February 14th, 2012

Economics & Finance

Venezuela bonds gain as Chavez rival wins primary landslide

Venezuelan bonds rallied after opposition candidate Henrique Capriles Radonski won more than 60% of the vote in a nationwide primary, a margin of victory that analysts said could strengthen his bid to unseat President Hugo Chavez in October elections. The yield on Venezuela’s benchmark 9.25% bonds due in 2027 fell 30 basis points, or 0.30% point, to 11.80%, the lowest since April 2010, at 3:30 p.m. in New York, according to data compiled by Bloomberg. The bond’s price rose 1.75 cents to 82 cents on the dollar. (Bloomberg. 02-13-2012; http://www.bloomberg.com/news/2012-02-13/venezuela-bonds-rally-as-capriles-wins-presidential-primary-caracas-mover.html)

Government gives Pepsi venture 4 Days to provide water receipts

Pepsi-Cola Venezuela, C.A. has four days to provide receipts to the government after the country’s price control agency received complaints that the company raised its price for mineral water ahead of price caps. The company, a joint venture between PepsiCo Inc. and the country’s largest foodmaker, Empresas Polar, must provide receipts for the November-to-January period showing what it has been charging for the water, according to a government statement sent by e-mail today. (Business Week, 02-13-2012; http://www.businessweek.com/news/2012-02-13/venezuela-gives-pepsi-venture-4-days-to-provide-water-receipts.html)

New controlled prices of several hygiene and basic products will come into effect on March 1st, according to Vice President Elías Jaua. He said businessmen will have the right to appeal to what was reviewed and that the government would be willing to go over decisions “if there were something convincing.” (Veneconomy, 02-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29400&idc=3)

Commodities

PETROBRAS gives PDVSA till 2013 to enter refinery

Brazil's PETROBRAS will allow its Venezuelan counterpart PDVSA to assume its stake in the Abreu e Lima refinery as late as 2013 when operations are expected to begin, Petrobras' supply director Paulo Roberto Costa said on Monday. Venezuela's state oil company PDVSA said last week it had managed to extend until the end of March a deadline to make its contribution to a long-delayed refinery project in northeast Brazil. PDVSA had failed earlier in February to secure a U$D10 billion loan from Brazil's state-development bank BNDES that it was counting on to pay its 40% stake in the Abreu e Lima facility. This was the latest of several deadlines that the Venezuelan company had missed in a six-year saga. (Reuters, 02-13-2012; http://www.reuters.com/article/2012/02/13/petrobras-pdvsa-refinery-idUSL2E8DDEC420120213)

PDVSA spilled 60,000 barrels of crude into river, lawmaker says

Venezuelan opposition lawmaker Hiram Gaviria said state oil company Petroleos de Venezuela SA spilled 60,000 barrels of crude oil from a pipeline into almost 140 kilometers (87 miles) of the Guarapiche River in eastern Monagas state. About 70% of the residents of Maturin, the state capital, have lost their drinking water supply since the oil spill occurred last week, said Gaviria. Members of congress’s environmental committee, which Gaviria heads, will visit Maturin Feb. 13, Union Radio reported. (Bloomberg, 02-11-2012; http://www.bloomberg.com/news/2012-02-11/pdvsa-spilled-60-000-barrels-of-crude-into-river-lawmaker-says.html)

Oil spill has been contained, Environment minister says

Environment Minister Alejandro Hitcher said that the oil spill in the eastern state of Monagas has been brought under control after an emergency was declared due to a pipeline rupture at the Jusepin Complex operated by state-owned Petroleos de Venezuela, or PDVSA. “We already have complete control of the oil spill. Ninety percent of the crude is already confined by the containment barriers and is being extracted with the different systems the petroleum industry has to deal with this type of accident,” said Hitcher. (Latin American Herald Tribune, 02-12-2012; http://www.laht.com/article.asp?ArticleId=470342&CategoryId=10717; El Universal, 02-13-2012; http://www.eluniversal.com/economia/120213/ninety-percent-of-oil-spill-in-venezuela-reportedly-collected)

Gold law curbs local mining

The reform of the decree on the Organic Law which Reserves the State the Activities of Gold Exploration and Exploitation, effective since December 15, 2011, "curbs the local mining development," according to Luis Rojas Machado, president of the Venezuelan Mining Chamber (CAMIVEN). Currently, "the sector does not show the best numbers in production, investment, employment and maintenance of equipment," he underlined. The legal framework, even with recent amendments, "does not provide incentives for companies to improve such conditions." (El Universal, 02-13-2012; http://www.eluniversal.com/economia/120213/gold-law-curbs-local-mining)

