Reuters, 01.12.03, 7:15 PM ET

SINGAPORE, Jan 13 (Reuters) - NYMEX crude futures fell 48 cents in opening off-hours dealings on Monday after the OPEC producers' cartel agreed to increase daily production by 1.5 million barrels to make up for strike-bound Venezuelan barrels.

Front-month February crude opened 38 cents down at $31.30 a barrel, and quickly skated to an early session low at $31.20.

The Organisation of the Petroleum Exporting Countries agreed on Sunday to increase output by almost seven percent to fill a supply gap left by the opposition-led strike in Venezuela, which has taken two million barrels per day out of the world market.

The cartel's official production ceiling stands at 24.5 million bpd for the 10 members bound by quotas, effective February 1.

OPEC's 11th member, Iraq, exports crude under the United Nations' oil-for-food programme and is excluded from the group's official quotas.

Copyright 2003, Reuters News Service

 www.dailytelegraph.co.uk By Yvette Essen  (Filed: 13/01/2003)

Members of Opec, the Organisation of Petroleum Exporting Countries, yesterday agreed to increase oil output by 1.5m barrels a day in an attempt to ease high prices.

The move follows a 42-day strike at Venezuela's state oil company, which is costing the third-largest oil producing country $50m a day.

Fears over war against Iraq have also pushed the price of Brent crude for February delivery to more than $30 a barrel - a two-year high. Oil supplies to the US are currently down 10pc compared with 2002.

Opec hopes that by increasing its oil output quota for members to 24.5m barrels per day from February 1, prices will return to the cartel's ideal range of $22 to $28. Its 11 members produce around a third of the world's crude oil.

Opec president Abdullah bin Hamad al-Attiyah said: "We are trying to send a strong message to consumers that we are doing our utmost to stabilise the whole market."

He said that because of the Venezuelan crisis over 2m barrels per day had disappeared from the market, but he denied that Opec is trying to take Venezuela's market share. He described the move as a way of "protecting it" and said Opec will reduce the quota once Venezuelan exports recover.

"We will respond very quickly when Venezuela reaches a quantity that will accommodate their market share," Mr Attiyah said.

Venezuela's energy and mines minister, Rafael Ramirez, said he expects production to return to 2.5m barrels a day by next month. "Opec has pledged to defend the stability of the market," he said. "Opec countries committed themselves to defend and support our market share until we can re-establish oil production levels in mid-February."

Mr Attiyah added that Opec could not rule out raising output further, should a war break out in the Middle East. "For sure we'll meet again if there's a war and we'll discuss it and we will take the right decision," he said.

"We will be very close to market and we will see if there is a big shortage for any reason."

www.afxpress.com

VIENNA (AFX-ASIA) - Petroleos de Venezuela (PDVSA) president Ali Rodriguez said Venezuela was aiming to increase production to two mln barrels per day (bpd) as it fixed and regained control of refineries and other oil facilities.

Rodriguez, speaking on the sidelines of the weekend OPEC meeting that agreed to increase production quotas in response to Venezuela's crisis, described the six-week strike as "not a labour strike, this is a political conflict."

"The intention of these people is not to obtain benefits for workers but to defeat the government," said the head of the coutnry's state-owned oil company.

In Venezuela yesterday, thousands of opponents of the government marched to a heavily guarded military complex as they pressed demands that President Hugo Chavez resign.

The 11-nation Organization of Petroleum Exporting Countries, of which

Venezuela is a member, agreed yesterday to increase oil production by 1.5 million barrels per day (bpd) in a bid to curb a surge in prices triggered by the strike.

OPEC agreed to raise its combined output ceiling by 6.5 percent to 24.5 million bpd from next month to try to cool world oil markets.

OPEC President and Qatar Oil Minister Abdullah bin Hamad al-Attiyah said the Venezuelan crisis had taken over two million bpd of oil off world markets, adding that OPEC would roll back the output hike once Venezuelan exports recovered.

Rodriguez described the situation in Venezuela as a "force majeure."

"In the meantime we are now very positive as far as reaching a level in order to satisfy our commitments to our customers," he said.

Rodriguez said Venezuela had not ruled out turning to foreign oil technicians, saying that "in certain cases, the need for specialist help, notably in refining, is felt." afxasiadesk@afxnews.com msa/rl/tjc

www.iht.com NYT NYT Monday, January 13, 2003   Presidents Vicente Fox and George W. Bush both took office two years ago promising to forge a new partnership bridging the Rio Grande, a partnership marked by a once unimaginable level of cooperation on a number of fronts. It hasn't happened, and as a result Mexico's enlightened foreign minister, Jorge Castañeda, has resigned.

The centerpiece of the new relationship was to have been a new accord on immigration. That encountered early resistance on Capitol Hill, and the terrorist attacks of Sept. 11, 2001, rearranged the White House's priorities. Washington has since failed to recognize that an immigration deal that serves American economic needs and diminishes the population living illegally in the United States can be compatible with heightened security.

The White House's neglect has proved to be politically damaging to Fox's administration. The Mexican government had to overcome widespread public skepticism, and concerns about surrendering national sovereignty, to sell the idea of a new understanding with the neighboring superpower. Castañeda was the most outspoken advocate of closer ties with the United States. His frustration over the stalemate in the relationship contributed to his decision to resign.

