www.ctv.ca Associated Press

CARACAS — Opponents of President Hugo Chavez launched a 24-hour street demonstration Saturday to protest a court ruling that postponed a referendum on Chavez's rule.

A four-kilometre stretch of central Caracas highway was set aside for the event, which organizers warned may last longer than one day.

"Prepare yourself for the longest protest in history!'' screamed TV commercials and newspaper ads in the opposition-run media. They advised protesters to bring drinking water, sun hats, folding chairs and portable TVs to while away the hours under the tropical sun.

The demonstration followed a Supreme Court decision Wednesday to indefinitely postpone a nonbinding plebiscite, dashing opposition's hopes for a means of removing Chavez from office. Opposition leaders were convinced Chavez would be so embarrassed by the outcome, he would quit.

Negotiations mediated by Cesar Gaviria, secretary general of the Organization of American States, continued, aimed at ending a 55-day-old work stoppage and political stalemate.

But the opposition says it isn't going to wait for talks to produce results.

"We can't wait for the rainstorm to hit without having an umbrella,'' said Haydee Deutsch, of the Democratic Co-ordinator opposition movement.

Opponents are now considering a proposal by former U.S. president Jimmy Carter, which would amend Venezuela's constitution to shorten presidential and legislative terms and mandate early elections.

"It's an option we think is viable,'' said labour leader Alfredo Ramos.

The proposal calls for the opposition to end the strike and for the government, which has a congressional majority, to move quickly on changing the constitution. Amending the constitution requires congressional approval and a popular referendum.

A second proposal by Carter, who won the Nobel Peace Prize last year, calls for Venezuelans to prepare for a binding recall referendum on the president's rule in August.

The so-called Group of Friends of Venezuela, six countries that have pledged to help Gaviria broker an end to the crisis, met for the first time in Washington on Friday.

U.S. Secretary of State Colin Powell, who attended the meeting, urged Venezuelans to adopt Carter's ideas.

"The Carter proposals represent the best path available to the Venezuelans. They provide the badly needed basis on which both sides can bridge their differences on the immediate issues,'' Powell said, in a text released by the State Department.

While the Friends initiative began to take shape, oil production in Venezuela, the world's fifth largest exporter, was creeping up.

Increased output could be a sign Chavez is defeating the strike intended to force his ouster. But the former paratroop commander still struggles with the strike's effect on a recession-hit economy.

Oil production stood at about 3.2 million barrels per day before the strike was called Dec. 2. -- and slipped as low as 150,000 barrels per day later that month.

On Friday, dissident executives at state-run monopoly Petroleos de Venezuela S.A., or PDVSA, said output had crept to 855,000 barrels per day, up from 812,000 barrels on Thursday.

But production gains could be capped if exports, averaging around 450,000 barrels a day, don't pick up quickly. If oil isn't shipped, inventories pile up and no space remains for fresh production.

www.miami.com Posted on Sat, Jan. 25, 2003 BY TIM JOHNSON tjohnson@herald.com

WASHINGTON - Pressure on Venezuela mounted on Friday as the United States and five other nations -- led by Brazil -- sought to break an impasse in the strife-torn nation even as the Caracas government said it was breaking the back of an opposition-led strike.

''The problem in Venezuela is a problem of great urgency and it requires therefore that we act immediately,'' Brazilian Foreign Minister Celso Amorim said after a closed-door meeting of the six-nation Group of Friends of Venezuela.

Friday's meeting of foreign ministers or senior envoys from the United States, Brazil, Chile, Mexico, Spain and Portugal marked significant new international pressure in efforts to resolve fierce unrest over the rule of President Hugo Chávez. Amorim said the group would pursue peace proposals presented by former President Jimmy Carter in Caracas this week designed to end an eight-week strike that has crippled oil production in the world's fifth-largest oil exporting nation. The proposals call for new presidential elections.

''Some momentum has been created,'' said a senior U.S. official who sat in on the meeting and who spoke later on condition of anonymity.

But Venezuelan Foreign Minister Roy Chaderton indicated that the Chávez government believes it is breaking the back of the strike and feels little need to show flexibility.

''The country is moving on. We've paid dearly for this but we've beaten the strikers,'' Chaderton said after a speech to the Group of Friends at the headquarters of the Organization of American States.

Chaderton complained bitterly about opposition-controlled media in Caracas, saying it is common to hear Chávez labeled as an ''assassin, killer, thief and other things'' on the airwaves. He called for international help in reining in what he called the excesses of the opposition to Chávez, who has ruled Venezuela since early 1999.

