s threat a “very serious” matter which – if made effective – could be highly damaging to the nation. More in Spanish: (El Universal, 01-10-2012; http://www.eluniversal.com/economia/120110/salida-del-ciadi-alejara-inversion-extranjera)

2012 inflation projected around 30%

Although the Government expects economic growth above 5% this year, analysts – such as IESA economis Hugo Faría – predict the country will suffer high inflation and indebtedness this year as a result of increased spending in support of President Chavez’s campaign for reelection. More in Spanish: (Tal Cual, 01-10-2012; http://www.talcualdigital.com/index.html)

Public Stock Exchange readies for new Petro-Bond

According to the President of the Bicentennial Public Stock Exchange, Felix Franco, they are getting ready for a new issue of Petro-Bonds to take place during the first five months of this year. He said during an interview “We expect the issue of Petro Bonds announced by President Chavez will be placed through the Public Stock Exchange in the secondary market”. More in Spanish: (AVN, 01-10-2012; http://www.avn.info.ve/contenido/bolsa-pública-valores-se-prepara-para-emisión-petrobono; El Universal, http://www.eluniversal.com/economia/120110/bolsa-publica-bicentenaria-prepara-plataforma-de-petrobonos)

Commodities

Venezuela's oil opens the year at U$D 108.27

The price of the Venezuelan oil basket started 2012 with a U$D 1.57 per barrel increase, to an average U$D 108.27, according to the Ministry of Petroleum and Mining. Last week, Venezuelan oil basket closed at U$D 106.70 for an average skyrocketing price of U$D 101.04 per barrel in 2011. (El Universal, 01-06-2012; http://www.eluniversal.com/economia/120106/venezuelas-oil-begins-the-year-at-usd-10827)

Petropiar drilled 157.200 bpd in 2011

PETROPIAR, the joint venture led by state-run oil holding Petróleos de Venezuela (PDVSA) which operates at the Orinoco Oil Belt, had an average output of 157,200 barrels per day (bpd) during, which surpassed the initial goal set by the National Budget Office (Onapre) of 155,300 bpd on a yearly average. (El Universal, 01-06-2012; http://www.eluniversal.com/economia/120106/petropiar-drills-157200-bpd-in-2011)

Chavez says the Orinoco Oil Belt project will bolster economic development

President Chavez says that the Orinoco Socialist Plan, to be developed along the Orinoco Oil Belt, will be the main tool for the economic development of the country and for the a newly launched program aimed at promoting productive employment in the country. According to governmental estimations bout 300,000 job posts will be created in the entire area in the next years. The Orinoco Oil Belt is the world's largest liquid hydrocarbon reserves and it covers 4 states in Venezuela (Delta Amacuro, Guárico, Anzoátegui and Monagas). (AVN, 01-08-2012; http://www.avn.info.ve/contenido/project-orinoco-oil-belt-bolster-economic-development)

Government predicts it will raise iron production to 20 million tons in 2012…

President Chavez claimed on national television that the Government expects to increase iron production to about 20 million tons during 2012. (AVN, 01-09-2012; http://www.avn.info.ve/node/94376)

and says it will increase cement production capacity by 27% in 2013

Industry Vice Minister Raul Pacheco announced that through official investments in the cement production, capacity is expected to increase by 27% by 2013; that is about 11.54 million tons a year. Pacheco made the statement from the Cerro Azul cement plant that is under construction in cooperation with Iran. (AVN, 01-09-2012; http://www.avn.info.ve/contenido/venezuela-increase-cement-production-capacity-27-2013)

Indepabis has published an updated list of price controlled items

The Institute for the Defense of People’s Access to Goods and Services (INDEPABIS) has updated a list of over 100 items in the basic foods category on its web page: http://www.indepabis.gob.ve/. Key items are vegetable oil, sugar, coffee, poultry, beef, milk, cheese, rice, sorghum, corn, precooked corn flour, pasta, and canned foods. More in Spanish: (AVN, 01-10-2012; http://www.avn.info.ve/contenido/indepabis-publica-listado-actualizado-rubros-alimenticios-regulados)

International Trade

Venezuela, Peru in pacts on oil investments, trade

The presidents of Venezuela and Peru have reached an agreement for the Peruvian state oil company to invest in development of Venezuela's eastern Orinoco oil belt. PDVSA will study a possible role in developing a petrochemical complex in Peru as well as helping Peru increase its production of heavy and extra heavy crude oil. The formal agreement came during a Saturday meeting between President Hugo Chavez and Peruvian leader Ollanta Humala, while representatives of the two governments signed agreements establishing mechanisms for transportation, storage, refining and marketing of hydrocarbons. Other pacts cover the sale in Peru of tractors and other farm implements made in Venezuela. The main Peruvian private sector organization, CONFIEP, has criticized the agreements, saying they are of no advantage to Peru. Venezuela’s imports from Peru rose 422,6% over the past 13 years, from U$D 88.4 million to U$D 462.1 million last year; but exports dropped 73,78%, from U$D 143.4 million in 1999 to U$D 37.5 million in 2011.  (AJC, 01-07-2012; http://www.ajc.com/business/venezuela-peru-in-pacts-1294147.html and more in Spanish: El Nacional, 01-09-2012; http://www.el-nacional.com/)

