May 22th, 2012

Economics & Finance

Liquid reserves estimated at U$D 1.6 billion

Liquid reserves at the Central Bank - reserves immediately available for imports and debt repayment - are shrinking rapidly. After a reduction of 17% year to date, total national reserves now stand at U$D 25.495 billion, the lowest point since 2007. However, since most of that amount is in gold bars, a report by the SINTESIS FINANCIERA research firm shows that disposable or liquid reserves are only U$D 1.6 billion which "would cover only ten days of imports". More in Spanish: (El Universal, 05-22-2012; http://www.eluniversal.com/economia/120522/caen-hasta-1600-millones-las-reservas-liquidas-del-bcv)

Public debt grows uncontrolled, Central Bank director says it must be reined in

The Finance Ministry reports that domestic public debt closed 2011 at U$D 34.690 billion, a jump of 62.2% over U$D 26.838 billion at the close of 2010. Foreign debt came to U$D 39.909 billion, that is 7.8% over U$D 37.35 billion the year before. Armando León, a director at Venezuela´s Central Bank says "At this time the debt is manageable but last year's growth pattern should not be replicated, we should not resemble other countries that are in crisis". León estimates imports will grow 35% this year and considers a drop in 6.9% food production during the first quarter 2012 to be "alarming". More in Spanish: (Tal Cual, 05-22-2102; http://www.talcualdigital.com/index.html and El Universal; http://www.eluniversal.com/economia/120522/armando-leon-considera-que-hay-que-frenar-el-aumento-de-la-deuda)

Agricultural imports rose 375%

Official figures on the National Statistics Institute web page show agricultural, vegetable and animal imports were above U$D 10 billion during the first quarter 2012, which is 375% above the same period last year. Beef and other animal products have had the most significant growth. More in Spanish: (El Nacional, 05-22-2012; http://www.el-nacional.com/)

Government says foreign deposits increase to U$D 40 billion

Balance of payments information released by the Central Bank (BCV) at the end of the first quarter shows that government financial authorities have cut authorizations of US dollars for private sector imports, while increasing foreign deposits and public debt. The government raised foreign deposits by U$D 4.13 billion to U$D 40.97 billion.

The BCV claimed overseas accounts have swollen due to "to increased deposits held by the National Development Fund (FONDEN), the investment funds backed by Chinese loans, and the deposits held by monetary authorities and state-run companies." (El Universal, 05-21-2012; http://www.eluniversal.com/economia/120521/venezuelas-foreign-deposits-increase-to-usd-40-billion)

Non-oil exports fall 8% in the first quarter

Venezuela would be the poorest country in the hemisphere -positions currently held by Haiti- were it not for oil. In the first quarter 2012, non-oil exports amounted to U$D 1.04 billion. This is 8% lower than that in the first quarter of 2011, and it would cover only 7.9% of the imports necessary to meet everyday demand of other kinds of products.

The official numbers highlight the failure of the government policy to reduce dependence on oil. (El Universal, 05-21-2012; http://www.eluniversal.com/economia/120521/non-oil-exports-fall-8-in-the-first-quarter)

Commodities

US Department of Energy projects Venezuela's 2012 oil revenue at U$D 63 billion

The pace of Venezuelan oil income for 2012 is similar to that recorded last year, according to estimates by the US Energy Information Administration, and data released by the Organization of the Petroleum Exporting Countries (OPEC). In a report released last week, the US Department of Energy said that between January and April 2011, Venezuela received U$D 21 billion from oil exports. If this trend continues unchanged, Venezuelan oil revenues would amount to USD 63 billion by the end of 2012. The report also shows that between January and April Venezuela s oil revenue per capita would amount to U$D 764. (El Universal, 05-21-2012; http://www.eluniversal.com/economia/120521/venezuelas-oil-revenue-in-2012-amount-to-usd-21-billion)

ECOPETROL's profit 85% more than PDVSA's in 2011, Colombia displaces Venezuela in world attention

Colombia´s state owned firm ECOPETROL had profits 85% more than Venezuela's PDVSA in 2011, according to a comparative study by ECOANALITICA research firm. Although PDVSA's 2011 income was U$D 124.7 billion versus ECOPETROL'S U$D 30.4 billion, profits showed reverse results: PDVSA made only U$D 4.4 billion due to fund transfers to the government, and ECOPETROL made a net U$D 8.3 billion. Concurrently, Colombia is displacing Venezuela in the attention of world forums and markets because, according to expert Roger Tissot: "Venezuela is the more attractive country for its oil production potential and has the largest heavy oil reserves in the world, such as the Orinoco belt, but has had the worst economic performance in the region by high inflation, the high unemployment and policies to attract capital away". More in Spanish: (El Nacional, 05-22-2012; http://www.el-nacional.com/)