''We have a very violent and irrational opposition,'' Chaderton said, asserting that opponents to Chávez employ ''psychological terrorism'' in spreading false rumors, a charge that foes of Chávez have denied.

Chaderton said the Chávez government has no plans to meet an opposition demand that it re-hire fired oil managers and workers from the huge crippled state oil company, Petróleos de Venezuela S.A., which is a bastion of opposition to Chávez. ''They are the ones who have brought about this failed strike,'' he said.

Secretary of State Colin Powell joined other envoys from the six-nation group in selecting Amorim to lead efforts to facilitate a peace deal in Venezuela.

Chávez sought a large role for Brazil in the Group of Friends, hoping that new Brazilian leader Luiz Inácio Lula da Silva, a leftist former union leader, would be supportive of his government, but Amorim, who has been in his job only since da Silva's inauguration Jan. 1, struck a noticeably impartial role.

Amorim said the Group of Friends would send envoys to Caracas Jan. 30-31 to push confidence-building measures between Chávez and his opposition and seek ways to reduce violence that has left dozens dead in the past two months.

Amorim called on both sides to make ``clear declarations against violence.''

''An appeal was made to the media for moderation so that dialogue can proceed in a constructive way,'' Amorim said.

Amorim, who met earlier in the day with Venezuelan opposition leaders, said all sides in the Venezuelan dispute concurred that Carter's proposals this week ``could constitute an important way forward.''

Carter, who won the Nobel Peace Prize last year for his globe-trotting peacemaking efforts, presented two proposals in Caracas on Tuesday. One calls on the opposition to lift its nationwide strike in exchange for Chávez agreeing to a binding Aug. 19 recall referendum on his rule. Another proposal suggests a constitutional change that would cut the term of the president from six to four years, and allow new elections before August.

Powell called Carter's proposals ''the best path available to Venezuelans,'' according to a text of his remarks.

Amorim said the Group of Friends would work through César Gaviria, the former Colombian president who is the secretary general of the OAS. Gaviria has been in Caracas for two months pushing the two sides to a settlement.

''There was absolute unanimity that the purpose of this group is to build on those efforts [by Gaviria] and not to supplant them,'' the U.S. official said.

The U.S. official indicated that the Group of Friends might stay engaged on Venezuela beyond any immediate agreement between Chávez and his opposition.

''We can perhaps offer to remain engaged as observers of compliance with any agreements that are reached that help to bridge the present lack of trust that is there,'' he said.

www.miami.com Posted on Sat, Jan. 25, 2003 BY PHIL GUNSON Special to The Herald

CARACAS - Repeated assurances by the government of Venezuelan President Hugo Chávez that the country's vital oil industry will soon overcome the effects of a seven-week-old strike are not credible, independent analysts suggest, especially if there is no agreement with the opposition.

The nationwide strike, organized by Chávez opponents in a bid to force the president into an early election, has decimated the oil industry's production capacity.

''If there is no solution and Chávez remains in power,'' said economist Orlando Ochoa, ``average oil production this year will be approximately 1.3 million barrels a day -- just 40 percent of normal.''

Even if the oil workers were to return to their jobs next month through some kind of amnesty, maximum production by the end of the year would still be only 85 percent of the 3.2 million barrels the country was producing before the strike, Ochoa's research suggests.

Under such a scenario, the economy would probably still shrink by 10 percent, but at least hyperinflation and a balance of payments collapse could be avoided, Ochoa said.

In his penthouse office, PdVSA chairman Alí Rodríguez, a former guerrilla fighter and friend of Fidel Castro, faces what is probably the greatest challenge of his life. The industry, which represents more than three-quarters of Venezuela's export earnings, has been brought to its knees by the strike.

''Progressively, we will return to normality,'' Rodríguez says. It will take, he admits, ''a certain amount of time'' -- just how much, however, he declines to predict, although he reluctantly agrees to put a figure on current crude oil production.

''I can tell you we're close to 900,000 barrels a day, and it's possible we've exceeded that,'' the PdVSA chairman said. Later, President Chávez said oil production had reached 1.2 million barrels a day and would pass the 2 million barrel mark by early February.

Before the strike, Venezuela produced about 3.2 million barrels of oil per day and was the world's fifth largest exporter.

ESTIMATES IN DOUBT The official figure, however, is widely disputed, not just by the strikers but by oil industry analysts and other independent observers. On Friday the opposition increased its estimate to 855,000 barrels per day and, in Washington, the U.S. Department of Energy said Venezuela's oil industry had boosted production to 600,000 barrels per day.

