January 10th, 2012

Economics & Finance

Chavez vows to reject arbitration in EXXON case

President Hugo Chavez says that Venezuela would not recognize a ruling by a World Bank panel in a multibillion-dollar arbitration case with the EXXON MOBIL Corporation. “I tell you now, we will not recognize any decision” by the center, Mr. Chavez said during a televised speech. “They are trying the impossible: to get us to pay them,” he said. “We are not going to pay them anything.” It was not immediately clear whether Mr. Chavez was also referring to about 20 other cases that Venezuela faces before the World Bank’s arbitration panel that were prompted by a wave of state takeovers in recent years. They include separate multibillion-dollar proceedings brought by ConocoPhillips, another major American oil company. (The New York Times, 01-09-2012; http://www.nytimes.com/2012/01/09/business/venezuela-will-not-recognize-world-bank-ruling-in-exxon-case.html?_r=2)

Leaving ICSID to hit foreign investment

Arbitration specialist Luis Alfredo Araque predicts Venezuela’s withdrawal from the World Bank’s International Center for Settlement of Investment Disputes (ICSID) will scare away foreign investment. “No one in their right mind will invest in a country that is not in ICSID”, says Araque, who considers the President’s threat a “very serious” matter which – if made effective – could be highly damaging to the nation. More in Spanish: (El Universal, 01-10-2012; http://www.eluniversal.com/economia/120110/salida-del-ciadi-alejara-inversion-extranjera)

2012 inflation projected around 30%

Although the Government expects economic growth above 5% this year, analysts – such as IESA economis Hugo Faría – predict the country will suffer high inflation and indebtedness this year as a result of increased spending in support of President Chavez’s campaign for reelection. More in Spanish: (Tal Cual, 01-10-2012; http://www.talcualdigital.com/index.html)

Public Stock Exchange readies for new Petro-Bond

According to the President of the Bicentennial Public Stock Exchange, Felix Franco, they are getting ready for a new issue of Petro-Bonds to take place during the first five months of this year. He said during an interview “We expect the issue of Petro Bonds announced by President Chavez will be placed through the Public Stock Exchange in the secondary market”. More in Spanish: (AVN, 01-10-2012; http://www.avn.info.ve/contenido/bolsa-pública-valores-se-prepara-para-emisión-petrobono; El Universal, http://www.eluniversal.com/economia/120110/bolsa-publica-bicentenaria-prepara-plataforma-de-petrobonos)

Commodities

Venezuela's oil opens the year at U$D 108.27

The price of the Venezuelan oil basket started 2012 with a U$D 1.57 per barrel increase, to an average U$D 108.27, according to the Ministry of Petroleum and Mining. Last week, Venezuelan oil basket closed at U$D 106.70 for an average skyrocketing price of U$D 101.04 per barrel in 2011. (El Universal, 01-06-2012; http://www.eluniversal.com/economia/120106/venezuelas-oil-begins-the-year-at-usd-10827)

Petropiar drilled 157.200 bpd in 2011

PETROPIAR, the joint venture led by state-run oil holding Petróleos de Venezuela (PDVSA) which operates at the Orinoco Oil Belt, had an average output of 157,200 barrels per day (bpd) during, which surpassed the initial goal set by the National Budget Office (Onapre) of 155,300 bpd on a yearly average. (El Universal, 01-06-2012; http://www.eluniversal.com/economia/120106/petropiar-drills-157200-bpd-in-2011)

Chavez says the Orinoco Oil Belt project will bolster economic development

President Chavez says that the Orinoco Socialist Plan, to be developed along the Orinoco Oil Belt, will be the main tool for the economic development of the country and for the a newly launched program aimed at promoting productive employment in the country. According to governmental estimations bout 300,000 job posts will be created in the entire area in the next years. The Orinoco Oil Belt is the world's largest liquid hydrocarbon reserves and it covers 4 states in Venezuela (Delta Amacuro, Guárico, Anzoátegui and Monagas). (AVN, 01-08-2012; http://www.avn.info.ve/contenido/project-orinoco-oil-belt-bolster-economic-development)

Government predicts it will raise iron production to 20 million tons in 2012…

President Chavez claimed on national television that the Government expects to increase iron production to about 20 million tons during 2012. (AVN, 01-09-2012; http://www.avn.info.ve/node/94376)

and says it will increase cement production capacity by 27% in 2013

Industry Vice Minister Raul Pacheco announced that through official investments in the cement production, capacity is expected to increase by 27% by 2013; that is about 11.54 million tons a year. Pacheco made the statement from the Cerro Azul cement plant that is under construction in cooperation with Iran. (AVN, 01-09-2012; http://www.avn.info.ve/contenido/venezuela-increase-cement-production-capacity-27-2013)

