August 07th, 2012

Economics & Finance

EXXON MOBIL insists on suing Venezuela for U$D 17 billion through multiple suits, says Hildegard Rondón de Sansó, a former Supreme Court Justice who is a legal advisor to PDVSA. Sansó, who is also mother in law to PDVSA President Rafael Ramírez, says that duplicating arbitration with lawsuits on behalf of the plaintiff is "judicial terrorism" against Venezuela. More in Spanish: (El Nacional: http://www.el-nacional.com/noticia/45707/18/exxon-mobil-mantiene-demanda-de-17-millardos.html)

TERNIUM and AMAZONIA take on Venezuela at ICSID

The International Center for Settlement of Investment Disputes (ICSID) has received requests for arbitration by Argentina's TERNIUM and Siderurgia AMAZONIA against Venezuela, on claims over steel products, Both companies have been negotiating with the Venezuelan government since 2009, after expropriation of MATESI (Steel Products), now called Briquetera de Venezuela; and TAVSA ("Tubos de Acero de Venezuela"). No agreement has been reached on payment; three years after both industries were taken over. More in Spanish: (El Universal, 08-07-2012; http://www.eluniversal.com/economia/120807/ternium-y-amazonia-demandan-al-pais-ante-el-ciadi)

Expropriation: A strategy to increase government control

If reelected, President Hugo Chavez will focus all his efforts toward trying to make the shift to socialism irreversible. As he lays out his future government plans throughout his campaign, he is insisting on this course of action. According to the Venezuelan Confederation of Industries (CONINDUSTRIA), from 2002 to June 2012, the government nationalized 1162 companies. Research shows that from 2002 to 2006 only 15 enterprises were expropriated, but from 2007 onwards, that figure amounts to 1147, a whopping 98%. The real cost of this policy puts things into perspective. Estimates by the ECONALÍTICA consulting firm show that the national government has paid U$D 13 billion for expropriations, but still owes former owners U$D 21 billion. (El Universal, 08-04-2012; http://www.eluniversal.com/economia/120804/expropriation-a-strategy-to-expand-government-control)

Commodities

Chavez says the first stage of the "Mariscal Sucre" Gas Project will be ready in December, to produce 300 million cubic feet of gas daily. More in Spanish: (AVN, 08-07-2012; http://www.avn.info.ve/contenido/primera-etapa-proyecto-gasífero-mariscal-sucre-estará-listo-diciembre)

PDVSA will begin exploration in Cuban waters on the Gulf of Mexico, according to CUBAPETROLEO, the Cuban state oil company. It will use equipment previously used by Malaysia's PC Gulf, and Russia's GAZPROMNEFT. More in Spanish: (AVN, 08-07-2012; http://www.avn.info.ve/contenido/pdvsa-iniciará-exploración-pozo-aguas-cubanas)

PDVSA exposure is growing due to social spending, according to a report by BANCTRUST & Co. PDVSA has honored its financial obligations and no worries arise as regards debt repayment. The same report indicates that the level of solvency and leverage became remarkably worse during 2011. (El Universal, 08-07-2012; http://www.eluniversal.com/economia/120807/preven-mayor-exposicion-de-pdvsa-ante-mas-gasto-social)

REPSOL to meet with Venezuela on YPF seizure

REPSOL will meet with Venezuelan officials Aug. 9 to discuss the Spanish oil company’s dispute over Argentina’s seizure of its majority stake in YPF SA, according to newspaper Pagina 12, which cites Venezuela’s Oil Minister Rafael Ramirez. Venezuelan authorities, who last month promised to invest in Argentina to boost oil production, are calling for a friendly solution to Repsol’s conflict with the Argentine government and view the company’s threats to take legal action as "a colonialist attitude", the paper quoted Ramirez as saying. REPSOL has stakes in oil and gas fields in Venezuela. (Bloomberg, 08-05-2012; http://www.bloomberg.com/news/2012-08-05/repsol-to-meet-with-venezuela-on-ypf-seizure-pagina-12-reports.html)