Colombia says will increase natgas flow to Venezuela

Colombia said on Friday it would send 50% more natural gas this year to neighboring Venezuela, which has yet to start producing the fuel commercially despite huge reserves. Colombia currently exports about 200 million cubic feet (mcf) of natural gas per day to Venezuela, but Energy Minister Mauricio Cardenas said that would rise to 300 mcf in September. "The supply of Colombian gas to Venezuela is going to increase, as will the flow of Venezuelan fuel to Colombia," Cardenas said during a meeting of energy officials in Caracas. (Reuters, 05-18-2012; http://www.reuters.com/article/2012/05/19/energy-colombia-venezuela-idUSL1E8GJ14O20120519; Fox Business, http://www.foxbusiness.com/news/2012/05/18/colombia-to-boost-natural-gas-supplies-to-venezuela-official/)

Venezuela sends third diesel shipment to Syria

Venezuela has sent a third shipment of diesel to Syria, the energy minister said on Friday, underscoring President Hugo Chavez's support of the Middle East country despite its intensified crackdown on protesters. Earlier this year, Venezuela's government said it had sent at least two shipments of fuel to Syria, potentially undermining Western sanctions as a rare supplier to the increasingly isolated regime of President Bashar al-Assad. A lawmaker from Chavez's socialist party said in March that another shipment was being prepared and Energy Minister Rafael Ramirez confirmed that it had been sent. (Reuters, 05-18-2012; http://www.reuters.com/article/2012/05/18/venezuela-syria-idUSL1E8GIJW720120518)

Politics

Chavez sets no date for registering candidacy

President Hugo Chavez placed a telephone call to a United Socialist Party meeting during which he said no date has yet been set to present his candidacy for reelection to the National Elections Board:"We have not set a date yet, it will be between the 1st and 11th of June". He had previously said he will no longer act as "a runaway horse", due to health problems, but said he will take over the reins of his reelection campaign after the 1st of July. "I have to accept it. I confess to the country that unfortunately I will no longer be the runaway horse you used to see around. Now, I am on a diet, work eight hours a day, and ask God to give me the strength of the buffalo rather than that of the horse." (El Universal, 05-19-2012; http://www.eluniversal.com/nacional-y-politica/120519/chavez-says-he-will-no-longer-be-a-runaway-horse; Reuters, http://www.reuters.com/article/2012/05/19/venezuela-chavez-idUSL1E8GIKJ420120519; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=507898&CategoryId=10717) and more in Spanish: (Tal Cual; http://www.talcualdigital.com/index.html)

...and says he will not respond to Uribe's accusations

During the same telephone conversation, Chavez said he will not respond to former Colombian President Álvaro Uribe Velez who accused him of supporting Colombia´s FARC guerrillas; but he did accuse Uribe of endangering regional peace toward the end of his administration. More in Spanish: (El Universal, 05-22-2012; http://www.eluniversal.com/internacional/120522/chavez-descarta-responder-a-las-acusaciones-de-uribe)

Road connecting Venezuela and Brazil closed for 96 hours

Trunk Road 10 that connects Venezuela with Brazil was blocked for 96 hours by a demonstration staged by indigenous miners of the Ikabarú community, in the Gran Sabana municipality, south the state of Bolívar. The blockade started on Thursday morning and demonstrators are still waiting for a response from Venezuelan authorities. Demonstrators are rejecting alleged abuses by National Guard troops who burnt a camp, equipments and attacked miners. The road blockade near the Wará Bridge, a few yards from the entrance of Santa Elena de Uairén town, restricted car traffic on the international road. (El Universal, 05-21-2012; http://www.eluniversal.com/economia/120521/road-connecting-venezuela-and-brazil-closed-for-96-hours)





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.

