November 19, 2013

Economics & Finance

Maduro to sign two laws immediately on getting special powers

President Nicolás Maduro says he will enact two laws immediately after the National Assembly grants him special powers to legislate by decree for a full year: One law will regulate costs, profits and prices; and the other will give his regime control over all foreign trade. Maduro also said he will establish "registration of all small and midsize merchants" in order to "protect" them from wholesalers and assist them with credit and investment. The National Assembly is today expected to approve a law granting Maduro special powers. More in Spanish: (NTN24; http://www.ntn24.com/node/113105

PDVSA 2026 bond sale approved

The Finance Ministry has approved the sale of U$D 4.5 billion in 2026 PDVSA bonds in a private placement with the Central Bank and PDVSA suppliers. The US dollar denominated bonds will be acquired via primary investment in bolivars at VEB 6.30 per US dollar. The price was 100%, with 6% coupon rate, payable every six months, and the minimum trade was U$D 100. (El Universal, 11-18-2013; http://www.eluniversal.com/economia/131118/authorities-approve-sale-of-pdvsa-2026-bond-as-private-offer; and more in Spanish.: AVN; http://www.avn.info.ve/contenido/autorizan-colocaci%C3%B3n-4500-millones-del-bono-pdvsa-2026; El Universal, http://www.eluniversal.com/economia/131119/proyectan-que-bonos-de-pdvsa-sufriran-un-descuento-de-50)

Domestic debt is up 12%, to U$D 66.7 billion

Finance Ministry data shows third quarter domestic indebtedness is up to U$D 66.7 billion, 12% above the same period in 2012. Oil and tax income, as well as special contributions from devaluation, are falling short of increased expenditures in wages, pensions, social projects and official operating costs. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131119/deuda-interna-crece-12-y-llega-a-667-millardos)

Operating reserves available for only 3 months worth of imports

Operating reserves available to the Central Bank for imports, debt service and back currency have dropped 31% year to date, and by November 15th stood at U$D 20.691 billion, their lowest level since 2004. Based on last year's total import data - U$D 77.5 billion - is appears that operating reserves can only pay for 3 months worth of imports. (El Universal, http://www.eluniversal.com/economia/131119/las-reservas-solo-cubren-tres-meses-de-importaciones)

Central Bank calls new FOREX auction this week

The Central Bank announced it will start taking orders for the 9th auction under the Ancillary Foreign Exchange System (SICAD) to be held this week. The auction will be open to individuals and companies in the automotive area, for spare parts; as well as companies importing supplies for printing and editing books, electric and electronic components, and supplies for manufacturing office furniture. More in Spanish: (AVN; http://www.avn.info.ve/contenido/este-martes-se-inicia-novena-subasta-del-sicad; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/bcv-convoco-nueva-subasta-del-sicad-para-esta-sema.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/bcv-subastara--95-millones-para-empresas-a-traves.aspx)

Central Bank to place gold with Goldman Sachs

Venezuela's Central Bank and Goldman Sachs are about to sign a barter agreement on gold bullion reserves, starting October 2013 through October 2020, for 1.45 million gold ounces held at the Bank of England. Transfers to Goldman Sachs will take place within set times. A margin account is to be set up in which the Central Bank and Goldman Sachs will deposit additional gold if prices fluctuate down or upwards. Venezuela will be responsible for depreciation, and the interest rate will be 8% per annum. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Venezuela stock market plunges 16% -- still up 375% YTD

Despite the tumble, the Venezuela Stock Market is now up 375% for the year to date in bolivar terms, though only 224% in official rate dollar terms because of a February devaluation -- but still maintaining its position as the top performing stock market in the world. The local market plunged this week, as the Venezuelan government announced it was fighting "economic war", government troops occupied stores across the country, and looting broke out. In addition, the black market rate of the currency also tumbled more than 20% on the government's offensive, adding to the panic and market's woes. The Caracas Stock Index lost 16.2% to close at 2,237,304 for the week ending November 15. This is only the second week in the last twelve months that the Caracas Stock Index has lost ground and its biggest one week fall. (Latin American Herald Tribune, 11-17-2013; http://www.laht.com/article.asp?ArticleId=1194352&CategoryId=10717)

