news.bbc.co.uk Some banks have remained open despite the strike Friday, 10 January, 2003, 19:36 GMT

Venezuela's currency has recovered some lost ground, despite a second day of action by bank workers in support of the country's general strike.

The bolivar gained 5.3% against the US dollar to stand at 1,511 to US$1 on Friday, the country's central bank said.

The increase saw the bolivar regain much of the ground lost earlier this week when bank staff announced their strike in support of efforts to unseat Venezuela's president, Hugo Chavez.

The strike call prompted a rush for dollars by individuals and firms fearing that the government might, while banks were closed by industrial action, order a devaluation of the bolivar.

A devaluation would help the government balance budgets hit by a reduction, caused by the general strike, in tax and oil revenues.

But while leaders of finance unions proclaimed the success of the bank strike, many branches have remained open.

Strike 'to harden'

Some 80% of bank workers participated in the bank strike on Thursday, the union Fetrabanca said.

And Fetrabanca president Jose Elias Torres predicted that the strike would harden as non-striking workers followed the example of protesting colleagues.

"Some workers who went to work [on Thursday] because of a certain fear have committed to observing the strike [on Friday]," he said.

Many stores closed after shoppers were left unable to pay by credit or debit cards, the National Association of Supermarkets said.

But some observers reported that many Venezuelans were tiring of action, with an increase reported by agency Associated Press in levels of traffic and street commerce.

And the government has said that oil output, reduced by industrial action to 15% of pre-strike levels, will return to normal levels next month, a claim questioned by protesters.

reuters.com Fri January 10, 2003 02:41 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - A grenade attack and bomb threats against foreign embassies in Caracas pulled the international community deeper into Venezuela's crisis on Friday as a 40-day-old opposition strike dragged down the country's oil-reliant economy.

A grenade exploded late Thursday at the residence of the ambassador from Algeria, which has offered to assist President Hugo Chavez in his fight to beat the strike.

The shutdown, now in its sixth week, has crippled oil output and exports in the world's No 5 petroleum exporter, jolting world markets and pushing up oil prices.

Venezuelan banks and supermarkets closed their doors for the second consecutive day on Friday in support of the grueling strike, called by opposition leaders to press the leftist Chavez to resign and call early elections.

Chavez refuses and has vowed to beat the strike, which has cut off millions of dollars of oil income.

Fitch Ratings lowered Venezuela's credit standing by two notches on Friday, downgrading its sovereign debt rating deeper into "junk bond" territory, to 'CCC-plus' from 'B'.

The blast at the Algerian ambassador's residence, which caused damage but no injuries, followed bomb threats Thursday against the German, Canadian and Australian embassies in Caracas.

No one claimed responsibility for the attack. But Algeria and other members of the Organization of Petroleum Exporting Countries (OPEC) have offered to help Venezuela counter the effects of the strike.

Chavez's government blamed the blast on hard-line "terrorist" political opponents supporting the strike. "This is the coup-mongering face of the Venezuelan opposition," Foreign Minister Roy Chaderton told Reuters.

EMBASSY SECURITY TIGHTENED

Government officials said security at foreign embassies would be increased. The grenade attack and threats may galvanize international efforts to resolve the crisis, which has disrupted Venezuelan oil shipments to clients as different as the United States and communist-ruled Cuba.

The United States and other members of the Organization of American States are studying the idea of creating a "Friends of Venezuela" group of nations to support current OAS efforts to broker a negotiated, electoral solution to Venezuela's conflict. Brazil has also been working on such an initiative.

"We remain deeply concerned about the deteriorating situation in Venezuela," White House spokesman Ari Fleischer told reporters in Washington.

The United States normally receives more than 13 percent of its crude oil imports from Venezuela.

Chaderton welcomed the idea of foreign support. "All this contributes to strengthening our democracy and the recognition of Venezuela's legitimate institutions," he said.

Chavez was elected in 1998 and survived a brief coup by military officers in April. He says his opponents are trying to topple him through the strike. His foes accuse him of ruling like a dictator and trying to implant Cuban-style communism.

