www.planetark.org USA: January 20, 2003

WASHINGTON - About two-thirds of federally owned land in key areas of the U.S. West is available to lease for oil and natural gas drilling, more land than expected by officials, according to a Bush administration report released.

Environmental groups said the widely anticipated study by the Interior Department's Bureau of Land Management could add momentum to the administration's efforts to streamline the leasing process and promote energy exploration in Western wilderness areas.

The analysis of federal land spanning 59 million acres in Colorado, Utah, Wyoming, Montana and New Mexico estimated the area contains 3.9 billion barrels of oil and 138.5 trillion cubic (Tcf) feet of gas that is technically recoverable.

The data is of great interest to energy companies, which have long pressed for the Bureau of Land Management to streamline and reform its leasing procedures.

While the report stopped short of proposing new energy policies, Rebecca Watson, assistant secretary for Interior's land management, said there were fewer restrictions to block energy development than had been previously thought.

"This report does identify that, at least from a leasing stage, the stipulations that land management agencies put on resources still allow a majority of those oil and gas resources to be leased," Watson told reporters.

Of the land inventoried, 2.2 billion barrels of technically recoverable oil and 86.6 Tcf of technically recoverable gas are in areas covered by standard leasing procedures.

However, 21 million acres of the area cannot be leased because of environmental restrictions. That puts off limits about 600 million barrels of oil and 16 Tcf of natural gas.

Energy that is technically recoverable may not be economic to develop, depending on market prices and the costs of drilling and transporting production.

The U.S. consumes about 23 Tcf of natural gas and 7.3 billion barrels of oil annually. Half the oil must be imported from countries such as Venezuela, Saudi Arabia and Iraq.

GREEN GROUPS NOT IMPRESSED

The study was ordered by the Clinton administration in 2000 and funded by Congress to assess the energy potential on lands in the Western United States.

President George W. Bush, a former Texas oilman, made energy exploration in the Western U.S. a focal-point of his energy plan to help reduce U.S. dependence on foreign oil and to meet future demand for natural gas.

Conservation groups said the new report will boost support for energy exploration because it outlines all oil and natural gas reserves that can be recovered, not just those that are profitable for energy companies to remove.

Pete Morton, an economist with the Wilderness Society, said that because most of the land is already available for leasing, the administration has no grounds to further ease environmental rules for energy exploration.

"This report completely undercuts any agenda (by the Bush administration) for waiving any environmental laws to pursue oil and gas development," said Morton who authored an oil and gas assessment in the West last year.

In its report, the Wilderness Society estimated that if more drilling was allowed in key national forests and monuments in the West, the combined areas would produce only enough natural gas to meet U.S. demand for about 11 weeks, and crude oil to satisfy consumption for about 3 weeks.

OILMEN WANT PERMITS STREAMLINED

The Independent Petroleum Association of America, which represents thousands of oil and natural gas producers, praised the Bureau of Land Management report.

Diemer True, chairman of the group, said producers have been reluctant to develop federal land in parts of the United States because of a cumbersome permit process, excessive environmental reviews and litigation that makes it too time consuming and costly.

Watson said the administration has made little progress to streamline the permit process during the last few years.

"Now we know that these resources in the inter-mountain West should be available for leasing," said True. "We need to make sure it happens."

The new report studied the San Juan Paradox in New Mexico, the Montana Thrust Belt, Colorado's Uinta Piceance, and Wyoming's Green River Valley and Powder River Basin.

The Bureau of Land Management said it would begin similar reviews of oil and gas on other Western federal lands, including the Wind River Basin in Wyoming and the Eastern Great Basin in Utah and Idaho.

Story by Christopher Doering

news.ft.com By Sebastian Edwards Published: January 19 2003 20:36 | Last Updated: January 19 2003 20:36

The election of Luiz Inácio Lula da Silva as Brazil's president has given Washington a unique opportunity to engage seriously with the biggest country in South America. Improved relations with Brazil - including genuine progress towards a free trade agreement - would dramatically change the political and diplomatic landscape of Latin America. Indeed, after a US-Brazil trade accord, the rest of the region would follow swiftly and the Free Trade Area of the Americas - until now an elusive goal - would rapidly become a reality.

