July 16, 2013

Economics & Finance

Big Mac indicator shows Bolivar is the second most overvalued currency

According to the Big Mac indicator devised by The ECONOMIST magazine, Venezuela's Bolívar is the world's second most overvalued currency. According to the most recent information from the publication, the official exchange rate is 56.9% overvalued at 6.3 Bolivars to the US dollar, and the correct value should be around 9.88 Bolivars to the US dollar. More in Spanish: (El Mundo, 07-16-2013; http://www.elmundo.com.ve/noticias/economia/mercados/el-bolivar-es-la-segunda-moneda-sobrevaluada--segu.aspx#ixzz2ZCo1yOOl; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/el-big-mac-de-venezuela-es-el-segundo-mas-caro-del.aspx)

Unofficial exchange rate will continue to rise if SICAD does not provide sufficient FOREX

Analysts and exchange operators are saying the black market rate will continue to rise if the new FOREX supply established through SICAD is insufficient. The Central Bank is scheduled to call at least two tenders per month, and the first call is not considered a positive sign, as it will offer only U$D 200 million. Should the trend continue SICAD would be providing only U$D 2.4 billion during the rest of the year, which will not qualm demand. According to sources in the financial community, received petitions for FOREX were far more than then the amount to be tendered, More in Spanish: (El Universal, 07-16-2013; http://www.eluniversal.com/economia/130716/sin-alta-oferta-del-sicad-el-dolar-paralelo-seguira-en-alza; and El Nacional; http://www.el-nacional.com/)

Central Bank Board member seeks price reviews on a regular basis

Central Bank Board Member Armando Leon says the institution is seeking periodic price revision on regulated products in order to ensure supply. "It has been established that frozen prices become inefficient after a certain time. The idea is that they should be reviewed every certain time", he said. "Why have a fixed price if there are no sales?", Leon added. More in Spanish: (AVN, 07-16-2013; http://www.avn.info.ve/contenido/bcv-plantea-revisi%C3%B3n-y-administraci%C3%B3n-precios-manera-regular)

Inflation at 39.60%

The inflation rate for the month of June was at 4.7%, lower than that of May’s 6.1%, according to the Central Bank. This brings the rate of inflation for just the first half of 2013 to a total of 25% and the annualized rate at 39.6% - far from the Venezuelan government’s stated goal of keeping it between 14% and 16%. The food group is the one that is rising at the most accelerated pace, with the food and non-alcoholic beverages sector rising 5.8% in June, 10% in May and 35.2% in the last half year, 55.4% in one year. This hits families the most as it is estimated that over 50% of income is now devoted to this sector. (Latin American Herald Tribune, 07-15-2013; http://www.laht.com/article.asp?ArticleId=862588&CategoryId=10717; El Universal; http://www.eluniversal.com/economia/130715/purchasing-power-down-10-due-to-inflation)

Commodities

Venezuela can double industrial park with energy-efficient use, says Minister Chacon

Jesse Chacon, Minister for Electric Power, says Venezuela today has the capacity to double its industrial park for commercial and social development, "provided that we make efficient use of energy, because otherwise the demand will always be above the generation." He claims installed capacity of Venezuela can generate 28,000 megawatts of electricity, of which 20,000 MW are now available, "and we should reach 32,000 installed MW in the projects that should close in the next two years." (AVN, 07-15-2013; http://www.avn.info.ve/contenido/quotvenezuela-has-capacity-double-industrial-park-energy-efficient-usequot)

Price of construction-related inputs climbs 54.2% in one year

The price of construction materials continues to soar, rising 9.5% in June. Inflation in the construction sector hit 39.2% during the first half of the year, far exceeding the rate recorded in the same period of 2012 (8%). Data from the Central Bank shows the price of construction materials shot up 54.2% in one year. (El Universal, 07-15-2013; http://www.eluniversal.com/economia/130715/prices-of-construction-related-inputs-climb-542-in-one-year)

Logistics & Transport

Building extension and modernization of La Guaira port is 47% complete

Official sources report 47.35% progress in the expansion of a new container terminal, and work continuing for a prompt and successful conclusion. More in Spanish: (Bolipuertos, 07-15-2013; http://www.bolipuertos.gob.ve/noticia.aspx?id=7379)

