April 24, 2012

Economics & Finance

Amid food shortages, some blame price controls

Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here. The shortages hit both the poor and the well-off, in surprising ways. The heart government imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor, and these are often the very products that are the hardest to find. Prices are set so low that companies and producers cannot make a profit. So farmers grow less food, manufacturers cut back production and retailers stock less inventory. Moreover, some of the shortages are in industries, like dairy and coffee, where the government has seized private companies and is now running them, saying it is in the national interest. (The New York Times, 04-21-2012; http://www.nytimes.com/2012/04/21/world/americas/venezuela-faces-shortages-in-grocery-staples.html?_r=1)

Commodities

PDVSA: U$D 16 billion disbursed in interest payments since 2007

According to reports by the KPMG auditing firm, PDVSA's financial debt grew 1097% over the past five years, leading to high interest payments by the company. Audit reports show PDVSA disbursed U$D 16 billion for interest payments between 2007 and 2011. The report shows that in 2011 figures disclosed include devaluation costs, foreign currency sales to the Central Bank and assets transferred to government companies such as PDVAL. More in Spanish: (El Nacional; http://www.el-nacional.com/)

... and reported profits up due to sale of Germany-based refinery

PDVSA 2011 financial and operating results show the net profits of the state-owned oil company rose 42%, from U$D 3.14 billion to U$D 4.49 billion last year. However, PDVSA's financial statements show that the increase in the state-run oil company profits was due to the sale of PDVSA's shares in the four Ruhr Oel GmgH refineries in Germany, which were sold to Russian company ROSNEFT in October 2010, and to increasing oil prices. (El Universal, 04-21-2012; http://www.eluniversal.com/economia/120421/pdvsas-profits-climb-due-to-sale-of-germany-based-refinery)

           

... and the company meets 96% of oil export goals to China

PDVSA, which is committed to pay the loans made to Venezuela under the Chinese Fund, has shipped oil and oil products to China since 2007 at market prices. Based on data released last week by the state-owned oil company, Venezuela has achieved 96% of the oil export goals set under the agreements signed with Chinese authorities. (El Universal, 04-23-2012; http://www.eluniversal.com/economia/120423/pdvsa-meets-96-of-oil-export-goals-to-china)

CNPC, PDVSA to start building joint refinery in late April

State-run China National Petroleum Corp (CNPC) and Petróleos de Venezuela SA (PDVSA) will start building their mega joint refinery on China's southern coast later this month, a move would pave the way for more Venezuelan oil to flow to the world's second-largest oil user. CNPC, which operates key businesses via PetroChina, has been preparing for a formal construction kickoff of the 400,000 barrels-per-day (bpd) Jieyang plant in the coming weekend, two company officials said. (Reuters, 04-23-2012; http://www.reuters.com/article/2012/04/23/us-china-venezuela-refinery-idUSBRE83M07D20120423)

Vietnam, Venezuela begin tapping a new oil field

A Vietnam-Venezuela oil and gas joint venture has begun production at a new field in the Orinoco region with an initial output of 50,000 barrels per day (bpd), the Vietnamese government said on Thursday. The venture, PETROMACAREO, would raise extra heavy crude oil output from the field in Junin 2 block to 200,000 bpd by 2015, the government said in a statement. (Reuters, 04-19-2012; http://www.reuters.com/article/2012/04/19/vietnam-venezuela-oil-idUSL3E8FJ3OA20120419)

Iran to deliver oil tanker to Venezuela by September, Mehr says

Iran Marine Industrial Co. has completed two-thirds of an oil tanker ordered by Venezuela’s state oil company and will be delivering the vessel by late September, Mehr reported, citing, managing director of the Iranian company Mehdi Etesam. PDVSA signed a contract with the Iranian company, known as Sadra, for the construction of four Aframax tankers, each capable of carrying 113,000 tons of crude oil, Etesam said, according to a report by the state-run news agency published yesterday. The vessels will each cost about $52 million and delivery time will depend on the financing, he said. (Bloomberg, 04-23-2012; http://www.bloomberg.com/news/2012-04-23/iran-to-deliver-oil-tanker-to-venezuela-by-september-mehr-says.html)