March 09, 2012

Economics & Finance

Central Bank says there will be no devaluation this year, increases foreign currency flow to public

Nelson Merentes, President of the Central Bank has said there will be no devaluation this year, but added that this is something that depends on “economic dynamics”, adding that the Government is trying to “closet he gap between the official exchange rate and the unofficial ones”. Merentes made his statements during a CNN interview. At the same time and in order to stem inflation, it has increased the supply of foreign currency supply through the System for Transactions in Foreign-Currency Denominated Securities (SITME) to expedite imports and to steady the supply of goods. SITME provides State or Pdvsa-issued US dollar-denominated bonds in bolivars in order to resell them abroad and obtain US dollars at an exchange rate of VEB 5.30. From January 1 to March 6h, companies purchased bonds on the order of U$D 1.72 billion from SITME, an amount 31% higher than in the same period of 2011. When the bonds are sold abroad, companies must absorb a discount on price of these securities. (El Universal, 03-08-2012; http://www.eluniversal.com/economia/120308/central-bank-of-venezuela-boosts-foreign-currency-supply; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/merentes-descarta-devaluacion-este-ano.aspx)

Frozen corporate dividend repatriation mounts to around U$D 9.436 billion

The ECOANALITICA economic analysis firm reports that international companies operating in Venezuela have a dividend repatriation backlog of some U$D 9.436 billion due to processing delays at Venezuela’s Currency Board (CADIVI). The figure includes both official requests pending with CADIVI and those that have not yet been registered because the exchange authority will not accept additional requests until previous ones have been adjudicated. More in Spanish: (El Universal, 03-09-2012; http://www.eluniversal.com/economia/120309/crece-deuda-de-cadivi-por-repatriacion-de-dividendos)

Investment climate is seriously deteriorated

Carlos Tejera, general manager of the Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM), says that investment climate has seriously deteriorated in Venezuela."It is obvious that foreign investor perception about Venezuela's country risk is high. It is evident that according to academic and objective criteria there is a bad assessment about our country's risk and the rule of law in Venezuela," Tejera noted. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venamcham-venezuelas-investment-climate-has-seriously-deteriorated)

Special funds managed by the Executive estimated around U$D 52 billion

Special – not budgeted - funds managed by the Government have continued to increase. According to the ECOANALITICA firm, by the close of January they were up to U$D 52 billion, an increase of 52.8% over last January year. More in Spanish: (El Nacional, 03-09-2012; http://www.el-nacional.com/)

Inflation decreased 1.1% in February

The National Consumer Price Index (CPI) registered an inter-monthly variation of 1.1%, according to the monthly report published jointly by the Venezuelan Central Bank (BCV) and the National Statistics Institute (INE). The monthly report highlights that it is a positive indicator, as it has been falling for three consecutive months and "it is the lowest value registered since January 2008." (AVN, 03-06-2012; http://www.avn.info.ve/node/102128; El Universal, http://www.eluniversal.com/economia/120306/inflation-hits-the-lowest-month-to-month-increase-since-january-2008)

Commodities

ECOANALITICA estimates PDVSA loses around U$D 6.8 billion a year in China operations

According to the ECOANALITICA firm around U$D 3.5-5 billion are discounted from the price of oil shipments in order to amortize loans from China, and also makes interest payments around U$D 1.8 on bonds issued, which hinders its ability to fund the special investment plan. More in Spanish: (El Nacional, 03-09-2012; http://www.el-nacional.com/)

PDVSA, Chevron ready U$D 2 bln oil project credit

State oil company PDVSA and U.S. oil major Chevron are readying a U$D 2 billion credit to expand oil production at the PETROBOSCAN joint project, sources close to the operation said on Tuesday. "The conditions for the credit have already been negotiated. The U$D2 billion will be loaned by Chevron's headquarters," said one of the sources who were not authorized to speak on the record about the deal. PETROBOSCAN, in western Venezuela, now produces 115,000 barrels per day of crude and is 60% controlled by PSVSA and 40% owned by Chevron. (Reuters, 03-06-2012; http://www.reuters.com/article/2012/03/06/venezuela-oil-idUSL2E8E6D5R20120306)

PDVSA to trade bonds in the Hong Kong Stock Exchange which would expand its markets says Oil and Mining Minister Rafael Ramírez. He also said State oil company is not planning to sell part of its shares. Ramírez did not detail amounts or the time in which PDVSA would concrete the registration in the market and he also discarded a short-term securities issuance. (Veneconomy, 03-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29714&idc=4)

Government expects to produce 8.3 million tons of cement in 2012

Raúl Pacheco, Vice Minister of Productivity Management, predicts the Executive will to produce 8.3 million tons of cement in 2012 to further strengthen the country's infrastructure, as well as the housing construction program. He says that cement production was 7.77 million tons in 2011. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuelan-govt-to-produce-83-million-tons-of-cement-in-2012)