Argentina allows currency buying for PDVSA deals

According to Argentine daily CLARIN, that nation's central bank authorized local companies doing business with Petroleos de Venezuela SA to buy U.S. currency. Companies will be able to buy dollars at the official exchange rate when exporting machinery to Venezuela’s state oil company known as PDVSA, Clarin said. Argentina’s YPF SA and PDVSA have recently signed an accord aimed at jointly developing oil and gas projects. (Bloomberg, 08-04-2012; http://www.bloomberg.com/news/2012-08-04/argentine-allows-currency-buying-for-pdvsa-deals-clarin-says.html)

Political management of the electric industry has increased outages since the takeover of private companies and the creation of CORPOELEC in 2007. The faults usual in the old state company, CADAFE: non compliance with project deadlines, lack of maintenance, and corruption, have now extended to the entire system, according to labor representatives in the area. Outages have multiplies in the interior of Venezuela, and CORPOELEC's own statistics show an increase of 300% in major energy failures since 2007. More in Spanish: (El Universal, 08-07-2012; http://www.eluniversal.com/economia/120807/politizacion-de-la-electricidad-aumento-las-fallas-en-el-sistema)

International Trade

Venezuela’s admission into the MERCOSUR disturbs most local business which remains convinced that weak competitiveness leaves the country unarmed before the large economies within the bloc, despite offers by President Chávez’ to dialogue and support exports. What worries them most is the strict foreign exchange control that currently establishes the official rate at the completely fictitious rate of Bs.4.30:$. Werner Corrales, former Ambassador to the World Trade Organization, says Venezuela should request application of conditions within Complementary Agreement # 59, which establishes differentiated conditions for sensitive staples, and allow for tax reductions in twice the time Brazil took. (Veneconomy, 08-04-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31564&idc=3 and  http://www.veneconomy.com/site/index.asp?ids=44&idt=31565&idc=3)

Logistics & Transport

Congestion persists at Puerto Cabello, as Chavez predicts trade to increase 300%

Although authorities refuse to speak of "congestion", sources at the port insist on the number of ships at bay and delays in import procedures, saying that some vessels must wait up to three or four weeks for docking facilities. Further, collapsed operations at Puerto Cabello customs have delayed offloading of at least 14 ships now bearing cereals, agricultural products and over 4000 tons of fertilizers, which have been unable to dock. Over 188,000 tons of imported white and yellow corn, wheat and other products such as crude and refined sugar are also in waiting. Delays and the diversion of ships to neighboring ports lead to increased freight costs to Venezuela.  Meanwhile, during a campaign visit by President Chavez to Puerto Cabello, he claimed port redevelopment currently underway will increase trade by 300%. More in Spanish: (El Universal, 08-07-2012; http://www.eluniversal.com/economia/120807/reportan-congestion-del-puerto-de-puerto-cabello; El Nacional; http://www.el-nacional.com/;  El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/26938/lluvias-restrasan-descarga-en-muelles-porteos; AVN, 08-06-2012; http://www.avn.info.ve/contenido/quotcon-nuevo-puerto-cabello-se-aumentará-comercio-300”; Notitarde, http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1714888&idcat=9849&tipo=2; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-asegura-que-avanzan-proyectos-de-moderniz.aspx)

Politics

Thumbprint ID system stirs fears among voters ahead of Venezuela presidential vote

With President Hugo Chavez in his tightest re-election race yet, some of his opponents are warning that the use of thumbprint readers at Venezuelan ballot boxes could scare away voters, adding to fears about the fairness of the Oct. 7 vote. The country’s electoral council has long used fingerprint scanners at the entrance to polling places to ensure voter identification. But this year, the readers will be hooked to the electronic voting machines themselves. Citizens must press down a thumb to activate the ballot system. Experts say there is no evidence the system has ever been used to reveal voters’ preferences, and most opposition leaders, who stand to suffer if supporters don’t vote, have been eager to assure that the system is safe. (The Washington Post, 08-05-2012; http://www.washingtonpost.com/world/the_americas/thumbprint-id-system-stirs-fears-among-voters-ahead-of-venezuela-presidential-vote/2012/08/05/934ce99c-deff-11e1-8d48-2b1243f34c85_story.html)

