boston.com By Alexandra Olson, Associated Press, 1/29/2003 10:22

CARACAS, Venezuela (AP) President Hugo Chavez appeared to be winning the battle for control of Venezuela's oil industry, overcoming efforts by workers at the state oil company to strangle it with a 58-day-old strike.

In another sign the strike is weakening, private banks agreed Wednesday to restore normal banking hours next week, said Central Bank president Diego Luis Castellanos. Banks and many exchange houses had opened only three hours a day to support the strike.

The decision came after Chavez had threatened to fine banks, suspend their directors and withdraw military deposits from striking institutions.

Even as the government boosted oil production beyond the million-barrel benchmark, the work stoppage has had devastating effects on the country's recession-ridden economy.

Production reached 1 million barrels a day Tuesday one-third of pre-strike levels, according to striking executives at state oil monopoly Petroleos de Venezuela S.A. It had slipped as low as 200,000 barrels per day in December.

Output is rising because the government is focusing on newer oil fields, where crude is easier to extract. But the recovery should slow when the government is forced to reactivate old wells that have sat idle for nearly two months, making their crude sticky and difficult to pump.

''They are going for the lowest hanging fruit on the tree, the easiest to grab,'' said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. ''In a few weeks, it is going to be a struggle.''

Silliere said he expects difficulties to begin when output reaches 1.2 million to 1.4 million barrels per day.

In an effort to regain control of the oil monopoly, Chavez has sacked more than 5,000 of its 40,000 workers. State oil company executives warn the firings will make it even more difficult to reach full production capacity.

''That's what happens when unprepared personnel are put to work,'' Juan Fernandez, the leading spokesmen for dissident state oil workers, told a press conference.

Opposition leaders insist the strike will continue. But a public backlash over food, gasoline and medicine shortages has prompted some workers to consider easing the stoppage in certain areas.

Concerns about a public backlash over food, gasoline and medicine shortages has prompted some strike leaders to consider easing the stoppage in certain areas.

Shopping malls, restaurants and schools may reopen next week, at least part-time, said Julio Brazon, president of the Consecomercio business chamber. Some small businesses have reopened, and others never closed.

''The lifting of the strike is not being proposed now,'' said Carlos Ortega, president of the nation's largest labor union. ''What is being proposed are some strategies that correspond to sectors involved in the strike.'' He did not elaborate.

Venezuelans must wait for hours in miles-long lines outside service stations. To ease the inconvenience, the government will impose limits on daily gas sales, said Luis Vierma, director of hydrocarbons at the Energy and Mines Ministry.

Although Chavez has had some success in reviving oil production, which provides half of Venezuela's government revenue and 70 percent of export earnings, he faces a daunting task in recuperating the country's economy.

Capital flight, stalled investment and strike damage led Santander Central Hispano investment bank to forecast a 40 percent contraction in the first quarter of 2003. Unemployment stands at 17 percent.

A freeze on foreign currency sales to protect the bolivar, which has lost 25 percent of its value this year, was extended Tuesday. The bolivar traded at 2,300 to the dollar Tuesday in secondary markets between private parties, bankers said. It was 1,853 to the dollar before the suspension started last week.

Limits on the amount of foreign currency Venezuelans can buy go into effect next week. The measure has been severely criticized by executives who say it could hurt businesses that depend on U.S. dollars to import goods.

''Chavez many have the initial advantage, but over the long term, he's going to have a much more difficult path,'' said Steve Johnson, senior policy analyst for Latin America at the Washington-based Heritage Foundation.

www.rediff.com January 29, 2003 12:11 IST

World oil prices bounced back after Iraq said it could retaliate against crude producing neighbour Kuwait if the United States launches an attack from Kuwaiti territory.

US light crude by 1730 GMT was up 26 cents at $32.52 a barrel after losing 99 cents on Monday. London Brent blend added 34 cents to $30.20 a barrel.

Iraqi Deputy Prime Minister Tareq Aziz told Canada's CBC television in an interview in Baghdad that Iraq might strike at Kuwait to defend itself against a US invasion.

"Kuwait is a battlefield and American troops are in Kuwait and preparing themselves to attack Iraq," he said.

"If there will be an attack from Kuwait I cannot say that we will not retaliate. We will of course retaliate against the American troops wherever they start their aggression on Iraq. This is legitimate."