International Trade

Spain to dispatch seventh ship to Venezuela on Monday

Next Monday, Spanish company NAVANTIA will dispatch to Venezuela the offshore patrol ship Kariña (PC-24). This is the seventh vessel built by said corporation as part of a cooperation agreement reached between Spain and Venezuela in 2005. The agreement is for construction and purchase of four offshore patrol ships and four coast patrol vessels for patrol duties in exclusive economic zones, and surveillance of coasts. (AVN, 04-20-2012; http://www.avn.info.ve/contenido/spain-dispatch-seventh-ship-venezuela-monday)

Venezuela expects arbitration award with ConocoPhillips by 2013

According to PDVSA's 2011 financial report, an arbitration award on the dispute filed by US oil company ConocoPhillips against state-run oil company Petróleos de Venezuela (PDVSA) at the International Chamber of Commerce (ICC) could be issued in 2013. (El Universal, 04-23-2012; http://www.eluniversal.com/economia/120423/venezuela-expects-arbitration-award-with-conocophillips-in-2013)

Oil for food barters increased by 64%

Venezuela's trade through the oil for food barter scheme increased by 64% in 2011 compared to 2010, while debt owed to Venezuela for oil shipments rose to U$D 493 million in 2011 versus U$D 301 million in 2010. Among the main items received by Venezuela are agricultural raw products shipped by countries within the Bolivarian Alliance for the Peoples of Our America (ALBA) and the PETROCARIBE oil pact. (El Universal, 04-23-2012; http://www.eluniversal.com/economia/120423/venezuelas-oil-for-food-barter-deals-increase-by-64)

Politics

Chávez rejects rumors on his health as an opposition scheme

In a telephone call from Havana, President Hugo Chavez said he would return to Venezuela on April 26, but then he must leave again for another session of radiation therapy and further medical tests. "On April 26, 27 and 28, I will be in Venezuela," he announced. (El Universal, 04-23-2012; http://www.eluniversal.com/nacional-y-politica/120423/chavez-rejects-rumors-on-his-health-as-an-opposition-scheme)

Authorities issue arrest order for judge fired for alleged links to drug suspect

The Prosecutor General says a request was issued through INTERPOL for the arrest of former Magistrate Eladio Aponte, who was dismissed from his post by the National Assembly on March 20 over accusations that he had ties to drug suspect Walid Makled. Aponte has accused officials in President Hugo Chavez’s government and military of manipulating court cases, and acknowledged that he had participated in these actions. Asked if he had received any calls from government officials seeking to manipulate court cases, he said: “Sure, from the president on down.” Aponte said that as military prosecutor and later as a Supreme Court magistrate, he received calls from officials including Prosecutor General Luisa Ortega and Supreme Court President Luisa Estella Morales seeking to intervene in cases. He also said there have been weekly meetings at which the Vice President met with the Supreme Court president, the chief prosecutor and other officials to lay out “guidelines” for the judiciary. (Washington Post, 04-20-2012; http://www.washingtonpost.com/world/the_americas/venezuelan-authorities-issue-arrest-order-for-judge-fired-for-alleged-links-to-drug-suspect/2012/04/20/gIQAK3YoWT_story.html)

US alert on the use of weapons by Venezuela

US Defense Secretary Leon Panetta has expressed concern over the use Venezuela will make of weapons is has recently bought from Russia, China and Iran. "We have no objection to the purchases, but we are concerned with they are going to do with that material". More in Spanish: (El Universal, 04-24-2012; http://www.eluniversal.com/internacional/120424/eeuu-alerta-por-uso-que-dara-venezuela-a-su-armamento)

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 10th, 2012

Economics & Finance

Venezuela still risky for investment

Economist Jesús Casique says the nation remains among the riskiest emerging nations according to daily measurements. This is when country risk for foreign investment is rated by companies such as Moody ´s, Standard & Poor´s, and J.P. Morgan; there is a surcharge on its bonds above the rate paid for US Treasury Bonds. More in Spanish: (Tal Cual, 02-10-2012; http://www.talcualdigital.com/index.html)

Trade Minister admits inflation linked to low production

Trade Minister Edmée Betancourt admitted that production must meet demand in order to reduce inflation. She recently said: “We have not yet managed to balance demand with production and that is why we have inflation”. She added that “we need to produce more”, saying: “Whenever we manage to balance production and demand we will have beaten inflation”. More in Spanish: (El Universal, 02-10-2012 http://www.eluniversal.com/economia/120209/admiten-que-inflacion-esta-ligada-a-escasa-produccion)

