August 30th, 2011

Economics & Finance

Venezuela’s Central Bank director predicts economy to continue growing in 2nd half of 2011

Armando León, a director of Venezuela’s Central Bank predicts the South American country’s economy will continue growing in the second half of this year. He says growth will be comparable to the pace from January through June, when the economy grew 4.8% in the first quarter and 2.5% in the second quarter. Expansion during the first half of the year was spurred by increased government spending and high oil prices. (The Washington Post, 08-29-2011; http://www.washingtonpost.com/business/economy/venezuelas-central-bank-director-predicts-economy-to-continue-growing-in-2nd-half-of-2011/2011/08/29/gIQAO9tJoJ_story.html)

Debt soars, as parallel funds grow

According to the Central Bank’s (BCV) balance of payments, the government pays high interest rates for its debt at the same time it places billions of US dollars in funds that allow it to spend without budget constraints. The BCV has reported that the US dollar deposits held in parallel funds, such as the Fund related to the China agreement; the National Development Fund (FONDEN); the Fund for Social Emergencies (Fondo Súbito Social); the National Treasury; state-run oil company Petróleos de Venezuela (PDVSA)" and the Central Bank of Venezuela (BCV), added up to U$D 35.17 billion by the end of June 2011 after the government pumped U$D 15.26 billion into them over the past six months. (El Universal, 08-29-2011; http://www.eluniversal.com/2011/08/29/venezuelas-debt-climbs-parallel-funds-also.shtml)

Gov't has seized 988 companies

The Venezuelan government has seized 988 companies since 2002, according to data from the Venezuelan Confederation of Industries (CONINDUSTRIA). An in-depth analysis of seizures shows that, far from diminishing, government's seizures have increased. So far this year, 401 companies were taken over by Venezuelan authorities, which is 41% over the 284 companies expropriated in 2010. According to CONINDUSTRIA, this scenario "creates legal uncertainty; drives investments away; and reduces the possibility of increasing production," and offers diminishing opportunities for solving such problems as supply and the high cost of living. (El Universal, 08-29-2011; http://www.eluniversal.com/2011/08/29/venezuelan-govt-has-seized-988-companies.shtml)

Guayana holds U$D250 billion in gold, according to Mundo report

Venezuela’s southern Guayana region, which includes the states of Bolivar, Amazonas and part of Delta Amacuro, has 140 million ounces of gold reserves, newspaper El Mundo reported today. The reserves, valued at about U$D 250 billion, include deposits in the El Callao, Brisas del Cuyuni and Las Cristinas mining districts, the Caracas-based daily reported, citing a document from the Ministry of Mining and Basic Industries. (Bloomberg, 08-29-2011; http://www.bloomberg.com/news/2011-08-29/venezuela-s-guayana-holds-250-billion-of-gold-mundo-report.html)

Gov't airs plans on exploration of new gold mines

The Minister of Basic Industries and Mining José Khan says the government will embark on an exploration program to find new gold mines, an operation in the hands of joint ventures under the State control. "The purpose is to undertake a huge plan on certification and exploration of the mines that have been known for many years and discover new deposits," he said, as quoted in a press release from his ministry. (El Universal, 08-29-2011; http://www.eluniversal.com/2011/08/29/venezuelan-govt-airs-plans-on-exploration-of-new-gold-mines.shtml)

Public spending rose 8.1% but consumption rose only 3.1%

Public spending has increased 8.1% from January to July 30 2011 in real terms (indexed for inflation), according to the National Treasury. However, consumption which is one of the main generators of growth increased 3.2%. More in Spanish: (El Nacional, 08-30-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Commodities

Refineries operate 25% below their capacity and the volume of crude oil processed in said refineries has dropped 8.2% in 12 years as a result of delays in investments at the Paraguaná Complex and at El Palito, and Bajo Grande plant in Zulia state and Puerto La Cruz and San Roque plants in Anzoátegui. (Veneconomy, 08-29-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27354&idc=4)