Indepabis has published an updated list of price controlled items

The Institute for the Defense of People’s Access to Goods and Services (INDEPABIS) has updated a list of over 100 items in the basic foods category on its web page: http://www.indepabis.gob.ve/. Key items are vegetable oil, sugar, coffee, poultry, beef, milk, cheese, rice, sorghum, corn, precooked corn flour, pasta, and canned foods. More in Spanish: (AVN, 01-10-2012; http://www.avn.info.ve/contenido/indepabis-publica-listado-actualizado-rubros-alimenticios-regulados)

International Trade

Venezuela, Peru in pacts on oil investments, trade

The presidents of Venezuela and Peru have reached an agreement for the Peruvian state oil company to invest in development of Venezuela's eastern Orinoco oil belt. PDVSA will study a possible role in developing a petrochemical complex in Peru as well as helping Peru increase its production of heavy and extra heavy crude oil. The formal agreement came during a Saturday meeting between President Hugo Chavez and Peruvian leader Ollanta Humala, while representatives of the two governments signed agreements establishing mechanisms for transportation, storage, refining and marketing of hydrocarbons. Other pacts cover the sale in Peru of tractors and other farm implements made in Venezuela. The main Peruvian private sector organization, CONFIEP, has criticized the agreements, saying they are of no advantage to Peru. Venezuela’s imports from Peru rose 422,6% over the past 13 years, from U$D 88.4 million to U$D 462.1 million last year; but exports dropped 73,78%, from U$D 143.4 million in 1999 to U$D 37.5 million in 2011.  (AJC, 01-07-2012; http://www.ajc.com/business/venezuela-peru-in-pacts-1294147.html and more in Spanish: El Nacional, 01-09-2012; http://www.el-nacional.com/)

Venezuela to strengthen cooperation with Nicaragua

Venezuela’s ambassador to Nicaragua, María Alejandra Ávila, announced that cooperation agreements with that country will increase after the reelection of Daniel Ortega for a second term in office. The two countries are already undertaking several projects, all of which are covered by the PETROCARIBE energy agreement. PDVSA América maintains ALBANILISA operations in Nicaragua in order to purchase such items as beef, beans, rice and coffee for distribution in Venezuela through official outlets. More in Spanish: (El Nacional, 01-09-2012; http://www.el-nacional.com/ and AVN; http://www.avn.info.ve/contenido/venezuela-strengthen-cooperation-agreements-nicaragua)

Logistics & Transport

Patrol vessels to be built in Puerto Cabello by Cuban technicians

It is projected that during the first quarter of this year manufacturing of patrol vessels by Cuban technicians will begin at the Puerto Cabello Naval Base, based on a January 5^th agreement signed by the Defense Ministry and Cuba's Ministry for Transportation. More in Spanish: (El Nacional, 01-09-2012; http://www.el-nacional.com/)

Politics

Chavez defends Ahmadinejad against 'US warmongering'…

President Hugo Chavez defended his close ally Iranian leader Mahmoud Ahmadinejad and said:  "They accuse us of being warmongers," Chavez said. "They're the threat." He also accused the U.S. and its European allies of demonizing Iran and using false claims about the nuclear issue "like they used the excuse of weapons of mass destruction to do what they did in Iraq." Both leaders planned to travel to Nicaragua on Tuesday for the inauguration of newly re-elected President Daniel Ortega, and then Ahmadinejad will also visit Cuba and Ecuador. Laughing, Chavez said Ahmadinejad is traveling through "the axis of evil of Latin America." (AP, 01-09-2012; http://www.google.com/hostednews/ap/article/ALeqM5g_8vPleqBjcvHFI5K3wlevor-SPA?docId=386da2827cbe43c38cbe5b31004d0a18)

…But makes no oil deals with Iran

On the other hand, Oil Minister Rafael Ramirez told reporters the government had not made any oil-related agreements with Iran. On the issue of sanctions against Iran and its threats to block the Strait of Hormuz, Ramirez said OPEC, to which both countries belong, could not get involved in the issue. "Any action that Iran takes in defense of its sovereignty is a matter of Iran," Ramirez said. (AP, 01-09-2012; http://www.google.com/hostednews/ap/article/ALeqM5g_8vPleqBjcvHFI5K3wlevor-SPA?docId=386da2827cbe43c38cbe5b31004d0a18)