Commodities

PDVSA had record revenue of U$D128 billion in 2011

Petroleos de Venezuela SA, the state oil company, posted record annual revenue of U$D 127.8 billion in 2011, Venezuelan Oil Minister Rafael Ramirez said. That compares with revenue of U$D 94.9 billion in 2010. The company is using loans to finance its investment plan of about U$D 15 billion a year and pays expenses with cash flow, he said, without providing additional financial results. “When a company like PETROBRAS takes on new debt, everyone is happy,” Ramirez said, referring to Brazil’s state-controlled Petroleo Brasileiro SA. “But they criticize us when we do. We get loans because our company is strong. The China Development Bank, for example, has a very rigorous way of qualifying a company for a loan.” PDVSA’s total debt surged 40% in 2011 from a year earlier to U$D 34.9 billion after issuing more than U$D 10 billion last year in dollar-denominated bonds. (Business Week, 02-10-2012; http://www.businessweek.com/news/2012-02-10/venezuela-s-pdvsa-had-record-revenue-of-128-billion-in-2011.html and Reuters, 02-09-2012; http://www.reuters.com/article/2012/02/09/venezuela-pdvsa-idUSL2E8D9AE620120209)

PDVSA Ponzi scheme's US receiver sues to recover U$D 550 million for Venezuela

The US court-appointed receiver responsible for unwinding the asset management companies at the center of a Ponzi scheme involving Venezuelan state oil company Petroleos de Venezuela (PDVSA)'s pension funds in the US has filed 6 lawsuits in US Federal Court seeking U$D 550 million dollars from a host of figures, including PDVSA investment manager Juan Montes for bribery; Venezuelan multi-millionaire Moris Beracha and a host of his companies; and Ponzi schemer Francisco Illarramendi and his partners. (Latin American Herald Tribune, 02-09-2012; http://www.laht.com/article.asp?ArticleId=469516&CategoryId=10717)

Venezuela to increase oil production capacity to satisfy global demand

In view of estimates of rising oil demand worldwide, in excess of 100 million barrels a day, Venezuela is increasing its production capacity to satisfy future market demands, said the Petroleum and Mining minister, Rafael Ramirez.

Government expects to increase production from current three million barrels per day to four million in 2014 and to six million in 2019. (AVN, 02-09-2012; http://www.avn.info.ve/node/98633; http://www.avn.info.ve/node/98648)

By 2015 oil exports to China in 2015 will match current oil shipments to the US

Rafael Ramírez, Venezuela's Minister of Petroleum and Mining and president of state-run oil company Petróleos de Venezuela (Pdvsa) predicted that oil exports to China would be equal to current shipments of Venezuelan oil to the United States. Ramírez commented that PDVSA intends to export one million barrels a day to China in two years. The Asian superpower currently imports 460,000 barrels a day from Venezuela. (El Universal, 02-09-2012; http://www.eluniversal.com/economia/120209/oil-exports-to-china-in-2015-are-to-match-current-oil-shipments-to-the)

Refinery closing threatens Virgin Islands’ debt, employment

The U.S. Virgin Islands will confront the threat of a debt downgrade when one of the region’s largest oil refineries shuts down this month, doubling joblessness on St. Croix, the archipelago’s poorest island. About 2,000 workers will lose their jobs when the 350,000- barrel-a-day HOVENSA LLC refinery, a partnership of Hess Corp. (HES) and Petroleos de Venezuela SA, closes in mid-February to stem $UD 1.3 billion in losses over the last three years. The decision leaves the Virgin Islands without its biggest private employer and facing a widening budget deficit and higher energy costs as some of its best-paid jobs disappear. (Bloomberg, 02-09-2012; http://www.bloomberg.com/news/2012-02-09/refinery-closing-threatens-virgin-islands-debt-employment-1-.html)

PDVSA says secures March deadline on Brazil refinery

Venezuela's state oil company PDVSA says it managed to extend until the end of March a deadline to make its contribution to a long-delayed refinery project with Brazil's PETROBRAS. PETROBRAS said on Tuesday that PDVSA had failed to secure a U$D 10 billion loan from Brazil's state-development bank BNDES that it was counting on to pay its 40-percent stake in the Abreu e Lima facility. (Reuters, 02-09-2012; http://www.reuters.com/article/2012/02/09/venezuela-brasil-refinery-idUSL2E8D9BLG20120209; El Universal, 02-07-2012; http://www.eluniversal.com/economia/120207/pdvsa-fails-to-get-loan-for-pernambuco-refinery)

