30 Dec 2002 19:36

By Chris Baltimore

WASHINGTON, Dec 30 (Reuters) - A senior House Republican on Monday expressed pessimism that the Bush Administration will release crude oil from the nation's Strategic Petroleum Reserve to counter dwindling supplies from strike-ridden Venezuela, a vital U.S. supplier.

Republican Rep. Billy Tauzin of Louisiana, chairman of the House Energy and Commerce Committee, asked the Bush Administration last week to release oil from the stockpile in order to keep refineries well stocked.

"We haven't heard anything official yet. But we're not very optimistic given the administration's concerns about events in the Middle East," said Ken Johnson, Tauzin's spokesman, about the status of that request.

"We continue to be concerned that events in Venezuela will have a chilling effect on consumers in the United States," Johnson said.

Crude oil prices on Monday hit a two-year high of $33.65 per barrel as traders bet on a U.S. attack against Iraq early next year, but later fell on indications from OPEC that it will fill supply gaps caused by events in Venezuela and Iraq.

The U.S. Energy Department, which would act on Tauzin's request, has repeatedly said it has no plans to release oil from the reserve because it is not necessary.

The department was not available for comment on Monday.

The department has allowed energy firms to defer delivering 7.4 million barrel of oil to the reserve through January in order keep more crude in the U.S. market and counter a virtual cutoff in Venezuelan oil exports due to a workers strike.

The strike has closed most oil production and refinery operations in the world's fifth-biggest exporter.

Venezuelan oil workers are trying to pressure the country's president, Hugo Chavez, into early elections or to resign.

While the U.S. government has been willing to delay deliveries to the stockpile, it has refused to loan energy companies reserve oil to keep supplies steady to their refineries.

The department spokesman said there was no oil supply emergency to warrant tapping the reserve.

Ananova: 

Motorists could face higher petrol bills after the price of oil hit fresh two-year highs.

Mounting tension over Iraq and a continuing strike in Venezuela helped push the cost of crude up, and City analysts warned that the increase could feed through to petrol prices if the increase was sustained.

BP has confirmed that it was increasing the price of petrol in some of its stations by 1p per litre, taking the average across the country to about 74.8p per litre.

Supermarket chain Safeway also announced a price rise - up an average 2p a litre from New Year's Day to about 74.9p for unleaded fuel.

Other companies will be under pressure to follow suit if the increase in the price of crude on the world markets continues.

In trading today, the oil price in London surged to above the 31 dollars a barrel (£19.38) barrier before slipping back to 30.40 dollars (£19) - up 24 cents (15p) on the day.

A BP spokesman said: "Some forecourts in the low to mid price range have been selling petrol for anything from 71p per litre.

"We are in the process of moving this price up by 1p per litre in about 200 sites. This will bring the average for all stations to something in the region of 74.8p per litre."

A Safeway spokesman defended its 2p per litre rise, saying: "We expect that with the current climate of uncertainty in the oil market other companies will follow suit in the next couple of days."

Story filed: 18:23 Monday 30th December 2002

30 Dec 02(12:43 PM) | 

NEW YORK (Reuters) - Red-hot world oil prices fell back on Monday as the OPEC cartel indicated its readiness to fill in supply gaps caused by a long strike in Venezuela and looming war in Iraq.

U.S. light crude futures in New York were down 46 cents at $32.26 a barrel at 1236 EST (1736 GMT), after falling as low as $32.00. London Brent crude was down 44 cents at $29.72 a barrel.

U.S crude earlier set a new two-year high of $33.65 a barrel as traders bet on a U.S. attack against Iraq early next year and as supplies from OPEC nation Venezuela stayed choked off by a strike now in its fifth week. Brent hit $31.02 a barrel, a 15-month high.

Prices slid as a senior delegate from a member of the Organization of the Petroleum Exporting Countries said OPEC is sure to raise oil output quotas by at least 500,000 barrels per day (bpd) unless prices drop heavily in the next two weeks.

"The 500,000 barrels a day is sure. More than that is subject to ministerial consultations which are already under way," the delegate told Reuters.

OPEC, which controls two-thirds of world crude exports, has pledged to plug any supply shortfall due to the strike in Venezuela, the cartel's third biggest producer. So far ministers have said there are no signs of any real shortage.

OPEC in December raised output quotas by 1.3 million barrels a day to 23 million bpd from Jan. 1. Quota-busting means actual output has been running at some 24.5 million bpd.

Algeria's booming oil exports are set to dip only marginally next month, keeping the country some 200,000 bpd over its new, higher OPEC quota, trading sources said.

Under an informal output mechanism, OPEC aims to keep the price of its reference basket of seven crudes in a $22 to $28 a barrel range by increasing supply if prices exceed the upper end of the band for 20 consecutive trading days.