July 31th, 2012

Economics & Finance

Market points to Venezuela as riskier than Spain

Although Spain is the epicenter of the euro zone, the market considers Venezuela more likely to default.
CDS (Credit Default Swap) is the thermometer that measures the risk of insolvency and operates as insurance in global financial markets which bondholders purchase to shield themselves from noncompliance at maturity. Based on the price of the CDS, Venezuela is now placed as the third riskiest country in the world, only after Cyprus and Argentina, while Spain ranks fifth. (El Universal, 07-30-2012; http://www.eluniversal.com/economia/120730/for-the-market-venezuela-is-at-more-risk-of-default-than-spain)

Finance Ministry plans VEB 18.2 bond issues this quarter

The Planning and Finance Ministry plans to issue VEB 18.2 billion in bonds during this quarter. According to a press release they say the strategy "will further propel financial markets and support the Central Bank in managing monetary policy". More in Spanish: (El Universal, 07-31-2012; http://www.eluniversal.com/economia/120731/finanzas-preve-colocar-bonos-por-bs-182-millardos-en-este-trimestre)

Experts anticipate higher inflation

Inflation has being contained so far through controls on the economy, but they have failed to eliminate the problem.

Experts say the scenario in which the private sector agrees under pressure to keep prices down suppresses is merely a temporary situation which hides real inflation. More in Spanish: (Tal Cual, 07-30-2012; http://www.talcualdigital.com/index.html)

Industrial production slows to 1.3% growth rate

Public spending has accelerated economic growth rates, but private industry is showing very weak signs. According to Central Bank numbers industrial production for the first third of this year has grown only by 1.3%, which is down from 5.24% for the same period last year. Experts say this is due to difficulties in accessing foreign exchange, unfair competition from cheap imports bought through an overvalued currency and a hostile environment. More in Spanish: (El Universal, 07-31-2012; http://www.eluniversal.com/economia/120731/la-produccion-industrial-se-desacelera-y-solo-crece-13)

Basic industries are operating in the red

Deputy Julio Borges says production at basic industries has fallen by 25% and warns that the information is based on figures published by the Central Bank of Venezuela and released this year by the Planning and Finance Ministry. He says SIDOR's production has dropped by 40%, VENALUM by 17% and BAUXILUM by 14%, among others. More in Spanish: (Tal Cual, 07-30-2012; http://www.talcualdigital.com/index.html)

Expropriations have created a vast government industrial infrastructure

It is a government priority to establish state control over the means of production, particularly in the food production area. Over the past 10 years it has developed a considerable agribusiness infrastructure, in some areas as important as the private sector. This structure has been developed mainly through interventions, expropriations and direct acquisition of processing plants, storage centers and distribution networks. The government now controls 62.2% of the food supply, including 119 agribusiness industries, 52% of the gathering and storage of raw material, and over 22,000 outlets throughout the country, although distribution depends mainly on imports. More in Spanish: (El Universal, 07-31-2012; http://www.eluniversal.com/economia/120731/estado-creo-su-infraestructura-industrial-con-expropiaciones)

Commodities

PDVSA-YPF pact announced

Upon his arrival at Brasilia, President Hugo Chavez said the Venezuelan state oil company PDVSA will sign an agreement with its Argentine counterpart YPF. He claimed alliances with state oil companies in Brazil and Argentina "will lead to the creation of a PETROSUR". More in Spanish: (AVN, 07-31-2012; http://www.avn.info.ve/contenido/presidente-chávez-anuncia-firma-convenio-energético-estatal-argentina-ypf)

PDVSA increases US fuel purchases by 65%, crude sales to US drop by 12.8%

According to numbers from the US Department of Energy, fuel exports to Venezuela in January-May 2012 increased by 65% over the same period last year, for a total 37,600 BPD. The report also shows PDVSA dispatches to the US, basically crude oil. Fell by 12.8% PDVSA imports over 1.9 million liters of gasoline per day. More in Spanish: (El Nacional, 07-31-2012; http://www.el-nacional.com/)

El Palito refinery expansion project will take 3.5 years to complete

PDVSA has signed engineering, procurement and construction contract to expand the El Palito refinery, with the TFY&V group, which is made up by Japan's Toyo Engineering Construction, Foster Wheeler Italy, Spanish partners and Venezuela's Y&V. The project aims to reach international quality standards and optimize crude oil from the Orinoco oil belt. The project will take almost 50 months to complete and would increase crude oil processing capacity from 140,000 to 280,000 BPD. More in Spanish: (El Nacional, 07-31-2012; http://www.el-nacional.com/)

