www.guardian.co.uk Monday January 27, 2003 11:20 PM

CARACAS, Venezuela (AP) - A two-month strike against President Hugo Chavez showed signs of waning Monday as oil production rose and opposition leaders said schools, restaurants and malls may reopen.

Crude oil output reached 966,000 barrels a day Monday according to striking executives at the state oil monopoly, Petroleos de Venezuela S.A., or PDVSA. That amount is just under a third of Venezuela's prestrike production but well up from a low of 200,000 during the strike. Chavez claimed Sunday that daily production had surpassed 1 million barrels.

But the opposition said the strike in the oil industry, which provides half of government revenue, would continue despite government efforts to lift production.

Citing political unrest and economic turmoil, a coalition of business groups, labor unions and political parties launched the strike Dec. 2 to demand that Chavez resign or call early elections.

They began organizing a nonbinding referendum on Chavez's presidency. But Venezuela's Supreme Court last week postponed indefinitely the Feb. 2 vote, citing a technicality.

Instead, they now plan to collect signatures Feb. 2 on a petition demanding Chavez's term be cut to pave the way for new elections.

A petition - with 15 percent of Venezuela's 12 million voters - is necessary to amend the constitution, cutting Chavez's six-year term, due to run until 2007, to four.

Strike leaders, however, were concerned that frustration with long gas lines and shortages of basic goods could weaken their cause.

Julio Brazon, president of the Consecomercio business chamber that represents 450,000 businesses, said shopping malls and food and other franchises may be allowed to open part-time next week.

The National Association of Private Education, which represents 911 private schools, called assemblies this week to decide whether schools should open Feb. 3. School was supposed to start Jan. 7.

Chavez's government, meanwhile, was able to raise oil production to 966,000 barrels per day Monday, according to striking executives at the state oil monopoly.

The government claims most of the monopoly's 40,000 workers are back on the job. Strike leaders deny it and say the government has lifted production by focusing on newer oil fields, where crude is easier to extract.

The strike has cost Venezuela - the world's fifth-largest oil producer - at least $4 billion, according to government estimates.

The economy could contract by as much as 40 percent in the first quarter of 2003, the Santander Central Hispano investment bank has warned.

As the strike entered its ninth week, Chavez's government was preparing to impose currency exchange controls this week to limit the amount of foreign currencies Venezuelans can buy and stem a run on the bolivar, which has lost a quarter of its value this year.

With the apparent support of the armed forces, Chavez, a former paratroop commander who staged an unsuccessful coup bid in 1992, has fired almost 3,000 strikers from the oil monopoly, PDVSA.

He has sent soldiers to seize tankers piloted by striking crews and to confiscate soft drinks from two private bottling plants.

A waning strike could give Chavez more muscle in negotiations with the opposition sponsored by the Organization of American States. The main point of discussion is whether to hold early presidential elections.

Chavez was elected in 1998 and re-elected in 2000. A binding referendum on Chavez's presidency can be held only midway through his term, which would be in August.

The Caracas stock exchange resumed trading Monday for the first time since the strike began. It will open 2-1/2 hours each day to continue showing support for the strike, bourse officials said.

www.forbes.com Reuters, 01.27.03, 6:09 PM ET

CARACAS, Venezuela, Jan 27 (Reuters) - Venezuelan opposition leaders on Monday extended for a 58th day a crippling strike in the fifth largest oil exporter aimed at forcing President Hugo Chavez to resign.

The strike, which began on Dec. 2, has slashed vital crude oil output and exports, driven up global energy prices and brought the OPEC member nation to the brink of economic collapse.

"Today more than ever, we remain committed to the fight for a free country," said Carlos Fernandez, a strike leader who also heads the national business chamber Fedecamaras.

Striking employees of state oil giant Petroleos de Venezuela (PDVSA) say they will strike until Chavez resigns, calls elections and reinstates fired oil workers.

Some opposition leaders said shopping centers and food franchises could be allowed to reopen.

Chavez, a former paratrooper who was elected in 1998 and survived a coup, has refused to step down and sacked more than 3,000 PDVSA managers for abandoning their posts.

To deal with the devastating impact of the strike, he has prepared price controls, currency curbs and imposed a big cut in government spending.

The former paratrooper says he is defeating the strike using troops and replacement workers. Strikers dismiss his claims, but concede that oil production has crept up to about 30 percent of pre-strike levels.

Some blue-collar oil workers have also returned to work, but support for the strike remains strong among key PDVSA managers and skilled workers at oilfields, refineries and ports.

