www.theage.com.au January 15 2003

World oil prices rose yesterday, defying OPEC's decision to pump an extra 1.5 billion barrels a day, with traders concerned about the threat of an Iraqi war and a strike in Venezuela.

OPEC agreed at the weekend to increase production in an attempt to curb a surge in prices.

But underlying concerns about the situations in Iraq and Venezuela loomed large, as a large build-up of US forces pressed ahead and as oil-exporting Venezuela entered the seventh week of a crippling general strike.

New York's February-dated futures contract for light, sweet crude rose 58 US cents to $US32.26 a barrel.

In London, the February benchmark Brent North Sea crude oil futures contract advanced 53 US cents to $US30.20 a barrel. .

State-owned Petroleos de Venezuela (PDVSA) president Ali Rodriguez said on Monday that Venezuela aimed to increase production to two million barrels per day as it fixed and regained control of refineries and other oil facilities.

Analysts said OPEC's decision to lift production quotas had been widely expected.

Saudi Arabia's announcement that it could raise its own output if needed to 10.5 million bpd within two weeks, from a new quota of just under eight million, had only briefly lowered prices.

"The events of the weekend confirm a few suspicions and indicate that output is going to be above December levels, which I think is quite critical," said GNI analyst Lawrence Eagles in London.

"We've seen Saudi Arabia intimating that it had raised output prior to the meeting to offset the shortage to the United States," Mr Eagles said.

Saudi Arabia appeared to have chartered more tankers to the United States, indicating US deliveries were also set to rise next month, he said.

"What is clear is that Saudi Arabia, which is the pivotal player because of its spare capacity, is saying that it doesn't want to see prices rising further because it realises that would be detrimental to world economic growth," Mr Eagles added.

-AFP

www.newsok.com 2003-01-14 By Alexandra Olson Associated Press Writer

CARACAS, Venezuela -- Ruling party legislators said Monday they will urge citizens to boycott a February referendum on President Hugo Chavez's rule if the Supreme Court allows it to take place.

Venezuela's opposition is demanding that Chavez resign and call new elections if he loses the nonbinding referendum tentatively set for Feb. 2. They have buttressed their demands with a strike that entered its seventh week Monday and has dried up oil revenue.

Chavez refuses to step down, arguing that Venezuela's constitution only allows a binding referendum midway through a president's term -- August, in his case.

Members of his Fifth Republic Movement party, which has a slim majority in Congress, have challenged the constitutionality of the vote in the Supreme Court.

"If the referendum does take place, our position would be total abstention," Fifth Republic lawmaker Omar Mezza said. "Our complete abstention would take away its legitimacy."

Chavez's opponents cite articles in the constitution that let citizens petition for a referendum on "matters of national importance" at any time or to disown governments that threaten democracy.

The Supreme Court has not said when it will rule on the referendum.

www.abs-cbnnews.com Tuesday, January 14, 2003 9:10:56 p.m By MARK WEISBROT Special to The Washington Post

Weisbrot is codirector of the Center for Economic and Policy Research, an independent nonpartisan think tank in Washington.

Walking around Caracas late last month during Venezuela’s ongoing protests, I was surprised by what I saw. My expectations had been shaped by persistent US media coverage of the nationwide strike called by the opposition, which seeks President Hugo Chavez’s ouster. Yet in most of the city, where poor and working-class people live, there were few signs of the strike. Streets were crowded with holiday shoppers, metro trains and buses were running normally, and shops were open. Only in the eastern, wealthier neighborhoods of the capital were businesses mostly closed.

This is clearly an oil strike, not a “general strike,” as it is often described. At the state-owned oil company, PDVSA, which controls the industry, management is leading the strike because it is at odds with the Chavez government. And while Venezuela depends on oil for 80 percent of its export earnings and half its national budget, the industry’s workers represent a tiny fraction of the labor force. Outside the oil industry, it is hard to find workers who are on strike. Some have been locked out from their jobs, as business owners -- including big foreign corporations such as McDonald’s and FedEx -- have closed their doors in support of the opposition.

Most Americans seem to believe the Chavez government is a dictatorship, and one of the most repressive governments in Latin America. But these impressions are false.

Not only was Chavez democratically elected, his government is probably one of the least repressive in Latin America. This, too, is easy to see in Caracas. While army troops are deployed to protect Miraflores (the presidential compound), there is little military or police presence in most of the capital, which is particularly striking in such a tense and volatile political situation. No one seems the least bit afraid of the national government, and despite the seriousness of this latest effort to topple it, no one has been arrested for political activities.

