August 14th, 2012

Economics & Finance

Central Bank changes gold valuation method

The Central Bank has decided to change the method used to value gold reserves, and lessened the impact of internationally diminished gold prices. Gold accounts for 68% of Venezuela's total reserves, and beginning May this year its price will be measured by an six month average of prices in the London market and not - as before - on an average for the previous two months. This change should lessen the impact of dropping gold prices. More in Spanish: (El Universal, 08-14-2012; http://www.eluniversal.com/economia/120814/banco-central-modifica-metodo-para-valorar-las-reservas-en-oro)

Larger companies have begun using "sucres" for international transactions

Central Bank Vice President Eudomar Tovar announced that large companies such as MAZDA, KIA, and POLAR subsidiaries have begun using the Unified Regional Payment Compensation System (SUCRE), a currency system established by several nations that are part of the ALBA system (Cuba, Ecuador, Nicaragua, Bolivia and Venezuela). Tovar says the SUCRE provides an interesting niche for spare parts and assembled products. More in Spanish: (El Mundo, 08-14-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/empresas-venezolanas-privadas-comenzaron-a-transar.aspx)

Tax revision proposed due to Venezuelan's entry into MERCOSUR

Roberta Nuñez, an attorney with KPMG, says the local private sector requires a deep revision of the tax system in order to "preserve the purchasing power of investors and individuals", and match regulations and other conditions in MERCOSUR nations. Current conditions create a number of surcharges that have become a major concern in recent years. (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/tax-revision-suggested-upon-venezuelan-entry-into-mercosur)

Central government spending slows down in July

Spending by the central government slowed down, falling by 20% in real terms in July, three months ahead of the presidential elections. Data released by the Ministry of Finance reveals that public expenditure was U$D USD 7.2 billion, which is less than last year during the same period. According to ECOANALÍTICA think tank director Asdrúbal Oliveros, this reveals that the government began spending the annual budget early. However he foresees renewed acceleration of expenses in August, due to the number of additional credits recently approved to cover the deficit budget in public agencies. (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/venezuela-central-government-spending-loses-momentum-in-july)

Food sales drop to lowest level in 3 years

According to a report by the national Food Industry Chamber, food sales dropped 4.3% in June, which is the lowest level in three years. It shows tonnage has been falling steadily since March 2011, largely due to price controls and higher production costs. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/)

Commodities

Venezuela officially confirmed holding largest oil reserves in the world

The OPEC annual report has confirmed that Venezuela has larger proven oil reserves than Saudi Arabia. Proven reserves are estimated at 297.6 billion barrels, which is 0.4% more than measured in 2010 and triple the amount certified in 2007. Saudi Arabia comes in second at 265.4 billion barrels. The difference is that Venezuela has heavier crudes which sell at a lower price than Saudi light oil. Venezuela is also seventh globally in national gas, at 5.5 billion cubic feet. More in Spanish: (Ultimas Noticias, 08-14-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-es-primera-en-reservas-petroleras.aspx)

China shows it gets 320,900 barrels per day from Venezuela, at the cheapest price

Data from the Chinese Customs Authority show Venezuela as their sixth largest supplier of oil by the close of the first semester 2012, and also shows Venezuela sells China it´s oil at the lowest price: U$D 99.67 per barrel, which is 7.14% less than the average cost for Venezuelan oil, which was U$D 107.34 per barrel during the same time frame. Saudi Arabia is China's largest provider, holding 22.6% of total imported volume, at U$D 109.72 per barrel; Angola comes in second, at U$D 115 per barrel; and Iran is third at U$D 108 per barrel. Russia takes fourth place, and received U$D 112,63 per barrel; followed by Omán, which gets U$D 117.4 per barrel. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-sube-exportaciones-a-china-a-640-000-bar.aspx)

Oil Minister Rafael Ramírez claims oil is exported at international prices. More in Spanish: (AVN, 08-14-2012; http://www.avn.info.ve/contenido/rafael-ramírez-petróleo-venezolano-se-exporta-precios-internacionales)

OPEC: Venezuelan oil production down 2.4%

The Organization of Petroleum Exporting Countries (OPEC) reports that Venezuelan oil production dropped in July.