Steelmaker stopped production of 14,000 tons of rebars

The production steel bars in state-run steelmaker Siderúrgica del Orinoco (SIDOR) was stopped for two weeks, which hit the manufacture of rebars essential to meet goals within the government’s housing program. Operations started up again Monday. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuelan-steelmaker-stopped-producing-14000-tons-of-rebars)

Government regulates fuel sales in Venezuela's border states

The Ministry of Petroleum and Mining published rules for "setting up, operating and regulating" a system for fuel sales in Venezuela's border states. Users must register with the Control System for Fuel Supply (SISCCOMBF) in order to receive a tag or electronic identification, which is essential to buy fuel under government regulations.  Rules define five types of users, namely "end-users, residents, tourists, travelers, and emergency users." End-users who are not registered with SISCCOMBF will only be allowed to buy fuel up to three times. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/government-regulates-fuel-sales-in-venezuelas-border-states)

Harvest shares surge on Venezuela divestment plan

Harvest Natural Resources Inc. (HNR) climbed the most in four years after announcing it’s in exclusive talks to sell assets in Venezuela. Harvest rose 23% to U$D 7.70 at the close in New York, the biggest gain since June 18, 2007. The Houston-based oil producer is in exclusive talks to sell its 32% stake in the PETRODELTA joint venture in Venezuela, it said. “While no dollar amounts were provided, news of an imminent sale has nonetheless put a charge into shares today,” Chad Mabry, senior oil and gas analyst at Rodman & Renshaw LLC in Houston, said today in an e-mailed note to clients. (Bloomberg, 03-06-2012; http://www.bloomberg.com/news/2012-03-06/harvest-shares-surge-on-venezuela-divestment-plan-caracas-mover.html; El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/harvest-natural-seeks-to-sell-stake-in-petrodelta)

Power failure hits Andean region and Barinas

The Andean states of Trujillo and Mérida, and Barinas (plains) have been hit by power rationing due to an outage occurred last weekend at the José Antonio Páez hydroelectric power plant. As a result, generating units 3 and 4 and one of the transformers were left out of service. According to an unofficial report, a load of 70 megawatts has not been supplied during peak hours in several Andean and plains towns: Trujillo (30 MW), Mérida (10 MW) and Barinas (30 MW). (El Universal, 03-08-2012; http://www.eluniversal.com/economia/120308/power-failure-hits-andean-region-and-barinas)

Logistics & Transport

Venezuela’s tax authority (SENIAT) unifies criteria with customs agents in Vargas state to begin data transmission via the SIDUNEA World technological platform, scheduled for next month and which is expected to expedite operations. SENIAT is considering an expansion of this system customs operation at Guanta and Puerto La Cruz, in Anzoátegui, and Valencia, in Carabobo. (Veneconomy, 03-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29721&idc=2)

Politics

Chávez tells Santos he will return home next week, approves trade agreement

Colombian President Juan Manuel Santos met Wednesday afternoon with his President Chávez in Havana, Cuba, and reports that the Venezuelan Head of State told him that he plans to return to Venezuela early next week, after he underwent a surgery to remove a cancerous tumor. "We found him in good health condition, happy and in good spirits. He told me his recovery is going well." Santos spoke at the end of a short visit to Cuba. Both presidents discussed issues related to the Colombia-Venezuela bilateral trade agreement. "We had not given a green light to the annexes that our ministers and experts discussed for the trade agreement with Venezuela to take effect. We have given the green light and all we have left is the signing of the annexes by the foreign ministers. In order to save time, we are going to draft the corresponding decrees and take the steps for the agreements to take full effect as soon as possible," the Colombian leader added. (El Universal, 03-08-2012; http://www.eluniversal.com/nacional-y-politica/120308/chavez-tells-santos-he-will-return-home-next-week)

Journalist in eye of Chavez cancer storm

Derided as a "liar" and "clown" by President Hugo Chavez's allies, a bespectacled 66-year-old journalist has defied the verbal barrage to become a must-read for anyone tracking the Venezuelan leader's cancer. Veteran reporter and columnist Nelson Bocaranda broke the stunning news in mid-2011 that Chavez, the country's all-dominant socialist leader, and has garnered more than 670,000 followers via his two Twitter accounts - @NelsonBocaranda and @RunRunesWeb. Bocaranda says he has sources around the region, from Cuba and Colombia to Brazil and the United States, and protects them with personal meetings, constant changes of phone chips and the use of Blackberry messenger chat among other techniques. That prominence has made him a hate figure for Chavez supporters, and he does have serious concerns for his safety. He warned in a column this week that the state would be responsible for anything that happens to him or his family. (Chicago Tribune, 03-08-2012; http://www.chicagotribune.com/news/sns-rt-us-venezuela-chavez-journalistbre8270td-20120308,0,777161.story)

