August 23th, 2011

Economics & Finance

Venezuela’s debt rating cut by S&P on “arbitrary laws”, Chavez's health

Venezuela had its credit ratings cut for the first time since 2006 by Standard & Poor’s, which cited concern over the country’s “changing and arbitrary laws” as well as the health of President Hugo Chavez. The downgrade comes after Chavez ordered the central bank to repatriate as much as $11 billion of gold reserves as he battles with an undisclosed type of cancer. Venezuela’s international reserves held abroad were “a strength of the rating, and with this movement that situation is going to change, which adds extra uncertainty.” Venezuela joins Bolivia, Paraguay and Suriname as Latin American nations with the B+ rating. Moody’s assigns Venezuela a B2 grade, while Fitch also gives Venezuela a B+. (Bloomberg, 08-19-2011; http://www.bloomberg.com/news/2011-08-19/venezuela-s-debt-rating-is-downgaded-to-b-from-bb-by-standard-poor-s.html)

V-bonds fell less than expected

The behavior of the Venezuelan bonds in international markets yesterday was relatively stable, averaging a drop of 0.5%. It was expected that lowering the credit rating by Standard & Poor's would greatly affect the price of debt on the first day of operations, but Venezuelan papers remained a relatively good choice. A source said this was due to the fact that Standard & Poor's was the last to lower the rating of the country. Fitch and Moody's had punished the risk rating in Venezuela a few weeks ago, ranking it even lower than Standard. More in Spanish: (El Nacional, 08-23-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Local stock market up 51.43%

Venezuela's stock market dropped slightly this week, with the index dropping 0.62% to 98,094 from last week's 99,558 close. Volume picked up, but mostly with a large cross trade in MANTEX shares, which accounted for over 900,000 shares traded. (Latin American Herald Tribune, 08-22-2011; http://www.laht.com/article.asp?ArticleId=418669&CategoryId=10717)

Central Bank requests gold holdings held by BOE, Merentes says gold is over 60% of total reserves

Venezuela’s central bank has requested its 99 tons of gold holdings from the Bank of England, according to a bank statement sent by e-mail, citing the institution’s president Nelson Merentes. “We’ve contacted the Bank of England and the corresponding protocols have been initiated to complete this operation as soon as possible,” Merentes said, according to the statement. “Once that’s done, the shipments will begin by sea.” He also said Venezuela’s gold is a little over 60% of total international reserves, some U$D 18 billion. (Bloomberg, 08-21-2011; http://www.bloomberg.com/news/2011-08-21/venezuela-requests-gold-holdings-held-by-boe-merentes-says.html); and more in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/node/73498)

Swap of US dollars for yuans or rubles ruled out

Venezuelan reserves will be moved, but kept in US dollars according to Central Bank President Nelson Merentes. Venezuela will move its operating international reserves from Swiss, British, French, and American banks to financial institutions in Russia, China, or Brazil, but that does not mean that US dollars would be swapped for Chinese yuan, Russian ruble, or Brazilian real. He justified the decision to move reserve funds by saying that "we are protecting our funds, in a first phase. If there is a region affected by an economic disturbance, the most prudent and advisable decision is to change the location of these reserves (...) We are protecting ourselves from the risk of contagion. We seek better safeguard (for the funds)." (El Universal, 08-22-2011; http://www.eluniversal.com/2011/08/22/venezuela-rules-out-swap-of-us-dollars-for-yuans-or-rubles.shtml

Merentes: "It is not true that China asked to extend credit guarantees"

The president of the Central Bank of Venezuela, Nelson Merentes, says it is false that China has asked for guarantees to back credits. He says they will diversify their portfolio and only a small amount will be placed in China in order to anticipate markets. “China is virtually the second world power in production. Our studies say the yuan will become convertible very soon and those who get ahead will come out favorably”.  More in Spanish at (El Nacional, 08-22-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Chavez’s gold grab prompts dash for physical, Citigroup expects increase to $ 2,000 gold per ounce