International Trade

Colombia will sell food to Venezuela at no tariff

According to Colombian authorities, the Partial Trade Agreement reached between Colombia and Venezuela provides that 91% of items traded between 2006 and 2010 will be exempt from any tariff once the agreement comes into force. More in Spanish: (El Universal, 02-14-2012; http://www.eluniversal.com/economia/120214/colombia-vendera-alimentos-al-pais-con-cero-arancel; El Nacional; http://www.el-nacional.com/)

Dangerous liaisons

Venezuela's exports to Iran are just a fraction of its imports from Iran, which in 2009 were nearly U$D 90 million. In 2010, Venezuela and Iran agreed to establish a joint development bank with an initial capital of U$D 200 million. Both countries have signed dozens of trade agreements which on paper are worth millions of dollars. Iran is also helping Venezuela build houses and raised milk factories and cars in our country. According to TAL CUAL daily, the issue that concerns all Venezuelans is if both nations can benefit from this relationship and whether we can lose many of our natural allies if the Bolivarian government continues to emphasize this relationship. More in Spanish: (Tal Cual, 02-13-2012; http://www.talcualdigital.com/index.html)

Politics

Henrique Capriles will face Hugo Chavez in race

Presidential candidate Henrique Capriles easily won Sunday's primary vote to become the single challenger against President Hugo Chavez, setting the stage for an intense campaign season leading to the general election in October. Capriles, the governor of Miranda state, was declared the winner late Sunday with about 95% of the votes counted, officials said. Zulia state Gov. Pablo Perez came in a distant second. Speaking to thousands of supporters in east Caracas on Sunday night, Capriles thanked voters who "overcame obstructions and intimidation" to vote for him. Capriles was joined at his victory speech by his four opponents in the primary race, all of whom pledged to support him in the presidential race. (Los Angeles Times, 02-12-2012; http://www.latimes.com/news/nationworld/world/la-fg-venezuela-election-20120213,0,5226846.story; Reuters, 02-13-2012; http://www.reuters.com/article/2012/02/13/us-venezuela-election-opposition-idUSTRE81B0ET20120213)

Luis Vicente León: moderation triumphed

DATANALISIS director Luis Vicente Leon said that the primary results and the triumph of Henrique Capriles show that the population favored moderate opposition political discourse versus more radical approaches. More in Spanish: (Ultimas Noticias, 02-13-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/luis-vicente-leon--triunfo-la-moderacion.aspx)

US calls primary vote “just one step” in democratic process

Mike Hammer, US Assistant Secretary of State for Public Affairs Estates called Venezuela’s primary vote “just one step” in the democratic process; adding that the democratic process must allow Venezuelans to cho0se their leaders in “free and fair” elections, More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/primarias-2012/120214/eeuu-senala-que-primarias-son-un-paso-en-el-proceso-democratico)/

Capriles: the government speaks of the past, we talk about the future

Opposition presidential candidate Henrique Capriles Radonski said that "the government is stuck in the past, while our vision is the future. This is a closure." The governor of the state of Miranda said that the support he received from his opponents after the primaries is real. "All of those who were in the race... recognized the results and went immediately to our campaign team's headquarters to offer their support." (El Universal, 02-13-2012; http://www.eluniversal.com/nacional-y-politica/primarias-2012/120213/capriles-the-government-talks-about-the-past-we-talk-about-the-future)

Venezuela is world´s worst for legal disputes

Venezuela is the worst country in the world when it comes to having a legal framework that can help private businesses settle disputes, according to a Latin Business Chronicle analysis of an executive opinion survey from the Swiss-based World Economic Forum (WEF). Many foreign companies have had to take their disputes with the government of Venezuela to international for a like The World Bank's International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C. and the Paris-based ICC (International Chamber of Commerce). (Latin Business Chronicle, 02-13-2012; http://www.latinbusinesschronicle.com/app/article.aspx?id=5476)

Chavez: New satellite to contribute with technological development

The new satellite named “Generalissimo Francisco de Miranda” will be a great jump for Venezuela's independence and technological development, according to president Hugo Chavez at the farewell ceremony for a group of Venezuelan engineers leaving for China to be trained for the earth observation satellite project. This satellite is expected to contribute with the scientific, human and economic development of Venezuela, Chavez added. (AVN, 02-10-2012; http://www.avn.info.ve/node/98845)

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.