Politics

Colombia's Holguín says relations with Caracas are not broken

Colombian Foreign Minister María Ángela Holguín says diplomatic relations between her country and Venezuela have cooled off, but adds that she is confident they will come back to normal soon, after a meeting between Colombian President Juan Manuel Santos and Venezuelan opposition leader Henrique Capriles Radonski. More in Spanish: (El Universal, 07-16-2013; http://www.eluniversal.com/nacional-y-politica/130716/holguin-estima-que-no-se-ha-roto-el-dialogo-con-caracas)

Flagship housing program raises transparency questions

On 18 January, Transparency Venezuela launched a report, “Analysis of corruption and integrity risks in Gran Misión Vivienda Venezuela“. Based on the testimony of people coming to Transparency Venezuela’s legal advice centers, it is the first report of its kind to shed light on critical weaknesses regarding the accountability of the flagship social housing program in Venezuela. The study questions the controls in place to oversee the considerable resources allocated to this state housing program, warning that weaknesses and inconsistencies in the program are serious enough that people could be prevented from receiving the promised benefits. Launched by the government of the late president Hugo Chávez in 2011, the Gran Misión Vivienda Venezuela has seen more than three million families across the country enter the program, according to government statistics, seeking housing. Another 711,265 requested support for extensions or renovations to avoid structural risks and potential building collapse. Transparency Venezuela reports a discrepancy between the number of families the government says have received homes, and the total number of houses reported built by the more than 20 institutions responsible for constructing the homes, according to their financial accountability reports. (Transparency, http://blog.transparency.org/2013/07/12/venezuelas-flagship-housing-programme-raises-transparency-questions/)


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.

November 27th, 2012

Economics & Finance

Chavez choking on Bolivars to spur Venezuelan bond sales

The bolivar’s plunge to a record on the black market is pressuring Venezuelan President Hugo Chavez to end the longest drought of dollar-bond sales in five years. Venezuela hasn’t issued bonds denominated in U.S. currency since October last year, after selling a record U$D 7.2 billion in the first 10 months of 2011, according to data compiled by Bloomberg. State-owned Petroleos de Venezuela SA, Latin America’s largest oil producer, last sold dollar-denominated notes in May. The yearlong drought is leaving the central bank without enough dollars for Venezuelans to buy at official fixed rates, sparking the bolivar’s 42% drop this year in the unregulated market. The bolivar declined 6.2% today. (Bloomberg, 11-26-2012; http://www.bloomberg.com/news/2012-11-26/chavez-choking-on-bolivars-to-spur-venezuelan-bond-sales.html)

Devaluation will increase debt cost to the economy

As the Government considers devaluation under growing pressure from the gap between official income and expenditure, it must also deal with the fact that a devaluation will increase the share of indebtedness within the economy. According to a study by José Guerra and Luis Oliveros, economy professors at the Central University, while further devaluation dilutes the domestic debt as fewer dollars are needed to meet it, it also shrinks GDP, FOREX debt remain the same, country risk rises and interest rates shoot up. As standing debt service costs rise, taking up a larger budget share, resources dry up for health, education and infrastructure. More in Spanish: (El Universal, 11-27-2012; http://www.eluniversal.com/economia/121127/una-devaluacion-aumentara-el-peso-de-la-deuda-en-la-economia)

Non-oil exports at the worst level since 1997

Venezuela's entry into the Common Market of the South (MERCOSUR) takes place at the worst time for local industry. Dependence on oil revenues, higher imports, and small export capacity are just some of the features of the nation's current economy. Data from the Central Bank of Venezuela (BCV) shows that non-oil exports in the third quarter accounted for U$D 816 million, 30% below the figure recorded during the same period in 2011. Lower exports were reported at 33.33% and 26.7% in the public and private sectors, respectively. "In the public sector, exports of iron, steel, and aluminum plummeted whereas chemicals increased. Likewise, private sales slumped, particularly those of gold, propylene, hydrogen peroxide, nickel, and ferrosilicon," the BCV explained. (El Universal, 11-26-2012; http://www.eluniversal.com/economia/121126/venezuelan-non-oil-exports-at-the-worst-level-since-1997)