Venezuelan consul in Miami ordered to leave U.S. for discussing cyber-attacks

In a move likely to further strain relations between the United States and Venezuela, the State Department on Sunday said that it had ordered Livia Acosta Noguera, Venezuela’s consul general in Miami, to leave the country. The decision to expel Acosta was made one month after Spanish-language Univision Network broadcast a documentary about Iran’s alleged terrorist activities in Latin America, including a taped segment in which the consul reportedly asks an alleged Mexican hacker to give her access codes to nuclear facilities in the United States. President Hugo Chavez called the decision a show of “arrogance by the ridiculous empire”; and Foreign Minister Nicolás Maduro said they would give the US a “clear and firm” response. (Miami Herald, 01-08-2012; http://www.miamiherald.com/2012/01/08/2579965/venezuelan-consul-in-miami-ordered.html and more in Spanish: Noticiero Venevisión, http://www.noticierovenevision.net/politica/2012/enero/9/12582=chavez-asevera-que-expulsion-de-consul-venezolana-es-%E2%80%9Cuna-demostracion-mas-de-la-prepotencia-del-imperio-ridiculo%E2%80%9D and Tal Cual; http://www.talcualdigital.com/index.html)

President Chavez to attend Nicaragua's Ortega inauguration

President Chavez announced Sunday that he will travel next Tuesday Jan. 10 to Managua, Nicaragua, to attend the inauguration of his counterpart Daniel Ortega. (AVN, 01-09-2012; http://www.avn.info.ve/contenido/president-chavez-attend-nicaragua039s-ortega-inauguration)

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.

September 23th, 2011

Economics & Finance

Venezuela proposes U$D 1 billion compensation for EXXON MOBIL

Venezuela has proposed paying EXXON MOBIL Corp U$D 1 billion in compensation for the nationalization of its assets in 2007. In a telephone call to Reuters, Energy Minister Rafael Ramirez denied that the government of President Hugo Chavez was negotiating with Exxon separately from an ongoing arbitration process at New York's International Chamber of Commerce. "Our proposal is $1 billion for its assets .... We are not in negotiations with EXXON MOBIL, nor has it crossed our minds to approach them," Ramirez said. His statement seemed to contradict an earlier one made by Solicitor General, who had told media: “Venezuela has to pay -- we are clear on that. The problem now is how much we will pay”. (Reuters, 09-21-2011; http://www.reuters.com/article/2011/09/22/exxon-venezuela-idUSS1E78K26F20110922; Bloomberg, 09-21-2011; http://www.bloomberg.com/news/2011-09-21/exxon-pdvsa-arbitration-negotiations-at-6-billion-escarra-says.html)

IMF: Venezuela has region’s worst outlook

In its latest edition of the World Economic Outlook, the International Monetary Fund (IMF) forecast that Venezuela's economy should expand 2.8% this year, with an inflation rate of 25.8%. According to the intergovernmental organization, Venezuela has the worst outlook in South America and a poor performance among oil exporters.

The projected economic growth in the countries of the region is higher than Venezuela's, with their inflation rate much lower, at 7.9% on average. (El Universal, 09-21-2011; http://www.eluniversal.com/2011/09/21/imf-venezuela-has-the-worst-prospects-in-the-region.shtml)

World Bank calls Venezuela unresponsive to global crisis

The World Bank says that within the emerging environment it will be essential for Latin American economies to leverage their connections with China. The institution added that although Venezuela has ties with the Asian country, it is included in the group of low- and medium-growth countries. (El Universal, 09-21-2011; http://www.eluniversal.com/2011/09/21/world-bank-warns-that-venezuela-is-unresponsive-to-global-crisis.shtml)

Closer to Zimbabwe

Venezuela ranked 139th –down one rank from 2010- with 4.23 points out of 10 in the 2011 Annual Report on Economic Freedom of the World, published by the Canadian Fraser Institute and by CEDICE Libertad in Venezuela. Zimbabwe once again received the worst ranking among the 141 countries studied, preceded by Myanmar, Venezuela and Angola. (Veneconomy, 09-22-2011; http://www.veneconomy.com/site/index.asp?idt=27716&idc=2&ids=44&Var_Send=1&mmD=09&ddD=21&mmH=09&aaD=2011&ddH=22&aaH=2011&Send=Find)

Companies still waiting on foreign currency for dividends

Carlos Tejera, the general manager of the Venezuelan-American Chamber of Commerce and Industry (VenAmCham), said that none of the companies belonging to the trade organization has received foreign currency to repatriate dividends. He added that only 10 out of the 50 VenAmCham companies that have been seized by the government have received a compensation for their assets. (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/companies-wait-for-foreign-currency-to-repatriate-capital.shtml)

Costs Law to hit all economic sectors

The government is speeding up the mechanisms to implement the Law on Costs and Fair Prices starting November 22. Against all original statements, officials now say that the legislation will include all economic sectors. Trade Minister Edmée Betancourt says the Superintendent of Costs and Fair Prices will continue to assess cost structures, and that the study will first focus on food items, but later encompass all economic sectors. (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/costs-law-to-reach-all-economic-sectors-in-venezuela.shtml)