February 07th, 2012

Economics & Finance

International reserves down 8% due to transfers to FONDEN

International reserves have dropped 8% so far this year due to fund transfers from the Central Bank to the National Development Fund (FONDEN). Bank reports show it transferred U$D 500 billion to FONDEN, which adds up to U$D 1 billion this year. Reserves now stand at U$D 27.5 billion, down from U$D 29.8 billion at the close of 2012. More in Spanish: (El Universal, 02-07-2012; http://www.eluniversal.com/economia/120207/caen-8-las-reservas-internacionales-por-traspasos-al-fonden)

Venezuelan dollar bonds outperform region as yields plunge

Venezuela’s bonds gained, pushing yields relative to Treasuries to the lowest level in a year, as signs U.S. economic growth is accelerating fueled demand for higher-yielding emerging-market assets. The extra yield that investors demand to hold Venezuelan dollar debt instead of Treasuries shrank 56 basis points, or 0.56 percentage point, at 4:58 p.m. in New York to 1,073 basis points, the lowest since Feb. 8, 2011, according to JPMorgan Chase & Co.’s EMBI Global index. The yield differential has narrowed 80 basis points in the past week, compared with 33 for Latin American government debt, the index showed. (Bloomberg, 02-03-2012; http://www.bloomberg.com/news/2012-02-03/venezuelan-dollar-bonds-outperform-region-as-yields-plunge-caracas-mover.html)

ECONOMETRICA projects scenarios for Venezuela’s economy in 2012

The ECONOMETRICA economic analysis firm is projecting three scenarios for Venezuela’s economic performance in 2012. The base or average scenario says GDP will grown 2.1% in 2012, with oil averaging U$D 100 per barrel. A more positive scenario would have oil prices at U$D 120 per barrel and GDP at 2.7%. It says a negative scenario is unlikely. It also expects an increase in oil exports to be between 1.3% and 2.3%, More in Spanish: (El Mundo, 02-07-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/posibles-escenarios-para-la-economia-venezolana-en.aspx)

Food production stalled because of expropriations

Based on the numbers supplied by the Executive Office, from 2004 to date, government authorities have requisitioned around 3,600,000 hectares, which does not translate into raising food output. (El Universal, 02-04-2012; http://www.eluniversal.com/economia/120204/claims-of-arrested-production-because-of-expropriations)

Ten companies per week were expropriated during 2011

El proceso de expropiaciones emprendido por el Gobierno no corresponde con el número de indemnizaciones a los que obliga la Ley de Expropiaciones. The estimation was made by the National Council of Industry (CONINDUSTRIA), the National Association of Property Owners, the Federation of Spanish Centers in Venezuela, the National Confederation of Agricultural Producers and other NGO’s, which indicate only 10% of expropriated assets, have seen any sort of compensation. More in Spanish: (El Mundo, 02-07-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/diez-empresas-por-semana-expropio-el-gobierno-en-2.aspx)

Minister Ramirez: 86% of housing estimated this year to be ready in the first half of 2012

Rafael Ramirez, territorial vice-president and coordinator of the High Authority of the National Housing And Habitat System, claimed that 86% of construction projects currently in execution are expected to be finished in 2012 shall be ready in the first half of the year. This is estimated to benefit about 25,722 families currently living in about 572 makeshift shelters. (AVN, 02-06-2012; http://www.avn.info.ve/contenido/minister-ramirez-86-housing-estimated-year-be-ready-first-half-2012)

Commodities

PDVSA faces a growing challenges and mounting responsibilities

State oil- company PDVSA has seen its production and exports decrease as debt obligations and other commitments mount. It now faces the challenge of raising the volume of extraction to 3.5 million bpd, up from the current average of 2.9 million bpd, in the face of declining oilfields, a cut in the output by the Organization of Petroleum Exporting Countries (OPEC) and issues concerning the crude oil upgraders at Orinoco oil Belt. (El Universal, 02-04-2012; http://www.eluniversal.com/economia/120204/pdvsa-faces-a-growth-challenge-with-multiple-responsibilities-to-meet)

PDVSA oil pipeline explosion, leak shut down services

A Petroleos de Venezuela, S.A. oil pipeline at Monagas state’s Jusepin complex suffered an explosion and leak, which reached a dam and forced the shut-down of a water plant and power station, reducing the electricity supply, the Monagas governor’s office said. The “crude oil leak” reached the San Vicente dam and forced the indefinite stoppage of the Bajo Guarapiche water plant, the Monagas governor’s office said on its Twitter account. The leak also forced the stoppage of the Jusepin power station. (Bloomberg, 02-04-2012; http://www.bloomberg.com/news/2012-02-04/pdvsa-controls-jusepin-oil-pipeline-crack-company-says.html)

