September 14th, 2012

Economics & Finance

Chavez 67% spending surge sets up devaluation after vote

President Hugo Chavez’s 67% increase in government spending is setting the stage for a currency devaluation after national elections next month. As the 58-year-old president boosts wages and builds houses for the poor to win a third term, the bolivar is tumbling in unregulated markets to a level 62% weaker than the regulated exchange rate, compared with a 50% difference at the end of 2011. Most individuals and businesses now pay 11.19 bolivars per dollar versus 8.63 at the start of the year and the fixed 4.3 bolivar official rate. (Bloomberg, 09-13-2012; http://www.bloomberg.com/news/2012-09-13/chavez-67-spending-increase-sets-up-devaluation-after-election.html)

Inflation in food prices doubles the average for Latin America

A 31 July report by the UN's Food and Agriculture Organization shows that Venezuela has the highest rate of inflation in food prices in the Hemisphere. The cost of food rose 21.7% from July 2011 to July 2012, which doubles the 8.7% regional average. Colombia came in with 3.8%, Perú 4.6%, Chile 6.5%, Brazil 8.7% and Argentina 10.09%. More in Spanish: (El Universal, 09-14-2012; http://www.eluniversal.com/economia/120914/inflacion-de-alimentos-duplica-al-promedio-de-america-latina)

Credit rises 52-96% year to date through August

According to the Banking Superintendent, net credit growth rose 52.96%, as it increased from VEB 223.386 million in August 2011 to VEB 341.699 million in August 2012. The amount is 44.97% of total active bank assets. More in Spanish: (El Mundo, 09-14-2012; http://www.avn.info.ve/contenido/sudeban-créditos-registran-aumento-anual-5296-para-agosto)

Commodities

SIDOR will continue in the red due to operating limitations, basic industries reaching rock bottom

SIDOR, Venezuela's government iron and steel producing company, may lose U$D 673.4 million by the end of 2012, and estimates a 42% rise in losses during 2013, going up to U$D 958 million. The figures are reflected in the company's 2012 Annual Budget, which also sets expected production at 4 million tons of liquid steel, doubling current output, as it continues to direct funds to "social" expenditure on individuals and communities. (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuelan-steel-company-to-suffer-losses-upon-numerous-limitations; and more in Spanish: El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuelan-basic-industries-at-rock-bottom)

PDVSA says Amuay refinery operates at 52% capacity and under evaluation by reinsurance companies

Oil Minister Rafael Ramírez announced that reinsurance companies are evaluating damage at the Amuay refinery which -he said- is operating at 52% capacity. More in Spanish: (El Mundo, 09-13-2012;  http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa--amuay-opera-a-52--y-esta-siendo-evaluada-po.aspx; and El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/amuay-refinery-processes-300000-bpd)

           

OPEC reports 1.8% lower Venezuelan oil output

Venezuelan oil output dropped by 1.8% last August compared with the same month last year, according to statistics collected by the Organization of Petroleum Exporting Countries (OPEC) in its monthly report. The oil cartel reports oil drilling was 2.35 million barrels per day (bpd) in August, 43,000 barrels less than the average in August 2011. More in Spanish: (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120912/opec-reports-lower-venezuelan-oil-output-at-18)

Venezuela, Argentina discuss Orinoco oil belt projects

Rafael Ramírez, Minister of Petroleum and Mining Rafael Ramírez, and Argentina´s Planning Minister Julio De Vido, inaugurated meetings between some 150 businessmen from both countries to discuss cooperation in the development of the Orinoco oil belt. More in Spanish: (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuela-argentina-sketch-works-at-orinoco-oil-belt)

Brazil may extend deadline for Venezuela’s PDVSA participation in refinery

Brazil may extend the deadline for Venezuelan state oil firm Petroleos de Venezuela S.A. to provide loan guarantees and secure its participation in the bi-national Abreu e Lima heavy-oil refinery, the CEO of Brazilian state-controlled energy company PETROBRAS said. Maria das Gracas Foster said PDVSA is in the “final” phase of securing a loan needed to pay for its 40% stake in the refinery, although the November deadline is approaching. “If they don’t present the guarantees in November, I’m going to discuss a new deadline because I want them (PDVSA) to be a part of this project,” Foster said in a Senate hearing. (Latin American Herald Tribune, 09-12-2012; http://www.laht.com/article.asp?ArticleId=576227&CategoryId=10717)

