October 14th, 2011

Economics & Finance

Venezuela selling U$D3 billion of bonds to meet demand for foreign currency, may trade at BF 5.70

Venezuela will offer U$D 3 billion of bonds in the local market, swelling dollar debt sales this year to U$D 7.2 billion, as the country seeks to finance spending and meet investor demand for foreign currency. The government will sell the 11.75% bonds due in 2026 to local investors, who will pay with bolivars at the official foreign-exchange rate of 4.3 bolivars per dollar, according to a statement posted on the Public Credit Office’s website. CREDIT SUISSE Group AG (CSGN) and EVROFINANCE MOSNARBANK SA will manage the sale, the statement said. “This has taken the market by surprise,” said Jeff Williams, an emerging-market debt strategist at Citigroup Inc. in New York. “People weren’t expecting a new Venezuela issue this year, so in that sense it’s negative for the market.” The Finance Ministry will announce the results of the sale on Oct. 17. Analysts say local demand will be very high as the year is ending and there are many bolivars circulating, plus banks offer financing in order to promote their acquisition and their web pages have collapsed with orders. (Bloomberg, 10-11-2011; http://mobile.bloomberg.com/news/2011-10-11/venezuela-to-sell-3-billion-of-bonds-to-meet-demand-for-foreign-currency?category=%2Fnews%2Fbonds%2F and more in Spanish: El Mundo, 10-14-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/dolar-del-bono-2026-se-acerca-a-bs-f--5,70.aspx)

FITCH rates Venezuela's 2026 bond "B+"

Credit rating agency FITCH Ratings said on Wednesday that it had assigned a rating of 'B+' to the Venezuela U$D 3 billion Global bond maturing in 2026, with a 11.75% coupon, Reuters reported. The rating is in line with Venezuela's sovereign bond rating, which is underpinned by its positive record of servicing debt even under political and economic stress in recent years, FITCH said. (El Universal, 10-12-2011; http://www.eluniversal.com/economia/111012/fitch-rates-venezuelas-2026-bond-b)

Venezuela to pay U$D 5.28 billion in interest

Although average oil prices have hit a record high at U$D 100 this year, the government here is getting into debt at a frantic pace. According to Angel García Banchs, director of economic research firm ECONOMÉTRICA, Venezuela will have to pay U$D 5.28 billion in interests on bonds issued this week. (El Universal, 10-12-2011; http://www.eluniversal.com/economia/111012/venezuela-to-pay-usd-528-billion-in-interest-for-bond-issue)

Commodities

Venezuelan upgrader stopped by equipment failure-source

Venezuelan heavy crude upgrader PETROPIAR suffered equipment failure that shut down operations this week, a project source told Reuters on Tuesday, adding the project was expected to be back up and running on Thursday.

PETROPIAR converts up to 180,000 barrels per day of extra heavy crude from the Orinoco belt into exportable oil.

"There was a problem in a water pump and the upgrader is being reactivated," said the source, who requested anonymity as they are not allowed to comment on operations. (Reuters, 10-11-2011; http://www.reuters.com/article/2011/10/11/venezuela-upgrader-equipment-idUSN1E79A1T020111011)

Public foodstuff distribution data

According to official figures, 60% of food purchased through the MERCAL network comes from international purchases carried out by the Corporation CASA, while the other 40% is produced locally. The distribution plan of the main state network marketing is still at 130,000 tons of food a month, despite resources approved to expand its distribution to 140,000 tons. The Government, through MERCAL, PDVAL and the Bicentennial market network, provides some 300,000 tons of food for public consumption. It also has an infrastructure of 19,000 retail outlets across the country. The government's goal is to meet 50% of national consumption. More in Spanish. (El Universal, 10-13-2011; http://www.eluniversal.com/economia/111013/datos-de-distribucion-publica)

MERCAL price increase denied: Productive Economy Vice President Minister Ricardo Menéndez denied government plans to increase prices of products distributed by the MERCAL Network and assured they will remain under Government subsidy. However, last Monday Venezuelan News Agency reported that at least 14 food staples could experience increases, citing Food Minister Carlos Osorio. (Veneconomy, 10-12-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28002&idc=3)