Its data indicates Venezuelan oil output stood at 2.3 million barrels per day (bpd), that is to say 2.4% down if compared with figures recorded in July (2.4 million bpd). (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/opec-venezuelan-oil-production-down-24)

ONGC sees start of Venezuelan project delayed by election

India’s Oil & Natural Gas Corp. (ONGC) expects the start of production at the Carabobo 1 block in Venezuela to be delayed until early next year as the country prepares for presidential elections in October. The project, previously slated to begin output in December, will probably start producing about 10,000 barrels of heavy crude a day in February or March, an executive at ONGC, as the New Delhi-based state-owned company is known, said in a conference call. (Bloomberg, 08-13-2012; http://www.bloomberg.com/news/2012-08-13/ongc-sees-start-of-venezuelan-project-delayed-by-election.html)

PDVSA says it repaired ruptured pipe carrying crude oil

Petróleos de Venezuela SA, the state oil company, said it repaired a ruptured pipe carrying crude oil from the Orinoco Belt to the company’s refineries in Puerto La Cruz, Anzoátegui state. PDVSA, as the company is known, ceased pumping oil after a 26-inch pipe fractured at around 8 a.m. local time, the company said in a statement. It didn’t say when it resumed extraction. (Bloomberg, 08-12-2012; http://www.bloomberg.com/news/2012-08-13/pdvsa-says-it-repaired-ruptured-pipe-carrying-crude-oil.html)

Venezuela gets good sign from REPSOL on YPF dispute, Chavez says

Venezuela has received a “positive” letter from REPSOL SA about its efforts to resolve a dispute with Argentina over the nationalization of its YPF unit, President Hugo Chavez says. Venezuela is “friends” with REPSOL and maintains good relations with the company, Chavez said on state television, adding that he received a letter from REPSOL Chairman Antonio Brufau that contained a “good signal.” (Bloomberg, 08-10-2012; http://www.bloomberg.com/news/2012-08-10/venezuela-gets-good-sign-from-repsol-on-ypf-dispute-chavez-says.html)

Labor leader reports SIDOR thermoelectric plants paralyzed, no gas available for steel production

Both thermoelectric plants ordered by the government for installment at the SIDOR steel plant are paralyzed: one due to fuel supplies logistics and the other because its construction was never finished. The report comes by SIDOR labor leader Junis Hernández, who explains poor road conditions between the Anaco filling facility in Anzoátegui and the SIDOR plant at Matanzas, in Bolivar state, make it difficult to bring some 30 daily tank trunks to the plant. He also said PDVSA does not send gas supplies with regularity. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/)

International Trade

Puerto Cabello holds 26 vessels at bay, some for up to 44 days

The port of Puerto Cabello still reports 26 ships at bay, and vessels such as grain carrier “Nai Chang Hai”, have been waiting to dock with yellow corn for 44 days.  Yesterday there were 12 grain ships undertaking offloading operations. More in Spanish: (El Carabobeño, 08-14-2012; http://www.el-carabobeno.com/impreso/articulo/27783/baha-portea-cierra-el-lunes-con-26-buques-en-fondeo)

Logistics & Transport

Trade between Venezuela and Colombia increased by 32% over last year according to the Venezuela-Colombia Integration Chamber President Luis Alberto Russian, who added volume could be higher if the pending trade agreement is signed. More in Spanish: (El Mundo, 08-14-2012, http://www.elmundo.com.ve/noticias/economia/internacional/intercambio-comercial-entre-venezuela-y-colombia-c.aspx)

Imports from Brazil increased 30%

During the first seven months of the year, the value of Brazilian exports to Venezuela rose 30.2% over the same period of 2011 and exceeded U$D 2.758 billion. By the end of the year, purchases from Brazil should total trade last year, when averaged U$D 4.591 billion. More in Spanish: (El Mundo, 08-13-2012, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/valor-de-importaciones-brasilenas-aumento-30-.aspx)