International Trade

Predicting 18.8% rise in imports from the country

The UN's Economic Commission for Latin America and the Caribbean is estimating that Venezuela will continue to increase imports through the end of the year. It projects imports will increase by 18.8% by the end of the year, after a rise of 25.3% in the first semester. Venezuela's rate of imports is the highest of the region, much above the 6.2% projected average increase. More in Spanish: (El Nacional, 09-14-2012; http://www.el-nacional.com/)

Logistics & Transport

Blackouts hit operations at main Venezuelan port

Continued blackouts at the port of Puerto Cabello, in Carabobo state are jeopardizing the operations in the main Venezuelan port. According to sources close to the terminal, electric power supply has been fitful, including extended lapses since last week. On September 5th, a 12 hour blackout interrupted commodity exports. (El Universal, 09-12-2012; http://www.eluniversal.com/economia/120912/blackouts-hit-operations-in-main-venezuelan-port)

Politics

Former Justice confirms Chavez manipulates the Supreme Court

Former Supreme Court Justice Eladio Aponte has confessed that President Hugo Chavez personally ordered him to sentence former police officials accused for participating in the failed effort to replace him - Chavez - in 2002, to 30 years imprisonment. He added that the case "proves political persecution through the Judiciary". Aponte, who is currently in the US witness protection programs, made is revelation through a notarized statement recorded in Costa Rica last April and divulged yesterday in Miami by attorney Carlos Ramírez López, at the former magistrate's request. More in Spanish: (Tal Cual, 09-14-2012; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/120914/aponte-aponte-chavez-ordeno-condenar-a-comisarios-del-11a)

Capriles quickly fires high ranking ally following allegations of improper campaign funding activity

Opposition Presidential candidate Henrique Capriles Radonski moved swiftly to expel Congressman Juan Carlos Caldera, one of the highest officials in his own party, after pro Government television aired a clandestine tape showing the Congressman - who is also the opposition candidate for Mayor of the Sucre District in metropolitan Caracas - taking an unreported campaign contribution. Concealed cameras filmed Caldera a little less than U$D 4000 from Luis Peña, an emissary of pro-Chavez tycoon Wilmer Ruperti. The money was intended for Caldera's race for the mayoralty, Although Caldera has admitted his own entrapment, Capriles and the Justice First Party expelled him for unauthorized use of the candidate's name in soliciting funds, and demanded an investigation. Honesty and transparency are among the key goals of the Capriles campaign. More in Spanish: (El Universal, 09-14-2012; http://www.eluniversal.com/nacional-y-politica/120914/capriles-expulsa-a-caldera-y-exige-investigacion; El Universal; http://www.eluniversal.com/nacional-y-politica/120914/el-diputado-acusado-dice-que-recibio-bs-40-mil-de-ruperti; El Universal; http://www.eluniversal.com/nacional-y-politica/120914/primero-justicia-suspendio-a-caldera-de-toda-militancia; El Nacional; http://www.el-nacional.com/)

September 11th, 2012

Economics & Finance

Chavez’s cash pump PDVSA runs on empty

Hugo Chavez’s cash pump, Petróleos de Venezuela (PDVSA), is running on empty. The troubled state oil group may now pay its suppliers with IOUs instead of cash. That’s hardly surprising given Chavez’s systematic squeezing of PDVSA to finance social spending, particularly ahead of elections set for Oct. 7. Harder to imagine is what happens when oil prices decline from today’s lofty heights. PDVSA is a lesson in oil wealth mismanagement. Last year the company posted U$D 125 billion in sales. More than 40% of that fed Chavez’s spending machine. Roughly U$D 24 billion fattened state coffers in the form of royalties, taxes and dividends. And U$D 30 billion lined Chavez’s discretionary spending funds. After covering production and financing costs, PDVSA had to borrow U$D 9.5 billion and tap its U$D 6 billion cash holdings to help fund investments. Despite generally rising crude prices, PDVSA has seen negative free cash flow for the last five years. Worse still, Chavez appears to be letting PDVSA put too little back into the business. The company invested U$D 17.5 billion last year, scarcely more than half what went to Chavez’s social projects. But PDVSA’s own plan requires it to invest nearly twice that much on average over the next six years to reach its goal of producing 4.2 million barrels a day by 2018. Venezuela is currently pumping 2.9 million barrels a day, according to the Organization of the Petroleum Exporting Countries, and it probably won’t reach its goal of 3.5 million by year-end. Output is 17% less than when Chavez took office 13 years ago. (Reuters, 09-06-2012; http://blogs.reuters.com/breakingviews/2012/09/06/chavezs-cash-pump-pdvsa-runs-on-empty/)