Venezuela readies third diesel fuel shipment to Syria

Venezuela is readying a new shipment of diesel to Damascus as part of a supply agreement signed by both governments in 2010. The Chávez's administration plans to continue meet the agreement despite the troubled political situation in the Middle East country, according to a pro-government legislator.  State-run oil company Petroleos de Venezuela (PDVSA) delivered a cargo of low-sulfur diesel in February aboard the Negra Hipólita tanker, a Venezuelan vessel operated by a PDVSA subsidiary. According to sources, it was the second fuel cargo shipped from the Venezuelan refinery of Puerto La Cruz. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuela-prepares-third-shipment-of-diesel-fuel-to-syria)

US Southern Command to remain vigilant

During a hearing before the Armed Forces Committee in the House of Representatives, Southern Command chief General Douglas Fraser said they were attentive to the “geopolitical turmoil” that may originate in Cuba, Venezuela, Bolivia and Haiti. As to Venezuela, General Fraser pointed out the country faces “uncertainty over President Chávez’ health,” a “persistent economic instability and growing violence levels that generate more demands from the government.” (Veneconomy, 03-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29683&idc=1)

Caracas to host Sao Paulo Forum

PSUV party International Affairs coordinator Rodrigo Cabezas has announced that the 18th Sao Paulo Forum will be held in Caracas, with 40 countries in attendance from July 4 to July 6 and the formal opening would be on July 5 to celebrate Venezuelan Independence Day. (Veneconomy, 03-06-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29681&idc=1)

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 21th, 2012

Economics & Finance

Government expands funding sources

In order to obtain added revenue, President Hugo Chavez does not just pressure state-run oil Petroleos de Venezuela (PDVSA) and the Internal Revenue Service (SENIAT): Public banks and state-run companies must also render extra funds in order to meet expanding public spending. At a council of ministers held last Wednesday, Chavez showed a wide array of funding sources. Here claimed to have "a little book" for Finance Minister Jorge Giordani, showing availability of funds and a breakdown of the “Socialist Efficiency Fund”, a facility designed to manage earnings from public companies. (El Universal, 02-18-2012; http://www.eluniversal.com/economia/120218/venezuelan-government-expands-funding-sources)

Commodities

Venezuela ships fuel to war-torn Syria

The government of Venezuela's Hugo Chavez is emerging as a rare supplier of diesel to Syria, potentially undermining Western sanctions and helping the Syrian government fuel its military in the middle of a bloody crackdown on civilian protests. A cargo of diesel, which can be used to fuel army tanks or as heating fuel, was expected to arrive at Syria's Mediterranean port of Banias this week, according to two traders and shipping data. The cargo could be worth up to $50 million. (Reuters, 02-18-2012; http://www.reuters.com/article/2012/02/18/us-venezuela-syria-idUSTRE81F2AU20120218; The Washington Post, http://www.washingtonpost.com/business/chavez-says-venezuela-free-to-sell-oil-to-any-nations-it-wishes-amid-reports-of-sales-to-syria/2012/02/16/gIQAd7UZIR_story.html)

Crude oil cleanup Monagas river said to be 95% completed

Cleanup work on the crude oil spill into the Guarapiche river in the state of Monagas, has been 95% completed, according to the executive director for environment at PDVSA, Ramiro Ramirez. As for other areas hit by the accident which took place at the Jusepin Operational Complex, Ramirez said that the state company has installed permanent monitor points in the area and that intense cleansing work continues. (AVN, 02-19-2012; http://www.avn.info.ve/node/100083)

Government names temporary board at steelmaker SIDETUR

The Government has named a temporary state- run board at steelmaker Siderurgica del Turbio, S.A. after the government seized the company’s assets in 2010, according to a resolution by the Industry Ministry published today in the Official Gazette. SIDETUR’s management had continued to operate the company since the seizure as it waited to conclude compensation talks with the government. Ramon Ernesto Perdomo was named as the head of the board, according to the resolution. (Bloomberg, 02-17-2012; http://www.bloomberg.com/news/2012-02-17/venezuela-names-temporary-board-at-steelmaker-sidetur-1-.html)

Venezuelan oil rises to U$D110.82

Venezuela's weekly oil basket rose to U$D 110.82 as oil prices rose in international markets on concerns over attacks on Iran's nuclear facilities and on good growth numbers from the US. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending February 17 rose to U$D110.82 from the previous week's U$D108.39. (Latin American Herald Tribune, 02-17-2012; http://www.laht.com/article.asp?ArticleId=471323&CategoryId=10717)