SIDOR rudderless and without support for the past 18 months

Steelmaker SIDOR –the second largest company in Venezuela - has gone without a stockholder meeting since September 10, 2009, and the latest Board of Directors meeting was August 5, 2010, 18 months ago, and even then most directors – political appointees – did not show, nor have most of them ever set foot in SIDOR. The company’s Executive President, Carlos D’Oliveira, continues to act without having his signature validated, while the Chairman of the Board still appears to be Rodolfo Sanz, current Ambassador to Ecuador, who left his position in April 2010. More in Spanish: (Tal Cual, 02-06-2012; http://www.talcualdigital.com/index.html)

Politics

ALBA Summit closed with new special members, stressing defense of sovereignty

The 11^th Summit of the Bolivarian Alliance for the Peoples of America (ALBA), held this weekend in Caracas, closed stressing the defense of sovereignty and people's self-determination, besides the adhesion of Suriname and Saint Lucia as special members of the bloc and Haiti as full member. "We have changed from three to six Caricom members in the ALBA and, though we did not realize it, they represent more than half the population (of that Caribbean organization)," said Prime Minister of Saint Vincent and the Grenadines, Ralph Gonsalves. The next ALBA meeting will take place in Dominica next August. (AVN, 02-05-2012; http://www.avn.info.ve/contenido/alba-summit-closed-new-special-members-stressing-defense-sovereignty; http://www.avn.info.ve/contenido/suriname-saint-lucia-request-full-alba-membership; and http://www.avn.info.ve/contenido/next-alba-summit-take-place-dominica)

ALBA economic independence depends on Venezuelan oil

During the second session of the 11th Summit of Heads of State of the Bolivarian Alliance for the Peoples of Our America (ALBA), President Hugo Chavez said the Orinoco Oil Belt "is the main engine for the integral development of Venezuela and to cooperate with the economic independence" of the members of the regional bloc. Chavez warned his counterparts that the United States wants to take possession of the Orinoco Oil Belt "because it has oil for 200 years." The President estimated crude oil production to 2014 at 4 billion barrels per day. According to him, it would allow "more flexibility in all these programs" of cooperation with Caribbean countries. (AVN, 02-05-2012; http://www.avn.info.ve/contenido/venezuela-boost-alba-economic-independence-oil)

Giordani ranked the worst Finance Minister in Latin America

A survey carried out by Chilean magazine America Economía ranked Jorge Giordani last among Finance Ministers in 18 Latin American nations. The magazine says Giordani “is considered responsible for the lowest institutional development in Venezuela´s economic management, least transparency, the promotion of policies that stifle investment and the creation of wealth, creating an economy that is ever more dependent on the price of oil and State decisions”. The best ranked minister was Juan Carlos Echeverry, of Colombia. More in Spanish: (Ultimas Noticias, 02-06-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ponen-a-giordani-como-el-peor-ministro-de-finanzas.aspx)

Opposition angered as Chavez celebrates coup

President Hugo Chavez mounted a lavish celebration on Saturday to mark the 20th anniversary of the failed coup that helped launch his political career, as opposition leaders slammed the event as a blemish on the country's democracy. (Reuters, 02-05-2012; http://www.reuters.com/article/2012/02/05/us-venezuela-chavez-idUSTRE8130RA20120205)

American oil worker murdered in Venezuela

A U.S. citizen employed by Intermoor Inc., a closely held Houston-based oil-services provider, was fatally shot in Venezuela on Jan. 27, according to the attorney general’s office. Craig Dwayne Cormier, 36, was caught in crossfire at 11:30 p.m. in the city of Carupano in eastern Sucre state, the attorney general’s office said in a statement today. He had arrived in Venezuela two days earlier to conduct repair work on the Turquoise vessel that services an offshore platform owned by state-oil company Petroleos de Venezuela SA, according to the statement. The murder rate has almost tripled to 67 per 100,000 inhabitants, the highest in South America, since President Hugo Chavez took power in 1999, according to the Venezuelan Violence Observatory. (Bloomberg, 02-06-2012; http://www.bloomberg.com/news/2012-02-06/american-oil-worker-murdered-in-venezuela-government-says.html)