Eight month liquidity is more than all of 2010

Central Bank figures show liquidity for the first eight months of this year has risen by 19,89%, which is more than 19,06% for all of 2010. More in Spanish at: (Tal Cual; http://www.talcualdigital.com/index.html)

GDP projected to grow 3,1% this year and 3,4% in 2012

Cristina Rodríguez, director of METROECONÓMICA-ECOANALÍTICA, says a weakened global demand for hydrocarbons and renewed production in Libya will bring down the Venezuelan oil basked to an average U$D 85 per barrel. More in Spanish at: (El Universal, 09-23-2011; http://www.eluniversal.com/2011/09/23/proyectan-que-el-pib-crecera-31-este-ao-y-34-en-2012.shtml)

International reserves up to U$D 30.842 billion

International Reserves on closed Tuesday at U$D 30,842 according to the Central Bank of Venezuela (BCV). More in Spanish at: (El Mundo, 09-22-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-subieron-a-$30-842-millon.aspx)

Commodities

US Department of Energy says Venezuela's oil policy will hinder Orinoco belt development

The US Department of Energy International Energy Outlook for 2011-2035 says sustained high oil prices will make it cost competitive to develop unconventional petroleum resources such as heavy crudes in the Orinoco belt, oil sands in Canada, deep-water oil reservoirs in Mexico. However, it adds that "for some resource-rich countries it is assumed that current political barriers to production increases will not continue after 2015. For instance, both Mexico and Venezuela currently have laws that restrict foreign ownership of hydrocarbon resources. Their resources policies have discouraged investment, both foreign and domestic, and hindered their ability to increase or even maintain historic production levels." (El Universal, 09-21-2011; http://www.eluniversal.com/2011/09/21/us-agency-venezuelas-oil-policy-is-to-hit-orinoco-belt.shtml)

Central bank to purchase gold produced in Venezuela

The Central Bank of Venezuela (BCV) was designated as the entity responsible of the purchase of gold obtained from mining activities in Venezuela following the recently issued law that reserves exploration and development of gold activities to the State. (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/central-bank-to-purchase-gold-produced-in-venezuela.shtml)

Logistics & Transport

Air Cargo: Monterrey, Caracas Gain

Airports in Monterrey, Caracas and Buenos Aires were among the fastest-growing in cargo traffic in Latin America last year, according to a Latin Business Chronicle analysis based on data from Swiss-based Airports Council International (ACI).  Cargo traffic at Monterrey (MTY), the 20th-largest cargo airport in Latin America, grew 42.4% to 48,710 metric tons. Meanwhile, traffic at Caracas (CCS), the 14th-largest cargo airport, grew 39.6% to 85,655 metric tons.  And at the Aeroparque Jorge Newbery in Buenos Aires (AEP), the 34th-largest cargo airport, traffic grew 38.3% to 18,945 metric tons. The three were among the top five winners in Latin American cargo growth last year. (Latin Business Chronicle, 09-19-2011; http://www.latinbusinesschronicle.com/app/article.aspx?id=5129)

Politics

Chavez said "The chemotherapy cycle is over, we will now work on a full recovery", as he returned to Venezuela from Cuba. He added: “I know speculation continues, let’s not pay attention. I feel well and will continue to undertake my duties at an adequate pace”. More in Spanish at: (Enfoques 365; 09-23-2011; http://www.enfoques365.net/N29021-ha-terminado-la-fase-de-quimioterapia-dijo-chavez-a-su-regreso-de-cuba.html)

Solicitor General to challenge IACHR Court ruling

Solicitor General Carlos Escarrá says independence and national sovereignty will be official arguments for asking the Supreme Court to support the Government’s position of disregarding the ruling by the Inter-American Court of Human Rights (IACHR Court), which orders political reinstatement of opposition leader and former Chacao municipality mayor Leopoldo López, and would allow him to participate in primary elections to be held in 2012. (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/solicitor-general-to-challenge-iachr-court-ruling.shtml)

Chavez opponents prepare for Venezuela's 2012 vote

Venezuela's opposition coalition will pick a unity candidate in February to fight the 2012 presidential election and try to scupper President Hugo Chavez's re-election bid. Henrique Capriles Radonski. The youthful governor of Venezuela's second most populous state, Capriles has emerged as the strongest candidate in a crowded field, according to polls. (Reuters, 09-22-2011; http://www.reuters.com/article/2011/09/22/us-venezuela-opposition-fb-idUSTRE78L3DU20110922)