Politics

Chavez says he’ll undergo another operation in coming days, Venezuelan bonds rally

President Hugo Chavez said he’ll undergo another operation as part of his battle with cancer in the “coming days” after tests in Cuba showed a “wound” in the same area where a tumor was removed in June. Chavez, 57, said he traveled to Cuba on Feb. 18 for a routine check up and that tests showed a lesion of about 2 centimeters in diameter. He said he’s still evaluating where to have the operation and that doctors will remove the lesion to see if it’s malignant or not. Venezuelan bonds rallied on the prospect of a change in government and policies that have fueled the region’s highest inflation rate and dried up investment amid nationalizations. The yield on Venezuela’s benchmark 9.25% bonds maturing in 2027 fell 23 basis points, or 0.23 percentage point, to 11.66% today at 2:45 p.m. in New York, according to data compiled by Bloomberg. The bond’s price rose 1.38 cents to 82.88 cents on the dollar. (Business Week, 02-21-2012; http://www.businessweek.com/news/2012-02-21/chavez-says-he-ll-undergo-another-operation-in-coming-days.html)

Hugo Chavez faces an uprising at the ballot box

On Feb. 12, Henrique Capriles Radonski, a 39-year-old Venezuelan state governor, won a primary election to become the opposition’s candidate against Hugo Chavez in October’s presidential election. He won 1.8 million of an astonishing 3 million votes — double the turnout predicted by most analysts. The next day, Capriles, a devout Catholic, was greeted by a commentary on the government-run Web site of Venezuelan National Radio titled “The Enemy Is Zionism.” Capriles, it explained, is the descendant of Jews. “In order to understand the interests embodied” by Capriles, the commentary declared, “it’s important to know what is Zionism, the Israeli ideology that he sneakily represents.. . . It is, without doubt, an ideology of terror, of the most putrefied sentiments of humanity; its supposedly patriotic impetus is based in greed.” And so on. Thus began the latest — and what will surely be the ugliest — political campaign by Chavez, a ruler who has served as a friend in need to Moammar Gaddafi, Bashar al-Assad and Mahmoud Ahmadinejad — and who now is facing his own homegrown democratic uprising. But Venezuela’s spring differs from those of Libya, Syria or Iran: Instead of pouring into the streets, Venezuelans — fed up with the chaos and violence of Chavez’s 13 years in power — are marching to the polls and trying to restore the country’s crippled and compromised institutions. (Washington Post, 02-17-2012; http://www.washingtonpost.com/opinions/venezuelas-hugo-chavez-faces-an-uprising-at-the-ballot-box/2012/02/17/gIQAfApFOR_story.html)

October 07th, 2011

Economics & Finance

Venezuela projects U$D 50 per barrel of oil for 2012 budget

Venezuela will calculate its budget for 2012 based on an average price for Venezuelan crude oil of U$D 50 a barrel, according to Ricardo Sanguino, President of the Finance Commission at the National Assembly, who was quoted as saying the budget is in its final phase of calculation. This year’s budget was based on an average price of U$D 40 a barrel. (Bloomberg, 10-05-2011; http://www.bloomberg.com/news/2011-10-05/venezuela-sees-50-a-barrel-oil-for-2012-budget-panorama-says.html)

Inflation reaches 20.5%

Both the Central Bank and the National Statistics Institute have reported that the September Consumer Price Index closed at 1.6%, which brings year to date inflation to 20.5%. Inflation projected for the year is now 26.5%. Central Bank President Nelson Merentes says inflation is slowing down and added: “It is a complex problem, we are going to work hard on production and we are going to try to avoid speculation". More in Spanish: (Tal Cual, 10-07-2011; http://www.talcualdigital.com/index.html)

Venezuelan government has taken over 459 companies this year

The Venezuelan government has taken control of 459 companies so far this year, according to data provided by the Venezuelan Confederation of Industries (CONINDUSTRIA). The figure nearly doubles the number of companies (284) that were taken over by Venezuelan authorities last year, according to Conindustria. (El Universal, 10-05-2011; http://www.eluniversal.com/economia/111005/venezuelan-government-has-taken-over-459-companies-this-year)

Gold to begin arriving by mid November

The Central Bank chief says they will begin repatriating gold reserves from Western nations by mid-November.