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 03rd, 2012

Economics & Finance

Public debt will exceed $ UD 200 billion

According to economists such as Orlando Ochoa and Jose Guerra, the cost of Venezuela's public debt is increasing as the Government strives to avoid possible currency devaluation during an election year; and to cover administrative costs and other acquired commitments. These experts say the implicit cost of such indebtedness has elevated the higher the cost of living in Venezuela, while it is dominated politics over economics. (Tal Cual, 02-01-2012; http://www.talcualdigital.com/index.html)

ECONOMETRICA says investment will not increase over 0.6% in 2012

ECONOMETRICA, an economics research firm, is estimating that 2012 growth in the Venezuelan economy will not be matched by a significant rise in investment, which will remain stagnant. The firm raised projections in 3 scenarios based on the price of the Venezuelan basket of crude oil and derivatives: the optimistic U$D 120 per barrel, medium at U$D 100 and U$D 80 in a pessimistic scenario. In all 3 scenarios there is an expansion of GDP from 0.8% to 2.7% driven by private consumption, which will rise to 4%, and public spending us projected to increase to a cap of 7.5%. (El Nacional, 02-01-2012; http://www.el-nacional.com/)

Central Bank to inject U$D 698 million into agriculture

President Chavez announced that the Central Bank of Venezuela (BCV) will grant VEB 3 billion (U$D 698 million) to the agricultural sector, in an operation that could increase inflationary pressures. There are indications that loans will be granted by the BCV by printing money, following a legal reform which allows the central bank to use a "direct credit method" in "programs that are considered a priority by the Executive Office and which are related to agriculture, manufacturing, construction, agribusiness and projects with an export potential." (El Universal, 02-01-2012; http://www.eluniversal.com/economia/120201/central-bank-to-grant-usd-698-million-to-the-agricultural-sector)

The Revenue Service (SENIAT) has not submitted a report with a proposal to increase the value of Taxation Units, as announced by Ricardo Sanguino, chairman of the Permanent Finance and Economic Development Committee Deputy. In 2011, the Venezuelan Parliament approved a 17.25% increase in the value of Taxation Units, from Bs.65 to Bs.76. (Veneconomy, 02-01-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29261&idc=2)

Commodities

Venezuela’s oil exports to US hit nine year low

Venezuela’s oil exports to the United States have dipped in recent months to their lowest level in nearly nine years, according to new U.S. government figures, reflecting a long-term trend of declining oil shipments during President Hugo Chavez’s 13-year-old government. The U.S. imported 764,000 barrels per day of Venezuelan crude oil and refined products such as gasoline in November, the last month for which figures are available, according to U.S. Energy Information Administration figures released this week.That was the lowest monthly amount since February 2003, when 613,000 barrels a day were imported at the end of an oil industry strike that hobbled Venezuela’s economy. The United States remains the top market for Venezuelan oil, but Chavez has been diversifying his country’s clientele by selling more to China and to allies in Latin America and the Caribbean. (The Washington Post, 02-02-2012; http://www.washingtonpost.com/business/worldbusiness/venezuelas-oil-exports-to-us-decline-reflecting-downward-trend-during-chavez-government/2012/02/02/gIQAhglNkQ_story.html)

PDVSA has failed to deliver guarantees for Abreu Lima Refinery in Brazil

A source at Brazil’s PETROBRAS has said PDVSA did not deliver guarantees or request an extension to deliver financial guarantees for the 10 billion Reais loan required for a 40% stake participation in the Abreu Lima Refinery project. The deadline expired on January 31. (Veneconomy, 02-01-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29262&idc=4; El Universal; http://www.eluniversal.com/economia/120201/pdvsa-fails-to-provide-guarantee-for-abreu-e-lima-refinery-with-petrob)

COMSIGUA aims to produce 933,000 tons of briquettes in 2012

Briquette steelmaker Complejo Siderúrgico de Guayana (COMSIGUA) aims to produce 933,000 tons of briquettes, after it reached a production of 842,763 tons in 2011, 27% higher than the previous year. Company President Iván Hernández says COMSIGUA will undergo major maintenance for 45 days using Venezuelan workers and its own funds. There are 200,000 tons of briquettes have been stored at company headquarters in order to meet demand during the maintenance shutdown. (El Universal, 02-01-2012;

http://www.eluniversal.com/economia/120201/comsigua-aims-to-produce-933000-tons-of-briquettes-in-2012)

International Trade

Cuba says imports from US down sharply in 2010; trade with Venezuela nearly doubled