But not everything is about trade. If Brazil were to become a close ally, it would be much easier for the US to tackle other tricky Latin American issues, including increasing political instability in Venezuela and implementation of an effective anti-narcotics policy for the region. It would also be easier to tackle the increasing use by Islamic terrorists of the triple frontier of Argentina, Brazil and Paraguay as a financial centre.

Unfortunately, the Bush administration has failed to grasp this opportunity. Indeed it has done little to signal any interest in forging closer ties with Brazil. Diplomatic circles were astonished to find out that no senior US cabinet member attended Mr Lula da Silva's inauguration this month and at last week's nomination of Roger Noriega - the little-known ambassador to the ineffective Organisation of American States - as the senior state department official responsible for Latin America. Indeed, the nomination of Mr Noriega - a staunch anti- communist who once served as an aide to former Senator Jesse Helms and who has little expertise beyond central America and Cuba - is a snub to the large Latin American countries. The nomination can be interpreted only as a political move aimed at pleasing the anti-Castro Cuban community in South Florida.

But it is not too late for the US to change course. The administration should recognise its mistake and withdraw Mr Noriega's nomination. It should then nominate a truly senior figure with deep knowledge and understanding of the region and in particular of Brazil. And if the administration is unwilling to do it, Senator Richard Lugar, the highly respected chairman of the Senate's foreign relations committee, should step in and ensure that Mr Noriega is not confirmed to such a critical post.

While not openly anti-American, many Latin Americans - and in particular many Brazilians - have traditionally been suspicious of US goals in the region. Some believe that Washington intends to impose its own policies, without much regard for domestic views; others worry about the implications of US protectionism. These concerns have been exacerbated by recent US protectionist policies on steel and agriculture.

Because of this deep suspicion, Brazilian politicians have traditionally taken a cautious approach towards relations with the US. Indeed, most Brazilian political leaders have feared that voters could interpret overtures towards Washington as a sign of weakness and of catering to American interests. As a result, Brazil's diplomatic relations with the US have historically been cold, awkward and distant.

With Mr Lula da Silva at the helm, however, this difficult relationship could change for the better. With his impeccable left-wing credentials and his past as a trade union leader, no one could possibly accuse Mr Lula da Silva of being pro-capitalist or of giving in to pressure from multinational corporations. He is thus uniquely positioned to initiate open, frank and productive negotiations with the US that go beyond the usual rhetoric. This is a chance to make real headway on bilateral and hemispheric issues.

During his first few weeks in office Mr Lula da Silva has given positive signals. Contrary to the fears of many Wall Street analysts, he has appointed a solid economic team. He clearly intends to pursue economic modernisation and his administration will welcome foreign investment. Indeed, after years of seeking the presidency, Mr Lula da Silva is aware that fiscal discipline, low inflation and honouring debt commitments are the prerequisites for sustained growth in any modern economy. He is also aware that without robust growth there is no chance that his social programmes will succeed.

All of this is good news, not only for Brazil but also for Latin America as a whole. The best way to make sure that Mr Lula da Silva keeps his promises is for the US to treat him seriously and to bring him to the table to discuss a free trade agreement that would dismantle protectionist measures in both countries. This, however, would require the White House to appoint a first-rate diplomatic team to deal with Brazil and the rest of Latin America. Mr Noriega simply does not make the cut. As the experience of the North American Free Trade Agreement has shown, enhanced trade is not only good for the economies involved. It also brings closer diplomatic ties and forges support in the world diplomatic arena. And more and better friends are one thing the US needs as the crises in Iraq and North Korea deepen.

The writer is a professor of international economics at UCLA's Anderson graduate school of management. From 1993 to 1996 he was the World Bank's chief economist for Latin America

news.ft.com By Andy Webb-Vidal in Caracas Published: January 19 2003 21:01 | Last Updated: January 19 2003 21:01

US corporations with interests in Venezuela are facing increasing risk of government intervention or even expropriation, as President Hugo Chávez moves to confront a general strike and consolidate his position, business leaders warned on Sunday.

The warning comes after the military raided a Coca-Cola subsidiary bottling plant on Friday and distributed the soft drink to the poor to help ease shortages of staple goods arising from a six-week-old protest stoppage by opponents of Mr Chávez.

Mr Chávez said orders had been issued to military units to carry out similar "legal" actions against companies deemed to be hoarding essential foodstuffs. "Those who attempt to deprive the people of food and then complain that Chávez is arbitrary are traitors to the nation," he said.