Some observers feel the crisis has dealt the company a blow from which it will recover, if at all, years from now.

''The longer this drags on,'' said a foreign oil company executive who requested anonymity, ``and the more you see changes within PdVSA -- and maybe some foreign suppliers or service companies withdrawing people -- to get all that back up there is going to take time, if it's possible at all.''

TOP ALLY Venezuela, which before the strike provided about 14 percent of U.S. imports, has traditionally been among the world's most secure suppliers, especially during times of war and international crises.

''While Chávez is in power,'' says former energy minister and former chairman of PdVSA Humberto Calderon, ``it will never recover that position.''

Some recall the fate of the Libyan oil industry after Col. Moammar Gadhafi's 1969 revolution, and Iran after the overthrow of the shah in 1979. Both countries experienced massive production cuts, from which neither has fully recovered. Their respective revolutionary governments remain in power.

Rodríguez rejects the comparison. He said Venezuela aspires not only to fulfill its current OPEC quota of more than 2.8 million barrels per day, ``but much more, because the market is growing and not every country has the same capacity as Venezuela to satisfy increased demand in coming decades.''

Ochoa, however, points out that in recent years PdVSA has spent an average of $2.7 billion just to maintain production levels. This year, because of the cost of repairing wells damaged by the shutdown, that could rise to between $3.5 billion and $4 billion -- money the corporation does not have.

The nature of the Venezuelan oil fields, which are widely dispersed geographically, complicates the task. Before the strike, more than 9,000 wells were in operation, each producing relatively small amounts of oil.

''If you recover a well in Saudi Arabia,'' said former PdVSA executive Alberto Quiros, ``you've recovered 10,000 barrels a day. In Venezuela you recover a well and you've got an average of about 300 barrels a day.''

Additionally, with production, refining and port operations being run by skeleton staffs, many less than adequately trained for the job or brought back from retirement, maintenance capacity has all but disappeared, and the chances of serious accidents occurring are very high.

LIGHT DUTY One field -- San Tomé in Anzoátegui state -- for example, which normally requires 280 people to run it, is currently being operated by 50 people, sources said.

There are also two major bottlenecks, both of which prevent production being raised beyond a certain level. One is the ports, where a lack of personnel, along with militarization, has caused insurers to withdraw cover and shipowners to keep their vessels away, crippling the export trade.

The other is the refineries.

''It would take between 45 and 60 days, with full staff, to recover the Amuay-Cardon refinery,'' with its 940,000 barrel-per-day capacity, Ochoa says. With exports and refining disrupted, the availability of storage tanks becomes a crucial limiting factor.

www.forbes.com Reuters, 01.25.03, 3:16 AM ET

DAVOS, Switzerland, Jan 25 (Reuters) - Saudi Oil Minister Ali Naimi said on Saturday there was no shortage of oil in the market despite fears of war in Iraq and there were no grounds for prices to be as high as they now are.

"There is no shortage in the market and there should be no reason for prices where they are today," Naimi told a panel discussion at the World Economic Forum annual meeting in the Swiss ski resort of Davos. "That is speculation. Those are perceptions (of a shortage)."

He said oil prices would be above $40 a barrel now if Saudi Arabia had not maintained spare capacity of around three million or 3.5 million barrels per day.

OPEC aims to keep prices for a basket of its crude in a $22-$28 range and has just raised production quotas by seven percent to 1.5 million barrels a day effective February 1.

Prices have topped that range to hit two-year highs this week amid fears of a U.S.-led war in Iraq and due to a general strike that has cut exports from OPEC member Venezuela.

www.globeandmail.com By PATRICK BRETHOUR AND LILY NGUYEN With files from Reuters

Saturday, January 25, 2003 – Page B1

CALGARY -- Canadians, already suffering through a brutal cold snap, are facing a year of soaring heating bills and costly fill-ups, with prices for oil and natural gas expected to linger at lofty levels.

Cold weather, geopolitical instability and tight inventories have pushed energy prices up sharply in the past two months. And a U.S. attack on Iraq would push oil prices much higher -- to levels not seen since the original Persian Gulf war, threatening to eat into consumer spending and throw the global economy into recession.

Already, rising energy costs are starting to pinch Canadians' wallets. The national average cost for gasoline has risen substantially and now hefty heating bills are starting to arrive.