The gold price reached a new nominal high of $1,913.50 in Asian trading today, while silver, platinum and palladium all also recording gains. Gold has been propelled sharply higher in recent trading sessions by the news that Venezuelan strongman Hugo Chavez plans to repatriate Venezuela’s gold holdings from banks mainly in the UK and the USA. Given that the “physical market” in gold is approximately 100-times the size of the amount of actual metal by which it is purportedly backed, this is raising concerns of a dramatic short-squeeze. According to a study by the analysis unit of Citigroup, the price of gold in the nearest term will continue to rise, expected a price of U$D 2,000 per ounce underpinned by market uncertainty and unsteadiness of monetary policy. More in Spanish: (El Universal, 08-23-2011; http://www.eluniversal.com/2011/08/23/citigroup-preve-que-el-oro-aumentara-hasta-$2000-por-onza.shtml and Gold Money, http://www.goldmoney.com/gold-research/chavezs-gold-grab-prompts-dash-for-physical.html?page=3088&utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+GoldMoneyGoldResearch+%28GoldMoney+-+Gold+Research%29)

Tax revenue share declines in 2010

The 2010 economic report issued by the Central Bank of Venezuela (BCV) showed that the tax revenues share of Venezuela's total fiscal revenues declined last year. According to the central bank, "as a result of increased oil prices and foreign exchange adjustment there was a change in favor of oil revenues and at the expense of funds of domestic origin." In 2010, the share of oil revenues climbed from 35.1% to 40.6%, while the weight of tax revenues fell from 64.9% to 59.4%. (El Universal, 08-22-2011; http://www.eluniversal.com/2011/08/22/tax-revenue-share-declines-in-2010.shtml)

401 companies reported taken over by the Government since January 2011

In 2011 to date 401 companies have been taken over by the Government, according to Carlos Larrazábal, president of the National Industrial Council, who adds the situation generates legal uncertainties, scares away investments and hurts chances of raising production. He made the statement after the expropriation of Forjas Santa Clara, TETRACERO and Cartonajes GRANICS. Larrazabal says over 80% of takeovers have taken place since 2009 and are growing. More in Spanish at: (Noticias 24, 08-22-2011; http://economia.noticias24.com/noticia/76024/conindustria-asegura-que-401-empresas-han-sido-intervenidas-durante-2011/)

Commodities

Venezuela has world’s largest oil reserves: OPEC

The Organization of Petroleum Exporting Countries, a notoriously conservative organization, has stated that Venezuela has world’s largest oil reserves, even exceeding those of OPEC’s top producer, Saudi Arabia. Oil production in Venezuela is under the control of the state-owned Petróleos de Venezuela, S.A. company, or PDVSA. Petroleum Intelligence Weekly lists PDVSA as the world's fourth largest oil company, due to its proven reserves, production, refining and sales, MercoPress news agency reported. (Commodities Now, 08-19-2011; http://www.commodities-now.com/news/power-and-energy/7467-venezuela-has-worlds-largest-oil-reserves-opec.html)

Iran, Venezuela start building Petchem complex, Press TV says

Iran and Venezuela started construction on a petrochemical complex in the southern Iranian province of Bushehr, Press TV reported, citing National Iranian Petrochemical Organization Managing Director Abdolhossein Bayat. The countries are building a methanol unit in the southern port town of Assaluyeh, Bayat said yesterday, according to a report published on the website of the state-run news channel. Agreements for a similar project in the South American country have yet to be completed, he said, without giving details of the costs. (Bloomberg, 08-21-2011; http://www.bloomberg.com/news/2011-08-21/iran-venezuela-start-building-petchem-complex-press-tv-says.html)

Companies acquired by PDVSA report losses

Diverse responsibilities assigned to state-run oil company Petróleos de Venezuela (PDVSA) have boosted its operating costs. Most industrial and agricultural companies purchased since 2008 are no longer profitable and report losses during the 2010 fiscal year. According to PDVSA's operating report, the companies purchased by the oil giant reported U$D 14 million in losses as of December 31, 2010 (VEB 60 million, at the exchange rate of VEB 4.28 per US dollar.) At the end of 2009, PDVSA's accounting ledgers showed the companies reporting earnings amounting to U$D 12 million (VEB 26 million at the exchange rate of VEB 2.15 per US dollar). (El Universal, 08-22-2011; http://www.eluniversal.com/2011/08/22/companies-acquired-by-pdvsa-report-losses.shtml)

