www.theage.com.au January 22 2003 By Angela Macdonald-Smith Singapore

Crude oil futures rose in New York after the United Kingdom ordered 26,000 troops to the Persian Gulf in preparation for a possible war and, along with the United States, dismissed new pledges by Iraq to cooperate with arms inspectors.

Oil contracts traded in London rose to near a two-year high after Iraq declared more illegal warheads and Britain said it would send more than 25 per cent of its army, tanks and attack helicopters to the Gulf.

"Sending a quarter of the British army is another clear signal" that the US and UK are preparing for war, said Simon Games-Thomas, an energy analyst in Sydney.

Crude oil for March delivery rose as much as 19 cents, or 0.6 per cent, to $US33.15 a barrel in after-hours electronic trading on the NY Mercantile Exchange.

On Friday, the February contract rose 25 US cents, or 0.7 per cent, to $US33.91 a barrel on the NYME, the highest closing price for a contract closest to delivery since November 29, 2000.    advertisement       advertisement

The exchange was closed yesterday for the Martin Luther King Day holiday.

The March Brent crude-oil futures contract gained 11 US cents to $US30.65 a barrel in London trading on Monday.

"The oil market is concerned that the weapons inspectors will make further discoveries in Iraq," said Steve Turner, an oil analyst at Commerzbank Securities. "That's supporting prices."

Iraqi officials and the United Nation's chief arms inspectors issued a statement on Monday saying Saddam Hussein's regime would search for chemical weapons similar to the 11 empty warheads found last week and answer questions raised by its weapons declaration, while foreign ministers of China, France and Germany said they wanted to give Iraq more time to comply.

Crude oil futures in New York rose more than $US11 a barrel in 2002, and have added almost $US2 this year on concern the US is preparing to attack Iraq, which the Bush administration accuses of developing chemical, nuclear and biological weapons. The US has said Iraq may need to be disarmed by force.

Oil prices also have risen as a strike in Venezuela enters its eighth week, disrupting oil shipments from the country.

Venezuela's oil output has tripled this month as more fields have been activated, but is about one-third of normal output.

www.forbes.com Reuters, 01.21.03, 8:50 AM ET

CARACAS, Venezuela (Reuters) - Oil tanker pilots have ended a seven-week-old strike in western Lake Maracaibo, a key oil export area, Venezuelan shipping agents said Tuesday.

The move should ease the export of crude oil from western Venezuela, which has dropped sharply due to the strike, but shippers said flows were unlikely to rise dramatically until foreign ship operators began using the ports again.

"We received a verbal assurance from the port captain that the pilots strike stopped yesterday," said one agent. It was confirmed by a second ship agent. Pilots are key to oil exports from the lake, both for docking tankers at loading berths and for navigating a long, narrow channel from the lake to the Caribbean.

In total there are some 24 channel pilots and 20 docking pilots in Maracaibo. Only five or six pilots, who broke the strike aimed at forcing President Hugo Chavez to resign, were available until now. Agents said the end of the pilots' strike meant that up to five tankers could leave the channel on one tide, versus two tankers now.

However, only tankers chartered by Venezuela's state-owned Citgo are currently exporting oil from Venezuela, and exports have dropped to one-sixth of normal levels.

Copyright 2003, Reuters News Service

www.heraldsun.news.com.au From a correspondent in Caracas 22jan03

BLOODY clashes between opponents and supporters of Venezuelan President Hugo Chavez yesterday overshadowed efforts by former US president Jimmy Carter to help resolve the general strike that has crippled the world's fifth largest oil exporter. On the 50th day of the civil action, one man was killed and 27 injured when gunfire erupted as the opposing forces clashed in Charallave, 30km south of the capital Caracas.

Both sides threw rocks, bottles and sticks at each other as police struggled to keep them apart, but it was not clear who fired the live ammunition.

Opposition leaders blamed the violence on the Government, saying Chavez sympathisers, primed by the President's fiery rhetoric, attacked their march. "The only one responsible is the Government," said Juan Fernandez, an executive fired from the state oil monopoly, Petroleos de Venezuela SA, for leading the strike.

Mr Carter, who won the Nobel peace prize in October, attended negotiations yesterday and met separately with Mr Chavez and strike leaders. His Atlanta-based Carter Centre, the Organisation of American States and the United Nations are sponsoring the talks.

Business leaders, unions and opposition parties launched the strike on December 2 to demand Mr Chavez resign or call early elections. After two months of negotiations, the two sides seem little closer to agreement.

Mr Chavez threatened yesterday to walk out of talks, accusing the Opposition of trying to topple him even as they negotiated and declaring the country was at war.

Strike leader Carlos Ortega said opponents would continue negotiating but called Mr Chavez undemocratic and said he would never accept a vote on his rule. Mr Ortega, president of the 1million-member Confederation of Venezuelan Workers, said OAS secretary general Cesar Gaviria and Mr Carter should "convince themselves once and for all that we are dealing with a regime that is not democratic, and that as long as Chavez stays in power there is no possibility of holding elections".

The National Elections Council, accepting an opposition petition, agreed to organise a February 2 non-binding referendum asking citizens whether Mr Chavez should step down.

Mr Chavez said the vote would be unconstitutional and his supporters have challenged it in the Supreme Court. But the President has welcomed a possible binding referendum halfway through his six-year-term - in August this year - as allowed by the constitution.

The strike has slashed Venezuela's oil production by more than two thirds and caused shortages of petrol, food and drinking water. It has cost Venezuela $US4billion ($6.77billion), according to the Government, and contributed to the fall of the bolivar.