China Fund to finance new SIDOR plant

The Orinoco Iron and Steel Industry (SIDOR) plans to build a new plant to process 870,000 of semi prepared material for he oil industry and housing construction, thanks to a U$D 250 million investment from the China-Venezuela Fund. The project is due for completion by the end of 2014. More in Spanish: (AVN, 07-31-2012; http://www.avn.info.ve/contenido/sidor-instalará-nueva-planta-recursos-del-fondo-pesado-chino-venezolano; El Universal, http://www.eluniversal.com/economia/120731/sidor-espera-invertir-250-millones-en-nueva-maquina-de-colada)

International Trade

MERCOSUR experts meet to discuss Venezuela's accession dates

MERCOSUR technicians are meeting in working groups in Brasilia to define dates for Venezuela's gradual accession, by adopting the Common Foreign Tariff and the Common Nomenclature. Venezuela still uses the system of the Community of Andean Nations, from which pulled out in April 2011. According to the protocol of adhesion, adopting the regulations will be carried out "gradually within four months since the date of the entry into force." (AVN, 07-30-2012; http://www.avn.info.ve/contenido/mercosur-experts-meet-brazil-discuss-venezuela039s-accession-dates)

Venezuela's auto industry seeks exclusion from MERCOSUR

Local business has alerted the government of the risks of entering MERCOSUR, and the auto industry is the most highly concerned. The association of auto parts manufacturers (FAVENPA) has written to Foreign Minister Nicolas Maduro, asking that the auto industry be excluded from Venezuela's entry as a full member of MERCOSUR. They also urged the government not to negotiate rules of origin and tariff advantages in this area. The automotive industry argues that Venezuela has a plan in place since 2007 to increase production and reach 50% locally supplied parts in auto assembly by 2013. They say there is no way the Venezuelan auto industry can compete or avoid being displaced by industries in Argentina and Brazil because of the enormous differences in scale. The domestic auto industry argues it will require a transition of five to ten years to increase local competitiveness. More in Spanish: (El Universal, 07-31-2012; http://playball.eluniversal.com/economia/120731/solicitan-excluir-a-la-industria-automotriz-de-reglas-mercosur)

Expert says MERCOSUR entry will favor foreign companies

Eduardo Porcarelli says "there will be an increase in the variety and prices of products available to consumers". He warns this will have a serious impact on domestic production which could lose domestic markets due to higher production and distribution costs internally, as well as price regulations. More in Spanish: (El Nacional, 07-31-2012; http://www.el-nacional.com/)

Venezuela purchases 20 aircraft from Brazil

Government sources say Venezuela's official airline CONVIASA will purchase 20 EMBRAER Model E190 aircraft this week. The contract will be signed this week, during President Chavez's visit to Brasilia. More in Spanish: (Ultimas Noticias, 07-31-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-firmara-en-brasil-la-compra-de-20-avione.aspx)

Logistics & Transport

More scales needed at Puerto Cabello

Puerto Cabello, the country's main sea terminal, has only two scales for weighing at the entrance and two for the output process, which results in delays in processing bulk products. Durvelle Jonathan, second vice president of the government CASA Transportation Center, says there should be at least five for entry and the same number for output, especially at least 80% of bulk cargo comes to this port. More in Spanish: (Notitarde, 07-30-2012; http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1708633&idcat=9849&tipo=2)

Politics

Chavez in Brazil for MERCOSUR summit

President Hugo Chavez is in Brasilia to attend a meeting of the Common Market of the South (MERCOSUR), where Venezuela's accession to the bloc will come into effect. He is also expected to meet with his counterparts from Argentina, Cristina Fernandez, Uruguay's Jose Mujica and Brazil's Dilma Rousseff. (AVN, 07-30-2012; http://www.avn.info.ve/contenido/chavez-travels-brazil-mercosur-summit; El Universal, http://www.eluniversal.com/economia/120730/president-chavez-heads-for-brazil-apropos-mercosur)