Imports spike record consumption

Venezuela's economy has had steady growth over the last eight quarters, and so has consumption, which has skyrocketed over the past five quarters. Yet domestic demand has not been met by domestic production, but by imports. After shrinking for six consecutive quarters (2009-2010), private consumption has increased from 2.7% in the second quarter of 2010 to 7.8% by the end of the third quarter of 2012. In fact, the Central Bank reports the highest consumption in history in July-September this year. (El Universal, 11-26-2012; http://www.eluniversal.com/economia/121126/venezuelas-imports-may-lead-to-consumption-record-year)

Private construction drops by another 10.7% after steadily falling for 11 quarters

Last week, Finance and Planning Minister Jorge Giordani reported a 12.6% growth in construction. However, Central Bank data shows the activity increased due only to public projects as private construction continued to drop an additional 10.7% after an 11 quarter recession. More in Spanish: (El Universal, 11-27-2012; http://www.eluniversal.com/economia/121127/construccion-privada-cae-107-y-lleva-11-trimestres-de-retroceso)

CADIVI says October US dollar supply 4.5% above 2011

Manuel Barroso, President of Venezuela's Foreign Exchange Administration Commission (CADIVI) reports that U$D 26.9 have been supplied through the end of October, 4.5% above the amount authorized during the same period in 2011. U$D 21.3 billion (79%) went to imports; U$D 1.2 billion to financial operations; U$D 1.8 billion to family-related remittance, students, and special cases; and U$D 2.6 billion to travelers. Regarding imports he said, "There are no requests that may extend the given periods because of specific situations. The system works as usual." (El Universal, 11-26-2012; http://www.eluniversal.com/economia/121126/us-dollar-supply-by-october-45-above-that-in-2011)

Commodities

EXXON and CONOCO purchase 28% of the crude oil PDVSA ships to the US

Despite arbitration procedures brought against PDVSA by CONOCO PHILLIPS and EXXON MOBIL, trade relations continue to the point that 28% of all oil PDVSA ships to the United States goes to these two companies. Information from the US Energy Department through August shows that PDVSA has been shipping an average 223,830 barrels daily to both companies; far above the 57,000 daily barrels of crude the government oil company is committed to send the Chalmette refinery, where it is an equal partner with EXXON. CONOCO maintains a supply contract for an average 190,000 BPD to the Sweeny refinery, in Texas. More in Spanish:  (El Nacional, 11-27-2012; http://www.el-nacional.com/)

Venezuelan oil exports gained $1.29/bbl. driven by persistent concerns over supply disruptions due to tensions in the Middle East and an “unexpected” drop of inventories in the United States, says the Venezuelan Oil Ministry. The crude oil barrel averaged U$D 97.15/bbl. between November 19 and November 23 which took the average price for this year to U$D 104.09/bbl. (Veneconomy, 11-24-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32951&idc=4; El Universal, 11-23-2012; http://www.eluniversal.com/economia/121123/venezuelan-oil-basket-rebounds-ends-at-usd-9715)

International Trade

RENAULT considering Venezuela plant

French automaker RENAULT is considering the possibility of creating a factory in Venezuela to increase its production capacity outside struggling Europe. RENAULT already has three plants in Latin America - in Argentina, Brazil and Colombia - as well as six factories in France. Venezuela's Industry Ministry and RENAULT have signed a "letter of intent for the installation of a vehicle assembly plant", the carmaker said in a statement on Monday. "Which will lead to a feasibility study for local production of vehicles," Renault said. (Reuters, 11-26-2012; http://www.reuters.com/article/2012/11/26/renault-venezuela-idUSL5E8MQD5W20121126; El Universal, 11-26-2012; http://www.eluniversal.com/economia/121126/venezuela-france-enter-into-agreement-on-automobiles-and-tourism)

Logistics & Transport

Containers at bay increased by 223.3%

Cipriana Ramos, Chairperson of the FEDECÁMARAS Committee on Customs and Port Services, reports containers waiting at bay for Christmas season imports rose 223.3%, from 3,356 in 2011 to 10,853 through mid November this year. The number of refrigerated containers stalled at ports rose from 101 last year to 468 this November 16th, and empty containers rose from 3,500 to 8,731. The Government itself admits that 80% of all products are imported. Some economists estimate that this year's imports - largely Government funded - will close the year at U$D 50-54 billion. Exports, on the other hand, have dropped from 365 containers in 2011 to a mere 45 this year. To make matters worse, current work on port remodeling, now scheduled for completion by December 2014, has reduced port capacity by 30%, and the SIDUNEA automatic customs system, designed to process a container through the port in 2 hours, now takes an approximate 30 days to process. More in Spanish: (El Carabobeño, 11-26-2012; http://www.el-carabobeno.com/litoral/articulo/46713/en-223,3-ha-aumentado-cantidad-de-contendores-en-baha)