International Trade

Trade with Colombia to be conducted in local currencies

Trade between Colombia and Venezuela is no longer dependent on the dollar as the only means of payment. The Venezuelan customs authority (SENIAT) has issued a resolution allowing bilateral trade to be priced in local currencies. Henceforth products exported to Colombia may be payable in pesos and imported into bolivars. More in Spanish. (El Universal, 10-13-2011; http://www.eluniversal.com/economia/111013/comercio-con-colombia-se-transa-en-moneda-nacional)

Economic agreement to relaunch Venezuela, Peru relations

The governments of Peru and Venezuela will relaunch their political and economic relations by signing an agreement on productive and commercial complementation next Friday in Lima, according to Peruvian Foreign Minister Rafael Roncagliolo, who will meet with his Venezuelan counterpart Nicolas Maduro. Roncagliolo said that the accord was previously debated in round tables of technical commissions from the two countries, which took place on October 04-05 in the Peruvian capital city. "These talks attained advances, but there are some aspects pending to be defined," said the Peruvian diplomat. (AVN, 10-12-2011; http://www.avn.info.ve/node/81797)

13% of Nicaraguan exports go to Venezuela

Nicaragua expects to close 2011 with record exports of over U$D 2,000 billion, sending its main products in the U.S. and Venezuela. The first country is 30% of sales and 12% in Venezuela, mainly beef, cattle and beans, DPA said. More in Spanish. (El Universal, 10-13-2011; http://www.eluniversal.com/economia/111013/breves)

Politics

President Chavez in Cuba for medical exams

President Chavez confirmed he will travel to Cuba for a series of medical exams to check on his recovery. He said; ”I am going to Cuba this weekend for some medical exams. I have no more chemotherapy. My hair has started to grow out and now I am going to have thorough exams to see how I am. I feel well and better every day, I am not exaggerating”. More in Spanish. (AVN, 10-14-2011;  http://www.avn.info.ve/node/82060)

US asks Venezuela to "reconsider" human rights suggestions

The United States on Wednesday urged Venezuela to reconsider its decision to reject several of the recommendations made during the Universal Periodic Review of the UN Human Rights Council that Venezuela underwent last week.

"Many countries raised serious and legitimate concerns about the state of human rights in Venezuela at its Universal Periodic Review (UPR) process," the US State Department said in a statement quoted by AFP. (El Universal, 10-12-2011; http://www.eluniversal.com/nacional-y-politica/111012/us-asks-venezuela-to-reconsider-human-rights-suggestions)

Chavez proposes a law to defend airspace

President Chavez has proposed a Law for the Control and Defense of Airspace which will authorize gunning down aircraft involved in drug trafficking. More in Spanish. (El Universal, 10-14-2011; http://www.eluniversal.com/nacional-y-politica/111014/chavez-pide-crear-ley-de-defensa-del-espacio-aereo)

Chavez gives U$D 1.5 billion to Cuba and ALBA

Venezuela spent more than U$D 1.5 billion in three years to finance dozens of projects in Cuba and other allied countries, including airport expansions in Cuba and replacing light bulbs in Bolivia, although the oil producer has amassed massive debt in the last few years to cover its own commitments, according to a Venezuelan government document. 88% of disbursements from January 2007 to May 2010 covered Cuban financial projects said the document from the Economic Social Development Bank of Venezuela (BANDES), which was obtained by El Nuevo Herald. (The Miami Herald, 10-13-2011; http://www.miamiherald.com/2011/10/13/2452971/chavez-gives-15-billion-to-cuba.html#ixzz1alEL7Nuf)

Chavez's increasingly long shadow in Latin America

Recent reports, no less than their accompanying photos, suggest that Hugo Chavez may be dying. But if he hangs on, he is on his way to being reelected president again in Venezuela's December 2012 national elections. He is now using his cancer patient status to his political advantage, and his popularity is rising as a result. But if his illness increases his popularity, it lessens his authority. He is getting his medical treatment in Cuba in order to control the flow of information that might leak back into Caracas. So an optimist might say that the prospects for change in Venezuela are excellent: Either Chavez is finished, by cancer or the ballot box; or in his efforts to appeal to the middle class and small businessmen he is compelled to moderate his socialist policies. However, it now seems that Chavez is hardly the extent of Venezuela's political problem. No matter what happens to the founder of chavismo, evidence shows that the country's political class is marked by institutionalized criminality and ties to international terrorism. (CBS News, 10-11-2011; http://www.cbsnews.com/stories/2011/10/11/opinion/main20118378.shtml)

