www.morningstar.ca 29 Jan 03(6:03 PM) |  E-mail Article to a Friend By Jeffrey Jones

CALGARY, Alberta (Reuters) - Pipeline and utility company Enbridge Inc. <ENB.TO> said on Wednesday fourth-quarter profit slipped due to a loss on the sale of U.S. assets to an affiliate, although operating income matched expectations.

Enbridge, best known as operator of the main pipeline for Canadian oil exports to the United States, also raised its quarterly dividend 9 percent to C$0.415 a share, becoming the second Canadian energy firm to boost its payout in as many days.

It earned C$34 million ($22 million), or 18 Canadian cents a share, in the quarter, down from year-earlier C$40 million, or 25 Canadian cents a share.

Adjusting for a C$5.9 million loss on the sale of the Enbridge Midcoast assets to 12.9-percent owned Enbridge Energy Partners <EEP.N>, the company's earnings were C$40 million, or 25 Canadian cents a share, just a penny under an average estimate among analysts polled by Thomson First Call.

The result was driven by strong performances from Alberta pipelines, the U.S. partnership and a higher return from its major Ontario gas utility, Enbridge Consumers, Enbridge said.

Enbridge sold the southern U.S. pipeline and processing assets to its partnership to cut debt, but was forced to cut the price in September by $109 million to $820 million amid poor energy industry conditions in the United States.

Revenues were C$658 million, down from C$712 million.

For the full year, Enbridge earned C$577 million, or C$3.60 a share, up from C$459 million, or C$2.91 a share, in 2001.

"The significant dividend increase announced today reflects confidence in our ability to continue to deliver above-average earnings growth," chief executive Pat Daniel said.

The dividend boost, the company's eighth consecutive increase, follows an 8-percent increase in rival TransCanada PipeLines Ltd.'s <TRP.TO> dividend and highlights the confidence among Canadian energy transport firms compared with U.S. firms, which are struggling with credit concerns.

Enbridge executives predicted first-quarter earnings of 55-60 Canadian cents a share, down from last year's 71 Canadian cents, a drop blamed on an Ontario Energy Board decision to reject an allowance Enbridge sought related to its stake in the Alliance natural gas pipeline.

But Enbridge said it was sticking to its previous outlook of C$2.85-C$2.95 a share for 2003.

The stock slipped 4 Canadian cents to C$43.36 on Wednesday, down 5.5 percent since the start of the last quarter and lagging a 5 percent rise in the Toronto Stock Exchange's main index.

Despite its expansion into natural gas and international businesses, Daniel said oil transport remained the cornerstone of the company, stressing it accounted for half of earnings.

That business has become more important as the United States has sought secure sources of supply amid tensions in the Middle East and the protracted strike in Venezuela, which provided 13 percent of U.S. oil needs, he said.

"It really highlights the reliability and long-term role of Canadian supply. That positioning has never been better," he said.

Canadian output is increasing with development of Alberta's vast oil sands, a situation aided by new guarantees from Ottawa that the recently ratified Kyoto accord on climate change won't cause insurmountable costs, Daniel said.

With expansion, Enbridge's mainline, which runs to the U.S. Midwest and southern Ontario from western Canada, is expected to pump 1.56 million barrels a day by the end of this year, a jump of 170,000 from the end of 2002.

Meanwhile, Enbridge said chief financial officer Derek Truswell was set to retire on April 1. He will be replaced by Stephen Wuori, now vice president of planning and development.

($1=$1.52 Canadian)

www.heraldtribune.com The Associated Press

Crude oil futures ended higher Tuesday, as traders awaited weekly inventory data and President Bush's State of the Union address.

"What news is out there is not big enough to drive the market one way or another," said Jan Stuart, an analyst at ABN Amro in New York, referring to the market's lackluster performance.

On the New York Mercantile Exchange, nearby March crude rose 38 cents to close at $32.67 a barrel

February heating oil slipped 0.39 cent to close at 93.04 cents a gallon. February gasoline jumped 2.57 cents to close at 92.72 cents a gallon.

On London's International Petroleum Exchange, March Brent advanced 38 cents to close at $30.24 a barrel Natural gas for February delivery rose 4.8 cents to settle at $5.44 per 1,000 cubic feet.

Bush is expected to use his annual speech to Congress to persuade the American public that Iraq's weapons of mass destruction and links to the al-Qaida terrorist network pose a threat to the nation.

Bush spokesman Ari Fleischer said that "from the president's point of view, it remains a very grave threat" that Saddam Hussein will strike soon at U.S. interests. However, Bush plans neither a declaration of war nor an announcement of what Iraq's last-ditch deadline is for complying with a demand to disarm in his address.

Secretary of State Colin Powell will present new evidence on Iraqi weapons of mass destruction, perhaps at the United Nations, early next week, officials said.

Although growing international calls for more inspections helped spur Monday's sell-off, traders remain jittery as the United States steps up preparation for a possible attack on Iraq.

Traders fear that an attack would lead to a large-scale disruption of oil supplies from the Middle East - a concern that was heightened by comments from Iraqi Deputy Prime Minister Tariq Aziz.

"Kuwait is a battlefield and American troops are in Kuwait and preparing themselves to attack Iraq," Aziz told Canada's CBC television. "If there will be an attack from Kuwait, I cannot say that we will not retaliate."

Separately, Venezuelan oil output topped the 1 million barrel a day mark, according to dissident workers at state-owned monopoly Petroleos de Venezuela.

The increase in output and exports comes amid signs of a breakdown in the eight-week-old general strike.