"Only 4 out of 20 docks are operating", says Rusval Gutierrez, President of the Shipping Agents Association, and adds that the emergency is due to failures by the Port Authority and by the "inability to operate and deliver incoming freight to both customs and importers" More in Spanish: (Tal Cual, 11-27-2012; http://www.talcualdigital.com/index.html)

Politics

Chavez public profile dropping drastically since August

According to a special July-November study obtained by El Universal daily, President Chavez has drastically lowered his public profile after his reelection on October 7th. From a high of 3730 minutes of public appearances and speeches in August; his public showings since his reelection are down to 495 minutes in November, all of them in purely official ceremonies: No campaign activity, telephone calls, press conferences or interviews: And the President has sent only 4 Tweets in November, all of them calls for unity during the upcoming gubernatorial elections - down from 56 Tweets in July. More in Spanish: (El Universal, 11-27-2012; http://www.eluniversal.com/nacional-y-politica/121127/desde-agosto-viene-en-caida-presencia-publica-de-chavez)

No human rights in Venezuela

Each day, 53 Venezuelans, 11 of them within the Caracas Metropolitan, will not be lucky enough to get back home or will be killed in their own homes. Daily reports of accidents and crime show the variety of scenarios in which Venezuelans are killed. The stories seem to be accepted as some kind of unknown unstoppable force that overrides people's choices. At a distance, the phenomenon is accepted as some kind of misfortune which Venezuela cannot escape from. Last year stood out as the most violent year of all times, the criminal death toll rose to 19,336. (El Universal, 11-24-2012; http://www.eluniversal.com/nacional-y-politica/121124/no-human-rights-in-venezuela)

Government agents raid opposition printing plant in Venezuela ahead of election

Government intelligence agents have raided a business printing opposition political pamphlets ahead of next month’s state elections in Venezuela. Zulia state Gov. Pablo Perez says the raid by the Bolivarian National Intelligence Service in the western city of Maracaibo is an attempt to intimidate opponents of President Hugo Chavez’s government. He told reporters that such actions are “abuses of power.” (The Washington Post, 11-24-2012; http://www.washingtonpost.com/world/the_americas/government-agents-raid-opposition-printing-plant-in-venezuela-ahead-of-election/2012/11/24/055a8e92-366a-11e2-92f0-496af208bf23_story.html; Fox News, http://www.foxnews.com/world/2012/11/24/government-agents-raid-opposition-printing-plant-in-venezuela-ahead-el)

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)

February 24th, 2012

Economics & Finance

Chavez cancer surgery spurs investors to buy Venezuela debt

Venezuela’s bonds rose, sending yields relative to Treasuries to the lowest in 21 months, after President Hugo Chavez said he’ll travel to Cuba for another cancer operation, spurring speculation he may not be able to run in October elections. The extra yield investors demand to own Venezuelan government bonds instead of U.S. Treasuries fell 30 basis points, or 0.30 percentage point, to 988 at 12:38 p.m. in New York, according to JPMorgan Chase & Co.’s EMBI Global index. That compares to an average four basis-point decline in Latin America. (Bloomberg, 02-22-2012; http://www.bloomberg.com/news/2012-02-22/chavez-cancer-surgery-spurs-investors-to-buy-venezuela-debt-caracas-mover.html; El Universal; http://www.eluniversal.com/economia/120222/venezuelan-debt-rebounds-for-uncertainty-about-chavezs-health)

Spanish companies lose interest in Venezuelan market

The Venezuelan market is becoming less and less attractive for Spanish companies. Such is the conclusion from the report "2012: An Overview of Spanish Investment in Latin America," prepared by the IE Business School, based in Madrid. According to their research, countries like Brazil, Colombia, Mexico and Peru still attract Spanish investment. The opposite happens with Venezuela. (El Universal, 02-23-2012;

http://www.eluniversal.com/economia/120223/spanish-companies-lose-interest-in-venezuelan-market)

Private construction dropped 70% over the past two years

The president of the Venezuelan Construction Chamber, Juan Francisco Jiménez, says private construction has dropped 70% over the last two years. The situation was described as serious by the business leader, who said that the construction industry is necessary for the country's development. (El Universal, 02-23-2012; http://www.eluniversal.com/economia/120223/private-construction-drops-70-in-the-past-two-years)

Commodities

Is Venezuela on the cusp of a post-Chavez oil boom?