Official budget estimates for 2013 project oil prices at U$D 50, and 15% inflation

Official sources report the Ministry of Planning and Finance, along with the Central Bank are currently preparing overall variables for the 2013 budget using several scenarios, among them inflation is projected to range between 12-15% and the average price per oil barrel is being estimated at U$D 50. More in Spanish: (El Universal, 09-11-2012; http://www.eluniversal.com/economia/120911/crudo-en-50-dolares-e-inflacion-de-15-por-ciento-estiman-para-gasto-20)

Domestic debt went up 17% from one quarter to the next even though the country’s external debt experienced a slight drop of 0.5% in the second quarter to close at U$D 43.3 billion. A report published by the Planning and Finance Ministry reveals the central government’s total public debt is U$D 93.5 billion at the end of this year’s second quarter, up 8.2% ($7.0 billion) from last March. (Veneconomy, 09-09-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31991&idc=2)

Venezuela debt up 7 times in 14 years

Public debt has risen out of all proportion due to the Governments voracious spending, which not only eat up income received from the oil industry, but also seeks extraordinary resources to fund unbridled public spending. Economist Ricardo Villasmil, who coordinates the policy platform for opposition candidate Henrique Capriles, says the main problem is not the amount of indebtedness, nor its accelerated increase, but rather the cost of interest payments. More in Spanish: (Tal Cual; http://www.talcualdigital.com/index.html)

Companies using SITME may open dollar denominated accounts

Central Bank President Nelson Merentes estimates that around 30% of the companies currently obtaining foreign currency through the SITME system may open dollar denominated accounts in Venezuela starting next week under the recently issued Exchange Agreement No. 20. More in Spanish: (El Mundo, 09-10-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/empresas-que-obtienen-divisas-a-traves-del-sitme-p.aspx)

Venezuela bottoms the list in the Global Competitiveness Ranking, as it fell two positions to 126th place in the rating prepared by the World Economic Forum 2012-2013. More in Spanish: (El Mundo, 09-10-2012; http://www.elmundo.com.ve/noticias/economia/internacional/venezuela-en-el-piso-del-ranking-de-competitividad.aspx)

DATANÁLISIS: Shortages down a bit, close at 11.6%

Supplies for the basic food basket rose slightly last week. "The index shows a 1.7% drop in shortages from the previous survey, for a total of 11.6%," according to the weekly report prepared by DATANALISIS. More in Spanish: (El Mundo, 09-10-2012; http://www.elmundo.com.ve/)

Commodities

Cost of refining overseas soars by 4.5%

As PDVSA has tried to develop 11 oil refining projects in the Americas and Asia, particularly in countries that are allies of the Chavez Government, it is finding that the cost in foreign refining plans has soared 4.5% as investment requirements rose from U$D 65.2 billion in 2011 to U$D 68.2 in 2012. The information comes from PDVSA's Refining Director Jesús Luongo. For instance, in Brazilian refinery Abreu e Lima, jointly developed by Brazilian state-run oil company PETROBRAS (60%) and PDVSA (40%), U$D 15.2 billion are needed to process 230,000 barrels per day (bpd) as of 2014, whereas only U$D 13.3 billion were needed for the project last year. (El Universal, 09-10-2012; http://www.eluniversal.com/economia/120910/venezuelas-foreign-refining-cost-soars-45)

Presidential rivals present sharply differing views on agriculture 
The opposition points out that production in agriculture has dropped 22% over the past few years and 70% of food consumed by Venezuela is imported from other nations. The government candidate insists that production has grown in all items, and says that while the agricultural component of GDP was insignificant in 1998 it is now 4%. More in Spanish: (El Mundo; http://www.elmundo.com.ve/noticias/tuvoto/dos-visiones-del-agro-quieren-levantar-produccion-.aspx)

International Trade

Construction of 5,000 houses with Portuguese bank financing

Portuguese bank Espirito Santo will finance $ 100 million to construct 5 thousand homes through the Grand Mission Housing Venezuela for housing complexes to the middle class.

Venezuelan Foreign Minister Nicolas Maduro said the information during the opening of a prefabricated building components manufacturer in Cua city, central state of Miranda.