Expert: Guyana's request is a hostile act against Venezuela

Aníbal Martínez, head of non-governmental organization Instituto de Defensa del Petróleo (Institute for the Defense of Oil), considers Guyana's request to extend its continental shelf from 200 miles to 350 miles is "the culmination of a series of hostile acts that have been carried out by this country against Venezuela, while our country has not exercised its legitimate right to defend territorial integrity." He adds that: "Venezuela has indisputable rights in its Atlantic front." (El Universal, 09-22-2011; http://www.eluniversal.com/2011/09/22/expert-guyanas-request-is-a-hostile-act-against-venezuela.shtml)

Peru seeks trade complementation agreement with Venezuela

Peruvian Trade and Tourism Minister José Luis Silva say his country seeks to close negotiations for a trade complementation agreement with Venezuela before October 19, which will mark the end of bilateral tariff preferences by Venezuela within. More in Spanish at: (El Nacional, 09-22-2011; http://www.el-nacional.com/)

Chavez in telephone conversation with CARICOM leaders about ALBA

President Hugo Chávez held a telephone conference with representatives of the 14 nations within the Caribbean Community (CARICOM), about a possible agreement between this regional grouping and ALBA toward an integrated economic area for South America and the Caribbean. More in Spanish: (Agencia Venezolana de Noticias, 09-23-2011;  http://www.avn.info.ve/node/78634)

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.

July 11th, 2011

Economics & Finance

Chavez says Venezuela to sell part of any new debt in US dollars

Venezuelan President Hugo Chavez said part of any new bonds sold by the nation will be denominated in dollars. Chavez announced financial terms for the expanded debt ceiling approved by the National Assembly last month. (Bloomberg, 07-09-2011; http://www.bloomberg.com/news/2011-07-09/chavez-says-venezuela-to-sell-part-of-any-new-debt-in-dollars.html)

New public debt bond issue approved  for BF Bs. 45.000 million

Chavez has approved issuing a new public debt bond for BF 45,000 million as granted in the Special Complementary Indebtedness Law approved on June 9th by the National Assembly. The bonds will be sold in bolivars and dollars, and the Treasury Ministry will set conditions for these operations, such as prices, interest rates and redemption. More information in Spanish. (Agencia Venezolana de Noticias;  http://www.avn.info.ve/node/66486)

2011 Petrobond for U$D $2.350 billion now due

The bond issued by PDVSA on 25 June 2009, for a total U$D 3 billion has come due. Financial sector sources indicate about U$D 2,350 billion are still in circulation. Although they have come due there are some doubts as to how they will be handled as over 50% were held by the Templeton investment fund, but there are reports that they were traded indirectly two weeks ago by this fund, PDVSA and Venezuela’s Central Bank; with PDVSA reopening its 2013 Bond with a private and direct offer to the Central Bank for U$D 1.783 billion, and the Bank would in turn these bonds over to Templeton in exchange for the 2011 bond. More information in Spanish. (El Universal; http://www.eluniversal.com/2011/07/11/vencio-petrobono-2011-con-$2350-millones-por-pagar.shtml)

Windfall oil revenues at U$D 6.6 billion in second quarter

An increase in Venezuelan oil prices above U$D 90 per barrel over the past few months resulted in windfall oil revenues available to the Executive Office, particularly after the "special tax on windfall oil revenue" was implemented under an April decree by President Chávez. (El Universal, 07-11-2011; http://english.eluniversal.com/2011/07/11/windfall-oil-revenues-at-usd-66-billion-in-second-quarter.shtml)

Central government spending rises 3.8% in the first half of 2011

The Chavez administration is again starting up the expansionist public spending policy it implemented in 2004-2008. More obligations and upcoming elections are boosting spending. Figures from the Ministry of Finance show government spending for the first half of 2011 at U$D 26.16 billion, which is a 3.8% increase in real terms over U$D 19.77 billion in the same period of 2010. Asdrúbal Oliveros, a director at ECOANALÍTICA, says "the government began the year with a spending spree and it is now in a expansionist phase in expenditures." He also says that economic growth is related to current expenditure. (El Universal, 07-11-2011;  http://english.eluniversal.com/2011/07/11/central-government-spending-rises-38-percent-in-the-first-half.shtml)

Venezuela allocates U$D2 billion for joint fund with China

President Chavez has approved a U$D2 billion contribution by Venezuela to the bi-national fund with China, which will contribute another U$D4 billion. “That’s $6 billion for the central railroad system,” which will use a total of $711 million from that fund, and for a metro line in Caracas, which will receive another $350 million, according to Chavez. (Latin American Herald Tribune, 07-09-2011; http://www.laht.com/article.asp?ArticleId=405865&CategoryId=10718)