If Venezuelan President Hugo Chavez is forced to drop his bid for re-election for health reasons, will the primary repercussion for the West be the exit of a voluble thorn in the side? Perhaps, but it will also mean the prospect of yet more newly available oil reserves -- on top of the widely projected U.S. shale oil bonanza. The takeaway: If the shale oil projections are accurate, and Chavez leaves politics under whatever scenario, we have the prospect of a geopolitical shakeup analogous to what has accompanied the rise of shale gas. Venezuela has the largest proven oil reserves on the planet -- 296 billion barrels, according to OPEC figures. The number is slightly misleading: Saudi Arabia's 264 billion barrels are higher quality and cheaper to produce than the extremely heavy crude of Venezuela's Orinoco Basin; yet Venezuela's reserves are so massive that such details almost don't matter. (The Oil and Glory, Foreign Policy, 02-22-2012; http://oilandglory.foreignpolicy.com/posts/2012/02/22/is_venezuela_on_the_cusp_of_a_post_chavez_oil_boom)

Catalytic cracking unit starts up at Venezuelan refinery

The catalytic cracking unit at PDVSA's Cardón refinery, Venezuela's second largest oil plant, began a start-up process, according to oil workers. The 89,000 bpd unit shut down last Monday due to a failure in a valve of steam equipments.

"Getting back to normal can take more than six hours," said an oil worker who preferred not to be identified by name, as quoted by Reuters. (El Universal, 02-23-2012; http://www.eluniversal.com/economia/120222/catalytic-cracking-unit-starts-up-in-venezuelan-refinery)

Around 80 CVG Alcasa workers chained themselves to the gates of the company to demand payment of insurance premiums, food tickets and severance, among others. Protestors say their bargaining collective agreement expired four years ago. (Veneconomy, 02-23-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29527&idc=3)

Venezuelan government would need six years to reach the 500,000 barrels a day production increase offered for this year if it continues with the present oil policies. Tax conditions for investment in Venezuelan oil are poorly perceived and the State cannot face the increasing needs for capital to dynamize the industry on its own. (Veneconomy, 02-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29511&idc=4)

HOVENSA: St Croix refinery shutdown completed

HOVENSA LLC completed the shutdown of its 350,000 barrel-a-day refinery on the U.S. Virgin Island of St. Croix, the company said. On Jan. 18, the company announced the refinery shutdown and said the complex will be operated as an oil storage terminal going forward. That plan is subject to the completion of negotiations with the government of the Virgin Islands, the company said. (Fox Business, 02-22-2012; http://www.foxbusiness.com/news/2012/02/22/hovensa-st-croix-refinery-shutdown-completed/)

International Trade

Lack of technology raises shipping costs, according to specialists, who say that as long as there is no modernization costs of shipping to Venezuela will remain above other ports in the region. As an example, shipping a 40 foot container from Shanghai to Colón, in Panama, costs an average U$D 2.600 dollars, yet costs to Puerto Cabello or La Guaira rise to some U$D 4.200 dollars, due to technology shortcomings unloading. More in Spanish: (Notitarde, 02-24-2012; http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1567529&idcat=9849&tipo=2; El Carabobeño, http://www.el-carabobeno.com/litoral/articulo/29471/comunidad-martima-preocupada-por-incremento-de-fletes)

Politics

Chavez surgery rocks Venezuela ahead of election

Venezuelan President Hugo Chavez's imminent departure for more cancer surgery in Cuba has thrown his re-election campaign into uncertainty and once again shaken the socialist leader's passionate supporters.