"The PDVSA we used to belong to no longer exists, so we don't have anywhere to go back to," said Orlando Perez, a striking employee at PDVSA subsidiary Intevep.

"The executive has dismembered the company, eliminating many of its functions," he added.

www.voanews.com VOA News 27 Jan 2003, 23:02 UTC

Venezuela's long-running general strike may be weakening as President Hugo Chavez announces plans for price and currency controls to keep the economy from collapsing.

Some business owners have returned to work because the walkout has cost them thousands of dollars in lost income. Reports also say the opposition may allow other businesses to re-open to avoid bankruptcy.

The labor action began December second to force President Chavez to resign and call early elections. He refuses to step down and has vowed to break the strike now in its ninth week.

On Sunday, the Venezuelan leader announced he would impose price controls on medicine and food to rescue the oil-reliant economy. Mr. Chavez said the measures would also prevent capital flight.

Last week, the president called for a five-day suspension of currency trading.

Venezuela's economy relies heavily on the oil industry, but the strike has disrupted the sector, forcing the government to import fuel. Severe fuel shortages, coupled with disruptions in food supplies, have triggered tensions.

The Chavez government has fought back by firing an estimated three-thousand dissident state oil workers and deploying troops to oil installations to restart operations.

ogj.pennnet.com Maureen Lorenzetti Washington Editor

WASHINGTON, DC, Jan. 27 -- Congress last week moved closer to completing a long-delayed federal budget for fiscal year 2003, with the US Senate passing a $390 billion appropriations bill Jan 23.

The House and Senate must now reconcile two different spending proposals and settle on a final "omnibus" bill that sets spending levels for most federal agencies through Sept. 30. So far it is unclear what, if anything, would provoke a White House veto.

Included in the bill are annual budgets for key agencies that regulate oil and gas companies, large and small. This includes the budgets for the departments of Interior and Energy, the Environmental Protection Agency, and operating funds for the Federal Energy Regulatory Commission and the Securities and Exchange Commission.

Senators considered more than 200 amendments to the measure, which combines 11 of the 13 annual appropriations bills that fund the federal government. Two military spending bills passed Congress and were signed into law last year.

Senators approved by voice vote a plan by Sen. Jeff Bingaman (D-NM) that gives the president permanent authority to draw down the Strategic Petroleum Reserve in case of an emergency. Congress typically reauthorizes the president's ability to use the SPR every 2 years, but a possible war with Iraq and the current supply woes from Venezuela justified giving the president permanent authority, bill sponsors said. The amendment also directs the Department of Energy to fill the reserve to capacity, even if Congress chooses to expand the stockpile beyond its current 700 million bbl limit. The proposal is expected to win support from the House and the White House.

Senators also approved by voice vote an amendment sponsored by Alaska Sens. Lisa Murkowski (R) and Ted Stevens (R) allowing the Department of the Interior to renew the right-of-way for the Trans-Alaska Pipeline without extensive environmental reviews.

Even with the new Republican majority, the Senate remains opposed to most offshore oil drilling as evidenced by two measures now in the bill. Mike DeWine and George Voinovich, both Republicans from Ohio, sponsored a largely symbolic measure that extends a 2-year ban on drilling in the Great Lakes. Similarly, Sen. Barbara Boxer (D-Calif.) won support for nonbinding language that calls on Interior not to spend staff resources related to the exploration or development of 36 disputed leases off California. The state wants the federal government to buy back the leases.

But that interest in supporting so-called "green" issues extended only so far. Senators narrowly defeated a measure by a 50-46 vote offered by Sen. John Edwards (D-NC). That measure sought to delay an EPA proposal that streamlines a permitting provision of the Clean Air Act called "new source review." NSR is supposed to ensure power generators and refiners do not create more industrial pollution when they expand operations.

Environmental groups, which oppose EPA's plan, said the close vote means there could be pressure on senators to consider the issue again.

Another pending clean air item already in the Senate bill would require EPA to submit a report no later than Feb. 15, 2004 "on the practices and procedures by which states develop separate emission standards, including standards for nonroad engines or vehicles, as compared to the development by EPA of national emission standards under the Clean Air Act."

Opponents of the language say the measure would require EPA to perform legal work that industries could use to attack state pollution control standards. Industry proponents say the study would help EPA be more efficient in its enforcement of clean air rules on a state-by state-basis.

Negotiations ahead Key policy issues regarding environmental enforcement, research, and taxes still await further debate before a final bill is sent to the White House for approval.

Funding in the $390 billion Senate-passed package is subject to a 2.9% across-the-board cut in all domestic programs, a figure likely to be challenged during conference negotiations. Those negotiations could stretch out through next month depending on what the White House is willing to accept.