Oil & Energy

Venezuelan oil exports dropping, as prices tumble

The Joint Organizations Data Initiative (JODI), overseen by the Saudi Arabia based International Energy Forum, reports that Venezuela's crude oil exports fell 12% to 1.38 million barrels a day (bpd) in September; and state run PDVSA reports Venezuela's September oil exports averaged U$D 103.12, which was U$D 7.63 below OPEC's average U$D 110.75 price for September exports. (Latin American Herald Tribune, 11-17-2013; http://www.laht.com/article.asp?ArticleId=119772&CategoryId=10717)

PDVSA says fire at PETROANZOATEGUI upgrader is under control

PDVSA says it has completely controlled a fire in a coke storage area of PETROANZOATEGUI heavy crude upgrader with no injuries or damage to facilities. PETROANZOATEGUI processes ultra-heavy crude from the Orinoco belt and turns it into lighter oil. (Reuters, 11-15-2013; http://www.reuters.com/article/2013/11/15/venezuela-oil-idUSL2N0J00IN20131115)

Venezuela's dependence on US fuel grows

Despite its own vast oil reserves, Latin America has doubled its reliance on the United States for fuels like diesel and gasoline over the last five years to keep its economies humming - and the dependence is growing. Venezuela, which has the world's largest crude reserves, became a net fuel importer last year after a series of refinery woes. With generous subsidies creating the cheapest gasoline in the world, rising imports are leaving state-run Petroleos de Venezuela (PDVSA) with a costly bill. PDVSA has made no advances in expanding its internal refining network and has put off refining projects abroad. The oil giant has plans for three new refineries and expanding two mid-size units - but it has put off inauguration dates. It now says it will to add some 25,000 bpd to capacity by 2015 and 140,000 bpd by 2016. (El Universal, 11-18-2013; http://www.eluniversal.com/economia/131118/venezuelas-dependence-on-us-fuel-grows, and The Chicago Tribune: http://www.chicagotribune.com/classified/automotive/sns-rt-us-oil-latam-imports-20131117,0,1279722.story)

Venezuela oil basket up slightly

Venezuela's weekly oil basket remained below the country's desired U$D 100 a barrel floor as well-supplied stocks reduced demand for oil, new Iraqi supplies came on line, and the Middle East remained calm. Venezuela's basket of heavy and mixed crudes rose slightly, breaking 10 straight weeks of falling Venezuela oil prices. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending November 15 was U$D 92.51, up U$D 0.45 from the previous week's U$D 92.06. (Latin American Herald Tribune, 11-16-2013; http://www.laht.com/article.asp?ArticleId=1190674&CategoryId=10717)

ALBA PETROLEOS fined over U$D 700,000 by Salvadorean authorities

ALBA PETROLEOS, a Venezuelan and Salvadorean joint venture has been fined over U$D 700 thousand by El Salvador's Competition Superintendent for acquiring 9 service stations without their prior authorization. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/mundo/multan-a-petrolera-venezolano-salvadorena-con-mas-.aspx#ixzz2l5avluDe; El Mundo, http://www.elmundo.com.ve/Noticias/Petroleo/Pdvsa/Multan-a-petrolera-venezolano-salvadorena-con-mas.aspx)

Commodities

Store inspections continue, checking for "fair prices"

The Government has continued inspecting shops nationwide, with the support of the military, to make sure tradesmen comply with the order to lower prices. Long lines continue to seek cheap offerings. Vice President Jorge Arreaza is heading up the new wave of inspections, along with General Vladimir Padrino, who heads the Operational Strategic Command of the Bolivarian Armed Forces, Defense Minister Admiral Carmen Melendez, and Major General Herbert García Plaza, who runs the Economic Defense High Command. Other Cabinet members and officials have covered Carabobo State and various areas of Caracas, all of them claiming to fight "speculation". Discounts at some apparel outlets were up to 70%, The government offensive against business includes high fines, surprise inspections, and even taking over well know appliance stores for alleged price gouging. The government has also announced it will establish profit margins in the entire nation to put an end to "usury" and "speculation", and reduce inflation. Opposition representatives say the regime is to blame for economic problems, and point out that it has destroyed the productive base of the nation. More in Spanish: (Infolatam)