In recent months, there have been grenade attacks against the offices of anti-Chavez union and business groups and media organizations critical of the president, which the opposition has blamed on the government.

Two people were killed in clashes a week ago involving anti- and pro-government demonstrators and troops and police.

Some foreign embassies, including those of the United States and Britain, have evacuated nonessential personnel and warned their nationals not to travel to Venezuela unless absolutely necessary.

Rangel said oil output and refining was recovering. But oil industry sources said government efforts to raise oil production have met with little success so far. They put production this week at about 450,000 barrels per day (bpd), compared with 3.1 bpd in November before the strike.

www.tribnet.com By CHRISTOPHER TOOTHAKER, Associated Press

CARACAS, Venezuela (January 10, 11:40 a.m. PST) - Opponents of President Hugo Chavez took to the streets Friday as a bank strike prompted authorities to suspend dollar auctions for a second day in a row after Venezuela's currency fell.

Bank workers and other opposition sympathizers were rallying in Caracas and 11 other cities on Friday, a day after violence broke out at similar protests amid a nationwide strike that has shut down thousands of businesses and brought Venezuela's vital oil industry - a top U.S. supplier and once the world's fifth-largest exporter - to a virtual halt.

The Bush administration was talking with other nations in the Americas on ways to end the strike, White House spokesman Ari Fleischer said Friday.

"We remain deeply concerned about the deteriorating situation in Venezuela," Fleischer said. Asked about a possible U.S. role in a breakthrough, Fleischer said, "An electoral solution is the direction the United States sees."

Hundreds gathered in Caracas to march on the Melia hotel, where Organization of American States Secretary-General Cesar Gaviria, who is mediating between the two sides, is staying.

Fleischer said Gaviria has been quietly discussing options with other OAS states, including formation of a "Friends of Venezuela" group "to help the Venezuelans find a solution."

The Central Bank suspended dollar auctions for a second day Friday after the currency, the bolivar, dropped to a record low of 1,593 to the dollar Thursday - 5 percent weaker than Wednesday and down 12 percent since the start of the year.

Analysts speculated Chavez's government may have to devalue the bolivar to balance its budget. Most government income is in dollars and a weaker bolivar would increase its domestic spending power.

Meanwhile, unknown assailants tossed a grenade at the residence of Algerian Ambassador Mohamed Khelladi on Thursday night, the embassy said Friday. Nobody was injured and no arrests were made.

Vice President Jose Vicente Rangel denounced the attack in an appearance on state television and called it an act of terrorism.

The motive for the attack wasn't known. Algeria has offered to send technicians to help jump-start Venezuela's oil industry.

Rangel said the government reinforced security at embassies and diplomatic residences after the attack and a series of telephoned bomb threats at the Australian, Canadian, German, Libyan and Uruguayan embassies.

On Thursday, government supporters attacked anti-Chavez marches in Caracas and outside oil facilities around the country as political violence increased in this crisis-stricken South American country of 24 million.

"Chavistas," as the president's backers are called, attacked a rally outside a refinery in Cardon, 270 miles east of Caracas, wounding a 40-year-old worker and a 28-year-old demonstrator, said Luis Arends, a civil defense worker.

In Caracas, gunfire erupted at an opposition rally. No one was hurt, and the rally resumed. Nobody was arrested.

Chavez supporters armed with machetes and sticks also prevented a demonstration at an oil facility in central Carabobo state, Globovision television reported. A minor clash occurred at a plant in Barinas state.

Chavez opponents claim the president's fiery rhetoric incites violent reactions from his most radical backers.

Chavez, a leftist former paratroop commander who was elected in 1998 and re-elected two years later, blames the opposition-aligned news media, which he accuses of campaigning for his overthrow.

Bloodshed last year spurred a coup and Chavez's brief ouster. Loyalists in the military returned him to power on April 14.

Spokesmen at three of Venezuela's largest banks - Banco de Venezuela, Banco Provincial and Banesco - said 80 percent of the country's nearly 60,000 bank employees stayed home Thursday.

The bank strike forced many supermarkets to close because shoppers were unable to pay with credit cards or debit cards, said Nelson Da Gama, president of the National Association of Supermarkets.