Refineries show U$D 10.2 billion in lost yield

Petróleos de Venezuela (PDVSA) refining figures are showing red. Costs and expenses exceed income. Numbers by the end of last year indicate losses of U$D 10.2 billion that were only be offset by higher revenues received from oil sales. Refined products revenue reached U$D 24.8 billion, but that amount covered only 71% of operating costs and expenses, which were at U$D 35 billion. More in Spanish: (El Nacional, 08-30-2011; http://www.el-nacional.com/www/site/p_contenido.php)

BCV has funded PDVSA by Bs 42.5 billion

Jose Guerra, who has served as manager of economic research at the Central Bank, says that by the end of July this year official indicators show "PDVSA – the state owned oil company - has been funded with Bs 42.5 billion, a figure that is nearly U$D 10 billion at the official exchange rate." More in Spanish: (El Universal, 08-30-2011; http://www.eluniversal.com/2011/08/30/en-ao-y-medio-el-bcv-financio-a-pdvsa-con-bs-425-millardos.shtml)

Local stock market up 52.93%

Venezuela stocks rose 0.33% last week on a return to low volumes, with barely 75,000 shares trading all week. Of the five stocks that changed price, four were up and one was down, with Electricidad de Caracas increasing the most to Bs. 0.2 for a 5.3% increase, Envases Venezolanos rose 5% at Bs. 21, CANTV rose 3.9% to Bs. 6.75 and Banco Provincial continued its ascent, rising 2.9% to Bs. 36. The lone stock to go down was Corimon, down 20% at Bs. 228. (Latin American Herald Tribune, 08-29-2011; http://www.laht.com/article.asp?ArticleId=420613&CategoryId=10717)

Transfer of shares suspended at the Caracas stock exchange

The National Securities Commission has ruled that intervened, liquidated or suspended brokerage firms may not sell or transfer its shares in the Caracas Stock Exchange. More in Spanish: (El Universal, 08-30-2011; http://www.eluniversal.com/2011/08/30/suspenden-transferencia-de-acciones-de-la-bolsa-de-caracas.shtml)

Politics

Chavez undergoes third chemo session in Venezuela

President Hugo Chavez is undergoing a third round of chemotherapy for cancer at home in Venezuela beginning Sunday, he said, instead of traveling to Cuba where he had two previous rounds of treatment. The socialist leader underwent surgery in Havana in June to remove a baseball-sized tumor, then returned to the communist-led island twice for chemotherapy as the guest of his friend and mentor, former Cuban leader Fidel Castro. (Reuters, 08-27-2011; http://www.reuters.com/article/2011/08/27/us-venezuela-chavez-idUSTRE77Q2XH20110827)

Venezuela puts signs in buses to fight world's highest murder rate

The government of President Hugo Chavez said Thursday it is adding a new weapon in its fight against the world's highest murder rate: signs in buses. According to the Interior and Justice Ministry, the signs will say “Firearms-free zone”. Venezuela’s murder rate has skyrocketed since Hugo Chavez took office in 1999, growing from 4,450 murders in 1998 to a projected 19,000-plus murder this year. The Chavez government has announced 33 different “security” plans, roughly three a year, since he took over, and the post of Interior & Justice minister has been held by 12 ministers in 12 years. (Latina American Herald Tribune, 08-25-2011; http://www.laht.com/article.asp?ArticleId=419627&CategoryId=10717)

"No de facto government can be established in Venezuela", says Heinz Dieterich

In a recent article posted on the Kaosenlared website, Heinz Dieterich described how his ties with Hugo Chávez began to deteriorate since 2005. He says the president does not want to hear Dieterich's assertion that "there is no socialism here, not in the historical sense of the term." From then on, the German Marxist sociologist, a professor at Universidad Nacional Autónoma de México (UNAM) and creator of the "Socialism of the 21st Century" thesis, fell from grace. Execrated, he progressively lost his status as ideologist of Chavezism, and in 2007 the final breakdown took place. (El Universal, 08-27-2011; http://www.eluniversal.com/2011/08/27/no-de-facto-government-can-be-established-in-venezuela.shtml)

Capriles will be officially launched in October

The governor of Miranda, Henrique Capriles Radonski, announced that the official launching of his campaign as presidential candidate will take place next October, and after the event he will begin touring the country. More in Spanish: (Tal Cual, 08-29-2911; http://www.talcualdigital.com/index.html)