REUTERS: Re-energized Chavez floods Venezuela's airwaves

Of many surreal moments in the life and times of Hugo Chavez, the flamboyant Venezuelan leader's encounter with a puppet of himself this week was one of the wackiest. Despite his convalescence from cancer surgery and four rounds of chemotherapy, the 57-year-old Chavez has since the start of October been hitting the air-waves like the old days, with phone-ins to state TV any time from dawn to midnight. "It's not time to die, it's time to live! To those who want me dead, I tell them that soon my return will be complete," Chavez said in what has become a daily mantra. He clearly feels upbeat, re-energized -- and desperate to show it. Yet cancer experts say it takes several years before anyone can be confident they have beaten the disease. "If you were my patient, and you said you had just finished chemotherapy two weeks ago and you were cured, I would say that is absolutely ridiculous," said a U.S. specialist, who asked not to be named. "It is much too early to say." (Reuters, 10-13-2011; http://in.reuters.com/article/2011/10/13/idINIndia-59876320111013)

Minister claims GUMILLA poll shows 52% prefer socialism over capitalism

And 71,4% say a socialist system guarantees the common good, according to a poll allegedly taken by the Jesuit Center for Research and Social Action (Centro GUMILLA) and distributed by Communications and Information Minister Andrés Izarra. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/gumilla--52--prefiere-el-socialismo-al-capitalismo.aspx)

Venezuela, Palestine to create commission to review bilateral accords

President Chavez and Palestinian National Authority President Mahmoud Abbas, have agreed to create a joint commission to extend and strengthen the accords signed by the two nations. "We have agreed to create a commission to review what we are doing and to review the new horizons of cooperation in all matters possible," said Chavez after a meeting he held in Caracas with Abbas. (AVN, 10-12-2011; http://www.avn.info.ve/node/81792)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

October 11th, 2011

Economics & Finance

PDVSA will pay interest this week on 2017, 2027 and 2037 bonds

In a press release, PDVSA announced that "according to the conditions," this Thursday it will pay out interest on bonds issued during in 2007. More in Spanish. (El Mundo, 10-10-2011; http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-paga-esta-semana-intereses-de-bonos-2017,-20.aspx)

70% of foods consumed locally are imported

According to statements by senior government spokesmen, 70% of food consumed by Venezuelans comes from abroad given the Government’s priority for avoiding shortages as experienced in early 2007. More in Spanish. (El Mundo, 10-10-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/70--de-los-alimentos-consumidos-por-los-venezolano.aspx)

What countries export beans to Venezuela?

President Chavez has said over half of the beans we eat are imported. He complained and proposed boost agriculture. According to the National Bureau of Statistics, the following countries send beans to Venezuela: China, Argentina, Nicaragua and Hong Kong. During the first half of 2011 Venezuela imported a total of 42,356 tons, 8% more than last year. More in Spanish. (El Mundo, 10-10-2011; http://www.elmundo.com.ve/noticias/economia/agro/¿de-que-paises-vienen-las-caraotas-que-compra-vene.aspx)

TAL CUAL says government incompetence is causing a national collapse

TAL CUAL daily says that countless and growing street protests and demonstrations, plus opinion polls, show that us as a country where almost nothing works, where basic public services are increasingly deteriorate, hurting both the economy and everyday living conditions for all people. More in Spanish. (Tal Cual, 10-10-2011; http://www.talcualdigital.com/index.html)

Commodities

Venezuela calls for discipline within OPEC

Energy and Petroleum Minister Rafael Ramírez says:"We firmly believe that we have to support unity and discipline, and correct what needs to be corrected, but the Organization of the Petroleum Exporting Countries (OPEC) is the only authority to coordinate oil policy" in petroleum producing countries. His remarks came after President Chavez twice proposed twice creating a new organization of "oil giants." Ramirez says Venezuela " will continue to protect OPEC, because there are several members that have a common interest with our country: to defend the price of oil because this commodity is a key element for our economic development." (El Universal, 10-10-2011; http://www.eluniversal.com/economia/111010/venezuela-calls-for-discipline-in-opec)