Politics

Government party says it will defend Chavez victory using all means

Less than two months away from presidential elections, the United Socialist Party of Venezuela is saying that it will defend a victory by President Chavez, "wherever and however". The statement was made by party Vice President Diosdado Cabello, who said votes must be sought in order to avoid any intention on the part of the opposition of not conceding results on October 7th. More in Spanish: (El Universal, 08-14-2012; http://www.eluniversal.com/nacional-y-politica/120814/psuv-el-triunfo-de-chavez-lo-defenderemos-como-sea)

August 10th, 2012

Economics & Finance

Bank of America forecasts devaluation in Venezuela in 2013

In its latest report on Venezuela, dated August 8, Bank of America estimated that, due to the fiscal imbalance, Venezuelan authorities may resort to currency devaluation in the first quarter of 2013. According to Bank of America, if President Hugo Chávez is reelected, the government would increase the exchange rate to VEB 7.5 per US dollar.

Historically, currency devaluation in Venezuela leads to economic recession. Therefore, such a move would have a cost in 2013, but the economy would grow again ahead of the upcoming parliamentary election of 2015. (El Universal, 08-09-2012; http://www.eluniversal.com/economia/120809/bank-of-america-forecasts-devaluation-in-venezuela-in-2013)

BBVA forecasts growth in Venezuela's economy will be third highest in Latin America this year

A report by the BBVA Spanish banking group published this week says Venezuela's economy will grow 4.6% this year, the third highest rate in Latin America, and one whole point about the regional median of 3.2%. Growth is being pushed by a 13.5% rise in internal demand as well as high international commodity prices. More in Spanish: (AVN, 08-10-2012; http://www.avn.info.ve/contenido/bbva-prevé-que-economía-venezolana-será-tercera-mayor-crecimiento-américa-latina)

An 48.5% increase in imports helps gov't curb inflation in Venezuela

Central Bank and Finance Ministry authorities are pointing to the drop in inflation. Yes prices have slowed down due to a historic increase in imports and an artificially low US dollar exchange rate, both of which are damaging the economy. During the first quarter this year, accumulated inflation was just 3.5%, the lowest in the past four years. On the other hand, imports jumped 48.5% (U$D 13.2 billion), the highest level since 1997. (El Universal, 08-09-2012; http://www.eluniversal.com/economia/120809/a-485-increase-in-imports-helps-govt-curb-inflation-in-venezuela; http://www.eluniversal.com/economia/120807/venezuelas-july-inflation-stands-at-1; http://www.eluniversal.com/economia/120807/president-chavez-claims-inflation-is-under-control)

Preliminary census data puts Venezuela's population at 28,946,101

Elías Eljuri, president of the National Statistics Institute (INE), reports that Census 2011 shows there are 28,946,101 Venezuelans. He says his is a referential approximation, but not yet the official number. He also said population density is 29.7 people per km2, and added that the states with highest growth in population are Zulia, Miranda, Capital District, Lara, Anzoátegui, Bolívar and Táchira. (El Universal, 08-08-2012; http://www.eluniversal.com/economia/120808/preliminary-census-data-put-venezuelas-population-at-28946101)

US dollar denominated bank accounts to be available in Venezuela soon

Nelson Merentes, President of the Central Banks, says there will soon be new exchange regulations that will make it legal to open US dollar denominated bank accounts in Venezuela. Details have not been defined as to the minimum deposit required within the Foreign Currency Denominated Securities Transaction System (Sitme), for the purchase of bonds in US dollars. (El Universal, 08-08-2012; http://www.eluniversal.com/economia/120808/bank-accounts-in-us-dollars-available-in-venezuela-soon)

EXTERRAN shares double as Venezuela agrees to pay U$D 442 million for nationalized assets