Logistics & Transport

Venezuela signed new agreements with Chinese company on port modernization

Venezuelan Transport and Communications Minister, Francisco Garces, and representatives of the China National Machinery Industry Corporation (SINOMACH) have signed an agreement to purchase equipment for Venezuelan harbors. The investment adds up to U$D 25.57 million for, among other items, 11 chargers, 78 forklifts, 52 trucks and tow trucks and 10 electricity generator plants. The equipment should be in the country in the next six months and will be distributed among the six harbors run by state-run harbor company Bolivariana de Puertos (BOLIPUERTOS). (AVN, 08-19-2011; http://www.avn.info.ve/node/73294)

Politics

“I do not feel sick, but I am convalescing from the disease I had,” says Chavez

The president of Venezuela, Hugo Chavez, said this Sunday that he does not feel sick anymore, but “convalescent” from the disease he had. He made said statements during a religious ceremony held for his recovery in the Miraflores Presidential Palace, in Caracas. Chavez added that he is in a recovery process and that the next week will be very important. Depending on the results, he could undergo a third round of chemotherapy. (AVN, 08-22-2011; http://www.avn.info.ve/node/73571)

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.

June 23th, 2011

Economics & Finance

PDVSA planning U$D1.5 billion bond offering to repay Venezuelan Central Bank

Petróleos de Venezuela SA will sell U$D1.5 billion of bonds to the central bank to repay a loan and will likely sell additional securities in the second half of the year, a government official said. PDVSA, as the state oil company is known, within a month plans to issue more of its bonds due in 2022 that were first sold in February, the official, who asked not to be identified because he isn’t authorized to speak publicly on the matter, told reporters. (Bloomberg, 06-23-2011; http://www.bloomberg.com/news/2011-06-23/petroleos-de-venezuela-to-issue-1-5-billion-of-bonds-to-pay-central-bank.html)

Overnight banking rates sink toward zero as Gov’t pushes to spur lending

Venezuela’s overnight bank lending rate fell to the lowest since 2008 as President Hugo Chavez’s push to boost bank lending swelled the amount of cash in the financial system. The rate at which banks lend to each other declined to an average of 0.09% today from 0.1% yesterday, said an official at the central bank, who asked not to be identified because he isn’t authorized to speak publicly. That’s the lowest level since June 20, 2008. The rate has fallen for 8 consecutive days from 10.5% on June 9. (Bloomberg, 06-21-2011; http://www.bloomberg.com/news/2011-06-21/venezuelan-overnight-rate-sinks-toward-zero-on-chavez-push-to-spur-lending.html)

Gold is now 60% of reserves

The balance sheet published by the Central Bank at the end of May shows that 60% of reserves is invested in gold.

A report published in May this year ECOANALÍTICA addresses the issue of investments in gold and notes that "it seems extremely high ratio of international reserves that the central bank remains in this metal. Today we can say that not only are vulnerable to oil prices, but also the fluctuations in the price of gold."It adds that the revaluation of this metal in recent months has allowed cushion the fall in international reserves and exchange profits and inflate the operation of the BCV to deliver to the Treasury. More information in Spanish. (El Universal; 06-23-2011; http://www.eluniversal.com/2011/06/23/inversiones-en-oro-representan-60-de-las-reservas.shtml)

BCV to increase supply of foreign exchange through SITME

Venezuela's Central Bank to raise the supply of foreign exchange through SITME system, securities transactions in foreign currency, in order to cover some of the unmet demand for some imports. A source close to the Ministry of Planning and Finance said the central bank has a sufficient bond portfolio from Petróleos de Venezuela and the Republic. More information in Spanish. (El Nacional; 06-23-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Ministry imposes fines of up to 320% on industry and commerce for electric consumption

The Ministries of Electricity and Information and Communication published the incentives and penalties on residential and corporate rates. For industrial, commercial or official users it provides fine ranging from 9% to 320%, with intermediate rates of 20%, 46%, 80% and 200%. More information in Spanish. (El Nacional; http://www.el-nacional.com/www/site/p_contenido.php)