Opening his latest heating bill, Mark Topolnyski got his own personal energy price shock. Cold weather and higher prices for natural gas sent his monthly tab soaring to $250, a two-thirds increase. "The furnace runs half the night," said Mr. Topolnyski, who lives west of Calgary in Bragg Creek, Alta.

He, and many other Canadians, can expect even higher bills later in the winter.

The cold snap clutching much of North America has driven up the price of natural gas on commodity markets this month, but that increase hasn't made its way into retail prices yet. It soon will, says the Consumers Association of Canada.

"The cold snap in North America will put significant upward pressure on prices of fuel oil and natural gas," said Peter Dyne, chairman of the association's energy network.

Heating oil prices are already on the rise with the per-litre cost increasing 9 per cent in Ottawa in January, according to M.J. Ervin & Associates Inc., which tracks retail prices for oil products across Canada.

In Ontario, electricity demand is soaring, spurred in part by the use of space heaters, according to the Independent Market Operator, which administers the province's wholesale market. On Wednesday, demand in the province hit an all-time high for the winter season.

Prices in the wholesale market are rising too, touching 15.27 cents a kilowatt-hour on Thursday. Ontario consumers and other low-volume users are shielded from the spike because of the price cap the province put in place last year. The province is ultimately responsible for the difference between the capped price of 4.3 cents a kilowatt-hour and higher wholesale rates, although there are some funds available to offset deficits. Also, times of low prices such as in early January help to cushion the impact of high-price periods.

In Alberta, where natural gas is the main source of home heating, prices are rising -- and so is demand for a rebate to ease the pain of higher bills. In the winter of 2000-01, the provincial government spent more than $3.8-billion on energy rebates for consumers and businesses, including $1.1-billion to offset soaring natural gas prices.

Alberta Liberal Leader Ken Nicol is pushing the Tories to issue a new round of rebate cheques immediately. "It's doing what the law says we have to do," he said, referring to provincial legislation that promises payouts to residents in times of high natural gas prices.

The government declined to comment on the rebate debate this week.

In the past, the Tories have contended that any refund should be based on the average price of natural gas over an entire fiscal year. That rationale did not hold sway in the election year of 2001, however, when Premier Ralph Klein announced a series of refunds, starting in October, 2000.

Prices are high enough to push the U.S. government into announcing yesterday an additional $200-million (U.S.) in emergency aid to help poor Americans pay winter heating bills.

Natural gas prices, already soaring because of tight supplies this winter, have been pushed further skyward by the recent deep freeze across much of North America -- and in New York City, home to the traders on the main gas futures exchange. "When New York City sees cold or snow, the gas futures go up," said Wilf Gobert, a Peters & Co. analyst in Calgary.

The U.S. benchmark for March closed yesterday at $5.46 (U.S.) per million British thermal units, up 15 per cent so far this month.

At Atco Gas, Alberta's dominant gas distributor, the price of gas has already soared to $7.022 (Canadian) a gigajoule this month, from $3.537 last January for northern customers. A similar increase was seen for southern customers.

Atco Gas vice-president Jim Beckett explained that the utility buys most of its gas on the spot market and merely passes it through to customers -- which means every price spike will eventually show up on the gas bill. "If there's a blip in the wholesale price, customers will see that," he said.

At BC Gas Inc., spokesman Dean Pelkey explained that the utility hedges most of its gas supply and tries to average out the year's gas costs, so that customers are insulated from short-term spikes.

On the other hand, if a series of spikes turns into a longer-term trend toward higher gas, customers are going to feel it, he said.

Martin Molyneaux, research director at FirstEnergy Capital Corp. in Calgary, said Wall Street analysts have been ratcheting up their predictions for 2003's average gas price by about 20 per cent in recent weeks, to $4 (U.S.) from $3.40.

Crude oil prices, too, are soaring.

Oil prices touched $35 a barrel this week, their highest level in more than two years, and are holding steady around $33 a barrel, rising $1.03 to $33.28 yesterday.

The protracted and crippling strike in Venezuela, along with the frosty weather in North America, is responsible for much of the rise in oil prices since early December.

The recent strength of oil prices prompted the Canadian Energy Research Institute to boost its estimate for the full-year average cost of oil to $26.50 a barrel. But Vincent Lauerman, CERI's global energy analyst, said that figure could soar to $33 a barrel -- and spike to $50 a barrel -- if the United States attacks Iraq.

Such a scenario would leave oil prices, adjusted for inflation, at an 18-year high, with crude more costly than even at the time of the first Persian Gulf war.