The funding is possible given that Espirito Santo Bank started operations in Venezuelan territory last January, amid joint projects to develop the Orinoco Oil Belt and others of bilateral strategic interest. (AVN, 09-10-2012; http://www.avn.info.ve/contenido/construction-5000-houses-portuguese-bank-financing)

Logistics

Oil tanker launched by Venezuela and China

The government news agency says that Venezuela y China have launched the "Carabobo", an oil tanker built at the Bohai shipyard in Huludao. with the capacity to hold 320,000 tons of dead weight, which is around 2 million barrels of oil. Bilateral agreements call for the construction of 3 more very large crude carriers in order to supply over one million barrels a day to China. More in Spanish: (Agencia Venezolana de Noticias, 09-11-2012; http://www.avn.info.ve/contenido/venezuela-y-china-estrenan-buque-para-transporte-petróleo)

Politics

Capriles pledges to end oil giveaways abroad, will adjust minimum wage upon taking office

During the presentation of the program for his first 100 days in office, opposition candidate Henrique Capriles Radonski pledged to maintain diplomatic relations with all nations, but will not "give away" any more oil to any country since oil revenue must be invested in solving local problems. He said: "Our oil will be used to develop Venezuela, not other countries". He also pledged to raise the minimum wage to VEB 2500 the day he takes office, and not allow it ever to fall behind inflation. More in Spanish: (El Siglo, 09-11-2012; http://elsiglo.com.ve/modules.php?name=News&file=article&sid=32007; El Mundo; http://www.elmundo.com.ve/noticias/tuvoto/capriles-radonski-promete-ajustar-el-salario-minim.aspx)

Chavez woos rich, warns of "civil war"

Venezuela's famously anti-capitalist president, Hugo Chavez, has urged rich voters to back him or face "civil war," while his opponent sought to reassure the poor he will not abandon popular socialist welfare policies if he wins next month's election. (Reuters, 09-10-2012; http://www.reuters.com/article/2012/09/10/venezuela-election-idUSL1E8KA3JK20120910)

September 07th, 2012

Economics & Finance

Inflation at 9.8% by August, nine basic food items rely heavily on imports

The Central Bank of Venezuela (BCV) announced that accumulated inflation from January through August slowed down and stood at 9.8%. BCV's Chairman Nelson Merentes and Finance Minister Jorge Giordani said this was a highly positive result. Last year's accumulated inflation was 18.6% for the same period. "By the end of the fiscal year inflation may be below the estimated levels, 20-22%," Merentes said. Low food prices are the reason for the drop in inflation, and such decline is the result of a "growing (domestic) production, the Law on Cost and Fair Prices, and a better distribution of products," according to the BCV president. The Central Bank also said 30% of the beef and 90% of the powdered milk consumed in Venezuela are imported. 80% of liquid milk is also imported. (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/venezuelan-inflation-at-98-by-august) and more in Spanish: (El Nacional; http://www.el-nacional.com/)

Private banks may participate in "Petrobond" distribution

President Hugo Chávez announced that the private and public banking sectors will work together on national apportionment of Petrorinoco bonds (Petrobonds). He said the government and private banks will sign agreements for private financial institutions to distribute bonds in remote places where Banco de Venezuela (a state-run bank) does not have branch offices. (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/banking-private-sector-participates-in-petrobonds-distribution)

Commodities

PDVSA to invest U$D 18 billion this year

Venezuela’s oil minister announced that state oil company PDVSA plans to invest U$D18 billion this year, primarily in exploration and production. Rafael Ramirez, who also heads PDVSA, says that in 2006 investment in the oil industry totaled U$D 5.83 billion and then climbed to U$D 11 billion in 2007 and U$D 15.44 billion in 2008. He said that U$D 13.54 billion were invested in 2009 and U$D 10.7 billion in 2010, a “bad year” due to the “impact of the entire drop in the price” in 2009, while investment rose to U$D 17.53 billion last year. He confirmed that in 2011 the Venezuelan oil company posted U$D 124.75 billion in revenue. (Latin American Herald Tribune, 09-05-2012; http://www.laht.com/article.asp?ArticleId=570259&CategoryId=10717)