Formation of the Bolivarian Militia speeds up

According to experts consulted and documents obtained by El Nuevo Herald reveal the important role the militias would have under the political-economic model leading to a totalitarian regime President Chávez has designed for Venezuela and whose implementation would take full force as of next year if he is re-elected in the October 7 presidential elections. His militia would have some 125,000 troops already. (Veneconomy, 07-30-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31476&idc=1)

Israeli Ambassador says Venezuela's should be of concern to MERCOSUR

Israel's ambassador to Uruguay, Dori Goren says the entry of Venezuela into MERCOSUR "should be a major concern for member countries" because "there are plenty of Iranian agents operating terror networks on the continent with coverage provided by Venezuela." More in Spanish: (El Mundo, 07-30-2012; http://www.elmundo.com.ve/noticias/economia/internacional/embajador-de-israel-afirma-que-ingreso-de-venezuel.aspx; El Universal, http://www.eluniversal.com/internacional/120730/israel-rechaza-comercio-binacional-con-venezuela)

October 29th, 2010

Economics, Trade & Business

Economist Pedro Palma foresees more debt, inflation and recession in 2011. He also said the 2011 national budget is insincere since it estimates monthly oil production at over 3 million barrels when in reality, Venezuela is producing much less. (Veneconomy, 10-27-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23672&idc=2)

Owens Illinois Announces Beginning of the transfer  of its Ownership to the State

The company issued a statement saying that -despite reports that it had not yet reached an agreement with the Government- the nationalization of the firm would begin today.  Officials are due to take the offices at Los Guayos (Carabobo) and Valera (Trujillo). (Ultimas Noticias, 10-28-2010; http://www.ultimasnoticias.com.ve/capriles/cadena-global/detalle.aspx?idart=3422396&idcat=56431&tipo=2)

Venamcham urges the government to stop government takeovers

Carlos Henrique Blohm, the president of the Venezuelan-American Chamber of Commerce and Industry (Venamcham) said that in order to improve the investment climate in the country the government should desist from the seizure of assets. Blohm said that 46 out of the 1,080 members of the trade chamber have had assets seized.  Further, he stated that of these, only 10 companies have received compensation from the Venezuelan government following the expropriations. The sum of the values of all expropriated assets amounts to USD 20 billion. (El Universal, 10-28-2010; http://english.eluniversal.com/2010/10/28/en_eco_art_venamcham-urges-the_28A4665371.shtml)

Owens-Illinois Seizure by Chavez May Undermine Empresas Polar

Venezuela’s plan to expropriate the local unit of glassmaker Owens-Illinois Inc. may undermine Empresas Polar SA, the South American country’s largest company and a frequent target of President Hugo Chavez’s criticism. The takeover will weaken closely held Polar, Venezuela’s biggest beer and food producer, by putting its supply chain under government control, said Rafael Alfonzo, president of Caracas-based researcher Cedice. Combined with the expropriation earlier this month of Agroislena C.A. Sucesora de Enrique Fraga Alfonso, Venezuela’s biggest farm-supply business, the move gives Chavez significant sway over Polar, Alfonzo said. (Bloomberg, 10-26-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=afKRLfrme52A)

Legal issues prevent operations at Las Cristinas gold mine from resuming

Operations at the Las Cristinas gold mine, paralyzed eight years ago by government decree, are still the subject of political and legal debate.  Estimates for the value of foregone production are as high as BF 10,000 billion; most of which would have been attributed to Crystallex’ facilities, the product of a $15 million in investment by the aforementioned Canadian firm.  Government party leaders claim that there still exist a series of legal hurdles which impede the conclusion of negotiations between all interested parties. (El Mundo, 10-29-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=18&Id_Noticia=35137)

Politics

Venezuela to nationalize U.S.-owned bottle manufacturer

Charging U.S. bottle manufacturer Owens- Illinois with worker exploitation and environmental damage, Venezuelan President Hugo Chavez has announced plans to confiscate the local unit of the company, the 200th nationalization of a private firm this year. The seizure comes as Venezuela suffers through a sinking economy and the continent's highest inflation rate. Some experts blame the conditions in part on the inefficiency caused by Chavez's takeovers of private industry, an element of his so-called 21st century socialism program. (Los Angeles Times, 10-27-2010; http://articles.latimes.com/2010/oct/27/world/la-fg-venezuela-nationalize-20101028)