Russia lends Venezuela U$D 4 billion in return for oil projects

Russia agrees to lend Venezuela U$D 4 billion through 2013 for defense spending in return for gaining access to heavy crude and offshore gas fields in the South American country, as Russia’s OAO Rosneft and OAO Gazprom signed a cooperation accord with Venezuelan state oil company Petroleos de Venezuela SA. The $4 billion defense loan will be disbursed in two equal parts in 2012 and 2013. The two countries agreed separately to commit U$D 2 billion each to boost the capital of a bi-national bank, known as Evrofinance Mosnarbank SA, that will provide lending for housing projects and a joint-venture oil project in the Junin 6 block. (Bloomberg, 10-07-2011; http://www.bloomberg.com/news/2011-10-07/russia-lends-venezuela-4-billion-in-return-for-oil-projects-1-.html)

Mining operations hit ethnic groups at the Essequibo

A report released in 2002 by The North-South Institute, a Canadian NGO dedicated to promote social justice, shows that the high number of mining licenses granted by the Guyanese government in the Essequibo territory is affecting indigenous communities in the area. Destruction of crops, desecration of sacred sites, erosion of soil, water pollution, and abuse of indigenous women are part of the acts of injustice suffered by the ethnic groups, the report added. (El Universal, 10-10-2011; http://www.eluniversal.com/nacional-y-politica/111010/mining-operations-hit-ethnic-groups-at-the-essequibo)

Guyana to supply rice to Venezuela

Guyana expanded and extended its rice export agreements with Venezuela to over 70,000 tons for U$D 54 million by upgrading the three previous contracts and the establishment of a fourth contractual arrangement. It is reported in Caracas that the price fixed for this importation is around 44% above international market prices. More in Spanish: (El Universal, 10-10-2011; http://www.eluniversal.com/nacional-y-politica/111010/arroz-para-venezuela and RUNRUNES, 10-11-2011; http://www.eluniversal.com/opinion/111011/runrunes)

Logistics & Transport

Airlines require refloating and adjusted airfares

In view of recent air incidents, Capitan William Brach, former President of the Chamber of Air Transport Companies says authorities and airlines must agree on a plan to refloat the sector and approve increases in airline tickets prices,.

About 80% of the aircraft comprising Venezuela's commercial air fleet are 35 years old. "This implies that maintenance is more demanding, frequent and preventive," rather than investing in new aircraft. (El Universal, 10-10-2011; http://www.eluniversal.com/economia/111010/airlines-in-venezuela-require-refloat-and-higher-airfares)

National Guard seizes 460 kilos of cocaine in Belgian ship

The Bolivarian National Guard seized this Monday 460 kilos of cocaine in Belgian ship Juergen Schulte, coming from Belgium that was anchored in a port of the Orinoco river in Bolivar state, Venezuela’s southeast.

The 22-people crew (of diverse Asian, European and African, nationalities) tried to transport the cocaine coming from Colombia to France. They have been all arrested by Venezuelan authorities. (AVN, 10-10-2011; http://www.avn.info.ve/node/81570)

31 machines to execute operations in the country’s ports will arrive to the country in the next few days, among them 13 Reach Stacker cranes and 19 terminal tractors. Bolivariana de Puertos S.A. (BOLIPUERTOS) authorities made the announcement and pointed out that the fleet in Venezuelan sea terminals will improve with these equipments. (Veneconomy, 10-10-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27972&idc=3)

Politics

Chavez travels to Cuba this weekend for medical examinations

President Chavez will travel to Havana, Cuba, this weekend, and remain for several days to undergo examinations to confirm the absence of cancerous cells in his body. “I have to go to Havana to spend some days there because I shall go now through very rigorous tests, with some of the most advanced scientific methods in the world. Here I am, in this week that is beginning, under medical observation, doing exercises, walking, sunbathing,” he said. (AVN, 10-10-2011; http://www.avn.info.ve/node/81559)

UN to approve Human Rights Report on Venezuela

The United Nations Human Rights Council will this week approve a Human Rights Report on Venezuela, including advice, points rejected by Venezuela, and points to be submitted to consultation by member States. Venezuela has presented its report for the Universal Periodical Review on Human Rights (UPR). A group of three UN rapporteurs (Guatemala, Burkina Faso, the Czech Republic) has been randomly selected and is in charge of drafting the final document. (AVN, 10-10-2011; http://www.avn.info.ve/node/81506; El Universal, 10-10-2011; http://www.eluniversal.com/nacional-y-politica/111010/un-expects-venezuela-to-accept-most-human-rights-recommendations)