Minister claims processing units undamaged

Venezuelan Minister of Petroleum and Mining Rafael Ramírez claims that processing units (for the output of by-products) reported no damages upon the explosion of the Amuay oil refinery in northwest Venezuela. He also said that a comprehensive revision is in place to ensure no further leaks.  Although the minister did not reveal the cost of overall damages, he stated, "nine out of 680 tanks has been affected (at the Paraguaná Refining Complex). Four out of the nine burnt tanks collapsed, eventually. The other five suffered some damages. We are evaluating everything, including all the systems; we are changing the valves." (El Universal, 09-05-2012; http://www.eluniversal.com/economia/120905/venezuelan-minister-of-petroleum-processing-units-undamaged; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=570068&CategoryId=10717)

Nation has fuel reserves for 10 days

Oil and Mining Minister and PDVSA Chief Rafael Ramírez says “the country still has fuel reserves for 10 days” after the explosion at the Amuay Refinery a little over a week ago. He also reiterated the country “is not importing gasoline.” (Veneconomy, 09-05-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31946&idc=4)

Perla gas field production at least 15 months away

The start of production at Venezuela's big offshore Perla gas field is still at least 15 months away, said a partner involved in the project, delaying once again the country's plans for domestic production of natural gas. Although Venezuela boasts some of the world's biggest natural gas reserves, and is one of its biggest oil exporters; the country doesn't yet produce gas commercially. The nation hopes the Perla field and other future gas projects will help it rely less on neighboring Colombia for its supplies. The project partners said last year they hoped to have some initial production from Perla by the end of 2012. (Reuters, 09-05-2012;

http://www.reuters.com/article/2012/09/06/venezuela-gas-idUSL2E8K60CT20120906)

PETROPIAR upgrader restarting after maintenance

A maintenance shutdown of the PETROPIAR oil upgrader is over, but a full return to production could still take two weeks, said the senior executive for the Venezuelan unit of Chevron, a partner at the facility. The upgrader, which converts heavy crude from the OPEC nation's Orinoco belt into lighter and more valuable oil, was shut down in July for maintenance and to expand capacity. With maintenance complete, the facility will now gradually resume operations. (Reuters, 09-05-2012; http://www.reuters.com/article/2012/09/06/venezuela-oil-petropiar-idUSL2E8K602O20120906)

PDVSA says six Orinoco projects to begin pumping this year

PDVSA says that six new projects in the Orinoco heavy oil belt are expected to start production by the end of the year, setting yet another target for development of a delay-plagued region vital to increased production in the country. The first project to begin producing, said Rubén Figuera, the PDVSA executive in charge of the Orinoco belt, will be Petromacareo, its joint venture with Vietnamese oil company PETROVIETNAM. After that there will be projects with Italian, Russian, Spanish, and American oil companies. "This year we'll begin early production at all of the new developments in the belt," said Figuera, at an oil industry conference in the coastal city of Puerto la Cruz. "The expectation for the wells is extraordinary." (Reuters, 09-05-2012; http://www.reuters.com/article/2012/09/05/venezuela-oil-production-idUSL2E8K5GMJ20120905)

Venezuela confirms start-up of oil exploration off Cuba

Venezuela – State-owned oil giant Petroleos de Venezuela (PDVSA) has started exploring for oil in deepwater areas off Cuba, Oil and Mining Minister Rafael Ramirez said. “It started and when we have the results, we’ll tell the country,” Ramirez said, without providing further details. State-owned Cubapetroleo, or CUPET, said in early August that PDVSA would continue drilling in deepwater areas despite the fact that other foreign oil companies hit two dry holes. (Latin American Herald Tribune, 09-05-2012; http://www.laht.com/article.asp?ArticleId=570242&CategoryId=10717)

Logistics & Transport

The Mazparro, Boconó and Arauca, are the first vessels to service the Orinoco-Apure river system, setting sail from the Orinoquia Bridge in Bolívar state down to Apure state. The boats, which bear up-to-the-minute technology thanks to the China-Venezuela agreement, are meant to boost national agricultural production. (Veneconomy, 09-05-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31967&idc=3)

Politics

Capriles pledges to end barriers to domestic production

A large part of the Capriles "Made in Venezuela" plan for the economy is based on "stimulating" domestic production, to achieve 6-7% growth annually, "end" scarcity, and promote diversification and exports  His platform adds "In recent years Venezuela has become unattractive for business, due to mistaken policies that threaten those who would invest". More in Spanish: (El Universal, 09-07-2012; http://www.eluniversal.com/economia/120907/capriles-promete-eliminar-trabas-a-la-produccion-local)