No problems in Sidetur

Unlike the situation in SIDOR-Guayana, there are no problems with contract workers at Sidetur, located in Barquisimeto’s Industrial Zone II, since they are few (around 20 people) and in charge of maintenance and services and are not “inherent in the company’s productivity,” said Vicente D’ Ángelo, a representative of the Sidetur Socialist Workers’ Union. (Veneconomy, 02-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29349&idc=3)

National Assembly approves agreement between PDVSA and GAZPROM

The National Assembly gave final approval to an agreement between Venezuelan Petroleum Corporation (Corporación Venezolana de Petróleo), a subsidiary of state-run oil company Petróleos de Venezuela (PDVSA), and GAZPROMBANK Latin America Ventures for the creation of a joint venture in the Orinoco Oil Belt. Under the agreement, PDVSA will own 60% of the venture and the Russian oil company will own 40% of the firm. The joint venture comprises an area of 21,236 square miles, in the states of Anzoátegui, Monagas and Guárico. (El Universal, 02-08-2012; http://www.eluniversal.com/economia/120208/national-assembly-approves-agreement-between-pdvsa-and-gazprom; AVN; http://www.avn.info.ve/node/98510)

International Trade

Trade agreement with Colombia reached, Colombia expects to increase sales to over U$D 2.5 billion

Colombian President Juan Manuel Santos has announced that Colombia and Venezuela reached a trade agreement to take the place of Andean Community rules. Colombia´s Trade Minister Sergio Díaz-Granados added that the final signature on annexes is expected soon, adding that over 91% of items exported by Colombia between 2006 and 2010 will have zero tariffs. Businessmen within the Colombia-Venezuelan Chamber are optimistic and expect to increase exports to Venezuela by U$D 2.5-3 billion, according to Chamber President Magdalena Pardo. More in Spanish: (El Nacional, 02-10-2012; http://www.el-nacional.com/ and  El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/colombianos-preven-aumentar-sus-ventas-a-venezuela.aspx)

Venezuela to purchase 20 Brazilian planes

President Hugo Chavez announced he signed an agreement with a representative of the Brazilian Government, Alessandro Teixeira, to purchase 20 airplanes to extend the air connection with Latin America and the Caribbean.

President Chavez said the deal discussed with Teixeira seeks to "ensure the future of Venezuela and the future of Brazil." The President highlighted other important projects reviewed as he said Venezuela is very interested in having Brazil's oil company PETROBRAS work in the Orinoco Oil Belt with the national venture, PDVSA. More in Spanish: (AVN, 02-09-2012; http://www.avn.info.ve/node/98629)

Venezuela and Haiti will cooperate in 12 areas under a three year agreement signed by Haitian President Michel Martelly and Venezuela´s Hugo Chávez. Areas covered by the agreement include agricultural development, irrigation systems, fertilizer production, industrial development, financial cooperation for productive credits, storage for oil byproducts, among others. More in Spanish: (El Universal, 02-10-2012; http://www.eluniversal.com/nacional-y-politica/120210/venezuela-y-haiti-acuerdan-cooperar-en-12-areas)

Politics

Chavez faces tough challenge in likely foe Henrique Capriles

When Chavez came on the political scene as a trim, 44-year-old former army paratrooper, his fresh face and revolutionary ideas made him a viable alternative to the established order. Now Capriles, who has a wiry athletic build and is 39, is offering a similar break — not only from the aging opposition politicians who came from the two-party system Chavez replaced but also from the president himself. Capriles faces an uphill battle, but polls released late last year showed him closer to the president than any other politician who has challenged Chavez. On Sunday, Capriles is expected to emerge from a field of five opposition leaders in a first-ever primary designed to choose one strong candidate who could end Chavez’s long rule in October’s presidential election, according to the Caracas-based pollster DATANALISIS. The very fact that a primary is taking place — one in which various parties are represented — demonstrates how a once-fractured opposition has united, political analysts say. (Washington Post, 02-07-2012; http://www.washingtonpost.com/world/venezuelas-hugo-chavez-faces-tough-challenge-in-likely-foe-henrique-capriles/2012/02/07/gIQArEVLyQ_story.html)

Election Board will announce primary results when 90% are tallied

Results will be given to the Election Committee of the National Unity Committee. No hour has been set for announcements, but polling stations will close at 4 PM if there are no voters in line. Experts feel it unlikely there will be results before 9 PM Sunday. More in Spanish: (El Nacional, 02-10-2012; http://www.el-nacional.com/)

Chávez postpones meeting with Brazil's Dilma Rousseff

President Hugo Chavez will not meet this weekend with his Brazilian counterpart Dilma Rousseff, as he had previously announced. He says he will travel to Brazil by the end of March to meet with Dilma Rousseff and promote the bilateral relationship. (El Universal, 02-09-2012; http://www.eluniversal.com/nacional-y-politica/120209/chavez-postpones-meeting-with-brazils-dilma-rousseff)

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.