Dealers are waiting for US President George W Bush's State of the Union address later on Tuesday, at 2100 local time (0200 GMT), for further clues on the timing of any war effort.

"Some traders are looking at whether the threat of war has really subsided, and are taking positions in case the State of the Union address is really more aggressive than the previous rhetoric from Bush," said John Hirjee, senior energy analyst at Deutsche Bank in Melbourne.

Drumbeat

Many military analysts expect hostilities to start by the end of February or early March, once the combined forces of the United States, Britain and Australia are in place in the Gulf.

"We'll hear a deafening drumbeat from the United States in the run-up to February 14," said Iraq expert Toby Dodge of Warwick University.

"I would be surprised if the air war had not started within seven days of that."

Britain joined the United States in declaring Iraq in "material breach" of UN disarmament demands on Tuesday, a day after chief UN arms inspector Hans Blix told the Security Council that Saddam had not come clean about stocks of lethal weapons.

British Foreign Secretary Jack Straw said a further report by UN inspectors on February 14 was not an ultimatum, but warned Iraq that its ‘unbelievable' refusal to comply with UN demands had diminished chances of a peaceful outcome.

"The US-British deployment will be in place towards the end of February. They could start the air campaign a bit ahead of that, but probably won't," said Sir Timothy Garden, a defence expert at London's Royal Institute of International Affairs.

Capping price gains was further evidence that Venezuela is managing to bring more strike-hit oil production back onstream.

Opposition oil workers in a daily report said output tapped a million barrels a day on Tuesday, a third of normal levels, for the first time during the eight-week shutdown.

The government has used troops and replacement crews to break the strike, which aims to force President Hugo Chavez to resign and call an election.

www.thisdayonline.com Dateline: undefined/Wed Jan 29 12:46:54 2003/undefined From George Oji in Abuja

Presidential Adviser on Petroleum and Energy, Dr. Rilwanu Lukman has said that given the tremendous influence of the Organisation of Petroleum Exporting Countries (OPEC) on the world oil market, sustaining Nigeria's membership of the organisation will better serve the interest of the country than pulling out of the body.

Lukman also argued that being a country whose over 90 per cent earnings come from oil and gas, and which is easily affected by the dwindling oil prices, Nigeria is better protected under OPEC than outside of it.

Lukman expressed this view yesterday in a lecture he delivered at the Voice of Nigeria (VON) quarterly personality programme, "Global Guest on VON."

"Our projections have shown that as time goes on, the world will become more dependent on OPEC oil. This makes our role as OPEC member very important", Lukman said.

Lukman made this clarification against the backdrop of calls for Nigeria to pull out of the 11-member oil cartel. OPEC, Lukman noted, controls about 75 per cent of total world crude oil reserve and 60 per cent of world traded oil.

With this strength, the presidential adviser stated that Nigeria's role as a member country of OPEC becomes very important. He said that Nigeria has through its activities in OPEC as the fifth largest producer of oil, been able to stabilize the price of oil the world over.

On the current high price of crude oil, Lukman called for caution, saying that history has shown that when prices of oil rise astronomically as is the case now, it also often assumes similar plunge down, with accompanying devastating effects.

Describing the current high price of oil as unreal, Lukman urged all OPEC countries to be prepared for any eventual change. He said that the current high price of oil which hovers around $32 per barrel, is the combined result of Venezuela's oil workers' strike and the threat of war in the gulf region.

"We may be making high revenue now, we may suffer low level of revenue later. We have to be careful to assume that the present high crude oil price may last long", he said.

He cautioned against the danger of making over bloated national projections based on such high prices, and said that the country should always be prepared for any sudden change.

While admitting that high oil prices bring more revenue into the national coffers, Lukman said that the same situation often have negative effects because it results in the encouragement of alternative sources to oil, thus bringing down the relevance of oil. In his own projection, a price of say $25 per barrel is good for the development of the energy sector.

www.channelnewsasia.com First created : 29 January 2003 1410 hrs (SST) 0610 hrs (GMT) Last modified : 29 January 2003 1410 hrs (SST) 0610 hrs (GMT)

South Korea, the world's fourth-biggest oil importer, has announced a package of measures to cushion its economy from rising oil prices.