Venezuela to appoint envoy to Colombian peace process

Foreign Minister Nicolás Maduro has said President Chávez will in the next few days be appointing an envoy to join the commission leading the Colombian peace process. "The guidelines, activities, and the scope of Venezuela's support in the talks," will be set out by the Colombian Government, said Maduro during an interview. (El Universal, 09-05-2012; http://www.eluniversal.com/nacional-y-politica/120905/venezuela-to-appoint-envoy-to-colombian-peace-process; http://www.eluniversal.com/nacional-y-politica/120905/venezuelas-incorporation-in-colombian-peace-talks-is-a-concession)

September 04, 2012

Economics & Finance

Official dollar holdings abroad drop

According to Central Bank reports the Government is reducing the amount of dollars it has abroad in order to keep up public spending amid the election campaign. Deposits abroad have gone down U$D 9.148 billion, from U$D 40.819 billion to U$D 31.671 billion. According to the ECOANALITICA firm this is a bad sign: "In an economy such as Venezuela's, that is vulnerable to oil prices and accelerated foreign debt, the balance of this account is of special interest to analysts, business and government itself."  More in Spanish: (El Universal; http://www.eluniversal.com/economia/120904/ejecutivo-reduce-dolares-colocados-en-el-exterior)

Commodities

State oil company's investments in welfare double those in oil refining

Since the beginning of the oil boom in 2004, state-run oil company PDVSA has been meeting a number of obligations, as it is forced to allocate a great part of its revenue into non-related activities. Company reports and accounts show that between 2007-2011 funds spent for social development, not including contributions to the National Development Fund (FONDEN) doubled the amount of investment made in oil refining. Whereas U$D 24.3 billion went to social programs and production projects, only U$D 11.8 billion have been invested in oil refining. (El Universal, 09-03-2012; http://www.eluniversal.com/economia/120903/state-oil-companys-investments-in-welfare-double-those-in-oil-refining)

Amuay Refinery processing 264,000 BPD

Energy and Mining Minister Rafael Ramírez claims that the Amuay Refinery - which caught fire after an explosion on August 25th - is now processing up to 264,000 barrels per day, from Units 2,3 and 4. He also says 65 cisterns loaded with asphalt were dispatched yesterday from the plant. (Veneconomy, 09-03-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31927&idc=4; AVN, http://www.avn.info.ve/node/130403 and more in Spanish: El Universal; http://www.eluniversal.com/economia/120904/refineria-de-amuay-ya-esta-procesando-264-mil-barriles-diarios; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/ramirez-ubica-el-procesamiento-de-refineria-amuay-.aspx)

Venezuela says it’s looking at everything in refinery blast

Venezuela’s government has not ruled out any theory in the investigation into the Aug. 25 explosion at the Amuay refinery that killed 42 people, but “there’s no way” that the proper maintenance was neglected, claims Energy and Mines Minister Rafael Ramirez. “We cannot rule out any hypothesis. We’re working on the basis that we need to clarify ... the origin of this situation,” he said. “However, there are things that can be ruled out,” the minister said. (Latin American Herald Tribune, 09-02-2012; http://www.laht.com/article.asp?ArticleId=568498&CategoryId=10717)

Logistics & Transport

Resources allocated for river transportation company

President Hugo Chavez has approved VEB 220 million to create a new river transportation company with four routes on the Apure and Orinoco rivers, in the plains." (AVN; 09-02-2012; http://www.avn.info.ve/node/130513)

CADIVI has allocated U$D 998.62 million for airline operations

The Currency Board says it has allocated over U$D 998.62 million to national and international airlines, according to Marisela de Loaiza, a representative for the International Air Transport Association. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Politics

Over 10% of voters took part in practice balloting

More than 10% of voters participated in a mock election last Sunday, according to Socorro Hernández, a director at the National Elections Council (CNE). She said that 99% of the transmitted data had been processed by 8:00 PM, and that results would not be released as it had not been called for in this the simulated balloting. (El Universal, 09-03-2012; http://www.eluniversal.com/nacional-y-politica/120903/over-10-of-voters-take-part-in-venezuelan-mock-election; http://www.eluniversal.com/nacional-y-politica/120903/proselytism-takes-hold-at-venezuelan-election)