Though the 57-year-old former soldier looked stoic and played down the dangers of his latest condition, the announcement inevitably raises questions over his ability to stand for the Oct. 7 presidential vote - or rule beyond it. (Reuters, 02-22-2012; http://www.reuters.com/article/2012/02/22/venezuela-chavez-idUSL2E8DM2EM20120222; Fox News, http://www.foxnews.com/world/2012/02/22/chavez-surgery-throws-venezuela-into-uncertainty/; The Wall Street Journal, http://online.wsj.com/article/SB10001424052970203960804577239753236433604.html?KEYWORDS=venezuela; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=472213&CategoryId=10717)

President Chavez is fully fit to govern the country

Executive Vice-President Elias Jaua says that President Hugo Chavez, has full capacity to continue heading the National Government, and denied that there would be a temporary absence which would make him assume the presidency. (AVN, 02-23-2012; http://www.avn.info.ve/node/100444; Bloomberg, http://www.bloomberg.com/news/2012-02-23/venezuela-s-jaua-says-won-t-hold-presidency-in-chavez-s-absence.html; El Universal, http://www.eluniversal.com/nacional-y-politica/120223/vp-jaua-no-need-to-act-in-president-chavezs-stead))

PSUV ratifies Chávez as its presidential candidate

National Assembly President and PSUV Vice President Diosdado Cabello has announced that President Chávez has been ratified as their presidential candidate. “Chávez is and will continue being our candidate,” he said. He announced the National Assembly approved President Chávez’ request to travel to Cuba to undergo surgery. (Veneconomy, 02-23-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29524&idc=1)

"Telling the truth is a democratic duty"

In a short statement, Venezuela's opposition umbrella group Unified Democratic Panel (MUD) lashed out at Hugo Chávez's administration for the "secrecy, lack of accurate, clear and reliable medical information" about the president's health. The MUD commented that due to the government's attitude lots of rumors have spread about the president's health. "The harmful consequences of the lack of transparency in reporting this information can be substantially blunted with responsible, clear and timely reporting," the text cited. (El Universal, 02-23-2012; http://www.eluniversal.com/nacional-y-politica/120223/telling-the-truth-is-a-democratic-duty)

Supreme Court fines opposition for burning voter registries

The Supreme Court fined the head of the opposition coalition’s election body 15,200 bolivars ($3,500) for defying an order to hand over voter lists compiled during a Feb. 12 primary and instead burning the register to preserve voter anonymity. The Supreme Court ruled that Teresa Albanes allowed the registry books to be burned in spite of the ruling that followed a candidate’s complaint, according to a statement. The attorney general’s office is studying whether Albanes could be imprisoned, the court said in the statement. (Bloomberg, 02-23-2012; http://www.bloomberg.com/news/2012-02-23/venezuela-court-fines-opposition-for-burning-voter-registries.html)

As others isolate Syria, Chávez ships fuel to It

A day before the United Nations General Assembly voted overwhelmingly to condemn President Bashar al-Assad of Syria this month for his bloody crackdown on the uprising in his country, President Hugo Chávez of Venezuela was conducting a very different kind of diplomacy on his own. A ship owned by the Venezuelan state oil company sailed into the Syrian port of Baniyas, its location captured by a satellite system that tracks ship movements. The ship, making its second trip to Baniyas since December, appeared to be carrying fuel to help prop up the embattled Mr. Assad. The Venezuelan shipment flies in the face of international efforts to isolate Mr. Assad and pressure him to step down, but Mr. Chávez is no stranger to such controversy. Last month, he played host to another Middle Eastern ally, President Mahmoud Ahmadinejad of Iran, ridiculing Western claims that Iran was seeking to be able to produce nuclear weapons. (The New York Times, 02-23-2012; http://www.nytimes.com/2012/02/23/world/americas/chavez-appears-to-use-venezuelan-fuel-to-help-syrias-assad.html?_r=1; UPI; http://www.upi.com/Business_News/Energy-Resources/2012/02/23/Caracas-defends-Syrian-oil-shipment/UPI-39191330002676/)

Census: preliminary count at 27.150.095

Venezuela has a population of 27.150.095 habitants, according to preliminary results from the latest census, and adjusted results could come to 28.800.000, which would be 1.6% annual growth since 2001. 66.6% of the population is calculated to be at working age, between 15 y 64 years old; 27.6% under 14 years of age; and 5.8% over 65 years old. More in Spanish: (AVN, 02-24-2012; http://www.avn.info.ve/node/100456)