Venezuela vows 'just compensation' for expropriated US firm

Venezuela will negotiate a "just compensation" for US glass maker Owens Illinois it expropriated earlier this week, Vice President Elias Jaua said Wednesday. "We've convened company officials here in Venezuela to begin talks on the company's transition from private to social property... (and) on setting up an evaluation committee for the payment of... a just compensation, as required under the law and the constitution," Jaua told a press briefing. Venezuelan President Hugo Chavez late Monday announced the expropriation of the local affiliate of the US-based firm, accusing it of causing environmental damage and exploiting its workers. (Yahoo News, 10-27-2010; http://news.yahoo.com/s/afp/20101027/bs_afp/venezuelauspoliticsbusinesscompany_20101027200454)

Santos, Chávez to meet in Caracas on Tuesday

The presidents of Colombia -Juan Manuel Santos- and Venezuela -Hugo Chávez- have plans to meet next Tuesday, November 2, in Caracas. This would be their second meeting since diplomatic relations between the two countries were resumed. "The meeting between Presidents Juan Manuel Santos and Hugo Chávez, on November 2 at the Miraflores Palace in Caracas, has been confirmed," reported a brief statement of Casa de Nariño, the seat of the Colombian Executive Office. (El Universal, 10-28-2010; http://english.eluniversal.com/2010/10/28/en_pol_esp_santos,-chavez-to-me_28A4665091.shtml)

70% of Venezuelans reject expropriations

Oscar Schemel, president of Hinterlaces, reported that over 70% of Venezuelans reject the policies of expropriation, confiscation and nationalization that President Chavez is advocating. "In the case of Polaris, the rejection of the expropriation is 76 %, a large majority of Venezuelans disagree with nationalizations and expropriations.  Polls carried out following parliamentary elections show that nearly 80 percent of Venezuelans believe that the results of these elections are a manifestation of a rejection of the direction the country is heading in right now," he said. (Notitarde, 10-28-2010; http://www.notitarde.com/notitarde/plantillas/nota.aspx?idart=1163477&idcat=9845&tipo=2)

Petroleum & Energy

Venezuela moves more oil exports away from U.S.

Venezuela has moved ahead with a strategy of diversification of oil exports by promising more fuel to Belarus and Syria and less to the United States, where President Hugo Chavez has hinted he would like to sell assets. Oil Minister Rafael Ramirez said on Wednesday that South America's top oil producer will boost crude oil exports to Belarus by 150 percent next year to 200,000 barrels per day. State oil company PDVSA will also export 20,000 bpd of diesel to Syria, under an agreement signed by Chavez on a recent tour. (Reuters, 10-27-2010; http://www.reuters.com/article/idUSTRE69R0DX20101028)

Citgo was impacted by sale of assets and financial aid to Pdvsa

The Venezuelan government reiterated its interest in selling the assets of Citgo Petroleum, the US subsidiary of the state-run oil company Petróleos de Venezuela. "Citgo has eight refineries in the United States; I don't know how many thousands of distribution tanks, terminals and pipelines. It distributes fuel, produced from Venezuelan crude oil via 8,000 gas stations, yet it yields no profit for us," President Hugo Chávez said on Monday. The Venezuelan president set a minimum price for the oil company because "Citgo should cost much more than USD 10 billion. If we sell it and put that money in banks, the benefits would be higher even if we only take interests into account." (El Universal, 10-27-2010; http://english.eluniversal.com/2010/10/27/en_eco_esp_citgo-was-impacted-b_27A4659411.shtml)

150% rise Venezuela oil shipments to Belarus

Following agreements signed between the Governments of Minsk and Caracas, Belarus will receive 200,000 barrels per day (bpd) in 2011, the minister of Energy and Petroleum and PDVSA President Rafael Ramirez told Reuters. Belarus currently receives about 80,000 barrels of PDVSA, which means that shipments will increase by 150% starting next year. Venezuela has embarked on a strategy of diversification with regards to the destinations of its crude oil exports. The main beneficiaries of this strategy have been China and Eurasian countries.  The government states that this policy is being pursued in order to reduce dependence on oil sales to the United States, which is currently the biggest customer for Venezuelan crude. (El Universal, 10-28-2010; http://www.eluniversal.com/2010/10/28/eco_art_venezuela-elevara-15_2083783.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.

