www.vheadline.com Posted: Wednesday, January 29, 2003 - 4:48:00 AM By: Robert Rudnicki

President Hugo Chavez Frias and his government have scored another important victory in the battle to recover Petroleos de Venezuela's (PDVSA) oil production, by lifting production levels above the one million barrel per day mark for the first time since the work stoppage started on December 2. 

The government has been able to achieve this milestone by concentrating efforts on newer fields where the recovery of wells has been easier, but may find it increasingly difficult to keep up this kind of momentum if older wells are not restarted. 

Energy Merchant LLC risk management vice president Ed Silliere told Reuters that "they are going for the lowest hanging fruit on the tree, the easiest to grab ... in a few weeks it is going to be a struggle."

Oil exports are also slowly beginning to recover, and are now around a third of normal levels, approximately 800,000 barrels per day. 

However, these exports made be affected when safety inspectors arrive in Venezuela next week to carry out assessment's of PDVSA Marine's shipping activities, after claims by striking workers that crews brought in to replace strikers lack experience and have caused several accidents.

www.vheadline.com Posted: Wednesday, January 29, 2003 - 2:42:42 AM By: Robert Rudnicki

After a reasonably long session of the Organization of American States (OAS) led negotiations, OAS secretary general Cesar Gaviria says the session has been on of the most productive so far. "The session was the most fruitful we have had so far ... we got round to discussing electoral solutions." 

According to the OAS chief, every member of the two negotiating teams had the opportunity to present their vision for an electoral solution to Venezuela's crisis, and all did so "quite reasonably."During the session the two sides discussed former US President Jimmy Carter's proposals, namely a constitutional amendment that would pave the way for early elections, or a revocatory referendum in mid-August, as is permitted under the current Constitution. 

Gaviria sees two possible ways of moving forward with these proposals, either the opposition puts the relative political wheels in motion and the government offers any guarantees that are needed, or that both sides agree on one scenario or another. "The can be no doubt the the path of agreement would be much more beneficial for the country."

www.boston.com By Kimberly Blanton, Globe Staff, 1/29/2003

The Federal Reserve's rate-setting panel is not expected to announce a reduction of short-term interest rates when it ends a second day of meetings today, but the nation's top monetary officials have had much to talk about.

Adding to the specter of war with Iraq and a general strike in Venezuela that cut oil production and caused world crude prices to rise, the Conference Board in New York reported yesterday that US consumer confidence fell this month to its lowest levels in nine years. Orders for durable goods rose in December, though not by enough to lift a moribund manufacturing industry burdened by excess capacity.

Other economic data argue against an interest rate cut by the Fed, economists said, including a housing market that was strong in December and prospects that some portion of the $670 billion tax-cut package by President Bush, if passed by Congress, would spur the economy later this year.

The Fed's open market committee is expected to hold the federal funds rate at 1.25 percent. With rates already low, the Fed wants ''to keep some bullets in the gun'' for use when they may need them more, said Brian Horrigan, chief economist in Boston for Loomis Sayles & Co.

But few economists predict that officials who set monetary policy in Washington will change the wording of their statement to reflect the rising uncertainty in the economy. The US will release its fourth-quarter estimate of growth tomorrow, and analysts expect it to show the economy slowed dramatically, or even contracted. While most economists forecast a turnaround later this year, they warn of many risks. The Fed ''won't do anything unless they have to,'' Horrigan said. ''The next meeting is March. If we're in a situation where bombs are dropping, they might decide to give us one more ease. They also could do it in the interim.''

Conflicting signals from the economy caused confusion in the markets. Yesterday, optimistic investors pushed up stocks in reaction to positive earnings reports by various companies and in anticipation of the president's State of the Union message last night and higher orders for durable goods. The Dow, which has trended downward for more than a week, rose 99.28 points, or 1.2 percent, to 8,088.84. The Nasdaq Composite index gained 16.91 points, or 1.3 percent, to close at 1,342.18.

Speaking yesterday at his confirmation hearing before the Senate Finance Committee, Treasury secretary nominee John Snow, the chief executive of CSX Corp., said about President Bush's sweeping tax-cut proposal, which would cut taxes on stock dividends, ''I do know, and I believe this deeply, [that] this is a well-conceived growth package ... that the country needs.''

But economists say a tax package tilted toward wealthy investors may do little to stimulate economic activity at a time when consumer spending may be trailing off and consumer confidence is at its lowest level since November 1993. The Conference Board's monthly index dropped nearly two points, to 79.0 in January, from 80.7 in December. The index does not necessarily portend a decline in actual spending, however, and a closer look revealed mixed sentiment: Consumers said their present situation has improved, but they are pessimistic about the future.

Orders for durable goods rose by 0.2 percent in December, a more sluggish pace than many expected. Excluding defense orders, total orders would have fallen. One surprise was a 3.2 percent surge in December orders for computers and electronics, which matched the pace in July 2002, said Jeoff Hall, economist for Thomson Financial IFR, a financial markets advisory firm in Boston.

In making their decisions about rates, Fed officials must weigh data from the consumer sector against manufacturing activity, Hall said. While the manufacturing sector has barely responded to low interest rates, another rate cut might encourage consumers to continue the questionable practice of building up debt by tapping into home equity to finance discretionary purchases, such as cars.