In the United States, a strike of this sort -- one that caused massive damage to the economy, or one where public or private workers were making political demands -- would be declared illegal. Its participants could be fired, and its leaders -- if they persisted in the strike -- imprisoned under a court injunction. In Venezuela, the issue has yet to be decided. The Supreme Court last month ordered PDVSA employees back to work until it rules on the strike’s legality.

To anyone who has been in Venezuela lately, opposition charges that Chavez is “turning the country into a Castro-communist dictatorship” -- repeated so often that millions of Americans apparently now believe them -- are absurd on their face.

If any leaders have a penchant for dictatorship in Venezuela, it is the opposition’s. On April 12 they carried out a military coup against the elected government. They installed the head of the business federation as president and dissolved the legislature and the supreme court, until mass protests and military officers reversed the coup two days later.

Military officers stand in Altamira Plaza and openly call for another coup. The government’s efforts to prosecute leaders of the coup were canceled when the court dismissed the charges in August. Despite the anger of his supporters, some of whom lost friends and relatives last year during the two days of the coup government, Chavez respected the decision of the court.

The opposition controls the private media, and to watch TV in Caracas is truly an Orwellian experience. The five private TV stations (there is one state-owned channel) play continuous anti-Chavez propaganda. But it is worse than that: They are also shamelessly dishonest. For example, on December 6 an apparently deranged gunman fired on a crowd of opposition demonstrators, killing three and injuring dozens. Although there was no evidence linking the government to the crime, the television news creators -- armed with footage of bloody bodies and grieving relatives -- went to work immediately to convince the public that Chavez was responsible. Soon after the shooting, they were broadcasting grainy video clips allegedly showing the assailant attending a pro-Chavez rally.

Now consider how people in Caracas’s barrios see the opposition, a view rarely heard in the United States: Led by representatives of the corrupt old order, the opposition is trying to overthrow a government that has won three elections and two referendums since 1998. Its coup failed partly because hundreds of thousands of people risked their lives by taking to the streets to defend democracy. So now it is crippling the economy with an oil strike. The upper classes are simply attempting to gain through economic sabotage what they could not win at the ballot box.

From the other side of the class divide, the conflict is also seen as a struggle over who will control and benefit from the nation’s oil riches. Over the past quarter-century PDVSA has swelled to a $50 billion a year enterprise, while the income of the average Venezuelan has declined and poverty has increased more than anywhere in Latin America. Billions of dollars of the oil company’s revenue could instead be used to finance health care and education for millions of Venezuelans.

Now add Washington to the mix: The United States, alone in the Americas, supported the coup, and before then it increased financial support of the opposition. Washington shares PDVSA executives’ goals of increasing oil production, busting OPED quotas and even selling off the company to private foreign investors. So it is not surprising that the whole conflict is seen in much of Latin America as another case of Washington trying to overthrow an independent, democratically elected government.

Where does the US government stand on the question of democracy in Venezuela? The Bush administration joined the opposition in taking advantage of the December 6 shootings to call for early elections, which would violate the Venezuelan constitution. The administration reversed itself the next week, but despite paying lip service to the negotiations mediated by the OAS, it has done nothing to encourage its allies in the opposition to seek a constitutional or even a peaceful solution.

Sixteen members of Congress sent a letter to Bush last month, asking him to state clearly that the United States would not have normal diplomatic relations with a coup-installed government in Venezuela. But despite its apprehension about disruption of Venezuelan oil supplies on the eve of a probable war against Iraq, the Bush administration is not yet ready to give up any of its options for “regime change” in Caracas. And -- not surprisingly -- neither is the Venezuelan opposition.

Please send your comments or feedback to newsfeedback@abs-cbn.com

www.newsmax.com NewsMax Wires Tuesday, Jan. 14, 2003 NEW YORK -- Oil markets reacted with a modicum of bullish skepticism Monday to OPEC's decision to hike its production of crude.

Futures prices went up instead of down Monday on the New York Mercantile Exchange and London's International Petroleum Exchange amid an apparent consensus that the increase in OPEC production by 1.5 million barrels per day would not fully offset the ongoing reduced exports from strife-torn Venezuela.

February crude settled up 58 cents on NYMEX at $32.26 per barrel while the IPE gained 53 cents to $30.20 per barrel.

OPEC voted during the weekend to increase its output by 6.5 percent to 24 million barrels per day. However, the tensions between the United States and Iraq continued to add long-term bullishness to the markets while mechanical difficulties at a North Sea oil field and a refinery in Louisiana contributed short-term price support.

The problems at Marathon's Garysville, La., contributed to a 2.71-cent increase in NYMEX gasoline futures and a 1.85-cent rise in heating oil that contributed to the firmer crude prices, although Iraq and Venezuela appeared to be the greater concern.

"The global market is going to remain tight with ongoing war fears," David Thurtell, a strategist with Commonwealth Bank in Sydney told the British Broadcasting Corp.