Profit margins for public transportation spare and auto parts will range 16-30%

Haiman El Troudi, Minister for Ground Transportation, has announced that the fair profit margin for manufacturers, importers and distributors of spare and auto parts for public transportation will be fixed between 16-30%. He says that to date 93 distributors, 16 domestic auto parts manufacturers, 4 tire manufacturers, and 20 body makers have adjusted their prices. More in Spanish: (AVN; http://www.avn.info.ve/contenido/troudi-margen-ganancia-repuestos-y-autopartes-oscilar%C3%A1-entre-16-y-30)

SIDOR strike is to continue

SIDOR'S board of directors has announced it will stop wage payments on days workers remain on strike until operations at the state-owned steelmaker begin anew. Workers went on strike again last Thursday and say they will continue stoppage despite threats. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131119/trabajadores-ratifican-paro-de-actividades-en-sidor)

Agriculture Ministry will raise milk subsidy to stimulate production

Agriculture and Land Minister Yvan Gil says the government has started a special plan to increase production of liquid milk, which includes subsidies and incentives. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131119/mat-elevara-subsidio-a-la-leche-para-subir-produccion)

International Trade

Government will control imports of spare parts, appliances

Haiman El Troudi, Minister for Ground Transportation, and General Hebert García Plaza, chief of the People's Economic Defense High Authority, have said the government is planning centralized control imports for appliances and spare parts. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131119/el-estado-centralizara-la-importacion-de-mas-rubros)

Government imports from China down 41% through August

A Bank of America Merrill Lynch report indicates there are signs government imports are dropping, as reflected by a 41.4% reduction in imports from China through the end of August. There has also been a 44.3% drop in Colombian exports to Venezuela through July. There appear to be some discrepancies in import data as Venezuela's balance of payments shows a 2.7% increase in purchases abroad during the first semester 2013, yet "our data shows a 4.4% drop, and this is because official imports rose, but these were pre-financed acquisitions which are reported as income, but they never actually did because importers did not receive FOREX." More in Spanish: (El Nacional; http://www.el-nacional.com/)

Politics

Maduro's worst public evaluation to date matches his economic moves

According to the latest poll by the Venezuela Data Analysis Institute (IVAD), at the time President Maduro decided to forcibly reduce prices, at least 7 out of 10 Venezuelans had a negative view of the country's situation, which means a negative perception continues to increase since he took office. Upon his election 54.8% of respondents had a negative view of the nation's situation; seven months later it is 68.5%, rising to 71% in central Venezuela, and includes 40.5% of individuals who define themselves as pro-Chavez. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/131119/medidas-economicas-coinciden-con-peor-evaluacion-de-maduro)

Special Report: Venezuela on the brink

On Thursday the National Assembly approved legislation that would grant President Nicolás Maduro extraordinary power to legislate by decree. The President claims such action is necessary to battle the “economic war” being waged against the country by the private sector and the opposition. Indeed, even as another Venezuelan wins the title of world’s most beautiful; the country’s economic situation is getting increasingly uglier. The legislation should finally be approved on November 19 Diego Moya Ocampos, Senior Analyst for the Americas at IHS Insight wrote in a memo. In an interview with LBC, Moya Ocampos said that with the granting of these powers we should expect more power concentrated in the executive branch and greater state intervention in the Venezuelan economy, including more price controls, restrictions on foreign currency, and expropriations. (Latin Business Chronicle, http://latinbusinesschronicle.com/app/article.aspx?id=6591)

Former bank official pleads guilty in bribery case

A former executive at a Venezuelan bank pleaded guilty in a New York federal court on Monday to charges stemming from a scheme in which she took bribes in exchange for steering millions of dollars of the bank’s business to an American brokerage firm. The executive, María de los Angeles González, 55, agreed to cooperate with prosecutors, suggesting there could be further revelations about corruption at the government-controlled bank, the Economic and Social Development Bank of Venezuela, known as BANDES. A plea agreement signed by Ms. González indicated that the corruption she was involved in went much further than previously revealed and that she admitted involvement in several other payoff schemes at BANDES and another government-run bank where she worked as an officer, Industrial Bank of Venezuela. The agreement said that the charges that Ms. González pleaded guilty to carried sentences totaling up to 55 years in jail. Ms. González was arrested in Miami in May. (The New York Times; http://www.nytimes.com/2013/11/19/world/americas/venezuela-former-bank-official-pleads-guilty-in-bribery-case.html?_r=0)

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.