EXTERRAN Holdings, Inc. agreed to settle its suit against Venezuela over assets nationalized in 2009 by Venezuela's state oil and gas giant Petroleos de Venezuela, S.A. (PDVSA) Gas, S.A. for approximately U$D 442 million, the company said. EXTERRAN received an initial payment of approximately U$D 177 million in cash at closing (U$D 50 million of which will be used to repay insurance proceeds previously collected under the policy EXTERRAN maintained for the risk of expropriation), and is due to receive the remaining principal amount of approximately U$D 265 million in periodic cash payments through the third quarter 2016. (Latin American Herald Tribune, 08-07-2012; http://www.laht.com/article.asp?ArticleId=554563&CategoryId=10717; Fox Business, http://www.foxbusiness.com/news/2012/08/07/exterran-completes-sale-nationalized-venezuelan-assets-for-442-million/)

Commodities

Oil exports to the US fell by 15.75% during the first semester this year, according to the Venezuelan American Chamber of Commerce and Industry (VENAMCHAM), quoting US Census Bureau figures which show US oil imports from Venezuela dropping from U$D 22.039 billion during the first semester last year to U$D 18.567 billion this year. More in Spanish: (El Universal, 08-10-2012; http://www.eluniversal.com/economia/120810/exportaciones-de-petroleo-a-eeuu-cayeron-1575)

30 oil drills paralyzed by workers demanding back pay

Around 44 workers in Monagas state stopped work at over 30 drills in protest over working conditions, according to labor leader Gregorio Rodríguez. Companies hit by the protest are Schlumberger, Petrex Venezuela, China National Petroleum, Bonjai, Punta de Mata, Tejero, Maturín and Jusepín. (El Universal, 08-10-2012; http://www.eluniversal.com/economia/120810/petroleros-paralizaron-30-taladros-por-pagos-atrasados)

Local chemicals industry threatened by MERCOSUR

The Association of Chemical and Petrochemical Manufacturers (ASOQUIM) says differences in scale and current policies, including exchange and price controls, place Venezuelan production at a disadvantage and are a threat to the nation's chemical and petrochemical industries. More in Spanish: (El Universal, 08-10-2012; http://www.eluniversal.com/economia/120810/temen-que-con-el-mercosur-se-debilite-la-industria-quimica)

Debts to labor and providers endanger SIDOR's solvency as total U$D 3 billion debt surpasses the total value the steel industry was valued at when re-nationalized in 2008, More in Spanish: (El Mundo, 08-10-2012, http://www.elmundo.com.ve/noticias/economia/industrias/deudas-laborales-y-con-proveedores-comprometen-pat.aspx)

Logistics & Transport

Export clearance in Venezuelan ports takes over 15 days

According to President Chavez, Venezuela's recent entry into the Common Market of the South (MERCOSUR) will increase the country's capacity to export. However, at the port of Puerto Cabello, export procedures take at least 15 days, as revealed during recent discussions between the local Chamber of Commerce and port authorities. (El Universal, 08-09-2012; http://www.eluniversal.com/economia/120809/export-clearance-in-venezuelan-ports-takes-over-15-days)

 “This is a disaster since the Cubans took control of the Puerto Cabello dock,” says Carabobo Governor Henrique Salas Feo. He said that there are 31 ships anchored off the shores for a month now, 14 of which carry grains. Salas explained the national government must pay Bs.65.000 a day for each ship that is delayed and for 31 ships that represents almost Bs.2 million a day. (Veneconomy, 08-09-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31635&idc=3)

Politics

Capriles charges that "food prices have risene 2067% under Chavez "

Presidential candidate Henrique Capriles Radonski has charged that over 80% of food consumed in Venezuela is now imported, and denies government claims that Venezuela has achieved what it calls "sovereignty in nutrition". Capriles says the government is not interested in the well being of local farmers, and showed figures proving that the country has 30 million hectares available for agriculture and forestry, yet when inflation is factored into the rise in imports prices have risen 2067% since 1998, and the basic food basket costs more than the basic salary. His figures show the scarcity index has risen from 1% in 1999 to 11.7% in 2012. Scarcity at the state owned MERCAL distribution system can be as high as 50%. More in Spanish: (El Nacional, 08-10-2012; http://www.el-nacional.com/)

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)

August 03rd, 2012

Economics & Finance

Big Mac index: Venezuelan currency overvalued by 83%

The Big Mac index computed by The Economist showed that the Venezuelan Bolívar is the most overvalued currency worldwide with respect to the US dollar, reflecting the imbalance of the Venezuelan economy.