Drugs found aboard the “Juergen Schulte” at the FERROMINERA docks in Guayana

The National Guard seized some 460 kilos of drugs hidden within the machine room of a ship named “Juergen Schulte” that came from Belgium and docked at Ferrominera Orinoco (Ciudad Guayana) ostensibly to load iron ore. 22 persons, all foreigners, were detained. The ship’s identity was not confirmed, although military sources say it may be Liberian. Other possible drug shipments are being investigated. More information in Spanish. (Correo del Caroní, 10-09-2011; http://www.correodelcaroni.com/index.php?option=com_wrapper&view=wrapper&Itemid=174&id_articulo=188811&catid=57)

IVAD Survey said that Chavez win elections with more than half of the votes against opponents

A survey by the Instituto Venezolano de Datos (IVAD) between September 24 and October 2, 2011 states that if presidential elections were conducted currently the President of the Republic, Hugo Chavez would win with 53, 7% of the votes of confronting the current governor of Miranda, Henrique Capriles Radonski (who obtained 34.6%), with 54.1% if the container was the former mayor of Chacao Leopoldo López (33.7%), and 54.3% facing the governor of Zulia, Pablo Perez, who achieved 32.4% of the vote. More in Spanish. (AVN, 10-10-2011; http://www.avn.info.ve/node/81390)

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.

October 04th, 2011

Economics & Finance

Food shortages estimated at 30%, government forced to approve price increases

Luis Vicente León, President of the DATANÁLISIS polling firm, said food shortages exceed 30% in several areas, especially for oil, flour, sugars, etc. Despite efforts to blame the private sector, the Government has had to accept the real cost of producing for milk, corn oil and sunflower oil, and it is now expected price adjustments will be forthcoming. More in Spanish. (Descifrado, 10-03-2011; http://www.descifrado.com/index.php?id=7&no_cache=1&showUid=56493 and Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.html)

Venezuela’s five key trading partners

Imports into Venezuela have increased significantly over the past few years, primarily by the Government. Currently, the five countries sending most supplies to Venezuela are: 1) US. Despite frozen relations, Venezuela bought U$D 4.711 billion from the US during the first semester 2011, according to official numbers. 2) China. Took second place after the political crisis between Venezuela and Colombia; with U$D 1.961 billion, which is 28% more than 2010. 3) Brazil, for U$D 1.406 billion, a figure similar to last year. 4) Spain. Rose by six places on the list, for U$D 1.076 billion, which triples the amount for last year. 5) México, for U$D 723 million, a 10% increase over last year. More in Spanish: (El Mundo, 10-04-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/los-cinco-paises-que-mas-mercancias-le-venden-a-ve.aspx)

Food Minister Carlos Osorio denies a drop in agricultural production, and claims sustainable development policies have increased product distribution capacity nationwide by over 60%. (Veneconomy, 10-03-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27874&idc=3)

Commodities

Venezuela to invest U$D 45 billion to build, maintain refineries

State-owned Petroleos de Venezuela SA says it will invest U$D 45 billion this decade to maintain its domestic refinery network in the country and build other crude-processing facilities. The director of PDVSA’s Paraguana complex, Jesus Luongo, made the announcement, saying the plan will also require the construction of adjacent “social infrastructure” to avoid creating “areas of poverty surrounding the oil installations.” In planning projects of this magnitude, “thought is given not only to oil infrastructure but also to the most important thing: people.” (Latin American Herald Tribune, 09-30-2011; http://www.laht.com/article.asp?ArticleId=429004&CategoryId=10717)

Venezuela oil falls below U$D100

Venezuela’s oil for export basket dropped U$D 3.67 a barrel this week, the second such weekly decline in a row and one the Energy and Oil ministry is now blaming on the “euro crisis”. The Venezuelan oil and products export basket fell to U$D 98.79 a barrel in the week of September 26-30, from $102.46 barrel the previous week. In a statement accompanying price information, the oil ministry said: “Concerns surrounding the debt crisis in the euro zone and the performance of the United States economy became the main factors weakening oil prices during this week.” (Latin American Herald Tribune, 09-30-2011; http://www.laht.com/article.asp?ArticleId=428859&CategoryId=10717)

Fuel prices to be stabilized in Dominican Republic due to PETROCARIBE contributions

Francisco Méndez, president of the Dominican Oil Refinery (REFIDOMSA), has proposed that benefits stemming from an additional 20,000 oil barrels per day provided by Venezuela, should be used  to create a fund to stabilize fuel prices. (AVN, 10-03-2011; http://www.avn.info.ve/node/80281)