October 11th, 2010

Economics, Trade & Business

Osorio: Polar and Cargill must go to the state

"Oligopolies do not ensure food security in the country and the Bolivarian government has seeking solutions to this problem for  11 years. There are two opposing extremes: the socialist and capitalist. Yankees’ attacks through their domestic lackeys have failed to halt the advance of the revolutionary laws. The Bolivarian government has made progress in these 11 years, despite capitalist and imperialist efforts." The speaker is not a stale leader of the radical left, but rather a general of the National Bolivarian Armed Forces. The People's Minister for Food, Carlos Osorio, is an example of the new era in Venezuela, in the process of building socialism. Companies like Polar and Cargill, as happened with Agroisleña should be in the hands of the state, said Osorio. The new coalition of forces in the National Assembly to be installed on January 5, 2011, will not be an impediment to the progress of the Revolutionary Government. (Correo del Orinoco, 10-11-2010; http://www.correodelorinoco.gob.ve/economia/osorio-polar-y-cargill-deben-pasar-a-manos-estado/)

Venezuela has seized about 185 industries in 2010

Carlos Larrazábal, the president of the Venezuelan Confederation of Industries (Conindustria), said that the Venezuelan government has seized at least 185 manufacturing companies in 2010, excluding firms in the agriculture sector. "We are concerned that the Venezuelan government will continue to seize companies without complying with Article 115 of the Constitution," Larrazábal said about the recent seizure of Agroisleña, Venoco and Fertinitro. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuela-has-seized_11A4591655.shtml)

Venezuela nationalizes Koch, Eni fertilizer plant

Venezuela's President Hugo Chavez nationalized a large U.S. and Italian-owned fertilizer factory on Sunday, just days after vowing to radicalize his state-led revolution in the aftermath of elections last month. The government will take over Fertinitro, one of the world's main producers of nitrogen fertilizer and part-owned by private U.S. company Koch and Saipem a subsidiary of Italy's Eni, Chavez said. During 12 years in power, the 56-year-old former soldier has put large swathes of the OPEC member country's economy into state hands. On Sunday, he also announced the nationalization of Venezuelan motor lubricants company Venoco. (Reuters, 10-10-2010; http://www.reuters.com/article/idUSN1026579720101011)

Venezuela's business sector asks top court for ruling on private property

Venezuela's private business association Fedecámaras will request that the Supreme Tribunal of Justice (TSJ) issue a ruling on the status of private property, said Noel Álvarez, the president of the Federation of Trade and Industry Chambers (Fedecámaras). "We are going to file an action with the TSJ for it to determine whether private property has been infringed or not," the business leader told private TV news channel Globovisión. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuelas-business_11A4591333.shtml)

Venezuela's government increases control over agricultural and industrial sectors

Venezuelan state policy to control the means of production was reinforced after President Hugo Chávez signed a decree expropriating Spanish farming supply firm Agroisleña, which provided supplies to 70 percent of the country's farmers before it was seized by the government. With  the seizure of Agroisleña, which was renamed Agropatria, the Venezuelan government aims at expanding and tightening the grip over food production. The first seizures of lands, which now total about 2.9 million hectares (7.17 million acres), were carried out at the end of 2004 with a series of expropriation decrees of farms located in the central state of Cojedes. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuelas-governme_11A4590051.shtml)

Nationalized agroindustry to offer products with discounts between 40 and 60%

The Venezuelan State company Agropatria (new name for the recently nationalized Agroisleña) will offer agricultural products at discounts between 40 and 60 percent, compared to the prices of said company when it was under private control. Agroisleña was nationalized on October 4 to put the company at the disposal of country’s agricultural development. During his weekly show “Alo, Presidente,” the Venezuelan Head of State ordered the reduction of 49.3% of the prices of 12 fertilizers, 43% the prices of 260 agrochemicals, and an average of 41.7% the prices of black beans, corn and rice seeds. (AVN, 10-11-2010; http://www.avn.info.ve/node/22405)