Venezuela's business criticizes steps taken in power crisis

Noel Álvarez, the president of the Venezuelan Federation of Trade and Industry Chambers (FEDECÁMARAS) is afraid that the government is not taking the "appropriate measures" to resolve the power crisis. He said that rather than "consumer demand," the main problem is "power demand." Álvarez said the collection of fines levied against companies that fail to reduce their power demand is an "indirect" increase of power rates. (El Universal, 06-22-2011; http://english.eluniversal.com/2011/06/22/venezuelas-business-criticizes-steps-to-solve-power-crisis.shtml)

16 State companies considered not sustainable

A study carried out by IESA researchers show that the way these companies –most of them expropriated- operate is not sustainable since they follow political criteria and not profit generation. The lack of funds has forced them to depend on government subsidies which have reduced incentives for employees and productivity. (Veneconomy, 06-22-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=26471&idc=3)

Venezuela moves to expropriate MATESI

TENARIS S.A. announced that the Venezuelan National Assembly passed a law declaring all MATESI assets of public and social interest and ordered the expropriation of assets required for a state-owned project for the production, sale and distribution of briquettes, and will start negotiations for the acquisition of said assets. (Finance Yahoo, 06-22-2011; http://finance.yahoo.com/news/Venezuela-Moves-Forward-With-iw-1604935290.html?x=0&.v=1)

Sucre operations said to reach U$D 375 million

Authorities claim that transactions have increased in the region despite obstacles encountered in the Unitary System Regional Payments (Sucre), which caused a first meeting of Authorized Operating Banks at the Central Bank of Venezuela (BCV). "The Sucre is a virtual currency for central banks such as the Ecuadorian exporter is paid in dollars, legal currency in this country and the exporter Venezuelan bolívar was canceled. The Venezuelan importer buying its currency and the importing Ecuador well. Each uses its national currency," said the president of Banco Central del Ecuador, Diego Borja. More information in Spanish. (El Mundo, 06-22-2011; http://www.elmundo.com.ve/Noticias/Economia/Internacional/Operaciones-con-el-Sucre-alcanzaran-$375-millones-.aspx)

Commodities

Venezuela claims oil output reaches 2.8 million bpd

Venezuela's oil production rose slightly to 2.82 million barrels per day (bpd) in April from 2.8 million bpd in March, according to the Ministry of Energy and Petroleum, which said that exports of crude oil and products amounted to 2.56 million bpd in May, compared to 2.22 million bpd in April. Rafael Ramírez, Minister of Energy and Petroleum and president of state-run oil company Petróleos de Venezuela (PDVSA), said recently that Venezuela would increase oil output by 50,000 bpd in 2011. (El Universal, 06-21-2011; http://english.eluniversal.com/2011/06/21/venezuelas-oil-output-reaches-28-million-bpd.shtml)

RUSORO requests flexibility on profit repatriations

RUSORO, the Russian firm aiming to exploit Las Cristinas mine, has asked the Government to be more flexible on obstacles to profits repatriation. At present only 30% of foreign exchange earned from exports can be repatriated. More information in Spanish. (El Nacional; 06-22-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Government imports up to 25,000 tons of beef per month

Imports come from countries such as Argentina, Uruguay, Brazil and Colombia, or from as far away as New Zealand, Mexico or the United States. South America continues to top the list as 80% is imported directly from Caracas through CASA and BARIVEN, and the remaining 20% goes through private importers. According to the CENDA economic analysis unit, Venezuelans paid 32% more to buy meat and meat products last year, a category that covers 16% of household expenditure on food. More information in Spanish. (El Carabobeño; 06-22-2011; http://www.el-carabobeno.com/litoral/articulo/15802/gobierno-importa-hasta-25-mil-toneladas-de-carne-al-mes and El Mundo,

http://www.elmundo.com.ve/Noticias/Economia/Agro/Venezolanos-gastaron-en-compra-de-carne-32--mas-qu.aspx)