They include cuts in oil import tariffs and local taxes, as well as limiting energy use of businesses like department stores.Advertisement

Official data show that a US$1 rise in crude oil prices costs South Korea US$750m in lost trade surplus annually, while cutting economic growth by 0.1 percentage point.

South Korea, Asia's fourth-largest economy, is vulnerable to global oil price moves as it imports all of its crude needs, more than 70 percent of which is sourced through the Middle East.

Benchmark US crude has soared over US$35 this month versus an average of US$26 in November.

Oil has risen some 30 percent since mid-November on concerns war in Iraq could upset supply from the Middle East while a prolonged strike in Venezuela has curtailed oil production and exports.

reuters.com Wed January 29, 2003 12:26 AM ET By Ibon Villelabeitia

BOGOTA, Colombia (Reuters) - Marxist rebels said on Tuesday they would release within the next two days a British reporter and a U.S. photographer they kidnapped last week in a war-torn stretch of eastern Colombia.

"They will be released in the next few days, in one or two days," Antonio Garcia, a senior commander of the Cuban-inspired National Liberation Army, or ELN, told RCN radio.

British reporter Ruth Morris and U.S. photographer Scott Dalton were abducted while traveling on a freelance assignment for the Los Angeles Times along a rural road on Jan. 21 in the violent province of Arauca, where U.S. Special Forces are training local troops in counterinsurgency techniques.

Morris and Dalton, both experienced hands in Colombia, were stopped at an ELN roadblock, hooded and taken to a secret guerrilla camp, said their driver, who was later released.

Garcia gave no details of the planned release but said the ELN was coordinating with the Los Angeles Times.

Colombia is ravaged by a four-decades-old war that pits leftist rebels against right-wing militias and the U.S.-backed military. It is one of the world's most dangerous places for reporters. Eight Colombian journalists were killed last year.

"WE HOPE TO SEE OUR FAMILIES SOON" In a crackling message broadcast over an ELN clandestine radio station, Morris said the two journalists were fine and in good health, but "very worried" about their relatives.

"I want my family to know that we are fine and in good health, and we hope to see them soon," Morris said in an interview with a man who identified himself as a member of the ELN's Domingo Lain unit, which operates in Arauca.

Dalton's voice was not heard in the message, recorded on Monday and released Tuesday.

The man interviewing Morris said the pair's release would take place "as soon as security conditions permit it."

Garcia, who spoke from an undisclosed location, said Morris was given an opportunity to broadcast a birthday greeting to her father over the ELN radio station.

The Los Angeles Times declined to comment.

Another radio message broadcast last week by the Domingo Lain unit said the release of Morris and Dalton depended on undefined "political and military conditions."

Military intelligence sources have pointed to infighting between the Domingo Lain unit and the ELN's central command. But Garcia, considered the ELN's top military commander and its No. 2 man, said the decision was definitive.

"There is a critical combat situation in the area but the will and the decision of the ELN is to release them in the coming days," he said, adding he hoped the pair's "contact" with the ELN contributes to the understanding of the conflict from the rebel's point of view.

FARC FREE TV CREW News of the radio broadcast came as rebels of the larger Revolutionary Armed Forces of Colombia, known as "FARC," on Tuesday released unharmed a five-man Colombian television crew they had kidnapped on Sunday, also in Arauca province.

The RCN Television crew had traveled to Arauca to cover the kidnapping of Morris and Dalton and the region's deteriorating security when they were snatched by the FARC. RCN said rebels took the crew's equipment, including a satellite telephone.

Arauca, an oil-rich region of savannas and swamps bordering Venezuela, is one of the most violent zones in a war that kills thousands every year. Suspected rebels Sunday killed six soldiers after detonating the fourth car bomb in a month in a fresh challenge to hard-line President Alvaro Uribe. Uribe has declared areas in Arauca as "special war zones."

Despite the savagery of Colombia's war, foreign correspondents here have long enjoyed a type of diplomatic immunity, moving relatively free through the countryside and interviewing rebels and militias sometimes fresh from the killing field.

The Cuban-inspired ELN, a 1960s rebel group, kidnaps hundreds of people every year for ransom to pay for their struggle, which they say is to impose socialist reform in a country torn by the divide between rich and poor.