December 02nd, 2011

Economics & Finance

Barclays estimates Venezuela inflation at 36.5% in 2012

In its latest report, Barclay’s says liquidity has increased 15.6% in real terms, and projects new official incentives due to the election campaign, which leads them to raise their 2012 inflation estimates for Venezuela from 26.2% to 36.5%. “It would be the highest rate since 1997”. More in Spanish: (El Universal, 12-02-2011; http://www.eluniversal.com/economia/111202/barclays-estima-que-la-inflacion-en-el-pais-llegara-a-365-en-2012)

Foreign debt up to U$D 94.6 billion

Despite an oil price exceeding U$D 90 per barrel, Venezuela's public sector has increased its debt through loans and the issuance of bonds. According to data provided by the Central Bank of Venezuela (BCV), external public debt (which includes the debt of the central government and state-owned companies) hit U$D 94.6 billion in the third quarter of 2011, up 21% compared to the same period of 2010, when the foreign debt was U$D 78.5 billion. According to analysts, even though Venezuela's debt levels are still manageable and there are collateral guarantees of payment given the upward trend of oil revenues, the growing debt has raised concern, in view of the substantial costs associated to high interest rates. (El Universal, 11-29-2011; http://www.eluniversal.com/economia/111129/venezuelas-foreign-debt-amounts-to-usd-946-billion)

Chavez pays half of CEMEX demand for seized Venezuela unit

Venezuela agreed to pay Mexican cement maker CEMEX SAB about half of what the company had been seeking in arbitration for a local unit that was nationalized by President Hugo Chavez in 2008. The deal, which Cemex expects to complete by Dec. 7, includes a cash payment of U$D 240 million and U$D 360 million in bonds issued by state oil company Petroleos de Venezuela SA, the Mexican cement maker said today in a filing to Mexico's stock exchange. The arbitration proceedings will be terminated "subject to receiving full payment," said Jorge Perez, a Cemex spokesman. (San Francisco Chronicle, 12-02-2011; http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/12/01/bloomberg_articlesLVJP2K6JTSE8.DTL#ixzz1fNNIDxcj)

Estimates indicate U$D 22 billion pending tab for nationalizations

According to ECOANALITICA, the Government has paid out U$D 11.4 billion for nationalizations, including the recent CEMEX settlement. It estimates pending obligations add up to U$D 22 billion, which is 79% of international reserves currently pegged at U$ 27.8 billion. More in Spanish: (El Universal, 12-02-2011; http://www.eluniversal.com/economia/111202/estiman-en-22-millardos-deuda-por-nacionalizaciones)

300 companies have registered in the Price Control Authority (SUNDECOP)

Over 300 companies have registered at www.sundecop.gob.ve, according to information in the SUNDECOP’s web page. Costs and Prices Superintendent Karlin Granadillo has said that once its true value has been determined for a product, the Maximum Sale Price (PMV, in Spanish) to the public will be established as of December 15. (Veneconomy, 12-01-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28659&idc=3)

Caracas among the cities with the worst standard of living

The Venezuelan capital ranked 164th out of 211 cities in the world included in the Mercer's 2011 Quality of Living Survey. Montevideo, Buenos Aires, Santiago de Chile, and Panama City are the Latin American cities with the highest quality of living in the region, according to a ranking released by consulting firm Mercer. Vienna has the best living standard in the world, followed by Zurich and Auckland. (El Universal, 11-30-2011; http://www.eluniversal.com/nacional-y-politica/111130/caracas-among-the-cities-with-the-worst-standard-of-living)