Venezuela coordinated contacts between the FARC and Bogota

Preliminary contacts between the Colombian government of President Juan Manuel Santos and the guerrillas of the Revolutionary Armed Forces of Colombia (FARC), in order to prepare a negotiating agenda, were conducted in Venezuela and Cuba, according to Colombian press sources. According to the newspaper El Tiempo of Bogota, a meeting was met in the city of Barinas "with the help" of President Hugo Chavez, and in Havana there were about ten meetings with the support of Raúl Castro, AFP quoted. More in Spanish: (El Universal, 09-03-2012; http://www.eluniversal.com/internacional/120903/venezuela-coordino-contactos-entre-las-farc-y-bogota)

Chávez vows to keep exchange controls, Capriles seeks to create investor confidence

Although the point has not been in his election platform, President Chavez has repeatedly said that if he remains in office exchange controls will become a fixture, and on May 20, 2005 he said these controls were not transitory but rather a key instrument in the Government's economic strategy. More in Spanish: (El Universal; http://www.eluniversal.com/economia/120904/en-1983-se-perdio-la-brujula-cambiaria-chavez-ofrece-mantener-el-contr)

NEWSWEEK Report: Henrique Capriles Radonski: The Guy Gunning for Chavez

If elections were simply endurance contests, Venezuela’s Oct. 7 presidential contest would be a romp. Young, hyperactive, and these days sweating, Henrique Capriles Radonski of the opposition coalition has turned the race in this oil-rich, politically vertiginous South American nation into a political version of the Ironman Triathlon. Juiced by opinion polls that show him gaining on incumbent Hugo Chávez, the governor has been tearing around Venezuela to make his case. Covering several towns in a day, his stamina is politico-athletic as he addresses crowds, greets press, and shoots hoops with the kids. More: (The Daily Beast, 09-02-2012; http://www.thedailybeast.com/newsweek/2012/09/02/henrique-capriles-radonski.html)

August 31th, 2012

Economics & Finance

Venezuela's internal debt up 40% in the first half of 2012

Although the crude oil price is about U$D 100, due to an official policy of extensive indebtedness internal and external debt rose by 18% during the first semester of 2012, according to data from the Finance and Planning Ministry which reflects it rose from U$D 79.2 billion in December 2011 to U$D 93.5 billion by the end of June this year. (El Universal, 08-30-2012; http://www.eluniversal.com/economia/120830/venezuelas-internal-debt-up-40-in-the-first-half-of-2012)

Government has U$D 6 billion available in the Chinese Fund

China and Venezuela contributed U$D 6 billion to establish the China Fund as a way for the government to increase its liquid assets. The China Development Bank disbursed U$D 4 billion and the Venezuelan National Development Fund (FONDEN) U$D 2 billion. President Chávez has said the fund is already activated and the Ministry of Foreign Affairs stated that the resources were already deposited, stated AFP. (El Universal, 08-29-2012; http://www.eluniversal.com/economia/120829/venezuelas-government-has-usd-6-billion-in-the-chinese-fund)

Commodities

Venezuela in ‘no hurry’ to restart oil refinery after fires

Venezuela is carrying out an “exhaustive” inspection of its biggest refinery before attempting to restart processing after extinguishing a four-day fire yesterday caused by an explosion that killed 48 people. State-owned Petroleos de Venezuela, S.A. is “in no hurry” to restart the Amuay refinery and will allow for at least a one-day cooling-down period, Oil Minister Rafael Ramirez told reporters in Falcon state near the plant. (Bloomberg, 08-29-2012; http://www.bloomberg.com/news/2012-08-29/venezuela-in-no-hurry-to-restart-refinery-after-four-day-fire.html; Reuters, http://www.reuters.com/article/2012/08/30/venezuela-refinery-idUSL2E8JU0O120120830; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=31892&idc=4; CNN, http://edition.cnn.com/2012/08/29/world/americas/venezuela-refinery-problems/index.html?iref=allsearch)

Refinery disaster reveals weaknesses in Venezuela oil company, financial hit expected

The deadly blast and fire at Venezuela’s biggest refinery are prompting critics to question whether the state oil company has been neglecting maintenance while helping fund government programs under President Hugo Chavez.