September 16th, 2011

Economics & Finance

Government considers denouncing investment protection treaties

A recently disclosed Venezuelan Foreign Ministry paper reveals that several meetings have been held to assess the possibility of denouncing several investment protection treaties signed with other nations; as well as a possible denunciation of the Convention on the Settlement of Investment Disputes between States and National of other States (ICSID Convention) in order to withdraw from the International Center for Settlement of Investment Disputes (Icsid). (El Universal, 09-14-2011; http://www.eluniversal.com/2011/09/14/venezuela-reviews-investment-protection-agreements.shtml)

Venezuelan bonds reach lowest level YTD on worsened risk perception

Despite a surge in the international bond market due to the agreement between Germany and France to aid Greece, The Venezuelan Global 27 closed at 66.75%, and the PDVSA 2022 at 76.5% of value, down from 86.5% in March. Brokers say the official announcements about gold repatriation and revising investment treaties have increased risk perception. More in Spanish at: (El Universal, 09-15-2011; http://www.eluniversal.com/2011/09/15/bono-marcador-venezolano-cae-al-nivel-mas-bajo-del-ao.shtml)

Central bank ponders keeping some gold reserves abroad

The board of directors of the Central Bank of Venezuela (BCV) is considering the possibility of keeping some of the gold reserves in foreign banks, so that they can be readily cashable, if necessary. BCV sources said that the number of gold ingots that will be brought to Venezuela and the gold bars that will remain in foreign financial institutions has not yet been determined. (El Universal, 09-14-2011; http://www.eluniversal.com/2011/09/14/central-bank-ponders-keeping-some-gold-reserves-abroad.shtml)

China has injected over U$D 30 billion into Venezuelan economy, U$D 4 billion more sought

Foreign Minister Nicolás Maduro has said agreements with China have brought over U$D 30 billion into the Venezuelan economy though two special funds. Venezuela has recently signed a long term agreement (2013-2030) with the China Development Bank to cover large investments in construction, telecommunications, health, technology and agriculture, among others. After a meeting between President Chavez and the President of the China Development Bank it was announced the Bank is currently financing 137 development projects locally. Maduro said there is a plan to install 3 refineries in China over the next 10-15 years to process heavy oil from the Orinoci Oil Belt. Chavez met this week with the Bank president to negotiate a new U$D 4 billion tranche. More in Spanish: (AVN, 09-14-2011; http://www.avn.info.ve/node/77403; http://www.avn.info.ve/node/77381 and http://www.avn.info.ve/node/77555; El Universal, 09-16-2011; http://www.eluniversal.com/2011/09/16/venezuela-negocia-nuevo-tramo-de-endeudamiento-con-china.shtml)

PDVSA has provided Treasury 61% of its annual fiscal contribution over first five months of 2011

According to the Central Bank. Petróleos de Venezuela (PDVSA) made a fiscal contribution of U$D 6.39 billion in five months. By the end of May, the state-owned oil company had transferred 61% of its expected fiscal contribution for 2011, which is projected at U$D 10.51 billion. (El Universal, 09-14-2011; http://www.eluniversal.com/2011/09/14/pdvsa-transfers-61-of-2011-contribution-to-the-treasury.shtml)

International reserves down slightly to U$D 31.113 billion

The Central Bank says international reserves remain over U$D 31 billion, although slightly down from U$D 31.223 billion last Monday. More information in Spanish: (El Mundo, 09-14-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-bajan-a-$31-113-millones.aspx)

Commodities

PETROBRAS-PDVSA talks on refinery hit snags

Brazilian federal oil company Petroleo Brasileiro (PBR, PETR4.BR) confirmed it is still talking to Petroleos de Venezuela SA (PDVSA) over a joint-venture deal to build a refinery in Brazil's Pernambuco state. PDVSA still faces several hurdles to officially take its expected 40% stake in the Abreu e Lima refinery currently under construction, and assume 40% of already contracted loans for the project and meet loan guarantee demands from the Brazilian National Development Bank, or BNDES. Petrobras has pledged to build the nearly U$D15 billion refinery with or without the participation of PDVSA, and would be able to save some cash by not needing to install specialized equipment to process heavy crude from Venezuela's Carabobo field should PDVSA not participate. (Fox Business, 09-13-2011; http://www.foxbusiness.com/industries/2011/09/13/brazil-petrobras-in-talks-with-venezuelas-pdvsa-on-refinery-jv/#ixzz1XvcBLRQT)