Colombia considers security is still a challenge for Venezuela

Colombian Foreign Minister Maria Angela Holguin has noted rebuilding relations with Venezuela and Ecuador, but says "there is still a challenge in terms of security." However, she emphasized that agreements have been signed for the fight against crime and drugs. More in Spanish: (El Universal, 08-29-2011; http://www.eluniversal.com/2011/08/30/para-colombia-la-seguridad-es-un-desafio-con-venezuela.shtml)

Andean Community keeps open doors for Venezuela

CAN Secretary General Adalid Contreras says no official steps have been taken for a potential return of Venezuela, but considers it "the right timing" due to positive development prospects in the Andean trade bloc, composed of Bolivia, Colombia, Ecuador and Peru. More in Spanish: (El Universal, 08-29-2011; http://www.eluniversal.com/2011/08/29/can-keeps-the-doors-open-to-venezuela.shtml)

Ambassador of Venezuela left Tripoli

Venezuela's ambassador to Libya, Afif Tajeldine has left Tripoli, according to his son, Basem Tajeldine, who says

"For reasons of security is no longer there, but in an area of the Maghreb, North Africa". More in Spanish: (El Nacional, 08-30-2011; http://www.el-nacional.com/www/site/p_contenido.php)

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.

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.

February 8th, 2011

Economics & Finance

Economist claims Venezuela’s Central Bank official figures show red

The transfer of international reserves to the National Development Fund (FONDEN) in the past five years has used up assets from the Central Bank of Venezuela. According to economist José Guerra, the institution´s balance, published two days ago, shows a capitalization of 64.3 billion Bolivars. According to the official report, total assets of Bs.207.5 billion add up to. However, this total amount includes reserves transferred to the FONDEN, which total 73.6 billion Bolivars since 2005. These transfers are no longer in the hands of BCV but are part of the fund used to finance the Executive, so they cannot be included as assets, according to Dr. Guerra. More information in Spanish. (Reportero 24; 02-08-2011; http://www.reportero24.com/2011/02/finanzas-bcv-se-descapitaliza-y-presenta-numeros-en-rojo/)

Macroeconomic Stabilization Fund turns over USD 832 million to Venezuela's Executive

About two weeks ago, Venezuela's President Hugo Chávez asked Rafael Ramírez, the president of state-run oil company Petróleos de Venezuela (Pdvsa), to transfer USD 500 million from the Macroeconomic Stabilization Fund (FEM), from the USD 832 million that Pdvsa held in the Central Bank of Venezuela (BCV). Chávez said that the money would be spent to build houses and refurbish shelters for people made homeless by heavy rains. The latest numbers released by the BCV indicate that the state-run oil company withdrew USD 829 million from the Macroeconomic Stabilization Fund (FEM). (El Universal, 02-04-2011; http://english.eluniversal.com/2011/02/04/en_eco_art_fem-transfers-usd-83_04A5113291.shtml)

Government considers transferring exchange functions to the Bicentennial Public Securities Exchange Market (BPVB, after its initials in Spanish) in the short term, according to sources within the Venezuelan Planning and Finance Ministry. (Veneconomy, 02-04-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24771&idc=2)

Average household income fell by 8% during 2010

Economic difficulties and rising prices in goods and services were the common denominators in a year in which household income plummeted for the first time since 2003. According to the numbers produced by the National Statistics Institute (INE), by the first half of last year, household monthly income averaged USD 743.62, versus USD 621.24 the previous year. In nominal terms, it was a 19.7-percent growth. However, inflation added, in 2009-2010 there was a real drop at 8.3 percent. (El Universal, 02-04-2011; http://english.eluniversal.com/2011/02/04/en_ing_esp_average-household-in_04A5099091.shtml)

