August 17th, 2012

Economics & Finance

Financial system income grew 88% during the first semester 2012 from acquisitions of bond and Treasury bills from the Ministry of Finance, which rose to VEB 8.524 billion, as the government continues to increase its debt with the banking system in order to meet the deficit amid the reelection campaign. More in Spanish; (El Universal, 08-17-2012; http://www.eluniversal.com/economia/120817/crecen-88-ingresos-de-la-banca-por-compra-de-bonos)

Government will pay 18% interest on new bond on the so-called Petro-Orinoco, which has been designed to repay debts outstanding with public employees. Petroleum and Mining Minister Rafael Ramirez says buyers will receive 18% interest rates, "far above the rate we paid before." (AVN, 08-15-2012; http://www.avn.info.ve/node/127438)

Study shows 70% perceive scarcity, according to a study by the DATOS firm shows 70% of the entire population perceives there is scarcity in the market, particularly in milk, cooking oil, coffee, sugar, butter, and cornmeal. More in Spanish: (El Universal, 08-17-2012; http://www.eluniversal.com/economia/120817/estudio-revela-que-70-de-las-personas-percibe-que-hay-escasez)

"Bond issues regulate the flow of US dollars through SITME", says Rafael Ramírez, Minister for Petroleum and Mining and President of the state-oil company PDVSA, in reference to the parallel currency trading system. He also claims that U$D 100 per oil barrel is a "comfortable and fair" price, and added that "Venezuela must maximize profits." Ramírez emphasized that PDVSA has relied on the international and national banking systems to develop its investment programs, and stated that additional debt issue has not been ruled out. (El Universal, 08-15-2012; http://www.eluniversal.com/economia/120815/issuance-of-bonds-regulates-us-dollars-through-sitme)

Commodities

PDVSA has transferred U$D 32.2 billion to special "missions" over the past 9 and a half years, as ordered by the national government. During the first semester of 2012 it has transferred U$D 1.5 billion, and industry data shows that the Housing Mission alone has received U$D 8 billion over the years. More in Spanish: (El Universal, 08-17-2012; http://www.eluniversal.com/economia/120817/322-millardos-destino-pdvsa-a-las-misiones-en-9-anos-y-medio)

Ramírez claims oil sold to China is U$D 10 per barrel above price on sales to the US. The Oil and Mining Minister, who is also President of PDVSA, told government media that the price of crude oil "revalues more" in growing Asian markets than in the North American market which is being "hit by internal economic crisis and the devaluation of the dollar". More in Spanish: (AVN, 08-17-2012; http://www.avn.info.ve/contenido/ramírez-barril-que-se-vende-china-es-diez-dólares-mayor-al-que-se-negocia-ee-uu)

Output in the Orinoco Oil Belt now said to start during Q3 2012

Early oil output from the new business operations in the Orinoco Oil Belt will not take place until the third quarter of 2012, said Rafael Ramírez, Minister of Petroleum and Mining, and president of Venezuelan state-run oil company Petróleos de Venezuela (PDVSA). He added that the Junín 10 and Junín 2 blocs within the Orinoco Oil Belt operated by PDVSA and PETROMACAREO, respectively, "will be leading" early production. PETROMACAREO is a joint venture owned 60% by PDVSA and 40% by Vietnam's state-run oil company PETROVIETNAM.  A start in production had been expected in June, and that had been originally scheduled early in May. (El Universal, 08-16-2012; http://www.eluniversal.com/economia/120816/early-oil-output-in-the-orinoco-oil-belt-starts-in-the-third-quarter)

PDVSA expects to hit Perla gas output target in 4Q 2013

PDVSA in June pushed back the estimated start of production at Perla to the first quarter of 2013 from its earlier estimate of the end of this year. It didn't cite a reason for the delay. Located in Venezuela's Cardon IV bloc, Perla holds 16.3 trillion cubic feet of natural gas and is considered one of Latin America's largest fields. PDVSA signed a contract in December with Italy's ENI SPA and Spain's REPSOL SA to develop the field. The Perla project is expected to help Venezuela overcome power shortages that have plagued the country in recent years. It is slated to receive around U$D4.5 billion in investment. (Fox Business, 08-16-2012; http://www.foxbusiness.com/news/2012/08/16/petroleos-de-venezuela-expects-to-hit-perla-gas-output-target-in-4q-2013/; El Universal, 08-16-2012; http://www.eluniversal.com/economia/120816/approved-off-shore-gas-operations-north-venezuela)