Venezuela's PDVSA says upgrader to halt on Sept 21

Venezuela's state-run oil company PDVSA announced that its 130,000-barrels-per-day Petroanzoategui heavy crude upgrader will shut down for planned maintenance on Sept. 21. The company announced the suspension of operations in a statement that did not mention how long the upgrader was expected to be closed. In February the local oil workers' union said the scheduled shutdown would last 40 days. (Reuters, 09-14-2011; http://www.reuters.com/article/2011/09/14/venezuela-upgrader-idUSS1E78D1WQ20110914)

Venezuelan oilmen find opportunities in Colombia

Oil workers banished by President Hugo Chavez have taken their experience drilling for Venezuela’s tar-like oil to countries as varied as Iraq, Nigeria and Canada. But the presence of Venezuelan petro-scientists has been most vital here in Colombia, where they have helped oil companies sharply increase the production of crude, much of which is exported to the United States. Colombia is now on the verge of achieving what just a few years ago were unthinkable: pumping 1 million barrels of oil a day, up from 540,000 barrels daily in 2005. (Washington Post, 09-12-2011; http://www.washingtonpost.com/world/americas/venezuelan-oilmen-find-opportunities-in-colombia/2011/09/12/gIQAiOcjTK_story.html)

Politics

Presidential elections in Venezuela scheduled for October 7, 2012

The National Electoral Council (CNE) has announced presidential elections for the 2013-2019 term will be held on October 7, 2012. It was decided unanimously that the presidential, governors and municipal elections would be carried out at different dates. Elections for governors will be held in December 2012 and municipal elections in April 2013. (AVN, 09-13-2011; http://www.avn.info.ve/node/77081)

Chavez to undergo fourth and last chemotherapy round, will skip UN General Assembly

President Chávez has announced he will soon begin the fourth and last round of chemotherapy. He explained he will undergo a comprehensive evaluation in October to “verify there are no malignant cells. Once that is done, we would enter a new stage.” However, he expects not to attend a United Nations General Assembly meeting this month in New York because of cancer treatment. (Veneconomy, 09-13-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27579&idc=1 and Bloomberg, 09-15-2011; http://www.bloomberg.com/news/2011-09-15/chavez-says-he-will-likely-start-new-round-of-chemo-on-sept-19.html)

Chávez avoids comment on China's recognition of Libyan rebels

President Hugo Chávez refrained from giving an opinion on a decision of the Chinese government to recognize the National Transitional Council (NTC) as Libya's official government. He reckoned that the Beijing had his reasons to do so. He says: “Beijing will certainly have reasons to do so. I am not going to question that decision". (El Universal, 09-13-2011; http://www.eluniversal.com/2011/09/13/chavez-avoids-assessing-chinas-recognition-of-the-ntc.shtml)

Chavez aims for 2012 re-election, says he will seek additional enabling powers after victory

Venezuela's 2012 presidential election race has kicked off with President Hugo Chavez confident of victory in South America's biggest oil exporter next year. The socialist leader has won three presidential votes during 12 years in power and has vowed to emerge triumphant again -- despite undergoing chemotherapy treatment for cancer. He recently said: “Once we achieve a ‘bolivarian’ victory on October 7th I may ask for a Special Enabling Law from October to February, for a transition from my Third Government to my Fourth Government” (Reuters, 09-14-2011; http://www.reuters.com/article/2011/09/14/us-venezuela-chavez-fb-idUSTRE78D45N20110914 and more in Spanish: El Universal, 09-15-2011; http://www.eluniversal.com/2011/09/15/chavez-pedira-ley-habilitante-si-gana-las-elecciones-de-2012.shtml)

Trade with Argentina rose 23% over the first semester 2011

Trade between Argentina and Venezuela totaled U$D 749,2 million over the first semester of 2011, an increase of 23% over the same period in 2010.Argentina sold U$D 742,6 million – mainly in food and beverages - and bought only U$D 6,6 million from Venezuela. More in Spanish: (El Nacional, 09-15-2011; http://www.el-nacional.com/)