Meanwhile, the White House unveils a proposed 2004 budget Feb. 3. Bush administration officials said in mid-January that the new budget seeks to increase most domestic spending by 4%, an increase of less than half of what Congress is expected to pass for the 2003 budget. Both White House and congressional officials predict there could be serious cuts in some government programs in order to help pay for increased military spending and a proposed economic stimulus package that includes deep tax cuts ($674 billion over 10 years).

Oil and gas casualties One casualty could be oil and gas research, some industry sources predicted. Even before budget deficits were considered a problem, this White House has historically proposed dramatic cuts in the Department of Energy's fossil fuel office.

This year, with oil prices at relatively high levels, there may not be as much political will in Congress to ignore the White House's wishes on the issue, congressional staff said.

Pending 2003 issues Under consideration in the pending omnibus bill are a myriad of spending items that impact industry directly and indirectly. These include earmarks for federally funded oil and gas research programs, environmental protection enforcement, and money to process leasing applications. Funds to inventory the oil and gas potential of federal land may also be included.

Some producers also would like to see the "Section 29" tax credit renewed. That tax incentive began in 1980 to encourage unconventional oil and gas domestic production. The comprehensive energy bill that failed last year included an extension; it is uncertain whether the tax credit will be included in this bill.

Also typically in the annual federal budget are public policy mandates: Congress this year is again expected to impose a 1-year moratorium on most offshore drilling, for example.

www.miami.com Posted on Mon, Jan. 27, 2003 Associated Press

NEW YORK - Via The Associated Press

Crude oil futures fell sharply Monday, weighed down by growing calls for continued inspections of Iraq's suspected weapons of mass destruction and signs of a breakdown in the strike in Venezuela.

On the New York Mercantile Exchange, nearby March crude oil dropped 99 cents to close at $32.29 a barrel, surrendering most of Friday's gains.

February heating oil shed 1.59 cent to close at 93.43 cents a gallon, while February gasoline was off 2.10 cents at 90.15 cents a gallon.

On London's International Petroleum Exchange, March crude fell 63 cents to close at $29.86 a barrel.

"I think the market is not looking for a Groundhog Day launch date," Tim Evans, an energy analyst at IFR Pegasus, said of a possible attack on Iraq. "I think the background concern is there, but the market is indicating a release of tensions regarding an attack on Iraq."

That release of tensions deepened as Chief U.N. weapons inspector Hans Blix delivered a mixed report to the Security Council that failed to provide an automatic trigger for action against Iraq, as many had speculated.

Blix said that while Iraq wasn't fully complying with disarmament demands, it was providing access to his team of inspectors now working in the country. On the question of how long inspectors need, Blix said he shared "the sense of urgency" to verify disarmament within "a reasonable period of time."

He didn't request more time, but Mohamed ElBaradei, the head of the U.N. nuclear agency, said the weapons search needed an extra few months.

Secretary of State Colin Powell said the inspectors' conclusion wasn't surprising and added that time is running out for Iraq.

"We cannot allow the process of inspections to string us out forever," Powell said.

The State Department has reportedly begun drafting a second resolution calling for authorizing force against Iraq, Cable News Network reported.

But Powell said America will decide on the next step once he consults other members of the Security Council and President Bush has conferred with foreign leaders.

Nevertheless, there was a chorus of calls that inspectors should be given more time to complete their work. The calls came from Russia and China as well as traditional U.S. allies France, Germany and Canada.

"There wasn't enough to make the U.S. change its position, and there wasn't enough new information to make France or Russia or China or Germany or the rest of the world change their view of the situation," Evans said.

The oil market had anticipated that a U.S. attack could come as soon as early- to mid-February, said Tom Bentz, an analyst at BNP Paribas Futures in New York. But with growing calls for more inspections, that may be several weeks away, Bentz added.

"It doesn't look like anything is going to happen immediately," Bentz said. "It's going to take time."

Meanwhile in Venezuela, there were signs that the general strike is crumbling, allowing oil production to recover from a sharp slump in December and January.

Output has risen to about 1 million barrels a day, according to dissident workers at state-owned Petroleos de Venezuela SA. A PdVSA spokesman said about 90 percent of workers at PdVSA have returned to work.

Before the strike, Venezuela produced about 3 million barrels a day of oil, sending about 2.5 million barrels a day to world markets, including 1.5 million barrels a day to the United States.

"It's going to take a while to get exports back to full capacity, but there are signs that the worst is behind us," said Ed Silliere, an analyst at Energy Merchant in New York.