Declining trade reported in Venezuela

Trade has not recovered in Venezuela, said Fernando Morgado, the president of the Venezuelan Council of Trade and Services (Consecomercio). "We have seen that the downward trend in trade continues," Morgado said during a meeting of the board of director of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras). With regard to the supply of food products in the domestic market, the businessman said that policies implemented by the government continue to hit manufacture, distribution, and marketing of different goods. (El Universal, 02-07-2011; http://english.eluniversal.com/2011/02/07/en_eco_art_warnings-against-dec_07A5127491.shtml)

Paraguayan congress puts price to Venezuela’s Mercosur incorporation

The Paraguayan political system is willing to consider the incorporation of Venezuela to Mercosur as a full member if there is a “significant gesture or compensation” from the government of President Hugo Chavez, according to congressional sources in Asunción. (MercoPress, 02-05-2011;  http://en.mercopress.com/2011/02/05/paraguayan-congress-puts-price-to-venezuela-s-mercosur-incorporation)

Paraguay supports Colombia’s bid to join Mercosur

Colombia’s request to formally join Mercosur will be addressed during the group’s next summit to be held in Paraguay June 24th, revealed Paraguayan Foreign Affairs minister Hector Lacognata. (Latin Daily Financial News, 02-01-2011; http://www.latindailyfinancialnews.com/index.php/en/politics/world/7710-paraguay-supports-colombias-bid-to-join-mercosur.html)

Commodities

Venezuela´s export barrel average up to $87.60/bbl. this week, up $3.65 from last week, said the Venezuelan Energy and Oil Ministry on Friday. The average for the year-to-date is $85.71/bbl., up $13.02/bbl. compared to 2010. (Veneconomy, 02-04-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24782&idc=4)

Venezuela's oil exports to the US rise to 1.38 million bpd

Venezuela's crude oil exports to the United States bounced back in the last week of January, up 34 percent compared to average exports in January 17-21. Venezuelan oil exports to the US in the week between January 24 and 28 averaged 1.38 million barrels per day (bpd), according to figures provided by the Energy Information Administration (EIA), the statistical arm of the US Department of Energy. The previous week, Venezuela's total crude oil exports amounted to 1.03 million bpd. Preliminary figures showed that in January Venezuelan oil exports to the United States averaged 998,000 bpd. (El Universal, 02-04-2011; http://english.eluniversal.com/2011/02/04/en_eco_esp_venezuelas-oil-expo_04A5112891.shtml)

Venezuelan oil minister: $200 oil possible

Crude oil prices could more than double if the unrest in Egypt forces the closure of the Suez Canal, Venezuelan Oil Minister Rafael Ramirez said, according to a Bloomberg News report. A disruption of shipments along the waterway would prompt a meeting by the Organization of Petroleum Exporting Countries “because oil could reach $200 a barrel,” Ramirez told reporters today in Caracas. A $200-a-barrel oil price would easily eclipse the all-time high of $147 a barrel reached in July 2008 and would be roughly double today's prices. A large, sustained rise in oil prices could send retail gasoline prices well above $4 a gallon in the U.S. (Blogs Star Telegram – Barnett Shale, 02-04-2011; http://blogs.star-telegram.com/barnett_shale/2011/02/venezuelan-oil-minister-200-oil-possible-.html)

Venezuela Terminates Crystallex - Canada Miner Mulls Legal Action

Canadian gold miner Crystallex International Corp said that a state-owned Venezuelan company unilaterally decided to end their contract on Las Cristinas project, their largest asset. The Venezuelan company, Corporación Venezolana de Guayana, claimed that Crystallex had not done enough to advance the project, according to a Crystallex statement on Sunday. Crystallex disputed that assertion, saying it had met all of its obligations under the contract and had worked to ensure the project was "shovel ready" while awaiting a permit from Venezuela's Ministry for the Environment and Natural Resources. (Reuters, 02-06-2011; http://www.reuters.com/article/2011/02/06/crystallex-idUSN0617093420110206)

Rusoro eyes Venezuela mine after Crystallex exit

Russian-Canadian miner Rusoro is eyeing Venezuela's Las Cristinas gold project after President Hugo Chavez's government canceled Crystallex International's permit, sending its shares down 35 percent. The mine, south of the Orinoco river and near a town bearing the name of the mythical golden city of El Dorado, may hold Latin America's biggest gold deposits, studies have shown. But a decades-old saga over its development underlines the risks of doing business in Venezuela, where the lure of vast natural resources has been dulled by rule changes, economic difficulties and Chavez's "21st century socialism" project. (Reuters, 02-07-2011; http://www.reuters.com/article/2011/02/07/venezuela-gold-idUSN0722524820110207)