The OPEC basket jumped to $31.06 Friday, the ninth day the reference price was above the target band. Unless prices drop sharply the 20-day target for the mechanism could be triggered in mid-January.

The OPEC delegate said oil ministers would not need to meet to raise output quotas by more than 500,000 bpd. "If they want to do more than that they can agree the volume by phone," he said.

ECONOMIC CONCERN

Oil has risen more than $5 in December and prices are now more than $10 higher than at the start of 2002. Concerns are growing that costly energy bills could stifle global economic recovery.

"Oil and politics are a volatile combination and we have two separate issues confronting the oil market at the moment," said Peter Gignoux, head of the London energy desk at Schroder Salomon Smith Barney.

Washington at the weekend ordered more U.S. troops, aircraft and ships to head to the Gulf from January in preparation for a possible war against Baghdad.

Secretary of State Colin Powell said Washington had not yet decided whether to attack Iraq to force it to disarm weapons of mass destruction, but was taking "prudent action" in readiness.

Dealers think an attack could start soon after Jan. 27 when the chief U.N. weapons inspector Hans Blix delivers a report to the Security Council on the progress of his inspections teams.

In Venezuela, opposition leaders extended a nationwide strike into Monday, marking the 29th day of action aimed at forcing the resignation of President Hugo Chavez and early elections.

The strike has closed most oil production and refinery operations in the world's fifth-biggest exporter and choked off overseas sales to 15 percent of normal levels.

A tough-talking Chavez Sunday showed no sign of meeting opposition demands. Chavez in a nationwide broadcast said he had no plans to step down and vowed to break the strike.

Data from state oil firm PDVSA and independent shippers showed government efforts to break the strike helped boost oil exports to about 520,000 bpd in the week to Dec. 29 compared with 260,000 bpd in the previous week.

Volumes remain way below November exports of about 2.7 million bpd.

Venezuela's energy minister said Monday the nation's crude output will rise to over a third of normal levels next week, but rebel employees of state oil firm PDVSA said government efforts to restart the strike-hit oil industry were failing.

"(We will be producing) 1.2 million bpd in the coming week," minister Rafael Ramirez told reporters. He said current output was between 600,000 and 700,000 bpd.

Associated Press

CARACAS — Police fired tear gas to separate supporters and opponents of President Hugo Chavez in a western city Monday, as leaders of an anti-Chavez strike called for protests in the president's strongholds in the capital.

Chavez opponents broke past police lines and tried to tear down a tent set up by supporters of the president in Maracaibo. Police firing tear gas shoved the two sides apart.

The four-week strike has depleted gasoline supplies in the world's No. 5 oil exporter but failed to force the president from office.

"The strike will continue until the last consequences," said Carlos Ortega, president of Venezuela's largest labour confederation. "This regime is only prolonging its agony. Venezuelans, your indignation is just. The people never give up."

Ortega's comments Sunday came after hundreds of thousands of Chavez opponents marched through the street of Caracas, the latest in countless protests that have accompanied the strike since it began Dec. 2.

Opposition leaders are threatening more civil disobedience, including urging citizens not to pay income taxes.

Venezuela's strike and the crisis in Iraq sent European benchmark Brent crude oil futures soaring to a 15-month high of $30.70 US a barrel Monday.

The opposition called rallies in two of poorest neighbourhoods in the capital on Monday, trying to chip away at Chavez's support in the slums, where many still consider him the first leader in generations to stand up for their interests.

Chavez's popularity has slipped to about 30 per cent, as discontent grows over a wrenching economic recession and political turmoil. The former army paratrooper, however, still counts on almost 45 per cent support in the poor regions.

On Sunday, Chavez again vowed he wouldn't quit. He insisted he was foiling a strike that has slashed oil exports from three million barrels a day to 160,000 and forced Venezuela to look abroad for food and fuel.

"I think I'm never going to leave. I feel so loved that I am never going to leave," Chavez said during his weekly television show. "It's a treacherous oligarchy that wants to break the government and break the Venezuelan people."

Chavez hosted the show outside the Yagua gasoline distribution centre in the western state of Carabobo, and applauded every time a gasoline truck left the installation. Two hundred trucks left, said Chavez, who replaced striking managers at Yagua.

Gasoline shipments were coming from Venezuela's La Isla refinery in Curacao and Trinidad, Chavez added. One oil tanker has already arrived from Brazil.

Lines as long as 1? kilometres persisted at service stations. Many Venezuelans were doing without products like fresh milk, soft drinks, beer and toilet paper.

Ali Rodriguez, president of state oil monopoly Petroleos de Venezuela S.A. or PDVSA, said Venezuela is currently producing between 600,000 and 700,000 barrels a day. Striking PDVSA executives saying it is producing less than 200,000 barrels a day. Production is normally about three million barrels a day.