Commodities

Area to be developed by CVP and Odebrecht E&P Spain is delimited

Delimitation of the geographical area where a joint venture formed by state-run oil company Corporación Venezolana de Petróleo (CVP) and Odebrecht E&P Spain will operate was published in the Official Gazette No. 39,810, dated Tuesday, November 29, 2011. The area will include three oil fields: Mara Oeste (41 square miles), Mara Este (111 square miles), both located at Mara Municipality; and La Paz area (68 square miles), located in Jesús Enrique Lossada municipality, in the northwestern state of Zulia, according to Resolution No. 174 of the Ministry of Petroleum and Mining. The joint venture will develop an area of 220 square miles. (El Universal, 11-30-2011; http://www.eluniversal.com/economia/111130/area-to-be-developed-by-cvp-and-odebrecht-ep-spain-is-delimited)

PDVSA revives project to build pipeline through Colombia

Colombian President Juan Manuel Santos and his Venezuelan counterpart Hugo Chávez signed this week several bilateral energy agreements, one of which dusts off the state-run oil company Petróleos de Venezuela's idea of laying a pipeline from Venezuela through Colombian territory in order to take advantage of Colombia's access to the Pacific Ocean. This project was first outlined in 2006, but the idea did not materialize because bilateral relations were frozen amidst verbal clashes between former Colombian President Álvaro Uribe Vélez and Chávez. (El Universal, 11-30-2011; http://www.eluniversal.com/economia/111130/pdvsa-takes-up-project-to-build-pipeline-through-colombia)

Cement and concrete sales fall short of 2009 levels

Sales of construction materials such as concrete and cement rebounded between January and September 2011, but remained far below those recorded in 2009. According to data compiled by cement companies and steelmakers, sales of these construction materials rose only 8%, despite the fact an official priority for the Great Housing Mission, intended to solve a substantial housing deficit in the country. (El Universal, 11-30-2011; http://www.eluniversal.com/economia/111130/cement-and-rebars-sales-fall-short-of-2009-levels)

PDVSA’s negotiations in Brazil’s refinery still ongoing

Negotiations regarding Petroleos de Venezuela S.A. (PDVSA) stake in the Refinery Abreu e Lima S.A. (RNEST) are still ongoing, according to PETROBRAS. PDVSA has been taking action to formalize guarantees for the Brazilian Development Bank (BNDES) to back its future obligations in respect of the RNEST Loan Contract with BNDES. (Latin American Herald Tribune, 11-30-2011; http://www.laht.com/article.asp?ArticleId=448988&CategoryId=10717)

International Trade

Colombia, Venezuela agree to zero-tariff for 3,800 items

Venezuela and Colombia have signed a Partial Trade Agreement (PSA). Although it’s terms and conditions are far different from those governing trade relations among the member countries of the Andean Community of Nations (CAN), the agreement provides some stability. Venezuela's Minister of Industry Ricardo Menéndez said that the two countries agreed to keep "zero-tariff" for 3,800 items. "The agreement will include all the tariff codes that we have been in place over the past five years," Menéndez said. The Venezuelan official stated that the number of items included would prevent any "disturbance" in the economies of the two countries. (El Universal, 11-30-2011; http://www.eluniversal.com/economia/111130/colombia-venezuela-agree-to-zero-tariff-for-3800-items)

PARMALAT apologizes for riling Chavez

Italy's PARMALAT apologized on Tuesday to President Hugo Chavez after a highly public spat over alleged milk hoarding by the dairy company's local unit in the South American nation. "We respectfully address you to offer our most sincere apologies," PARMALAT said in a letter to Chavez published by local media, saying it had failed to communicate its position clearly over authorities' confiscation of some milk. (Reuters, 11-29-2011; http://www.reuters.com/article/2011/11/29/venezuela-parmalat-idUSN1E7AS0JM20111129)

Politics

Chavez sees a Caracas-Brazil-Buenos Aires axis; signs deals with Rousseff and Fernández

Presidente Chavez underlined the importance of an axis of Argentina-Brasil-Venezuela within the context of the newly formed Community of Latin American and Caribbean States (CELAC). He signed several agreements with his Brazilian and Argentine counterparts, Dilma Rousseff and Cristina Kirchner. Brazil obtained agreements to set up a mixed venture between the Venezuelan Petroleum Corporation (CVP) and the ODEBRECHT construction firm in order to expand primary projects called for in the Hydrocarbons Law; and an agreement to carry out a hydroelectric project in Uribante-Caparo (Táchira state). Argentina will sell Venezuela powdered milk, beef, refined soy oil, chickens, rice, soy beans and yellow corn throughout 2012. More in Spanish: (Agencia Venezolana de Noticias, 12-02-2011;  http://www.avn.info.ve/contenido/venezuela-y-argentina-firman-acuerdos-áreas-energía-industria-y-comercio; http://www.avn.info.ve/contenido/venezuela-y-brasil-consolidan-acuerdos-vivienda-energía-petróleo-y-agricultura; http://www.avn.info.ve/contenido/chávez-discutió-fernández-y-rousseff-creación-eje-caracas-brasil-buenos-aires; El Universal, http://www.eluniversal.com/nacional-y-politica/111202/venezuela-y-brasil-firman-11-acuerdos-de-cooperacion)