Expropriations and seizures total U$D 23 billion

Prepared to increase the State clout on domestic economy, Venezuela's President Hugo Chávez has pioneered a plan of procurement and requisition of companies in a wide variety of sectors. The cost and results of this policy are reviewed by economists Richard Obuchi, Anabella Abadi and Bárbara Lira in a new book called “Management in Red”, published by the Institute of Higher Education in Business Administration (IESA). It reviews the performance of 16 companies that have gone to the State; macro-economic signals and an inventory of costs already paid or publicly acknowledged, in the first stage of expansion. (El Universal, 07-09-2011; http://english.eluniversal.com/2011/07/09/seizures-in-venezuela-amount-to-usd-23-billion.shtml)

Chávez claims his policies rein in inflation

Despite trends shown by Venezuela’s Central Bank which point to 13% inflation over the past six months, President Chávez claims the Government will have “correct policies that will avoid price speculation”.  He added that inflation closed at 2.5% for June, “but we are continuing downward, we continue to rein in inflation”. More information in Spanish. (El Universal; http://www.eluniversal.com/2011/07/11/chavez-asegura-que-hay-medidas-para-frenar-la-inflacion.shtml)

Forbes Magazine ranks Venezuela as one of the world’s worst run economies

FORBES has included Venezuela in a recent ranking of the 10 worst run world economies. The list is headed by Madagascar and Venezuela comes in sixth. The only worse nations are Armenia, Guinea, Ukraine y Jamaica. The list also includes Kyrgistan, Swaziland, Nicaragua and Irán. These are not the poorest countries but those with the worst economic management, headed for the worst results. More information in Spanish. (Tal Cual; http://www.talcualdigital.com/index.html)

Commodities

Venezuela rejects calls to change gold export limits

Industry Minister Jose Khan has rejected calls to change rules that limit miners to exporting only 50% of their gold output. He also says the government has perceived interest by various foreign companies in its giant Las Cristinas gold mine, which has estimated reserves of 17 million ounces but has not been developed since the 1980s. The Minister told reporters "These are regulations that were made to favor these companies; no one can criticize it... no one can reject it. It is an issue of sovereignty." (Reuters, 07-08-2011; http://www.reuters.com/article/2011/07/08/venezuela-gold-idUSN1E7671MO20110708)

Short fuel supply curbs electrical projects

Expert says "failure to comply with plans and widespread politicization" in the oil and electrical industries over the past few years has resulted in "losing energy security." Nelson Hernández, a Professor at the School of Graduate Studies in Economics and Energy Policy, Metropolitan University, says Venezuela has lagged significantly in investment, works and maintenance. (El Universal, 07-09-2011; http://english.eluniversal.com/2011/07/09/fuel-in-short-supply-curbs-electrical-projects.shtml)

Venezuela Oil Rises to $103.76

Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) rose during the week ending July 8 to U$D103.76 from the previous week's U$D100.43, raising the average for the year to U$D98.43. (Latin American Herald Tribune, 07-08-2011; http://www.laht.com/article.asp?ArticleId=405377&CategoryId=10717)

Politics

Former VP J.V. Rangel claims Chavez does not have colon cancer

Colombia’s SEMANA magazine reports Venezuelan President Hugo Chavez’s cancer isn’t of the colon and isn’t “serious,” saying its source is former Vice President and Defense Minister Jose Vicente Rangel. (Bloomberg, 07-10-2011; http://www.bloomberg.com/news/2011-07-10/venezuela-s-chavez-doesn-t-have-colon-cancer-semana-reports.html)

Burelli says Chavez ailments raise doubts about the region’s direction

Pedro Mario Burelli, an oil expert and former executive director of state-run oil holding Petróleos de Venezuela (PDVSA) says the key element that will henceforth define political structures in Latin America and Caribbean is the argument raging in Cuba between those adamant in keeping the Castro-style model and those who would bet on dramatic government reforms. He adds the Venezuelan president's current situation offers a chance for changes, as the briefing on his disease has raised multiple doubts about the leading role played by him in the region. (El Universal, 07-09-2011; http://english.eluniversal.com/2011/07/09/ailments-raise-doubts-about-regional-leadership.shtml)

No substitute in sight

A poll conducted by Keller & Associates just before a convalescent Chávez reported that he was fighting against a cancerous tumor shows over 65% of his followers cannot identify a successor. They cannot name a leader other than Chávez, or at least were not thinking about it. Recent surveys and polls show Vice-President Elías Jaua; Foreign Minister Nicolás Maduro and Congressman Diosdado Cabello as the top three. (El Universal, 07-09-2011; http://english.eluniversal.com/2011/07/09/no-relay.shtml)

Trade agreements with Colombia and Perú remain stalled

Three months after a continuance of Andean Pact trade rules was agreed to between Venezuela, Colombia and Perú, no final agreement has been reached to govern trade relations between these nations. Professor Gerardo Arellano, a trade expert, says that under present conditions the prívate sector remains at the mercy of changing official decisions and creates uncertainty. More information in Spanish. (El Universal; http://www.eluniversal.com/2011/07/11/parados-pactos-comerciales-con-colombia-y-peru.shtml)

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.