The Oil Ministry has authorized trading on the Cardon IV gas bloc, after several months delay. PDVSA has said that this step will allow them to move ahead on planning for field operations that will lead to supplying the domestic market with natural gas. They anticipate initial production at 300 million cubic feet per day by the Q4 2013, rising up to 1.200 million daily cubic feet by 2019. More in Spanish: (El Universal, 08-17-2012; http://www.eluniversal.com/economia/120817/menpet-aprobo-comercialidad-del-bloque-gasifero-cardon-iv)

International Trade

Entry into MERCOSUR reopens doors for arbitration

Venezuela's entry into the Common Market of the South (MERCOSUR) is bringing out official contradictions in economic policy. Although the government has moved against international against arbitration, by joining the South American trade bloc it implicitly "embraces" new arbitration mechanisms, says Diana Droulers, executive director of the Caracas Chamber of Commerce Arbitration Center. "The contradiction is that the State criticizes arbitration, as it broadens the basis for it," says Droulers. (El Universal, 08-16-2012; http://www.eluniversal.com/economia/120816/venezuelas-entry-into-mercosur-opens-the-door-to-arbitration)

Logistics & Transport

Bridge collapses on highway connecting Eastern Venezuela to Caracas

A bridge on the main highway connecting Caracas to the eastern part of the country has collapsed, restricting transit to cities including Puerto La Cruz. Five vehicles, including a cargo truck were on the bridge when it fell into a river due to an excess of weight at the town of Cupira in Miranda state, 85 miles east of Caracas, the Transport Ministry said in a statement. The government is working to establish temporary bridges and alternative routes, Vice President Elias Jaua said. (Bloomberg, 08-16-2012; http://www.bloomberg.com/news/2012-08-16/venezuela-bridge-collapses-on-highway-from-caracas-to-east-1-.html)

Politics

UNASUR to support Electoral Council

Venezuela's National Electoral Council (CNE) and the Union of South American Nations (UNASUR) are signing an agreement allowing the group's first mission to support Oct. 7 presidential elections. CNE President Tibisay Lucena said it will be Unasur's debut as an international participant in a presidential vote. Further, the event will be attended by Peru's Foreign Minister Rafael Roncagliolo, empowered to initial the agreement on behalf of the regional body. (El Universal, 08-16-2012; http://www.avn.info.ve/contenido/unasur-sign-support-agreement-electoral-council)

Prison violence rises, report says

The number of killings inside Venezuela's notoriously violent prisons has increased this year even as President Hugo Chavez faces mounting pressure to curtail the violence as he campaigns for re-election, according to a human rights group. Riots and clashes between rival gangs in Venezuelan prisons left 304 dead inmates during the first half of 2012, a 15% increase compared to the same period last year, according the Venezuelan Prisons Observatory, which tracks the violence. Prison violence killed 264 inmates in the first six months of 2011, and a total of 476 prisoners in all of 2010, according to the watchdog group. (Huff Post World, 08-13-2012; http://www.huffingtonpost.com/2012/08/13/venezuela-prison-violence_n_1773848.html)

Sex, cocaine and murder

Venezuela’s new Ambassador to Kenya, veteran diplomat Olga Fonseca, was discovered strangled in her bed in the official residence in Nairobi only 12 days after assuming her new post. She had replaced former Ambassador Gerardo Carrillo Silva, who fled Kenya last March after he was accused of sexual harassment by three male Kenyan domestic employees. Kenyan police officially charged the Embassy’s First Secretary, Dwight Sagaray with the murder of Ambassador Fonseca, and believe he murdered her because she discovered that cocaine was being smuggled from Venezuela to Kenya in Venezuelan diplomatic pouches prepared and dispatched from Caracas by Foreign Ministry officials. (Caracas Gringo, 08-07-2012;  http://caracasgringo.wordpress.com/2012/08/07/sex-cocaine-and-murder/)

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)