The additional OPEC production begins in February, but it takes an additional 4-6 weeks for tankers to sail from the Middle East to the United States.

Meanwhile, Venezuelan President Hugo Chavez has been unable to break the political turmoil and labor strife that has centered on the state oil company Petroleos de Venezuela S.A. (PdVSA), a major source of oil and gasoline for the U.S. refining industry.

In addition, the OPEC increase includes a higher quota for Venezuela -- an integral member of OPEC -- and is believed to be currently capable of shipping nowhere near its present quota due to ongoing labor strife that reached its 44th day Monday.

While Chavez's government has pledged to have PdVSA's production up to 2 million barrels per day by Feb.1, analysts aren't confident that level can be reached without a prompt labor settlement.

Venezuela also produces and markets gasoline in the United States under its Citgo subsidiary. A spokesman for the Lyondell-Citgo Refining (LCR) joint venture said Monday that it expected to increase its production at its Houston plant next week after it had been cut to 50 percent by the Venezuela strike.

"We're pleased that shipments to LCR are now increasing and that LCR has successfully plotted a course that we expect will take it to near-full rates over the next month," said Lyondell Executive Vice President Morris Gelb.

Prior to the strike, the LCR refinery received 230,000 barrels per day of crude from Venezuela and had a total processing capacity of 268,000 barrels per day.

www.vanguardngr.com

Monday, January 13, 2003

  VIENNA — UNITED Arab Emirates Oil Minister, Obeid bin Saif al-Nasseri said, Saturday that OPEC was discussing a production hike of around one million barrels per day (BPD) to stop prices rising due to a six-week-old strike in Venezuela and the threat of a US-led war against Iraq. “Obviously there is a shortage, but we have to see what quantity it requires. We have to discuss it to see if it is one million more or less,” he said upon arriving in Vienna for an extraordinary meeting, Sunday of the Organisation of Petroleum Exporting Countries (OPEC). Saudi Oil Minister, Ali al-Nuaimi said OPEC would move to prevent oil shortages. “I can tell you I support making sure the market is well balanced. There will be no shortage of supply in the market when the market is well balanced,” he said. Al-Nuaimi refused to give figures for what is expected to be an increase of one to two million barrels per day (BPD) in oil production, with the strike in Venezuela keeping some two million barrels BPD off the world market, and hitting the United States particularly hard.

OPEC President, Qatar Oil Minister, Abdullah bin Hamad al-Attiyah said all options are still open as OPEC ministers get ready to meet. OPEC member, Venezuela accounts for around 13 per cent of US oil imports. The strike there has caused US oil stocks to fall at a time when Washington needs them to increase as it prepares for a possible war on Iraq. If the United States launches a war in Iraq before the Venezuelan strike ends, markets could be deprived of about five million barrels of crude oil per day, or even more if the war were to destabilise other Middle East producers.

“Five million barrels a day is a significant shortfall ... There are severe disruptions out there,” said Washington-based analyst, Raad Alkadiri of the PFC Energy consulting firm. “There certainly is a crisis, a crisis OPEC is responding to,” he said. He said the Saudis wanted to show “they can be relied on to provide stability in the market.” But he said the United States may still be forced to dip into its 600-million-barrel strategic oil reserve to make up for shortfalls. 

OPEC increased its combined output ceiling by 1.3 million BPD to 23 million BPD excluding Iraq on January 1, together with a pledge to cut actual production to try to restore credibility in the face of chronic quota busting. A source at the cartel’s Vienna headquarters said that any rise in OPEC production quotas would take effect on February 1 at the earliest, and would probably be rolled back once exports recovered in troubled Venezuela. OPEC’s oil supply is estimated at 75 million BPD. Eight of its 11 members are Arab or Middle Eastern: Algeria, Iran, Iraq, Libya, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. The others are Indonesia, Nigeria and Venezuela. The cartel has a target price band of $22 to $28 per barrel.

OPEC, which produces about one-third of the world’s crude oil, agreed to meet for the second time in a month after oil prices roared above $30 per barrel in London and New York. A “compromise” agreement on the table here is for an output increase of around one million BPD, with Saudi Arabia pushing for a bigger hike, the Middle East Economic Survey (MEES) reported in its edition to appear Monday, monitored in Nicosia.

“In telephone consultations ahead of the Vienna meeting, Saudi Arabia has pushed for a substantial increase in the ceiling, but has faced opposition,” the industry news letter said, adding that spare OPEC production capacity is now mainly limited to Riyadh and the United Arab Emirates. Indonesia, Iraq, Kuwait and Iran will not be sending their ministers to the hastily called OPEC meeting, although they will still be represented. Analysts said some countries may be staying away since they have no excess capacity to offer.