A nonbinding referendum on Chavez's rule is scheduled for Feb. 2. Chavez insists the constitution only requires him to respect a possible recall referendum in August, the midpoint of his six-year term.

The spate of New Year killings set the tone for a week’s profoundly gloomy reading. www.algeria-interface.com

Algiers, 10/01/2003 - The first week of the new year has been a grim one in Algeria – 100 violent deaths. Understandably the front pages of the press were profoundly gloomy. El Khabar headlined that the GSPC chief, Hassan Hattab and GIA commander Rachid Abou Tourab had ushered in a year of bloodshed. Echourouk was moved to talk of the “decade of hell”.

The Arabic press refrained from the anti-Bouteflika fury of its French-language counterpart – which Al Quds surveyed. Pessimism was nevertheless the keynote.

Retired general Rachid Ben Yelles produced an implacable analysis of the week’s killing in Al Fadjr. His sentiment was that they were predictable and will continue as long as Bouteflika is in power. Yet he thwarted Bouteflika’s foes by asserting that there was no fundamental differenceof views between Bouteflika and the army chiefs who brought him to power.

The ambush in the north-east Aures mountains which claimed the lives of 50 paratroopers prompted claims that Al Qaeda was the mastermind. Speculation dismissed by Echourouk as political manipulation of the media. Echourouk’s view was that ordinary Algerians were dying because the all-out repressive policy of the government had failed and that the Civil Harmony amnesty policy had stopped half-way. Politicians had not been brave enough and Algerians were dying because politicians were “cowardly, opportunistic and hypocritical”.

Nor did the new year get off to a good start on the diplomatic front. After a council of Foreign Ministers in Algiers designed to revive the moribund Union of Maghreb States (UMA) which left observers sceptical, Algeria crossed the path of the US. It had the impudence to send experts from Sonatrach to Venezuela to lend a helping hand to the oil industry sorely tried by the current strike movement against Hugo Chavez.

Washington, according to El Khabar, summoned Algeria’s US ambassador, Driss El Djazayri, to rap his knuckles. The Algerian government denied the report which threw light on a series of embarrassed denials from Energy Minister, Chakib Khelil, also CEO of state-owned Sonatrach. He sought to justify and minimise the assistance given to Venezuela before issuing a statement that assistance was only being considered.

Nothing has been going right for Chakib Khelil 2003. Using indirect channels, particularly labour confederation UGTA, Prime Minister Ali Benflis, hinted that Khelil’s bill to reform the oil and gas industry would never come before parliament. Weekly El Khabar Hebdo believed that Khelil, widely seen as Bouteflika’s pet minister, had lost out to UGTA president, Abdelmadjid Sidi Said, whom it forecast would be “the man of 2003”.

The 2004 presidential elections continued to cloud the political atmosphere, with the FLN’s politburo having its work cut out to quell initiatives aimed at backing Bouteflika’s candidacy for a second term.

ogj.pennnet.com By OGJ editors

WASHINGTON, DC, Jan. 10 -- Depending on the path of world oil prices, imports may supply 65-70% of total US petroleum demand by 2025, up from 55% in 2001, the Energy Information Administration said Thursday.

The agency noted that world oil prices are influenced by many factors, including the ability of members of the Organization of Petroleum Exporting Countries to control their own oil production. Other considerations include economic growth rates among countries and the economic viability of alternative energy sources such as natural gas-to-liquids and oil sands.

By 2025, world oil prices (adjusted to 2001 values) could be $19-33/bbl, a range leading to variations in US dependence on oil imports, EIA said. The agency's predictions were part of its annual snapshot of long-term energy trends.

Consumption Total US energy consumption could vary significantly, depending on the rate of economic growth. EIA projects that the US Gross Domestic Product (GDP) could grow 2.5-3.5%/year during 2001-25. By 2025, energy consumption may be 129-149 quadrillion btu, EIA said. Even with that growth, EIA forecasts that the US will continue to use energy more efficiently.

"This will help to hold the rate of growth in consumption to about 50% of the rate of growth in economic output," EIA officials said.