Cuban imports from the United States fell sharply in 2010 while the country increasingly turned to trade with ally Venezuela, according to newly released government statistics. The government also announced that agricultural food prices rose 20% last year in part due to shorter supply, even as authorities try to stimulate productivity with agrarian and economic reforms. Cuba’s National Statistics Office said the island imported U$D 410 million worth of goods from the U.S. in 2010, mostly food products. That was down from U$D 645 million the previous year and about U$D1 billion in 2008. Cuba has said in the past that it would be buying less from the United States, saying the embargo’s requirement that the transactions be done in cash was too restrictive. Increasingly it has turned to sources like China, Vietnam and Brazil in search of better terms. The document said trade with Venezuela, which has become Cuba’s main commercial partner under President Hugo Chavez, topped U$D 6 billion in 2010, nearly double the U$D 3.4 billion registered the year before. (The Washington Post, 02-01-2012; http://www.washingtonpost.com/world/americas/cuba-says-imports-from-us-down-sharply-in-2010-trade-with-venezuela-nearly-doubled/2012/02/01/gIQAeksFiQ_story.html

Around 50% of trade between Ecuador and Venezuela is conducted in SUCRES (Unified Payment Compensation System), according to the Ecuadorean Ambassador to Caracas, Ramón Torres Galarza, who touted the system as one of the achievements of the Bolivarian Alliance of the People of the Americas (ALBA). More in Spanish: (Agencia Venezolana de Noticias, 02-03-2012; http://www.avn.info.ve/contenido/al-menos-50-del-intercambio-comercial-ecuador-venezuela-se-transa-sucre)

Logistics & Transport

Caracas Airport: Bridge to Nowhere – ranked worst for business in Latin America

Perched in a narrow valley, 800 meters (0.5 miles) up in Venezuela’s coastal range, and separated from the Caribbean sea by mountains that rise to over 2,600 meters, Caracas is poorly endowed with suitable sites for an accessible airport. For more than half a century, it has relied on Maiquetia (officially, Simon Bolivar International Airport), built on a narrow coastal strip and linked to the capital by a steep, four-lane highway that has seen better days. Just how vulnerable that link is to disasters, both natural and man-made, was made abundantly clear in 2006, when one of the main viaducts on the route collapsed, forcing an average 50,000 vehicles a day onto a narrow, hastily-built by-pass and frequently turning what should be a 45-minute journey into a four- or five-hour nightmare. (Latin Business Chronicle, 02-01-2012; http://www.latinbusinesschronicle.com/app/article.aspx?id=5434)

Politics

US Intel chief: PSUV will have a hard time replacing Chávez

US Director of National Intelligence James Clapper said in written testimony to the Senate Intelligence Committee that Venezuelan President Hugo Chavez "announced that he is cancer-free, but there are still doubts about his health." According to the US intelligence chief, "there is no other leader (in Venezuela) who can match his (Chávez's) charisma, force of personality, or ability to manipulate politics and policy should he be unable to run again," Efe reported. (El Universal, 02-01-2012; http://www.eluniversal.com/nacional-y-politica/120201/us-intel-chief-psuv-will-have-a-hard-time-replacing-chavez)

National Assembly elects Cilia Flores as Attorney General

The pro-Government majority at the National Assembly has approved the appointment of Cilia Flores as the new Attorney General, after President Chavez announced his proposal of appointing Cilia Flores to replace Carlos Escarra. (AVN, 01-02-2012; http://www.avn.info.ve/contenido/national-assembly-approves-appointment-cilia-flores-general-attorney)

General Luis Motta Domínguez appointed head of the National Land Institute. The former head of he National Guard has been placed in charge of “recovering land and put it into production”, according to President Chavez. More in Spanish: (Agencia Venezolana de Noticias, 02-03-2012; http://www.avn.info.ve/contenido/designado-luis-motta-domínguez-como-presidente-del-instituto-nacional-tierras)

Venezuela asks the OAS to recess for a year, rethink role

Carmen Velasquez, Venezuelan representative to the OAS has proposed that the Hemispheric organization take a year off after the upcoming Cochabamba General Assembly next June, in order to concentrate on discussing a strategic vision for the organization. The idea – which was promptly supported by Nicaraguan and Uruguay - would imply calling off the 2013 General Assembly. Guatemala, which has offered to host the 2013 Assembly, said the meeting would be important for a debate among member nation foreign ministers, and should not be called off. More in Spanish: (El Nacional, 02-03-2012; http://www.el-nacional.com/)





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.