London clearing house LCH.Clearnet said it will accept gold bullion as collateral by the end of this month, subject to regulatory approval. (Reuters, 10-06-2011; http://www.reuters.com/article/2011/10/06/us-markets-precious-idUSTRE78M11C20111006; More in Spanish at: Ultimas Noticias, 10-06-2011; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/el-oro-llegara-al-bcv-en-mes-y-medio.aspx)

Commodities

Chavez eyes new oil cartel

President Chavez proposed creating a new oil exporters group parallel to OPEC that would include only the "giants" of global petroleum producers.  He Chavez made the comments while hosting Russia's Deputy Prime Minister Igor Sechin and Energy Minister Sergei Smatko, saying the two countries could be part of such a super-cartel: "I had an idea, create a new organization... of petroleum giants" adding "we are not more than four or five" countries. He said that "Russia and Venezuela are two of the oil giants of this planet" and that such a super-cartel could co-exist with the Organization of Petroleum Exporting Counties. (AFP, 10-07-2011; http://www.france24.com/en/20111007-venezuelas-chavez-eyes-new-oil-cartel)

Cost of Venezuela's fuel subsidy up 19.4% in three years

The International Energy Agency (IEA) estimated that in 2010 subsidized fuel cost Venezuela U$D 15.7 billion. Frozen fuel prices have resulted in higher fiscal sacrifices in Venezuela, according to the World Energy Outlook 2011 conducted by the International Energy Agency (IEA). The study shows that in 2010 Venezuela spent U$D 19.9 billion to subsidize fuel, natural gas, and electricity, with discounts hitting 75% of the value of the product. (El Universal, 10-05-2011; http://www.eluniversal.com/economia/111004/cost-of-venezuelas-fuel-subsidy-up-194-in-three-years)

ENI and REPSOL await Venezuela gas project go-ahead

Italy's ENI and Spain's REPSOL are waiting for Venezuela to approve the extraction of gas from a field that has the biggest deposits found so far off the OPEC nation. Amid delays and setbacks to other offshore development plans, ENI and REPSOL completed their exploratory phase at the Cardon 4 block last year with the certification of more than 15 trillion cubic feet (tcf).  A source at one of the companies said they were wary after a senior PDVSA official said last week that the government was freezing its liquefied natural gas projects because the gas was needed domestically, and low prices did not support the cost involved. (Reuters, 10-04-2011; http://uk.reuters.com/article/2011/10/04/venezuela-gas-idUKN1E79315S20111004)

Venezuela stations are hit by shortages of gasoline, diesel

For the past week, Venezuela has experienced shortages of fuel supplies such as gasoline and diesel, sources and local news reports indicated Wednesday. PDVSA has yet to offer an explanation about the national fuel shortage, and did not immediately return phone calls or emails by Platts.  Daily newspaper El Nacional reported Wednesday that "the crisis of fuel supplies continues and affects the whole country, owing to failures in the PDVSA-managed transport system that does not stock all service stations equally, especially in the metropolitan Caracas area." Ramon Castro, formerly vice president of a previous PDVSA affiliate dedicated to managing the domestic fuel supplies market, said in an interview Wednesday that "national consumption tops 745,000 b/d, of which 400,000 corresponds to gasoline." (Platts, 10-05-2011; http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6557873)

Brazil Development Bank accepts PDVSA guarantees on refinery

Brazil’s main development bank has accepted the bank guarantees provided by Venezuelan state-owned oil giant PDVSA for its stake in the oil refinery being constructed in Pernambuco state, with Nov. 30 now the deadline for sealing the agreement, PETROBRAS said. The BNDES development bank decided on Sept. 30 that the guarantees PDVSA offered as a partial substitute for the debt taken on to build the Abreu e Lima refinery, which was originally planned to be a binational project, were acceptable. (Latin American Herald Tribune, 10-05-2011; http://www.laht.com/article.asp?ArticleId=430495&CategoryId=10717)

Logistics & Transport

Venezuela will double the capacity of Puerto Cabello port with support from China

Puerto Cabello, Venezuela's main port and one of the most important in Latin America will be the subject of extensive modernization project that involves building a new terminal, which specializes in containers, which will double to 700,000 20-foot containers (TEUs) to years their ability to manage in a first stage. The first phase is scheduled to begin in mid 2012 and end in 2014. There will be three phases, to be completed in 2030 and to be carried 200,000 TEUs a million annual capacity of this terminal sea. The new terminal is to be located northwest of Puerto Cabello. More in Spanish: (AVN, 10-06-2011; http://www.avn.info.ve/node/80507; Notitarde, http://www.notitarde.com/notitarde/plantillas/nota.aspx?idart=1445860&idcat=9849&tipo=2; El Carabobeño, http://www.el-carabobeno.com/litoral/articulo/21510/china-encargada-de-construir-nuevo-puerto-de-puerto-cabello)