Venezuela's largest labour confederation and business chamber called to demand Chavez accept a nonbinding referendum on his rule. Many in the opposition now demand early elections, which constitutionally can only take place if Chavez resigns.

They accuse the president of running roughshod over democratic institutions and wrecking the economy with leftist policies.

Chavez says opponents should wait for a possible recall referendum midway through his term, or August 2003, as permitted by the constitution. He was elected in 1998 and re-elected in 2000, and his term ends in 2007.

Negotiations sponsored by the Organization of American States, which have produced few results, were to resume Jan. 2 after a brief break for the holidays.

30 Dec 2002 20:18

By Jason Webb

CARACAS, Venezuela, Dec 30 (Reuters) - Venezuela's opposition threatened on Monday to add a tax revolt to a strike that has blocked oil exports and jolted world energy markets but so far failed to make President Hugo Chavez resign.

The leftist leader has thumbed his nose at massive marches, one of which brought a million demonstrators onto the streets of Caracas, and at a 29-day-old strike that has closed down shipments from the world's fifth-largest oil exporting nation.

"We're bashing up against a wall," one of the protest leaders, Carlos Fernandez, president of Venezuela's main business chamber, Fedecameras, told Reuters.

The opposition demands immediate elections and has refused Chavez's offer of a referendum on his rule in August, saying that if it waits that long he will wreck the country. Chavez says under the constitution August is the earliest date an election may be held to assess popular support for his rule.

"Today we are taking the road of legitimate civil disobedience," said another strike leader, union boss Carlos Ortega. "We will refuse to pay taxes to a regime which renders no accounts and squanders the money of the people."

The opposition could also call an assembly to rewrite the constitution, Fernandez said, adding that the law allows for such a move if it is clearly shown to be the will of the people.

Tax evasion is rife in Venezuela at the best of times.

Chavez, a former paratrooper who was jailed after a botched coup in 1992 but was elected in 1998, has fought hard against the strike, firing executives from state oil giant PDVSA and ordering troops onto halted oil tankers.

In a major role-reversal for the oil-rich nation, he has imported some gasoline to ease lines hundreds of cars long at filling stations. The government said that oil output would climb back to a third of normal next week, but PDVSA rebels said efforts to kick-start petroleum production were failing.

The squeeze on Venezuelan exports, which normally provide 13 percent of U.S. oil imports, have spooked world energy markets already fretting about a possible war in Iraq. U.S. crude futures jumped to a two-year high early on Monday before sliding sharply to $31.45 a barrel as the OPEC cartel indicated its readiness to come to consumers' rescue by boosting output.

The opposition, backed by business and unions but attracting support from most Venezuelans, accuses Chavez of authoritarianism, corruption and economic incompetence in what they say is a quest to establish a Cuban-style dictatorship.

Chavez condemns as "fascists" his opponents, who also backed a failed coup against him in April. His class war rhetoric and lengthy speeches that ramble from references to his grandmother to threats against his enemies make Venezuela's educated elite apoplectic.

The president, whose term is due to run until 2007, has seen his popularity plunge, even among his core constituency, Venezuela's poor majority. But, with about 30 percent support, he is more popular than any individual opposition figure.

Meanwhile, the country's economy is suffocating without petroleum, which normally provides 80 percent of exports and 50 percent of government revenues.

MARKETS COULD PANIC

While Chavez points to $15 billion in Central Bank reserves to allow him to withstand the strike, analysts say the economy, already in deep recession, could buckle if world financial markets panic about Venezuela in the new year.

Caracas-based political analyst Janet Kelly said she has hoped an agreement would be reached before economic pressures explode. But she said personal animosity between Chavez and the strike leaders was a barrier.

"Chavez is crazy, but like a fox. I wouldn't underestimate him. A critical rule of negotiation is never reveal that you're willing to give in tomorrow," she said.

"The opposition has equal problems, because if they really bring the country to a total crisis, of economic isolation, there is a point at which the country turns against them."

The opposition still holds cards it has yet to play, such as a march on the presidential palace in the Chavez stronghold of central Caracas. Many fear this could lead to violence, remembering the 19 deaths during a similar march before last April's coup.

Strike leaders are also organizing a nonbinding referendum in early February, although Chavez says he will pay no attention to the result even if 90 percent vote against him.

While holding firm around its petroleum core, the strike was fraying around the edges, with many smaller companies and restaurants opening their doors.

Several hundred thousand opposition supporters marched in Caracas on Sunday, but the protest was a fraction of the size of a million-strong demonstration a week earlier.

Talks between the opposition and the government, brokered by the Organization of American States, have made little progress. In public, communication between the two sides is largely limited to threats and insults.

"Chavez treats this like a war. He's a soldier and soldiers think of war as victory or defeat. If he were a democrat, which he isn't, he'd be giving some," said Fernandez.

(Additional reporting by Ana Isabel Martinez)