Logistics & Transport

Port services may increase at least by 53%

The new pricing structure for port services is an increase of at least 53% of the costs of port operations, according to calculations by the Chamber of Commerce of Puerto Cabello (JPAC). "Not only is this rate adjustment confusing in its wording, it also increase overall port costs at least 53% the rate of 4.30, not counting the increases that will occur in the freight and any surcharges further, "said the JPAC press release. On the contrary, Elsa Gutierrez Graffe, BOLIPUERTOS President, claims the new rates are an average decrease of 54.02%. More information in Spanish. (El Mundo, 06-22-2011; http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/Nuevas-tarifas-de-Bolipuertos-aumentaran-53--los.aspx)

Politics

Details scarce on Chavez's condition after surgery

Most reports sum up Hugo Chavez's medical condition in a few words. Official accounts repeatedly say Venezuelan leader is "recuperating satisfactorily". Chavez has not updated his Twitter page or appeared on live television. His absence from Venezuela has sparked debate and speculation. In a Wednesday interview Barinas State Governor Adán Chávez, said: “We don't know exactly when he will return. We have to wait for the doctors' evaluation. But In a few days, 10 days, 12 days, the president will be here". (CNN, 06-23-2011; http://edition.cnn.com/2011/WORLD/americas/06/22/venezuela.chavez/)

Chavez's silence gets Venezuela talking

Venezuela is abuzz these days over the condition of Hugo Chavez -- whose prolonged, uncharacteristic silence and convalescence in Cuba has generated all manner of rumor. No interviews, no broadcast tirades, and no Twitter postings for two weeks have fuelled speculation across online social networks and in bars and cafes. Officials have tried to be reassuring, saying 56-year-old Chavez was recovering well and was continuing to give orders from Cuba."It's all very dark, opaque and mysterious," says Ignacio Avalos, a sociology professor at the Central University of Venezuela. But in the legislature, a fierce debate is raging over whether Chavez has the right to rule from abroad. The minority opposition is demanding more transparency. (AFP, 06-22-2011; http://www.google.com/hostednews/afp/article/ALeqM5hRV5tbjYSfKHeQf4BfWqjUq5Q2_A?docId=CNG.77758f3d4ee843583f49a03846cd5894.1a1)

Five out of 10 Venezuelans support a change of government

Five out of 10 Venezuelans reject the government's argument suggesting that obstacles have been set to prevent Hugo Chávez from fulfilling his obligations. According to the second quarter's public opinion survey conducted by pollster Alfredo Keller & Asociados, only three out of 10 citizens deem it true that "the opposition does not let Chávez work." The Venezuelan pollster examined people's support for the Head of State and found that four out of 10 people retain hope and enthusiasm for Chávez, whereas five out of 10 have become disillusioned with the President or have become a permanent critic of his work. (El Universal, 06-22-2011; http://english.eluniversal.com/2011/06/22/five-out-of-10-venezuelans-endorse-change-of-government.shtml)

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.

June 07th, 2011

Economics & Finance

Interest payments and refinancing absorb U$D $2.330 billion of new debt

President Hugo Chavez’s request for almost doubling public indebtedness budgeted for this year would increase Government debt by 113% over 2010. The requested U$D 10 billion would add on to the current projected debt for this year of up to BF. 52.201 billion. U$D 2.330 billion of the new indebtedness will go to interest payments and refinancing outstanding commitments, not included in the 2011 budget. More information in Spanish at: (El Mundo, 06-07-2011; http://www.elmundo.com.ve/Noticias/Economia/Politica/Nuevo-endeudamiento--Venezuela-destinara--$2-330-m.aspx)

CITI warns deteriorating finances may hit Venezuela’s credit rating

CITI’s latest report on Venezuela analyzes the consequences of accelerated public indebtedness after it was announced that limits will be increased by 86,5% this year. The report says most of the additional debt is in the national currency and within the internal market, and therefore subject to reduction through future devaluation, but adds that its impact on fiscal indicators “could lead credit rating agencies to lower” sovereign bonds. CITI says according to their projections total Venezuelan indebtedness could rise this year to 39.9% of GDP. More information in Spanish at: (El Universal; 06-07-2011; http://www.eluniversal.com/2011/06/07/citi-alerta-que-el-deterioro-fiscal-afectara-rating-del-pais.shtml)