Gold´s share in Venezuela’s total reserve rises to 12%, while foreign currency share drops by 37%

Venezuela’s central bank increased its share of gold reserves 12 percent during the second half of 2010 while its reserves in foreign banks fell 37 percent in the period, according to the bank’s year-end financial report. The bank’s gold reserves increased to 42.4 billion bolivars ($9.86 billion) at the end of 2010 from 37.3 billion bolivars at the end of June, the bank report said. The central bank’s reserves held in foreign banks fell to 7.32 billion bolivars by year-end from 10 billion bolivars in June. (Bloomberg, 02-05-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=auvgUpD6iV_U)

PDVSA announces it will launch six agro-industrial complexes during 2012

Two sugar plants and four agro-industrial complexes to process ethanol and other sugar cane products will be inaugurated by PDVSA Agricola next year, informed Egly Ramirez, president of the Venezuelan state-run oil company subsidiary. “We are working intensively to inaugurate them in 2012. The budget has been approved, the works show great progress and we are currently in the construction stage,” he stated. The six complexes, built simultaneously in different zones of the country, will allow the Venezuelan Government to strengthen the domestic production of sugar, increase the production of balanced food for animals and make incursion into the processing of ethanol and sugar cane derivatives. The two sugar plants would have the capacity to process 7,000 tons of cane per day each. (AVN, 02-06-2011; http://www.avn.info.ve/node/41867)

Politics

Chavez seeking third six-year term

Venezuelan President Hugo Chavez, beset by an economic slowdown for the second consecutive year, announced he would fight on and seek re-election next year for a third six-year term. Chavez suffered setbacks in last year's National Assembly elections that depleted his comfortable majority but, as widely anticipated, he reacted by saying he wouldn't hesitate to issue a presidential decree if and when he faced opposition on a particular issue. (UPI, 02-03-2011; http://www.upi.com/Top_News/Special/2011/02/03/Chavez-to-fight-on-for-a-third-six-year-term/UPI-73841296765848/#ixzz1DHYuvgCy)

Strict timetable is set for National Assembly to grill three ministers on annual report

Three government ministers will appear before Parliament next week to face questions. National Assembly president, Fernando Soto Rojas has made it clear that questions to the ministers should be to the point. Each deputy will be given five minutes to put a question and get an answer. (VHeadline, 02-04-2011; http://www.vheadline.com/readnews.asp?id=100811)

Land redistribution is a clear priority in Venezuela after 12 years of Revolution

One of the most significant achievements in these 12 years of Bolivarian Government is the clear intention regarding lands redistribution and the planning for the agricultural development, said the Agriculture and Lands Minister Juan Carlos Loyo. “The Bolivarian Revolution brought with it the awakening, a spirit of freedom, the knowledge of what the values are and represent on the vision people had up to midst 90s, when nobody dared to express an own opinion, debate and only allowed minorities to make decisions for the majorities,” he said. (AVN, 02-06-2011; http://www.avn.info.ve/node/41907)

An American seems to have the President’s ear in Venezuela

Slip into Librerías del Sur, a chain of state bookstores. Read a state newspaper. Turn on state television. Listen to state radio. Eva Golinger, a New Yorker who speaks Spanish with a thick American accent, seems to be expounding everywhere these days on the threats to this country’s so-called “Bolivarian revolution.” Welcomed into President Hugo Chávez’s fold to such an extent that she accompanied him on a recent trip to Iran, Libya and Syria, Ms. Golinger, a lawyer who first came to Venezuela in the 1990s to research her family’s history, has created a unique niche for herself here: an American with the president’s ear. (The New York Times; 02-04-2011; http://www.nytimes.com/2011/02/05/world/americas/05venezuela.html?_r=1&scp=2&sq=venezuela&st=cse)

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.