Analysts say the disaster at the Amuay refinery could also mean a financial hit for state-run Petroleos de Venezuela SA by forcing it to further increase imports of fuel for domestic consumption. (The Washington Post, 08-29-2012; http://www.washingtonpost.com/world/the_americas/refinery-disaster-reveals-weaknesses-in-venezuela-oil-company-financial-hit-expected/2012/08/29/c627c7da-f24e-11e1-b74c-84ed55e0300b_story.html)

Oil spill reported at Venezuelan refinery in Curacao

Curacao's local press has reported a spill of hydrocarbons at the Venezuelan Isle refinery, located in Curacao, and that PDVSA officials responded ten days after the spill occurred. The Local newspaper reported that the Coastguard noticed the spill on August 17, and informed Harbor Safety Inspection (HVI). Nonetheless, responses did not come until August 25. "It's incomprehensible that Pdvsa waited until Saturday to send a cleaning team to the area and let the situation get worse" said Peter van Leeuwen,  chairman of Clean Environment on Curacao (SMOC). (El Universal, 08-29-2012; http://www.eluniversal.com/economia/120829/oil-spill-reported-at-venezuelan-refinery-in-curacao)

PETROBRAS sees first of new refineries starting up November 2014

The first processing train of the refinery joint venture with Venezuela's Petroleo de Venezuela SA, or PDVSA, will be followed by a second line in May 2015. The refinery will add 230,000 barrels of daily processing capacity, Petrobras said. PETROBRAS currently processes about 2 million barrels per day at 12 refineries, Downstream Director Jose Carlos Cosenza said during a presentation. PETROBRAS will invest U$D71.6 billion in its downstream operations through 2016. The investments are part of the company's U$D237 billion spending plan for 2012-2016. (Fox Business; 08-29-2012; http://www.foxbusiness.com/news/2012/08/29/petrobras-sees-first-new-refineries-starting-up-november-2014/)

Logistics & Transport

Port delays cost U$D 16,000 per day

Ismael Pérez Vigil, Executive President of CONINDUSTRIA, the National Federation of Industries, says port inefficiency increases costs as well as the risk for goods, all of which lowers productivity, increases inflation and loses international markets. At the same time, Carabobo state legislator Neidy Rosal reports "There are approximately 15 grain carriers at bay waiting to be offloaded because average stays are now 3 to 4 weeks, and each day costs around U$D 16,000. In the past offloading was done in 72 hours." More in Spanish: (Tal Cual, 08-30-2012; http://www.talcualdigital.com/index.html)

Politics

Chavez faces new election threats

It’s been a rough month for President Hugo Chávez. In less than two weeks, he has had to deal with a deadly prison riot, a collapsing bridge, flooding, an embarrassing confrontation with steel workers on live TV and the country’s worst oil-industry disaster, which killed at least 41 and still has families digging through the rubble looking for loved ones. The avalanche of bad news would be hard on any leader, but this train of troubles comes as Chávez, 58, is heading into an Oct. 7 presidential race that polls suggest is getting tighter. For the last 14 years in office, Chávez has played the roll of an energetic leader with a common touch. Even when his administration had missteps, voters rarely held their charismatic comandante accountable. But the scale of this month’s calamities might change that dynamic, said Xavier Rodríguez Franco with Entorno Parlamentario, a legislative watchdog group. “The events the country has had to face recently clearly show a breakdown in the government’s ability to manage,” he said “And that breakdown is dragging down the president’s image.” (Miami Herald, 08-30-2012; http://www.miamiherald.com/2012/08/30/2976134_p2/venezuelas-chavez-faces-new-election.html=)

Government Spins On Amuay Disaster, Evidence Mounts Of Insufficient Maintenance

Although the Government is trying to convince Venezuelans that the Amuay disaster is something normal and has little to do with bad management or bad maintenance, evidence seems to show the opposite and is mounting fast. The leak of the report by the refinery's underwriter is quite damming. The report says on page 8, that while US$1 billion was budgeted for maintenance, only US$314 million was actually spent. Less than US$ 2 billion was spent in the last four years. So, when PDVSA's Asdrubal Chavez boasts that US$ 4 billion were spent on maintenance in the same period, he clearly is talking about how much was budgeted, not spent. Part of the problem is that Bariven, the PDVSA affiliate in charge of imports, is now in charge of all the food imports of PDVAL, thus it's just in time ability of yesteryear is no longer there. The result, even if maintenance needs to be done, there are no materials for it. The report also says that the target of PDVSA was to have 80% of the maintenance be preventive and 20% corrective. However, the report concludes that it ended up being 69% corrective, 31% preventive. (The Devils Excrement, 08-30-2012; http://devilsexcrement.com/2012/08/30/venezuelan-governmentt-spins-on-amuay-disaster-evidence-mounts-of-insufficient-maintenance/)