Cadivi owes multinationals U$D $ 4.5 billion

A source close to Venezuela’s Central Bank told El Nacional daily that the Currency Board owes multinational companies around U$D 4.5 billion for capital repatriation, dividend payments, patent royalties, and technology payments. The Bank and Planning Ministry are preparing a payment schedule to reduce these debts, but that honoring all commitments would take up 15.2% of the nation’s foreign currency reserves. More information in Spanish at: (El Nacional; 06-07-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Chavez Administration disbursed U$D 106 billion over five year period through parallel funds

A parallel budget, comprising 9 special funds and administered separately from the official budget by the Venezuelan government, has disbursed an estimated U$D 106 billion between 2005 and 2010. The National Development Fund (FONDEN), the Chinese Heavy Fund, Miranda Fund, Alan Fund, Independence Fund, Sowing Fund, Simón Bolívar Fund, Mao Fund and Renot Fund, were used for special projects and to finance budget shortfalls in public entities and payroll commitments, among others. Analysts claim that this structure manages revenue without controls as they do not have the rigidity of ordinary allocations, which involves spending by items. (El Universal, 06-06-2011; http://english.eluniversal.com/2011/06/06/parallel-funds-disburse-usd-106-billion-in-five-years.shtml)

PDVSA faces sanctions and asset seizures

Petróleos de Venezuela (PDVSA), which supplies 95% of the country's revenue, is facing difficulties including, in the short term, such threats as additional US sanctions, impending verdicts in ongoing lawsuits and arbitration at the World Bank with EXXONMOBIL and CONOCOPHILIPS, and investor fears.  The Venezuelan government claims it is still evaluating the true impact of decisions which could prevent PDVSA from fulfilling commitments to the US government; obtaining funds to import and export from the United States, as well as export licenses in the United States. (El Universal, 06-04-2011; http://english.eluniversal.com/2011/06/04/pdvsa-faces-sanctions-and-requests-of-assets.shtml)

Opposition spokesman says staple prices have risen up to 50% in four months

Julio Borges, of Primero Justicia, says prices for basic food staples have risen up to 50% in four months. "Based on figures from the National Statistics Institute, prices for regulated basic food have risen unprecedently from December to April". More information in Spanish at: (El Nacional; 06-06-2011; http://www.el-nacional.com/www/site/p_contenido.php & El Universal, http://www.eluniversal.com/2011/06/06/borges-denuncia-que-precio-de-alimentos-aumento-50.shtml)

Venezuelan economy may grow more than 4% in 2011

Central Bank director Armando León says Venezuela’s economy may expand more than 4 percent in 2011 as the construction industry begins to grow, public spending is maintained and more importers have access to foreign currency. (Bloomberg, 06-06-2011; http://www.bloomberg.com/news/2011-06-06/venezuela-economy-may-grow-more-than-4-in-2011-mundo-reports.html)

Commodities

Government will import more aluminum to supply ALCASA deficits

After meeting with Basic Industries Minister José Khan, ALCASA President Elías Sayago has said the Ministry approved imports of 60,000 metric tons of primary aluminum to provide added value and continue meeting internal demand, and thus improve CVG ALCASA’s cash flow in order to meet added payment for raw materials and honor labor obligations. He said Khan told them President Chavez has approved their request for U$D 70 million for purchasing raw material; and called for the Executive Committee of the SINTRALCASA labor union to rejoin weekly meetings with company representatives. More information in Spanish at: (Correo del Caroní, 06-04-2011, with press information from CVG ALCASA, http://www.correodelcaroni.com/index.php?option=com_wrapper&view=wrapper&Itemid=174&id_articulo=180178&catid=75)

Venezuela oil rises to U$D103.01

Venezuela's Energy and Petroleum Ministry is reporting that the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending June 3 rose to U$D103.01 from the previous week's U$D100.70, raising the yearly average to U$D 96.68, above the previous high set by 2008's U$D 86.49 average. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=396235&CategoryId=10717)