The Big Mac index is based on the purchasing-power parity theory that provides that the exchange rate between two currencies is balanced when the price of a single product is the same in both countries. For such reference, a Big Mac burger is commonly used. According to the index, overvaluation of the Venezuelan currency stood at 83% by the end of July. (El Universal, 08-02-2012; http://www.eluniversal.com/economia/120802/big-mac-index-shows-overvalued-venezuelan-currency)

S&P sustains PDVSA's B+ credit rating

Petróleos de Venezuela received a credit rating of B+ from Standard & Poor's (S&P), which considers that the prospects for the Venezuelan oil conglomerate will remain stable. S&P explained that the B+ rating on Pdvsa reflects its opinion that "PDVSA's relationship with the government will not change significantly over the next few years." (El Universal, 08-01-2012; http://www.eluniversal.com/economia/120801/sampp-affirms-pdvsas-credit-rating)

PDVSA to allocate up to U$D 7 billion a year to repay debt

State-run oil firm Petróleos de Venezuela, S.A. (PDVSA) will need to earmark between U$D 4 billion and U$D 7 billion a year through 2017 to repay the heavy commitments it has contracted after five years of rapid indebtedness. This would force the oil holding to refinance its debt amid sluggish oil prices. The oil firm has resorted to issuing dollar-denominated bonds to finance current expenditure. PDVSA has also contracted several private loans in recent years, in the light of skyrocketing fund transfers to the government and stagnant oil production. (El Universal, 08-01-2012; http://www.eluniversal.com/economia/120801/pdvsa-to-allocate-up-to-usd-7-billion-a-year-to-pay-debt)

Chavez says domestic production to increase through MERCOSUR

President Hugo Chavez says the country's accession as full member of the Common Market of the South (MERCOSUR) is an opening for "a new horizon which will allow increasing domestic production", and will favor the establishment of complementary productive chains in the areas of manufacturing, industry, science and technology. (AVN, 08-02-2012; http://www.avn.info.ve/contenido/chavez-domestic-production-increase-through-mercosur)

Industry says entry into MERCOSUR requires a change in economic policy

Venezuela´s entry into the Common Market of the South (MERCOSUR) will force the government to "fully revise its economic policies", says the Venezuelan Industry Confederation (CONINDUSTRIA). Businessmen say that policies adopted over the recent years hit competitiveness, "investment, development and employment within industry." (El Universal, 08-02-2012; http://www.eluniversal.com/economia/120802/venezuelas-entry-into-mercosur-requires-a-review-of-economic-policy)

Commodities

PDVSA to have oil fields in Argentina, will develop shale oil

State oil company PDVSA will have oil fields in Argentinean waters, says President Hugo Chavez. Venezuela and Argentina signed an agreement for a strategic alliance between state oil companies PDVSA and YPF, after a meeting between presidents Hugo Chavez and Cristina Fernandez in Brazil. The agreement will lead PDVSA to develop shale gas and oil gas in Argentina, which has the largest reserves of shale gas in South America, approximately 774 TCF billion cubic feet. (AVN, 08-02-2012; http://www.avn.info.ve/contenido/venezuela039s-pdvsa-have-oil-fields-argentina)

Oil and byproducts sales to the US down 12.8% in May

Oil exports to the United States are on a clear downward trend. Consolidated data from the US Department of Energy indicate that during the period from January to May 2012, Venezuelan exports of oil and oil byproducts to the United States dropped 12.8% compared to the same period last year. During the first five months of 2012, oil exports averaged 866,000 bpd, down from 1.01 million barrels in the same period last year. In May, oil exports to the US totaled 861,000 barrels per day, down 13.8% compared to 999,000 barrels in May 2011, according to the US Energy Department. (El Universal, 08-01-2012; http://www.eluniversal.com/economia/120801/venezuelan-oil-and-byproducts-sales-to-the-us-down-128-in-may)