US companies with operations in Venezuela include food group Kraft, Procter & Gamble, and Cargill, the agribusiness. Business leaders are watching to see whether the raid was intended as a gesture aimed at persuading other companies to lift the economically crippling strike, or whether the move marks a Cuban-inspired leftward shift in Mr Chávez's policies.

Either way, the difficult relationship between the government and private businesses look set to deteriorate. "Tremendous damage is being done to Venezuela's reputation, countries in Latin America have long had to wrestle with the banana republic, tin-horn dictatorship image from the 19th century," said Antonio Herrera, vice-president of the Venezuelan-American Chamber of Commerce.

"Venezuela had to a great degree overcome this image, but through a single event on the part of a small group of people world opinion will now start thinking of Venezuela in terms of countries that aren't quite civilised," Mr Herrera said.

The move against the Coca-Cola distributor is likely to add urgency to a nascent diplomatic initiative by a six-nation group aimed at finding a negotiated resolution to the political deadlock between the government and opposition groups.

Brazil, Chile, Mexico, Portugal, Spain and the US last week agreed to form a "group of friendly nations" to bolster an existing mission by the Organisation of American States.

Colin Powell, US secretary of state, and some of the foreign ministers from the five other "friendly nations" are expected to hold talks in Washington this week. Irked over the inclusion of the US in the group, Mr Chávez said his government could walk away from the OAS talks.

Mr Chávez met Luiz Inácio Lula da Silva, Brazil's president, at the weekend to seek support to widen the group to include Russia and France. Celso Amorim, Brazil's foreign minister, said membership of the group would not be broadened for the time being.

news.ft.com By James Wilson in Bogotá Published: January 16 2003 21:23 | Last Updated: January 16 2003 21:23

With a recent spate of bomb attacks, Colombian guerrillas have continued to defy President Alvaro Uribe's security crackdown in the oil-rich Arauca province.

Arauca, which borders Venezuela, and is the location of a large oilfield operated by US oil company Occidental, has become a centrepiece of the government's counter-insurgency strategy.

In September the government imposed greater limitations on civil liberties on a special zone including three of Arauca's town. A heavier military presence was diverted to the zone, as well as plans for more investment.

US forces are set to arrive in Arauca to train Colombian troops to protect the oil pipeline used by Occidental, a frequent target of attacks.

This week's resignation of the province's governor has further highlighted the government's struggle to pacify the province, a hotbed of rebel activity and a key testing ground for Mr Uribe's hardline security policies.

The government was on Thursday expected to announce a replacement for José Emiro Palencia, a retired colonel appointed by the president as Arauca's governor only three months ago.

Mr Uribe's government says rebel activity has decreased in the security zone. But five people have been killed in car bombs this month in the province, showing the rebels have not been cowed by the extra attention being focused on Arauca and still  maintain their regional military net.

A suspected guerrilla member was also killed this month in an attempted car bomb attack in the security zone.

Colombia's army has accused the country's largest guerrilla group, the Revolutionary Armed Forces of Colombia (Farc), of using kidnapped civilians to drive two of the other vehicles that exploded in recent days, in what would be a gruesome new tactic by the rebels.

Marta Lucía Ramírez, the defence minister, has warned not to expect results too quickly as a result of the government's increased military build-up. But many political observers believe Mr Uribe's current high popularity ratings will only be maintained if he manages to show dramatic results against the rebels in coming months.

Some extra powers that the government had wanted to use in Arauca and in another security zone in northern Colombia were also overturned by a constitutional court ruling. The government is expected in March to introduce plans to change laws so the army can be given a freer hand to detain suspects.

www.forbes.com Reuters, 01.19.03, 2:37 PM ET

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez, battling a 7-week-old opposition strike, said Sunday that oil output had recovered to almost 1.2 million barrels per day, versus a top capacity of 3.2 million.

He said flows were rising fast in the east of the country, where current flows of 500,000 bpd would reach 1.3 million bpd by the first half of February.

In the west, he pegged output at 600,000 bpd, with 80,000 barrels per day from the southern fields.

Striking employees of the state-run Petroleos de Venezuela, who aim to force Chavez to resign by cutting off his economic lifeline, estimated output at 649,000 bpd on Sunday.