Bauxite transportation system severely damaged for lack of maintenance

BAUXILUM mining operations at Los Pijiguaos have taken a heavy blow when the motors for the giant conveyor belt that carries extracted bauxite to the El Jobal dock on the Orinoco river collapsed after working intensely without maintenance or spare parts. More in Spanish: (Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.html)

Rising international commodities prompt a review in oil and milk prices

The increase in international agricultural commodity prices has forced the government to review prices for foods such as corn oil, sunflower oil and milk powder. More in Spanish. (El Mundo, 10-03-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/aumento-de-los-commodities-obliga-a-revisar-precio.aspx

PDVSA acquires stake in Argentine service stations

State-run oil company Petróleos de Venezuela (PDVSA) purchased the stake held by Uruguay’s state energy company ANCAP within Petrolera del Conosur (PDVSUR), which generates losses and owns a network of service stations in Argentina. The ANCAP stake was valued at U$D 11 million but the Uruguayan company will not receive that amount: It agreed instead that PDVSA alone will assume the financial debt of PDVSUR. (El Universal, 10-03-2011; http://www.eluniversal.com/economia/111003/pdvsa-buys-stake-in-argentine-service-stations)

Politics

Chavez will return to Cuba for medical exams

President Chavez announced he will travel to Cuba in late October for medical exams, hours after dismissing a newspaper report that his health had deteriorated. Speaking by telephone on a state TV late night talk show, he said his condition was improving and that the exams will serve to “analyze the close of this cycle” of treatment; he added that he would not disclose the type of cancer he had because doing so would feed “people’s morbid curiosity” about his health. (Bloomberg Businessweek, 09-30-2011; http://www.businessweek.com/news/2011-09-30/venezuela-s-chavez-will-return-to-cuba-for-medical-exams.html)

Belarus delegate in Caracas

Viktor Sheirman, Assistant to the president of Belarus Republic for Special Affairs, was welcomed at the Miraflores Presidential Palace President Hugo Chavez. His Sheiman’s visit aims at evaluating the bilateral agenda, which includes a project to construct 20 thousand homes in Venezuela, within the Grand Housing Mission Venezuela. It is also expected to create tractor factory and construction machinery. (AVN, 10-03-2011; http://www.avn.info.ve/node/80319)

Colombia, Venezuela Foreign Ministers to meet

Venezuela’s Foreign Minister Nicolás Maduro and his Colombian counterpart María Ángela Holguín are scheduled to meet in Bogotá 19- 20 October, ahead of a mid November meeting scheduled for Presidents Juan Manuel Santos and Hugo Chávez. More in Spanish: (AVN; http://www.avn.info.ve/node/80427)

Venezuela, Guyana agree to negotiate maritime border

Diplomatic envoys of Venezuela and Guyana have signed a joint declaration stating their intent to “negotiate the delimitation of maritime boundaries between the two States.” According to official sources, a joint statement “was signed on Friday in Port of Spain, Republic of Trinidad and Tobago, as the two ministers reviewed “several matters of mutual interest.” The document highlights say that “several issues of mutual interest, including Good Offices,” were reviewed. (El Universal, 10-01-2011; http://www.eluniversal.com/nacional-y-politica/111001/venezuela-guyana-reach-agreement-to-negotiate-maritime-border)

All that’s gold doesn’t glitter

What do Hugo Chavez and Glenn Beck have in common? The socialist/populist president of Venezuela and the right-wing talk show host often have strange ideas – just not the same ones. But it turns out, they are both gold bugs.

Now, many people have been investing in gold. But Hugo Chavez wants to horde it literally, physically. The Venezuelan government controls the world’s 15^th largest stockpile of gold: about 365 tons. But, like most gold investors, it doesn’t really have that gold. At least not physically. More than half of Venezuela’s reserves are held overseas in London, New York and Zurich. If you ever visit the New York federal reserve, you can even see it in the underground vaults, neatly labeled as Venezuela’s. (CNN, 10-03-2011; http://globalpublicsquare.blogs.cnn.com/2011/10/03/why-gold-might-be-a-bad-investment/?iref=allsearch)

BANESCO-USA starting operations in Puerto Rico

BANESCO USA, a Florida based company that is a part of the Venezuelan BANESCO group has begun commercial operations in Puerto Rico. Juan Carlos Escotet, head of the BANESCO Multinational Financial Group says “We are convinced that this is the best time to start operations here”. More in Spanish: (Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.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.