Billionaire Cisneros seeking to buy Spanish assets amid crisis

Venezuelan billionaire Gustavo Cisneros is looking to buy Spanish companies as the European debt crisis drives down asset valuations. Cisneros says he has decided to “look at Spain again. It’s a natural market for us. These are good companies, especially companies that export to Latin America.”  He added: “Media obviously in Spain for us would be a natural, but I don’t discard manufacturing companies. I’m not interested in banking.” Cisneros is also setting up joint ventures with Chinese banks to carry out investment in Latin American commodities industries. (Business Week, 09-15-2011; http://www.businessweek.com/news/2011-09-15/billionaire-cisneros-seeking-to-buy-spanish-assets-amid-crisis.html)

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.

November 5th, 2010

Economics, Trade & Business

Venezuela Finance Minister: 2011 budget is prudent

Jorge Giordani, the Venezuelan Minister of Planning and Finance, said that the government's budgetary policy is prudent. For the purposes of  the 2011 government budget, the government estimated the price of the Venezuelan crude oil (which trades at a significant discount to Brent or WTI) to hover around USD 40 per barrel. Giordani's remarks were made at the Venezuelan legislature, where he commented on the draft 2011 Budget Law. He said that the budget cannot be prepared based on price variability; hence, revenues must be generated by the economy. (El Universal, 11-03-2010; http://english.eluniversal.com/2010/11/03/en_eco_esp_venezuela-finance-mi_03A4689451.shtml)

Cutting inflation rate index to one digit in three years is viable, said Venezuelan Central Bank (BCV) president Nelson Merentes. He also said he believes the Venezuelan economy will grow 2% by 2011. (Veneconomy, 11-04-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23771&idc=2)

Venezuela, Colombia Sign Accords, Vow to Revive Lost Trade

Venezuelan President Hugo Chávez and Colombian President Juan Manuel Santos signed agreements in Caracas on energy projects and vowed to revive bilateral trade hurt in part by a border dispute. Santos said the two leaders will meet every three months to improve ties and discuss joint projects. Petróleos de Venezuela, S.A. will restart gasoline shipments to Colombian border areas and work with Colombia’s Ecopetrol, S.A. to pump oil from mature wells, according to the accords. The companies may also create a venture to produce heavy crude oil from the Orinoco Belt. The two leaders agreed to study a plan to extend a gas pipeline into Central America and another to build an oil pipeline from Venezuela to Colombia’s Pacific coast. (Bloomberg, 11-03-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a3br6p.8V_nE)

No more Pdvsa bonds this year

State-run oil holding Pdvsa will not issue more bonds this year. Issuances of Pdvsa bonds are aimed at offsetting feeble cash flows, paying for nationalized companies and for funding CAPEX. In the meantime, the government has been applying  lot of pressure on the company to keep the social spending for its socialist project high. Ending October, Pdvsa issued USD 3 billion in amortizable bonds at 2017. Demand was more than twofold the supply. (El Universal, 11-03-2010; http://english.eluniversal.com/2010/11/03/en_eco_esp_no-more-pdvsa-bonds_03A4689893.shtml)

Industrialists say the economy will have negative growth of -1.8% in

Industrial sector entrepreneurs say that in 2011 the economy will shrink by 1.8%, according to results from a survey Conindustria at the "Outlook 2011" to over 300 participants. "It reveals the pessimism with which they are watching the situation in the country," press release. Inflation will be 31.5% in 2010 and 32.5% for 2011. (El Mundo, 11-04-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=17&Id_Noticia=35874)

Venezuela is one of the countries with the worst business climate, according to the eight edition of the World Bank’s report along with the International Finance Corporation (IFC): “Doing business 2011: Making a Difference for Entrepreneurs“. The report classifies 183 global economies. Venezuela ranked 172th, down two positions from 2010. Colombia, Mexico and Peru are ranked among the best in the region. (Veneconomy, 11-04-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23779&idc=3)

Fitch places Sidetur's ratings on Rating Watch Negative

Global rating agency Fitch Ratings has placed the ratings of the Venezuelan steel maker Siderúrgica del Turbio (Sidetur) on Rating Watch Negative, following the announcement made by the Venezuelan government last week to nationalize the steel producer. The decision reflects "the uncertainty regarding the exact time by which the nationalization will be completed and its impact on the company's operations during this process," Fitch said in a statement. (El Universal, 11-03-2010; http://english.eluniversal.com/2010/11/03/en_eco_esp_fitch-places-sidetur_03A4689577.shtml)