Venezuela perceived as the most corrupt country in the region and one of the most corrupt countries in the world, ranking 172nd in a study by Transparency International (TI) that included 182 nations. The least corrupt countries are New Zealand, Denmark and Finland while the bottom of the pack includes Myanmar, North Korea and Somalia. Chile ranked 22nd. (Veneconomy, 12-01-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28666&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.

October 18th, 2011

Economics & Finance

Venezuela sells U$D 3 billion of 15-year bonds within local market

Venezuela sold U$D 3 billion of bonds due in 2026, swelling total issuance this year to a record U$D 7.2 billion as President Hugo Chavez looks to finance government social programs ahead of his re-election bid. The bonds were priced to yield 11.75%, according to a statement published on the Public Credit Office’s website. Venezuelans who bought them in bolivars at the official rate of 4.3 per dollar, at a price of 95 cents on the dollar, can sell the bonds abroad at a discount to obtain foreign currency as a way to skirt controls imposed in 2003. (Bloomberg, 10-17-2011; http://www.bloomberg.com/news/2011-10-17/venezuela-sells-3-billion-of-11-75-bonds-due-in-2026.html; El Universal, 10-17-2011; http://www.eluniversal.com/economia/111017/individuals-access-to-venezuelas-foreign-currency-bond-limited)

U$D 47.452 billion in dollar denominated bonds are now outstanding

Since 2005 Venezuela has primarily used bond issues for financing government expenditure. Over 12 years of the Chavez administration there have been 17 bond issues for a total of U$D 47.452 billion, which is above current international reserves of U$D 30.594 billion. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/mercados/inversion/gobierno-ha-emitido-$47-452-millones-de-bonos-en-d.aspx)

200% increase projected in government food acquisition expenditure

As international dollar denominated food prices continue on the rise, President Chavez announced official plans to guarantee food supplies to the general population. The government has increased by 200% its projected budget for buying foodstuff in order to avoid scarcities. The plan to supply basic foods calls for an increase of 4900 tons of edibles for state distribution. More in Spanish: (El Mundo, 10-17-2011; http://www.elmundo.com.ve/noticias/economia/agro/gobierno-se-blinda-para-asumir-una-factura-aliment.aspx and http://www.elmundo.com.ve/noticias/economia/politica/gobierno-anuncia--soberania-alimentaria-para-2014”.aspx)

Giordani believes crisis in US reflects the depletion of its socio-productive model

Planning and Finances minister, Jorge Giordani, considers what he calls a current financial and political crisis in the United States to be " a consequence of the concentration of power" and of a productive model that generates inequalities. He claims the development and "sophistication" of finances, stocks and payment methods transformed into a bubble that has finally exploded. According to the architect of Venezuela’s current economic model:"True economy distances itself from the real economy and, at the end, a balloon is created that cannot resist the internal pressure anymore." (AVN, 10-17-2011; http://www.avn.info.ve/contenido/crisis-us-reflects-depletion-its-socio-productive-model)

Commodities

Venezuela oil jumps U$D 6 to U$D 102.05

Venezuela’s oil for export basket rose for the first time in 4 weeks, jumping U$D 5.75 a barrel, to U$D 102.05 for the week of October 10-14, Venezuela's Energy and Oil ministry said. The Venezuelan barrel of crude oil and products had fallen to U$D 96.30 the previous week. (Latin American Herald Tribune, 10-16-2011; http://www.laht.com/article.asp?ArticleId=433605&CategoryId=10717)

Expert: Guyana intends to develop oil fields at disputed waters

Oil expert Aníbal Martínez says the delimitation of marine and submarine waters along the western Venezuelan coast in state of Delta Amacuro is vital to ensure control over known energy resources and of those likely to be found in the area. He says Guyana's formal request to the United Nations Commission on the Limits of the Continental Shelf (CLCS) to extend its continental shelf and maritime domain from 200 to 350 nautical miles is a threat to Venezuelan gas projects such as DELTANA Platform located at Delta del Orinoco (El Universal, 10-17-2011; http://www.eluniversal.com/nacional-y-politica/111017/expert-guyana-intends-to-develop-oil-fields-at-disputed-waters)