 

May 16th, 2011

Economics & Finance

Venezuelan bond markets raise concerns

Investment experts note that the drop in oil prices and the dollar's recovery in the international market set to "Venezuelan bonds on the verge of suffering a major technical correction." BANCTRUST analysts, indicated in a report that "there are technical reasons to think the Venezuelan bonds may experience a correction close to 7%," so they recommend buying protection. It suggests that a financial instrument (Credit Default Swap, CDS) that qualifies as an insurance contract that pays an investor to the risk of default on a loan. The firm notes that there are problems with Venezuelan risk. More information in Spanish. (El Mundo, 05-16-2011;

http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=19&Id_Noticia=56359)

Chavez threatens taking over food distribution chains

President Hugo Chávez Frías has charged that those major food distribution private channels who speculate and hoard and should be operated with the participation of workers and community councils. "And possibly seized. It would increase the social networks of food distribution to ensure good quality and fair prices," he said Sunday. He referred particularly to the Central Madeirense supermarket chain, which was closed due to internal problems with its workers. More information in Spanish. (AVN, 05-16-2011; http://www.avn.info.ve/node/57714)

Bilateral trade with Colombia plunges as Venezuelan gas imports increase by 428%

Trade relations with Colombia have not been completely reactivated, and despite agreements reached by the presidents of both countries, trade still shows a negative trend. According to Colombia's National Administrative Department of Statistics (DANE), Colombian exports to Venezuela decreased by 8.6% in March. Sales of vehicles and auto parts, particularly "wheels and wheels parts" tumbled 70.9%. "On the contrary, exports of fuel, oil and products increased by 298.1%, from U$D 6.6 million to U$D 26.4 million. This was due to higher sales of natural gas (428.5%)," DANE added. (El Universal, 05-16-2011; http://english.eluniversal.com/2011/05/16/venezuela-increases-by-428-percent-gas-imports-from-colombia.shtml)

Food prices rise to the sky

According to major domestic pollsters, the issue of food prices is among the biggest challenges faced by Venezuelans, yet Finance Minister Jorge Giordani is optimistic that the 1.4% inflation rate recorded last April is going downhill. He says this, in addition to recent wage increase, is one of the most important achievements for the working class. He expects that the inflation top will remain around 25% in 2011. Nonetheless, what is viewed as an accomplishment in Venezuela looks outrageous elsewhere. (El Universal, 05-13-2011; http://english.eluniversal.com/2011/05/13/food-in-the-sky.shtml)

Venezuela BANDAGRO bond case draws U.S. Supreme Court inquiry

The U.S. Supreme Court sought the Obama administration’s views on an Ohio investor group’s effort to sue Venezuela over potentially $900 million in bank notes that the South American country says are forgeries. The justices asked acting Solicitor General Neal Katyal for his advice on whether the high court should hear the case. A lower court barred Venezuela from invoking a U.S. law that immunizes foreign sovereigns from some lawsuits in American courts. In seeking Supreme Court review, Hugo Chavez’s Venezuelan government told the justices that the suit by DRFP LLC, which does business under the name Skye Ventures, may be the first of several claims over the disputed bearer bonds. (Bloomberg, 05-16-2011; http://www.bloomberg.com/news/2011-05-16/venezuela-bandagro-bond-case-draws-u-s-supreme-court-inquiry.html)

US SEC charges Highview Point Partners in Venezuela's PDVSA Ponzi scam

The Securities and Exchange Commission charged Highview Point Partners, LLC, a Connecticut-based investment adviser, with engaging in a multi-year Ponzi scheme involving hundreds of millions of dollars. Highview was added as a defendant to a case the SEC previously filed in January 2011, and three hedge funds managed by Highview were named as relief defendants because, according to the SEC’s charges, they are in possession of funds tainted by the Ponzi scheme. After a hearing, the U.S. District Judge for the District of Connecticut, entered a consented-to order temporarily freezing the assets of Highview and the three hedge funds it advises. A hearing on the SEC’s motion for a preliminary injunction is set for May 23, 2011. (Latin American Herald Tribune, 05-16-2011;

http://www.laht.com/article.asp?ArticleId=394049&CategoryId=10717)