Gas picture Continued growth in natural gas demand and depletion of conventional natural gas resources in the lower 48 states will mean that future natural gas supplies would likely come from both new domestic and foreign supplies, EIA said. These projects include the Alaskan natural gas pipeline, the Mackenzie Delta pipeline in Canada, and new LNG facilities, both domestic and outside the country, to serve US markets (e.g., Baja California, Mexico or the Bahamas).

EIA assumes that the Alaskan natural gas pipeline will come online in 2021 (excluding consideration of any potential loan guarantees by the federal government that accelerates construction), and that the Mackenzie Delta pipeline will be operational in 2016. Total LNG imports are projected to grow to 1.6 tcf by 2020 and 2.3 tcf by 2025, with facilities online in the Gulf of Mexico region, serving Florida (via the Bahamas), and California (via Baja California, Mexico).

But EIA stressed that the timing and demand for these supplies vary, depending on the rate of technological improvement. If drilling costs, success rates, and finding rates improve at a slower rate than in the reference case, the Alaskan natural gas pipeline and Mackenzie Delta pipeline are projected to come online earlier in 2019 and 2015, respectively. In this scenario, total net LNG imports grow to 2.3 tcf by 2020 and 3.2 tcf by 2025. Conversely, if more-rapid technology improvements hold down natural gas prices longer, it will delay construction of these facilities.

In an EIA scenario with rapid technology improvement, the Alaskan natural gas pipeline would not be economically viable until 2024 and the Mackenzie Delta pipeline would be delayed due to economics until 2020. Net LNG imports would grow more slowly with greater domestic production, and LNG imports would reach 1.2 tcf by 2020 and 2.1 tcf by 2025.

Short-term predictions In a separate analysis, EIA noted that political situations in both Venezuela and Iraq might create price shocks in coming months.

"The combination of a sustained loss of most of Venezuela's exports, risk of increased tensions in the Middle East, and low (US) oil inventories could cause oil prices to spike, at least temporarily, above our base case," EIA said in its monthly short-term outlook published Jan. 8. "If the Venezuelan strike is prolonged and tensions in the Middle East continue, then the chance of a price spike is high. The magnitude of upward price pressure will depend on the duration of supply loss and on the willingness and ability of other suppliers to make up for the shortfall," EIA said.

Although risks remain high for price volatility and an oil price spike, EIA's forecasts for the next few months are more optimistic that the market will be relatively balanced, although the agency admitted its assumptions were "fragile," given the current state of international oil markets.

"We assume that the turmoil in Venezuela is resolved by the end of this month and that Iraq maintains recent export levels and that other producers step up production to keep markets stable, leaving the WTI price near current levels through February," EIA said. "Gradual movement toward full capacity output in Venezuela over the next 3-4 months, coupled with supplementary output from other OPEC countries, should result in a return to gradual price declines through the forecast horizon."

Gasoline predictions As events in Venezuela and Iraq continue to unfold, it appears that pump prices may rise even further in the near term, EIA suggested.

"We currently expect average regular motor gasoline prices to exceed $1.50/gal in February. These would represent year-to-year increases of about 40¢/gal. Our base case assumptions lead us to expect prices near $1.54/gal by mid-spring.

"Additional increases and possible regional price spikes before mid-year would be likely if the Venezuelan situation is not resolved this month, or if conflict arises in Iraq and disrupts oil flows there," EIA said.

The agency also said that refiner margins are expected to strengthen over the next 2 years, as demand for gasoline rises and the cost of producing gasoline increases. That is due in part to the likely substitution of the more costly ethanol for methyl tertiary butyl ether in California in 2004, EIA said.

"Given our base case crude oil price projections, 2003 pump prices for regular gasoline are expected to increase by 16¢/gal on an annual basis to $1.50/gal," Similarly, refiner margins are expected to rebound from their relatively weak levels of last year. In 2004, the annual average pump price is projected to decline by about 5¢/gal, falling in line with the expected decline in crude oil prices. However, because crude oil prices are assumed to decrease by 9¢/gal ($4.20/bbl in 2004), this forecast assumes a continued strengthening of refiner margins, EIA said.