''It's not that the Fed doesn't want to see consumer spending continue, but I think they are concerned about how that spending is coming about,'' he said.

Kimberly Blanton can be reached at blanton@globe.com.

www.interfax.ru 29.01.2003 11:12:03

DAVOS/MOSCOW. Jan 28 (Interfax) - The world is changing its outlook on the Russian economy, presidential advisor Andrei Illarionov believes.

   "Whereas previously, Russia was feared as a source of threats, and as a zone of political and economic instability, now it is being viewed as a factory of global stability," Illarionov has told Interfax, commenting on the World Economic Forum which ended in Davos on Tuesday.

   "Since the forum began, no one has asked me when a crisis will break out, or a default will occur in Russia. In the 1990s, such questions were quite common," Illarionov said.

   He said no special session on Russia had been held, which is a positive thing. "Special sessions usually dealt with such countries as Venezuela, Iran, Iraq, or North Korea - countries that may breed crises. The Davos forum vividly demonstrated that the world's attention is focused on Iraq. Russia could make its contribution to ensuring international security," Illarionov said. RTS$#&:

www.forbes.com Reuters, 01.29.03, 4:16 AM ET By Tanya Pang

SINGAPORE, Jan 29 (Reuters) - With war looming in the oil-rich Middle East, governments across Asia are stepping up emergency measures to protect energy-hungry economies from a possible crude price spike which would sap the region's fast growth.

With benchmark crude prices hovering close to 26-month peaks over $35 a barrel, import-dependent Asia, which has little by way of emergency stocks, is gearing up to safeguard supplies by stockpiling or enforcing measures to limit consumption.

South Korea, China, the Philippines and Thailand announced concrete emergency measures this week, while India, Bangladesh have been steadily extending inventories (see table below).

"We are ready to face any difficulty if there is an interuption in supplies. We are keeping our tanks full," Indian Oil Minister Ram Naik told Reuters on Wednesday.

Unexpected events such as the eight-week opposition strike in Venezuela, which has strangled sales from the world's fifth biggest exporter, and the possibility of war disrupting crude flows from the Middle East have reinforced Asia's vulnerabilty.

"For the last two to three months three factors have been supporting the market: the Venezuelan strike, Iraq and Asian buying," said Sarah Emerson, managing director at Energy Security Analysis (ESAI) in Boston.

"Asian governments and refiners tend to build inventory in a crisis, whereas Western countries don't have that kind of speculative buying pre-crisis, they have stocks," she said.

About 60 percent of Asia's daily crude requirement of 21 million barrels is shipped in from other continents, with roughly 10 million barrels a day coming from Middle East producers.

Only Japan and South Korea, which import virtually all their energy needs, have built appreciable state emergency reserves exceeding the minimum standard of 90 days of consumption set by the West's energy watchdog, the International Energy Agency.

Without that buffer, regional economies would be hard hit by soaring energy bills.

Since the 1997 financial crisis, Asia has been trying to boost domestic consumption as a cushion against external economic shocks. An oil price surge may hit consumer spending and corporate investment making Asia more reliant on exports.

The 10 ASEAN nations agreed at an unprecedented meeting with China, Japan and South Korea in Osaka, Japan, in September that concerted action was needed to step up energy security through cooperation and coordination of emergency policy.

ASEAN comprises Thailand, the Philippines, Brunei, Malaysia, Cambodia, Indonesia, Vietnam, Laos, Singapore and Myanmar.

Analysts say the huge cost of building and maintaining inventory gives emerging economies little incentive to stockpile fuel.

"China is most likely to build strategic stocks as it still has fast growing demand growth. It is enormously dependent on Middle East crude and it can foot the bill," said ESAI's Emerson.

"India may be able to one day, but only if the oil companies bear the brunt of the cost. Frankly, Southeast Asian nations will talk about regional reserves but they just cannot afford it."

Following are measures announced in January by Asian governments:

• China said on January 29 it would start to build this year a reserve of 150 million barrels of crude.

• The Philippines said on January 29 refiners must hold a minimum 30-day inventory of crude and oil products by February 3. Bulk oil suppliers must hold a minimum 15-day inventory and all players were required to have a minimum seven days of supply of liquefied petroleum gas.

• South Korea said on January 28 it may partially release oil stocks if Middle East benchmark Dubai crude hits $33 a barrel. It said it would cut import tariffs and local taxes on oil products and limit some business energy use if Dubai crude went into the range $29-$33. If Dubai topped $35, it said it would release more reserve oil, deepen tax cuts, set a ceiling price for local oil products and use funds set aside to subsidise refiners' oil imports and cut oil products exports.

• Thailand said on January 28 it had drawn up a contingency plan in the event of war including a stop to oil products exports and special crude imports from Malaysia, Indonesia and Brunei. Bangkok has kept strategic oil stocks of 50 days of consumption since the September 11, 2001, attacks on the United States.

• India said on January 7 that state refiners had raised oil products inventories to meet demand for 35-40 days and had enough crude to keep refineries running for one month.

• Bangladesh said on January 7 it had 340,000 tonnes of oil products and 175,000 tonnes of crude in stock to meet demand for 20-25 days. It also said it was seeking emergency oil imports from Malaysia, Thailand and Brunei.