Politics

Venezuelan Foreign Affairs Minister Nicolás Maduro began a tour that will take him to Turkey, Ukraine and Syria to go over the agreements signed by President Chávez during his recent trip. (Veneconomy, 11-04-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23777&idc=1)

Venezuela, Turkey Foreign Ministers meet to agree political consultation mechanisms

The Venezuelan Minister of Foreign Affairs, Nicolas Maduro, is holding a meeting on Thursday with his Turkish counterpart, Ahmet Davutoglu, with the aim of reinforcing the mechanisms of political consultation between the two nations. According to a press release from the Venezuelan Foreign Ministry, the Turkish diplomat emphasized the need of strengthening bilateral relations sixty years after Turkey and Venezuela built relationships for the first time. (AVN, 11-04-2010; http://www.avn.info.ve/node/26687)

Chavez allies back Basque separatist in Venezuela

A Basque separatist fighting extradition to Spain testified before Venezuelan prosecutors on Wednesday, a Venezuelan activist said. Spanish authorities want to try Arturo Cubillas, who holds a government job in Venezuela, on accusations he helped the Basque militant group ETA arrange explosives training with Colombian rebels in Venezuela. Cubillas insists he is innocent. Susana Gonzalez, who leads a Venezuelan group that supports Basque independence, said she spoke with Cubillas and he testified for two hours. Prosecutors did not immediately comment on the hearing, and Cubillas did not appear in public. (Miami Herald, 11-03-2010; http://www.miamiherald.com/2010/11/03/1907315/chavez-allies-back-basque-separatist.html)

Petroleum & Energy

Storm stops Venezuela oil upgrader again

Venezuela's troubled 130,000 barrels-per-day (bpd) Petroanzoategui heavy crude upgrader has stopped again after a storm caused a fault in its compressor unit, a source at state oil company PDVSA said on Wednesday. The large facility had been out of action since late September due to boiler problems, but this week PDVSA said it had been restarted and was operating normally. (Reuters, 11-03-2010; http://www.reuters.com/article/idUSN0310819020101103)

Venezuela to supply fuel to Turkey

Venezuela says it has agreed to sell fuel to Turkey and that the two countries have pledged to invest jointly in oil projects. The agreements are part of an energy accord signed by Foreign Minister Nicolas Maduro during a visit to Ankara. The foreign ministry said in a statement Thursday that Turkey will receive fuel and that the countries will cooperate in oil projects, including planned Turkish investment in Venezuela's crude-rich Orinoco River basin. (Boston.com, 11-04-2010; http://www.boston.com/news/world/europe/articles/2010/11/04/venezuela_to_supply_fuel_to_turkey/)

Pdvsa ships 240,000 barrels of jet fuel to China

State-run oil company Petróleos de Venezuela (Pdvsa) said it shipped of 240,000 barrels of aviation turbine fuel (Jet A-1) to different Chinese regions, as part of the energy and financial agreements signed with the Asian country. The first shipment (257,000 barrels) was delivered in early October. So far, Venezuela has exported 497,000 barrels to China. The fuel departed from Venezuela's El Palito refinery. (El Universal, 11-02-2010; http://english.eluniversal.com/2010/11/02/en_eco_art_pdvsa-ships-240,000_02A4684211.shtml)

Venezuela sees oil arbitration rulings 2011-12

Venezuela expects rulings in compensation claims against it by Exxon Mobil Corp and ConocoPhillips to be decided next year or in 2012, the South American OPEC member's energy minister said on Tuesday. The U.S. majors want payment for assets nationalized by Venezuela three years ago when it pushed foreign firms into minority partnerships with the state at multibillion dollar projects in the Orinoco Belt crude region. Both Exxon and ConocoPhillips rejected the terms and began international legal proceedings against Venezuela via the World Bank's arbitration panel. "We expect (a decision) in 2011 or 2012," Rafael Ramirez told reporters when asked about the cases. (Reuters, 11-02-2010; http://www.reuters.com/article/idUSN0225824020101103)

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.