National Statistics Institute highlights Venezuelan inflation decreasing tendency

The President of the National Statistics Institute (INE) Elias Eljuri highlighted on Monday a deceleration of the inflation rate in Venezuela, estimating that the indicator will finish 2010 at about 27%, a figure well below the 40% predicted by “opposition” analysts. He reiterated that the inflation rate of 1.1% in September reflects this decreasing tendency and represents a significant reduction compared to the rate of 2.5% obtained in the same month last year. (AVN, 10-11-2010; http://www.avn.info.ve/node/22426)

Politics

Chavez backs China over Nobel for jailed dissident

Venezuelan President Hugo Chavez expressed solidarity with China's government Sunday over the awarding of the Nobel Peace Prize to a jailed Chinese dissident. He suggested the prize should not have gone to Liu Xiaobo, who has drawn praise from Western governments as an advocate of gradual political change without any violent confrontation with Chinese leaders. "This (Liu) is like Obama, the other peace prize," Chavez said. (Miami Herald, 10-10-2010; http://www.miamiherald.com/2010/10/10/1866972/chavez-backs-china-over-nobel.html)

The wave continues to swell

Since the appearance of the computers belonging to Raúl Reyes in 2008, the wave of compromising evidence indicating that the Hugo Chávez administration has ties with the narco-terrorist group, the Revolutionary Armed Forces of Colombia (FARC), has not ceased to grow. Now, this year, new facts have emerged that would seem to corroborate the high level of collaboration maintained by the Venezuelan Government not only with the FARC, but also with terrorist groups such as the National Liberation Front (ELN), and Euskadi Ta Askatasuna (ETA). On July 22, Álvaro Uribe presented accusations against Hugo Chávez before the International Criminal Court (ICC) and filed a lawsuit against the Bolivarian Republic of Venezuela before the inter-American Court of Human Rights (IACHR). (Veneconomy, 10-11-2010; http://www.veneconomy.com/site/?ids=44&idt=23417&idc=4)

Venezuelan opposition reinvents itself

Venezuelan opposition leaders have realized that unity works. They support this idea and they highlight this fact from their different political views. Ramón Guillermo Aveledo, the executive secretary of the Democratic Unified Panel (MUD), says that it is the best course to follow in the coming years. "Unity has proven successful. Unity -as people demand and as political success requires - has been endorsed by the successful election results," he said. According to Aveledo, they are now faced with a new challenge: proposing a real agenda to both slums and affluent residential areas. Such agenda should include "the fight against crime and against the high cost of living and the protection of private property." (El Universal, 10-08-2010; http://english.eluniversal.com/2010/10/08/en_ing_esp_venezuelan-oppositio_08A4577251.shtml)

ETA members claim they were trained in weapons use in Venezuela

The government of Venezuela's President Hugo Chávez has decided to launch an investigation into the activities of ETA activist Arturo Cubillas Fontán after it emerged that he provided weapons training to Xabier Atristain and Juan Carlos Besance, two alleged members of Basque terrorist group ETA, in Venezuela in 2008. (El Universal, 10-08-2010; http://english.eluniversal.com/2010/10/08/en_ing_esp_eta-members-claim-th_08A4582691.shtml)

Petroleum & Energy

Venezuela approves China's stake in Orinoco Oil Belt

Venezuela has approved China's stake in a joint venture to tap up to 400,000 barrels per day of extra-heavy crude oil in the Orinoco Oil Belt, under an agreement published in Venezuela's Official Gazette on Monday.
The Venezuelan government has negotiated several oil interests in the Junín block with companies from China (CNPC), Russia (Rosneft), Vietnam and Italy (ENI) after it completed a successful bidding of two multimillion projects in the Carabobo block of Venezuela's Orinoco belt. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuela-approves-c_11A4591291.shtml)

Domestic gas market requires over 2,000 million additional cubic feet (MMcf) -excluding what is demanded by the oil industry-  to satisfy domestic demand. This means production would have to double. PDVSA consumes 71% of the 7,000 MMcf a day of national production. (Veneconomy, 10-11-2010; http://www.veneconomy.com/site/?ids=44&idt=23417&idc=4)

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.