Castañeda worked tirelessly to promote an immigration deal and closer cooperation in fighting drug trafficking. He ended Mexico's tradition of warm ties with Cuba in order to back American denunciations of Fidel Castro's human rights record.

Beyond its failure to deliver on immigration, the Bush administration largely missed an opportunity to collaborate with Latin American democracies in dealing with a number of thorny Western Hemisphere matters, most notably the crisis in Venezuela. Angry calls by Mexican farmers in recent weeks for their government to renegotiate the North American Free Trade Agreement in response to the ill-advised agricultural subsidies passed by Congress last summer serve no one's interest, as Castañeda has pointed out. But they are indicative of a broader disenchantment with the United States that cuts across Mexican society. The Bush administration should take note of Castañeda's frustration and seek to improve ties with Mexico.

www.iht.com Eric Pfanner International Herald Tribune Monday, January 13, 2003

Strikes in Venezuela a concern as cartel seeks to assure flow   VIENNA The Organization of Petroleum Exporting Countries agreed Sunday to increase its official production quota in an effort to ease concern over tight global oil supplies and keep a lid on rising prices.

In an emergency meeting here, called to address the effects of anti-government strikes in Venezuela that have cut off most of that country's oil production, members of the cartel agreed to raise their total output quota to 24.5 million barrels a day as of Feb. 1. "OPEC is trying to send a very strong message that it is doing the utmost to ensure adequate supplies," said Abdullah Hamad Attiyah, the OPEC president and Qatari oil minister.

Though the new quota represents an increase of 6.5 percent from the 23 million barrel level set only a month ago, industry analysts said the actual amount of new oil that enters the market may be smaller, meaning any downward effect on prices could be muted. That is because the cartel's sensitive politics required every member to get a proportionately higher share of the quota, even though Venezuela's production will remain only a fraction of its official quota until strike-damaged facilities are repaired.

The only way that OPEC, which pumps about one-third of the world's oil, will be able to make up for Venezuela's lost share in the short term is if other members produce above their set limits, analysts said. In December, total OPEC production fell short of the 23 million barrel limit by several hundred thousand barrels.

OPEC had sought to stamp out so-called quota cheating at its December meeting, when it raised the official quota from 21.7 million barrels per day. But since then, the strikes in Venezuela against the government of President Hugo Chavez, along with concerns about a possible war in Iraq, have pushed prices sharply higher, throwing a wrench into those plans. On Friday, crude oil for February delivery on the New York Mercantile Exchange closed at $31.68 a barrel, down 31 cents from the previous day but still nearly 31 percent above its November low.

"It's hard to put Humpty Dumpty back together again," said Gary Ross, chief executive of the PIRA Energy Group, referring to the effort to clamp down on quota cheating.

Analysts said the increase in the overall quota suggests that OPEC members that can pump more oil - only Saudi Arabia and the United Arab Emirates have significant spare capacity - will do so to some extent, even if their individual quotas are rising only marginally. Saudi Arabia's official level, for instance, rises to 7.96 million barrels per day from 7.48 million, but analysts say it could produce as much as 10 million barrels.

"There is no shortage. We never allowed the shortage to take place," said Ali Naimi, the Saudi oil minister. "There is a significant shortage from Venezuela, but there is no shortage in the international market."

If the official outcome of the meeting was less important than the reality of what happens in the market, then why would OPEC ministers gather in frigid Vienna - the city was blanketed in snow - only one month after their last regular meeting? Appearances matter a great deal, too. Analysts said Saudi Arabia, in particular, was eager to be seen as cooperative at a time when many American conservatives are raising questions about the Saudi commitment to fighting terrorism.

Unusually high oil prices are also not in Saudi Arabia's interest if they contribute to a slowdown in the global economy and thus lower demand for the country's oil reserves.

"They are trying to paint OPEC in a good light," said Leonidas Drollas, chief economist with the Center for Global Energy Studies in London. "The Saudis are trying to ingratiate themselves a bit with the United States."

But OPEC also emphasized that the increase in quotas may be temporary. If Venezuelan production returns to pre-strike levels and a war with Iraq is averted, for instance, the cartel might be faced with a price-depressing oil glut just as seasonal demand wanes in spring.

"We will look very closely at the market and we will continue our consultation," Attiyah said.

The OPEC president said the he had faced no pressure from the United States, the world's largest oil consumer, to do something about rising prices, but hinted that the possibility of a war in Iraq had figured in OPEC's discussions.

"We take all the factors into consideration in determining whether there is a shortage in the market," he said.

Iraq, which is nominally an OPEC member but outside the group's quotas because its production is monitored by the United Nations, stepped in to fill some of the gaps left by the loss of Venezuelan output. Over the last few weeks it has been producing about 2 million barrels a day, Drollas said.

The increased output from Iraq and quota cheating by other OPEC members probably accounts for the fact that U.S. petroleum stockpiles were above predicted levels in the week ending Jan. 3, actually rising by one estimate and falling less than expected by another. Though total OPEC production fell slightly short of the 23 million quota, the relative adequacy of supply helped push down futures prices slightly last week.

Though OPEC insists that it has enough spare capacity to make up for all of the lost production from Venezuela, a war in Iraq could upset the fragile supply-demand balance.

In the event of a war, analysts say the International Energy Agency would probably release some oil from its strategic reserves, held by 26 member nations. And the United States could tap its own Strategic Petroleum Reserve, as President Bill Clinton did in 2000 when prices spiraled.