Six countries - Brazil, Chile, Mexico, Portugal, Spain and the US - began an initiative called "Friends of Venezuela" to help end the crisis. Mr Chavez warned that his Government would not allow interference in domestic affairs.

Mr Chavez, 48, was elected in 1998 and re-elected in 2000 on promises to redistribute the country's vast oil wealth among the poor majority.

His opponents accuse him of steering the economy into recession with leftist policies and running roughshod over democratic institutions.

www.forbes.com Reuters, 01.21.03, 8:45 AM ET

HOUSTON, Jan 21 (Reuters) - Lyondell Chemical Co. (nyse: LYO - news - people) said production at its joint-venture refinery in Houston is at 85 percent of its capacity of 270,000 barrels per day (bpd).

Production at Lyondell-Citgo Refining LP is running between 220,000 and 230,000 bpd, the Houston-based company said in astatement Monday.

In late December, the refinery shut a crude unit accounting for half of oil processing capacity because it was unable to obtain the sour Venezuelan crude that unit is configured to handle. A general strike in Venezuela has slashed oil output from that country. Prior to the strike, Lyondell-Citgo received about 230,000 bpd of oil from Venezuela.

The company said it has restarted the crude unit. It also said availability of spot and Venezuelan contract crude has improved the refinery's ability to operate.

Lyondell-Citgo is a joint venture between Lyondell and Citgo Petroleum Co., which is an indirect, wholly-owned subsidiary of Petroleos de Venezuela SA, the state oil company of Venezuela.

www.canada.com Chris Varcoe Calgary Herald Tuesday, January 21, 2003 CREDIT: Calgary Herald Archive   Nine of the 50 largest companies traded in Toronto are energy firms.

ulked up by strong oil and natural gas prices, at least two Canadian energy companies are set to become billionaires in the profit department.

Canadian petroleum producers will begin releasing 2002 financial results today and two oil companies -- Imperial Oil Ltd. and EnCana Corp. -- are expected to post more than $1 billion in net earnings.

Industry analysts say a string of mergers, along with relatively strong commodity prices, have Imperial, EnCana, and possibly Petro-Canada poised to join the domain of Canada's biggest banks and blue-chip businesses.

"From the consumers' standpoint, it's wow, how much is enough," said energy analyst Wilf Gobert of Peters & Co. "But when I put my financial analyst's hat on here, the amount of profit doesn't matter. It's a question of what your rate of return is."

While commodity prices were low at the start of 2002, oil rose throughout the year due to mounting tensions in the Middle East and political instability choking off exports from Venezuela.

Crude oil traded on the New York Mercantile Exchange averaged $26.20 US a barrel during 2002, up one per cent from the previous year and surging above $30 in December.

Spot prices for western Canadian natural gas averaged $4.12 a gigajoule, down 24 per cent from the previous year, but rallying from a low point during the summer to a recent two-year high.

With a spate of mergers and takeovers creating large-scale companies such as EnCana -- the biggest independent producer in the world -- it's little surprise the sector's heavyweights will top $1 billion in earnings, said Patricia Mohr, vice-president of economics at Scotiabank.

"These are very large companies. I wouldn't sneeze at that," she said. "I'm sure the results will look good."

Gobert forecasts Imperial Oil, Canada's largest integrated oil company, to make about $1.1 billion in 2002. EnCana -- created by the merger of Alberta Energy Co. Ltd. and PanCanadian Energy Corp. -- should earn $1.37 billion for the entire year.

Petro-Canada, which bulked up significantly in early 2002 with its $3.2-billion takeover of Veba Oil & Gas, is projected to make between $923 million and $964 million, but could "have a shot" at a billion dollars in profits depending upon unusual charges, Gobert added.

"In Canada, it's been a long time since we've had this many companies that are this big -- in fact, probably never," he said.

Gobert noted that nine of the 50 largest companies traded on the Toronto Stock Exchange are energy firms.

The best year on oilpatch record, 2000, saw Imperial post net earnings of $1.4 billion, while PanCanadian -- then controlled by Canadian Pacific Ltd. -- made $1 billion.

Suncor Energy Ltd. is set to release results today and fourth-quarter figures are also expected to show the influence of rising commodity prices.

Oil jumped 38 per cent during the fourth quarter compared with the same period in 2001, averaging $28.33 US a barrel. And heavy oil prices were particularly strong.

Natural gas prices in Western Canada gained 67 per cent to average $5.38 per gigajoule for the three months ending Dec. 31, putting gas-leveraged companies in a profitable position.

However, many companies were challenged to increase gas output in the mature Western Canadian Sedimentary Basin, said analyst Dan Tsubouchi of Griffith McBurney Partners.

"We think there might be some minor disappointment on production numbers," Tsubouchi said. "It's very difficult for this industry to build (gas) supply in a maturing basin."

For integrated companies that refine and market petroleum products, another issue is the tight refining margins witnessed during parts of the year.

"We're going to see continued lack of profitability or difficulties in refining," said analyst Kate Warne of Edwards Jones in St. Louis.

varcoec@theherald.southam.ca

By the Numbers

Earnings expectations for 2002, in millions of dollars, followed by percentage change over the year before. (Earnings are net, and if unusual items are added, figures will be higher, as companies had negative foreign exchange transactions.)

EnCana 1,393 7%

Imperial Oil 1,127 -9%

Petro-Canada 923 2%

Talisman 858 13%

Husky 802 14%

Suncor Energy 709 96%

Canadian Natural 571 -18%

Shell Canada 526 -48%

Nexen 410 0%

Penn West 158 -35%

Source: Peters & Co.

This story features a factbox "By the Numbers".