Politics

Reuters identifies key political risks to watch in Venezuela

Speculation about President Hugo Chavez's health after cancer treatment, falling oil output that could slow economic recovery and rising passions ahead of next year's presidential election are the main risks to watch in Venezuela. What to watch: - Further twists and turns in Chavez's health saga. - Opposition candidates positioning ahead of primaries. - More controversial economic announcements by Chavez. - Possible new debt issuances by PDVSA. - Movements in global oil prices which are significant to Venezuela's income and overall economic picture. - More details of investments in projects to exploit the huge reserves in the Orinoco belt. - Unscheduled maintenance, stoppages and outages at Venezuela's refineries and heavy oil upgraders. - Possible ruling in the Exxon arbitration case. (Reuters, 10-03-2011; http://www.reuters.com/article/2011/10/03/venezuela-risks-idUSRISKVE20111003)

DATANALISIS poll shows six out of 10 people think Chavez should not be reelected

DATANALISIS polling company says positive assessment of President Chavez reached 58.9% in September, a 10% increase over July. The same poll found that the willingness to vote for Chavez in a polarized environment with only one opposition candidate rose from 31% to 40% from July to September. (El Universal, 10-05-2011; http://www.eluniversal.com/nacional-y-politica/111005/six-out-of-10-people-think-that-chavez-should-not-be-reelected)

A Keller poll indicates half of the Venezuelans consider Chavez must not be re-elected in the next presidential election. The same poll indicates the President’s popularity rose eight points to 57% after the cancer announcement. (Veneconomy, 10-04-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27902&idc=1)

Venezuela to present advances in Geneva

A team of ministers and Government representatives has left for Geneva to present a progress report to the United Nations Universal Periodic Review (UPR). The team includes Foreign Minister Nicolas Maduro; Luisa Estela Morales, President of the Supreme Court; Attorney General Ortega Diaz; Interior Minister Tareck El Aissami and others. (AVN, 10-05-2011; http://www.avn.info.ve/node/80635)

Chavez eyes tourist islands for takeover

President Chavez said his government would seize private homes on the idyllic Los Roques archipelago in the Caribbean and use them for state-run tourism in the latest move to implant socialism across Venezuela. "I've always said we should nationalize Los Roques," the ever-pugnacious Chavez said. (Reuters, 10-06-2011; http://www.reuters.com/article/2011/10/06/venezuela-islands-idUSN1E7950FW20111006)

Colombia anticipates smoother relations with Venezuela

During a radio interview Colombian Foreign Minister María Angela Holguín said "President Chávez has been a little bit distant from the daily issues due to his illness". She added that "those duties have been gradually assumed by Foreign Minister (Nicolás Maduro)" and said she talks with Maduro "almost every week," and that bilateral ties have been developing "but not as smoothly as we would like." Colombian Defense Minister Juan Carlos Pinzón has also said relations between his country and Venezuela have steadily improved and strengthened since they were restored in August 2010, after meeting with his Venezuelan counterpart and Interior Minister Al aissami. (El Universal, 10-05-2011; http://www.eluniversal.com/nacional-y-politica/111005/colombia-expects-smoother-relations-with-venezuela and ; http://www.eluniversal.com/nacional-y-politica/111005/colombia-stresses-improving-relations-with-venezuela)

Trade between Venezuela and Colombia un 24%

Year to date binational trade is now at U$D 1.3 billion, which is 24% above last year, according to the Venezuela-Colombia Chamber of Commerce. Business, however, remains very much under earlier years. More in Spanish: (El Nacional, 10-07-2011; http://www.el-nacional.com/)

Venezuela among the last places in democratic progress

Germany’s Konrad Adenauer Foundation has published its 2011 Index on Democracy noting that “Inequality was slightly reduced thanks, among others, to successful transference programs, but in many countries this trend has not meant improved a democratic for their citizens”. Those best rated on their democratic structure were Chile, Uruguay and Costa Rica. The worst positions are held by Nicaragua, Venezuela, Ecuador and Guatemala. More in Spanish at: (El Mundo, 10-07-2011; http://www.elmundo.com.ve/noticias/economia/internacional/venezuela-en-los-ultimos-puestos-en-mejoras-democr.aspx)

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.