FITCH Ratings has affirmed Venezuela-based Banco Provincial's ratings as follows: Long-term foreign and local currency Issuer Default Ratings (IDR) at 'B+'; Short-term foreign and local currency ratings at 'B'; Individual at 'D'; Support at 5. The Rating Outlooks for the long-term IDRs are Stable. Additional government intervention resulting in pressures on Provincial's financial performance could negatively affect its ratings. (Veneconomy, 05-16-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25974&idc=2)

Expert dismisses official claims of wasted electricity in Venezuela

According to José Aguilar, an international consultant on electricity grids, the maximum energy demand this year has been lower than the system peak reported in 2009 and 2010. (El Universal, 05-16-2011;

http://english.eluniversal.com/2011/05/16/expert-dismisses-waste-of-electricity-in-venezuela.shtml)

Commodities

Venezuelan exports dropped U$D 8.01 to close at U$D100/bbl. this week, according to data from the Ministry of Oil and Energy. It stated the drop is due to concerns over oil demand in industrialized countries. The average for May is $104.01/bbl. and the year-to-date average is U$D96.01/bbl. (Veneconomy, 05-16-2011;

http://www.veneconomy.com/site/index.asp?ids=44&idt=25977&idc=4)

Chalmette refinery files unit malfunction

Exxon Mobil Corp's joint-venture 192,500 barrel per day (bpd) Chalmette, Louisiana, refinery reported a unit malfunction late on Friday, according a notice filed with the U.S. National Response Center. The filing did not identify the unit, but said hydrogen sulfide, compressed flammable gas and nitrogen dioxide were released in the malfunction. The Chalmette refinery is a joint-venture between Exxon and Venezuela's national oil company PDVSA. (Reuters, 05-15-2011; http://af.reuters.com/article/energyOilNews/idAFWEN322420110515)

Sale of assets

M&P plans to sell its Venezuelan assets, including a 26.35% stake in the LAGOPETROl JV, to Integra (Argentina). The Lagopetrol JV is held by CVP 69%, Hocol (M&P) 26.35%, Ehcopek 3.10% and Cartera de Inversiones Petroleras II 1.55%, and operates the 41.91-sq km B2X-70/80 field area in Zulia. (M&P in Venezuela, 05-13-2011)

ALBA Petroleo in El Salvador ready to start operations

The Board of Directors of ALBA Petróleo in El Salvador says all is set to start operations in that company’s fuel storage plant. Luz Estrella Rodriguez, vice-president of the society, says that the large-scale project, built jointly with Venezuela, will be inaugurated next Thursday 19. This modern facility required an investment of U$D 120 million, it has the capacity to storage 350,000 barrels of diverse kind of fuel, diesel and liquefied gas (5,000 barrels). (AVN, 05-13-2011; http://www.avn.info.ve/node/57433)

Venezuelan government will maintain terms of the PETROCARIBE agreement even if oil prices rally, according to Energy and Oil Minister Rafael Ramírez. He added eight joint ventures have been created with the governments of the member countries. (Veneconomy, 05-13-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25968&idc=4)

Latin American and the Caribbean Energy Ministers’ Regional Summit opened in Caracas with only four ministers in attendance (Cuba, Bolivia, Dominican Republic and Venezuela). They will draft a joint document on energy potential for the region and on common strategies to follow as the presidential summit approaches next July. (Veneconomy, 05-16-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25976&idc=4)

Politics

Venezuela will add fingerprint verification for voting by 2012

Venezuela’s electoral board approved a device for fingerprint verification to be added to computerized voting machines in time for regional and presidential elections to be held in 2012.  The move aims to confirm voter identity and limit fraud, according to a statement dated May 12 and posted on the electoral board’s website. Venezuela’s opposition has accused President Hugo Chavez of manipulating the country’s electronic voting machines even as international groups have endorsed election results. (Bloomberg, 05-14-2011; http://www.bloomberg.com/news/2011-05-14/venezuela-to-add-finger-print-verification-for-voting-by-2012.html)

Peru and Venezuela to negotiate trade agreement

Peru and Venezuela will open negotiations on May 18 on a Complementation Agreement on Production and Trade, according to the Peruvian Ministry of Foreign Trade and Tourism (MINCETUR). According to official reports, the first round of talks will be held in Caracas from Wednesday, May 18 to Friday 20 with the goal of opening a six-month negotiation process on general coordination, preferential tariff treatment, sanitary and phytosanitary measures, technical standards, among others. (El Universal, 05-16-2011; http://english.eluniversal.com/2011/05/16/peru-and-venezuela-to-negotiate-trade-agreement.shtml)

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.