SIDOR President fired by Chavez

Carlos D'Oliveira, who had been ratified in his position as President of SIDOR on July 19, has been fired by Chavez due to protests by some 1600 employees for an outsourcing firm whose relationship with PDVSA was terminated on July 31. D'Oliveira's discharge took place "over the telephone and without much protocol". Basic Industries Vice Minister Carlos Faría, the brother of Jesus Faría, Chairman of the Basic Industries Special Committee at the National Assembly, has been temporarily been named in his place. More in Spanish: (El Mundo, 08-03-2012, http://www.elmundo.com.ve/noticias/petroleo/industria/presidente-de-sidor-fue-sustituido-debido-a-las-ac.aspx)

Agribusiness hopes urea exports do not hurt internal supply, after Chavez announces the possibility of exporting the product to Brazil in a "very, very short term". More in Spanish: (El Universal, 08-03-2012; http://www.eluniversal.com/economia/120803/esperan-que-plan-de-exportar-urea-no-afecte-oferta-interna)

International Trade

Chavez agrees to talk to automotive industry

President Hugo Chavez has ordered the Ministry of Industry to listen to the proposals by the Venezuelan automotive industry about the country's entry into the Common Market of the South (MERCOSUR), after the sector asked to be excluded from the agreement. "We have to listen to them. (Minister of Industry Ricardo) Menéndez, there should be a meeting with them," said Chávez during a press conference with local and foreign journalists. (El Universal, 08-02-2012; http://www.eluniversal.com/economia/120802/chavez-agrees-to-engage-in-dialogue-with-car-industry)

Venezuela paid U$D 1 billion in old debt for Colombian exports

According to Colombian President Juan Manuel Santos, Venezuela has paid U$D 1 billion in debts with Colombian exporters, and Colombian exports to Venezuela are likely to rise to U$D 3 billion by the end of the year. He also said U$D 200 million payments are still pending "as it has not been proven that Venezuela actually owned such amount of money; we have found fake exports in our records". (El Universal, 08-02-2012; http://www.eluniversal.com/economia/120801/venezuela-pays-usd-1-billion-in-debt-related-to-colombian-exports)

PDVSA exported 275,000 tons of coke in July

Petroleos de Venezuela (PDVSA) announced that during July it has dispatched 275,000 tons of coke to markets in Europe, the Middle East and South America. More in Spanish: (AVN, 08-03-2012; http://www.avn.info.ve/contenido/pdvsa-despachó-275-mil-toneladas-coque-durante-julio; El Universal, http://www.eluniversal.com/economia/120803/se-elevo-tasa-de-despacho-de-coque-a-traves-del-terminal-de-jose)

Uruguay's President Mujica says Venezuela's entry into MERCOSUR gives a vigorous impulse to the region

"Venezuela will be our third trading partner," said Mujica after expressing his wish for Uruguayan dairy products to secure successful positioning in Venezuela's market. (AVN, 08-02-2012; http://www.avn.info.ve/contenido/mujica-venezuela039s-inclusion-mercosur-gives-vigorous-impulse-region)

Politics

Chávez says that the IACHR Court and Commission ought to vanish

President Hugo Chavez says that both the Inter-American Commission on Human Rights (IACHR) and the Inter-American Human Rights Court should vanish. He says the IACHR Court is "abominable, rotten and disgraceful," and added that both institutions shall cease to exist as they are not up to the challenges of the new world. (El Universal, 08-02-2012; http://www.eluniversal.com/nacional-y-politica/120802/chavez-says-that-the-iachr-and-iachr-court-ought-to-vanish)

Legislator charges Chavez brother tried to "buy" Paraguayan votes

Jorge Oviedo, President of the Paraguayan Congress, has charged that a brother of President Chavez offered Paraguayan Senator Zulma Gomez U$D 100,000 to promote Venezuela's entry into MERCOSUR. Senator Gomez made her accusation in October 2011. President Chavez has charged that a group of Paraguayan senators were demanding "millions of dollars" to approve Venezuela's entry into the MERCOSUR Common Market. More in Spanish: (El Universal, 08-03-2012; http://www.eluniversal.com/nacional-y-politica/120803/senalan-que-chavez-intento-comprar-el-voto-de-paraguay)