Brazilian daily reports China Development Bank backs PDVSA loan for refinery

A Chinese government-backed bank will provide loan guarantees needed by Venezuela's government-run oil company, Petroleos de Venezuela SA, to participate in construction of an oil refinery in Brazil, according to a person familiar with the transaction. Over the weekend, the O Estado de Sao Paulo newspaper reported the China Development Bank will provide 75% of the bank guarantees needed by PDVSA to participate in the U$D15 billion Abreu e Lima refinery to be built in Brazil's Pernambuco state in partnership with Brazil's government-run oil company, Petroleo Brasileiro, S.A. (Fox Business; 10-17-2011; http://www.foxbusiness.com/industries/2011/10/17/china-development-bank-backs-pdvsa-loan-for-refinery-source/)

International Trade

Provisional trade rules expire this Friday

Next Friday the provisional trade rules established between Venezuela and Colombia will expire. Negotiations have been conducted for six months and Foreign Ministers Nicolás Maduro y María Ángela Holguín and scheduled to meet next Monday in Bogotá. The Bilateral Chamber of Commerce in Caracas believes it possible that a new extension will be agreed to, and suggests it should be “for 180 days or a year, in order to allow both sides time enough” to arrive at a full agreement. More in Spanish: (El Universal, 10-17-2011; http://www.eluniversal.com/economia/111017/en-manos-de-chavez-y-santos-extension-de-norma-andina)

Logistics & Transport

Almost half of national aircraft units are damaged

As local airlines prepare to submit import requirements for replacement parts needed for out-of-service aircraft, the head of the National Aeronautics Institute (INAC), Francisco Paz Fleitas, has confirmed that 43 to 45 out of 90 units of national aircraft are out of service for lack of replacement parts. More in Spanish: (Ultimas Noticias, 10-17-2011; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/la-mitad-de-los-aviones-nacionales-estan-danados.aspx)

Politics

Chavez heads to Cuba for cancer check-up

President Hugo Chavez said he is travelling to Cuba for a health check-up, four months after he had surgery for cancer there. He said tests would determine if any cancerous cells remained in his body and has previously described his treatment as successful. But secrecy about his illness has fuelled speculation that it may be worse than officially stated. In comments broadcast on Venezuelan state television, he said he was going to Cuba to undergo "rigorous examinations" to check for cancerous cells, and would "inform the people" on his return to Venezuela. He has also said his illness will not stop him from standing for re-election next year. (BBC News, 10-15-2011; http://www.bbc.co.uk/news/world-latin-america-15323343)

Former Chavez surgeon projects President’s life expectancy up to two years

According to surgeon Salvador Navarrete, who was part of the President’s medical team, Hugo Chavez has “an aggressive pelvis tumor and his life expectancy could be up to two years”. In an interview, the former medical advisor said he is surgeon for the Chavez family, which has supplied him the information. More in Spanish: (El Nacional, 10-17-2011; http://www.el-nacional.com/; Fox News, http://www.foxnews.com/world/2011/10/17/report-venezuelas-chavez-only-has-two-years-to-live/)

Supreme Court bars Hugo Chavez rival from taking office

The Court dismissed as "unfeasible" a decision issued last month by the Inter-American Court of Human Rights, based in Costa Rica that demanded Venezuelan electoral officials allow presidential hopeful Leopoldo Lopez to run for office. The former Caracas district mayor was on a list of politicians blacklisted due to corruption investigations but insists he is innocent and was never sentenced in a court. The Supreme Court president, Luisa Estella Morales, told reporters that Lopez "can freely sign up and participate in elections" including next year's presidential vote, but whether or not he could actually take office if elected "isn't within the judicial branch's analysis at this time". Chavez has strongly criticized the Costa Rica-based Human Rights court, saying it was part of an international system that "protects the corrupt and obeys the mandate of the [US] imperial power". The coalition of Venezuela's main opposition parties, known as the Democratic Unity Table, condemned the supreme court ruling, saying in a statement that it violated the constitution as well as international treaties and promising to take the matter to the Organization of American States. (The Guardian, 10-18-2011; http://www.guardian.co.uk/world/2011/oct/18/venezuela-bars-hugo-chavez-rival?newsfeed=true)

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 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.