Venezuela to strengthen cooperation with Nicaragua

Venezuela’s ambassador to Nicaragua, María Alejandra Ávila, announced that cooperation agreements with that country will increase after the reelection of Daniel Ortega for a second term in office. The two countries are already undertaking several projects, all of which are covered by the PETROCARIBE energy agreement. PDVSA América maintains ALBANILISA operations in Nicaragua in order to purchase such items as beef, beans, rice and coffee for distribution in Venezuela through official outlets. More in Spanish: (El Nacional, 01-09-2012; http://www.el-nacional.com/ and AVN; http://www.avn.info.ve/contenido/venezuela-strengthen-cooperation-agreements-nicaragua)

Logistics & Transport

Patrol vessels to be built in Puerto Cabello by Cuban technicians

It is projected that during the first quarter of this year manufacturing of patrol vessels by Cuban technicians will begin at the Puerto Cabello Naval Base, based on a January 5^th agreement signed by the Defense Ministry and Cuba's Ministry for Transportation. More in Spanish: (El Nacional, 01-09-2012; http://www.el-nacional.com/)

Politics

Chavez defends Ahmadinejad against 'US warmongering'…

President Hugo Chavez defended his close ally Iranian leader Mahmoud Ahmadinejad and said:  "They accuse us of being warmongers," Chavez said. "They're the threat." He also accused the U.S. and its European allies of demonizing Iran and using false claims about the nuclear issue "like they used the excuse of weapons of mass destruction to do what they did in Iraq." Both leaders planned to travel to Nicaragua on Tuesday for the inauguration of newly re-elected President Daniel Ortega, and then Ahmadinejad will also visit Cuba and Ecuador. Laughing, Chavez said Ahmadinejad is traveling through "the axis of evil of Latin America." (AP, 01-09-2012; http://www.google.com/hostednews/ap/article/ALeqM5g_8vPleqBjcvHFI5K3wlevor-SPA?docId=386da2827cbe43c38cbe5b31004d0a18)

…But makes no oil deals with Iran

On the other hand, Oil Minister Rafael Ramirez told reporters the government had not made any oil-related agreements with Iran. On the issue of sanctions against Iran and its threats to block the Strait of Hormuz, Ramirez said OPEC, to which both countries belong, could not get involved in the issue. "Any action that Iran takes in defense of its sovereignty is a matter of Iran," Ramirez said. (AP, 01-09-2012; http://www.google.com/hostednews/ap/article/ALeqM5g_8vPleqBjcvHFI5K3wlevor-SPA?docId=386da2827cbe43c38cbe5b31004d0a18)

Venezuelan consul in Miami ordered to leave U.S. for discussing cyber-attacks

In a move likely to further strain relations between the United States and Venezuela, the State Department on Sunday said that it had ordered Livia Acosta Noguera, Venezuela’s consul general in Miami, to leave the country. The decision to expel Acosta was made one month after Spanish-language Univision Network broadcast a documentary about Iran’s alleged terrorist activities in Latin America, including a taped segment in which the consul reportedly asks an alleged Mexican hacker to give her access codes to nuclear facilities in the United States. President Hugo Chavez called the decision a show of “arrogance by the ridiculous empire”; and Foreign Minister Nicolás Maduro said they would give the US a “clear and firm” response. (Miami Herald, 01-08-2012; http://www.miamiherald.com/2012/01/08/2579965/venezuelan-consul-in-miami-ordered.html and more in Spanish: Noticiero Venevisión, http://www.noticierovenevision.net/politica/2012/enero/9/12582=chavez-asevera-que-expulsion-de-consul-venezolana-es-%E2%80%9Cuna-demostracion-mas-de-la-prepotencia-del-imperio-ridiculo%E2%80%9D and Tal Cual; http://www.talcualdigital.com/index.html)

President Chavez to attend Nicaragua's Ortega inauguration

President Chavez announced Sunday that he will travel next Tuesday Jan. 10 to Managua, Nicaragua, to attend the inauguration of his counterpart Daniel Ortega. (AVN, 01-09-2012; http://www.avn.info.ve/contenido/president-chavez-attend-nicaragua039s-ortega-inauguration)

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.