Venezuelan Oil Minister says OPEC not likely to raise output

The Organization of Petroleum Exporting Countries is unlikely to raise production quotas at this week’s meeting in Vienna, according to Venezuelan Oil Minister Rafael Ramirez. “We have to wait to discuss the situation in the market, we believe at the moment we’re in balance,” Ramirez said as he arrived today in the Austrian capital. (Bloomberg, 06-06-2011; http://www.bloomberg.com/news/2011-06-06/venezuelan-oil-minister-says-opec-not-likely-to-raise-output-1-.html; Reuters, http://www.reuters.com/article/2011/06/06/us-opec-idUSTRE7553M720110606)

Politics

Venezuela paid ODEBRECHT U$D 630 million

Before travelling to Brazil President Chávez ordered partial payment on the Government’s billion dollar plus debt with Brazilian contractor ODEBRECHT. The disbursement is reported to be of U$D 630 million pending on construction of a third bridge over the Orinoco river and new Metro subway lines in Caracas. Once payment was made, the Government requested speeding up completion so the projects can be inaugurated during 2012, an election year. More information in Spanish at: (El Nacional; 06-07-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Chavez announces new U$D 3-4 billion dollar deal with Brazil’s ODEBRECHT

President Chavez announced last Sunday that Brazilian contractor ODEBRECHT would finance Venezuela’s Government with around U$D 3-4 billion to build housing. He said the agreement was made during Lula’s recent visit and was to be signed in Brasilia during his recent visit, but provided no further details. Agence France Presse. More information in Spanish at: (Noticiero Venevisión, 06-05-2011;  http://noticiero.venevision.net/index_not.asp?id_noticia=20110605001502&id_seccion=02)

Brazil will finance a shipyard in Venezuela, refinery talks progressing

Brazil’s National Bank for Social and Economic Development (BNDES) will provide financing for a U$D 637 shipyard to be built by Brazilian companies in the state of Sucre, northeast Venezuela. Venezuela is also pondering the purchase of up to 30 aircraft from Brazilian manufacturer EMBRAER, according to an aide to the Brazilian President. Progress was made on plans for Venezuela's state oil company PDVSA and Brazil's PETROBRAS to build the Abreu e Lima refinery in Pernambuco, according to Brazil's foreign policy advisor Marco Aurelio Garcia. (El Universal, 06-06-2011; http://english.eluniversal.com/2011/06/06/venezuela-brazil-sign-agreements-on-oil-and-infrastructure.shtml)

Government spokesmen say Venezuela-Iran ties go beyond the oil issue

Following sanctions by the US Department of State on the state owned oil holding Petróleos de Venezuela (PDVSA), Venezuelan authorities, such as Foreign Minister Nicolás Maduro, Minister of Energy and Petroleum Rafael Ramírez and National Assembly (AN) Deputy Speaker Aristóbulo Istúriz contend that Venezuela will maintain political and trade relations with whomever it wants. And, they underscored, "Venezuela will sell oil to whomever it feels right with," including Iran, also a Member State of the Organization of Petroleum Exporting Countries (OPEC). Caracas and Tehran have established a political and trade relationship in line with their anti-US discourse which encompasses energy, production, housing, food and education, some of which challenge the international community. (El Universal, 06-04-2011; http://english.eluniversal.com/2011/06/04/venezuela-iran-ties-go-beyond-the-oil-issue.shtml)

Foreign Minister Maduro says Venezuela-US relations are frozen

The Foreign Minister claimed relations remain frozen despite attempts by the Chavez regime to restore flowing dialogue and mutual respect with Washington. “Relations with Venezuela are frozen. We cannot say they are tense, although they become tense from time to time”. He added that relations “do not move and there are no prospects that they could move toward more positive communication and respect in the near future”. (Agencia Venezolana de Noticias; 06-06-2011; http://www.avn.info.ve/node/61205)

DATANALISIS says Chavez has not recovered lost popularity

According to the DATANALISIS the uptick in President Chavez’s popularity in 2011 first quarter polls is only transitory. It says that since 2007 he is undergoing a slow but constant decrease in the way public values his performance. The firm says that overall 49% have a positive view of his work, while 46% have a negative opinion on it. Luis Vicente León, director of DATANALISIS, says approval ratings now stand at 49%, down from a high of 55%. More information in Spanish at: (El Universal; 06-06-2011; http://www.eluniversal.com/2011/06/06/chavez-no-logra-recuperar-la-conexion-popular-perdida.shtml)

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.