The erosion of the strike could result in further increases in output, but longer-term, the erosion is bullish because it means President Hugo Chavez "stays in power, and PdVSA does not go back to the efficient company that it was," Jan Stuart of ABN Amro said.

Meanwhile, traders were awaiting weekly inventory data from the American Petroleum Institute and the Department of Energy due out early Wednesday.

The data is expected to show an average decline of 2 million barrels in crude oil stocks for the week ended Jan. 24, according to a Dow Jones Newswires survey of analysts.

Distillate stocks, which include heating oil and diesel fuel, are expected to show a decline of 4.4 million barrels, while gasoline inventories are mostly seen building by about 1.25 million barrels.

abcnews.go.com The Associated Press

Under intense pressure from President Hugo Chavez, Venezuela's banks agreed to abandon a 59-day-old opposition strike the latest sign the drive to force Chavez's quick ouster was unraveling.

Wednesday's decision came as the government nibbled away at the strike's core: a walkout that hobbled the oil industry, the world's No. 5 exporter.

Output surpassed 1 million barrels a day this week, a third of normal. Oil provides half of government income and 70 percent of export revenue.

Venezuela's National Banking Council said its members will return to normal operating hours on Monday. For two months, thousands of people have waited in long lines while banks opened just three hours a day.

"I think it's great," said Juan Pardo, 50, as he stood in line to cash a check. "It's time things returned to normal. We can't continue like this."

Management at shopping malls, restaurants, franchises and schools also planned to resume work Monday. Many strike supporters fear a popular backlash because of strike-related food, medicine and cash shortages. Others say they'll go out of business permanently if they stay closed.

Most small businesses never joined the strike, which began Dec. 2.

In a sign of growing resentment, banks in downtown Caracas were splattered with graffiti reading, "Banker thieves!" and "Coup plotters!"

"We owe the public," Nelson Mezerhane, the council's vice president, said after a Wednesday council meeting. "They have their earnings and money in our institutions."

Mezerhane refused to say how much banks lost during the strike.

Chavez applied heavy pressure. The president threatened to suspend directors at striking banks, fine them and withdraw the armed forces' deposits from private institutions.

But the president of Venezuela's main bank workers union spoke out against abandoning the protest. Fetrabanca president Jose Elias Torres said workers would hold an assembly Friday to decide whether to continue striking.

"The strike should continue," Torres said.

Opposition leaders insist the strike isn't over but appear to be relying more on international pressure to force early elections.

Labor, business and political parties called the strike to demand Chavez resign or call early elections. They argue Chavez's leftist policies have hobbled the economy and unleashed political violence.

Chavez, with the support of the armed forces, fought back.

He fired 5,000 strikers from the state oil monopoly, Petroleos de Venezuela S.A., eliminating dissent as he tries to consolidate government control over the semi-autonomous corporation.

Chavez sent troops to raid two private bottling plants, accusing them of hoarding products. He opened investigations that could lead to the shutdown of two independent television stations supporting the strike.

Venezuela's opposition vows to keep up the oil strike despite government progress in restoring production. Some 35,000 of the state oil monopoly's 40,000 workers walked out.

Opposition leaders were discussing future strategy Wednesday. They are gathering voter signatures to change the constitution and shorten Chavez's term from six years to four. Chavez's term runs until 2007.

Government and opposition leaders were studying proposals by former President Carter to end the impasse. Carter suggested either amending the constitution to shorten Chavez's term or holding a binding referendum on Chavez's presidency in August.

The strike has cost Venezuela more than $4 billion, and some analysts predict the economy will shrink by at least 25 percent in 2003 after an 8 percent contraction in 2002.

Responding to a panicky run for U.S. dollars, the government last week banned currency trading until it works out a way to sustain the bolivar without depleting foreign reserves. The bolivar has lost a quarter of its value against the dollar this year a major blow to businesses that rely on imports, and a country that imports most of its food.

On Wednesday, the government suspended import taxes on food for six months to ease the effects of exchange controls and strike-related shortages, state news agency Venpres reported.

news.ft.com By Richard Lapper and Andy Webb-Vidal in Caracas Published: January 29 2003 22:19 | Last Updated: January 29 2003 22:19

Venezuela could become ungovernable if government and opposition fail to make progress in talks that will become the focus of fresh international attention later this week, the head of the Organisation of American States warned on Wednesday.

César Gaviria, the OAS secretary-general, said a fast deteriorating economic crisis threatened to tear apart already precarious social stability and lead to new and potentially more violent political tensions.

"If we don't move ahead, new problems will emerge and the situation could get out of control," Mr Gaviria told the Financial Times.

Venezuela's political and economic crisis is accelerating. A general strike - now in its eighth week - has crippled the strategically important oil export industry, formerly the world's fifth largest, contributing to the recent rises in crude oil prices to a two-year high. The strike is expected to lead to an economic contraction of 10-20 per cent this year. Faced with a sharp fall in international reserves and a steep drop in the value of the bolívar - the Venezuelan currency - President Hugo Chávez this week introduced exchange controls, which are expected to stoke a sharp increase in retail prices.

Opposition leaders are pressing Mr Chávez to resign. But they have been unable to agree on strategy. If leaders press for a constitutional amendment to shorten Mr Chávez's six-year term, the president - who still commands popularity ratings of between 30 and 35 per cent - would be able to contest new elections. His term is scheduled to end in 2007.

Efforts to end the political impasse will be given greater urgency and weight tomorrow when representatives of the six-nation Group of Friends (Brazil, the US, Chile, Mexico, Spain and Portugal) are expected to meet Mr Gaviria, government and opposition leaders.

The OAS-sponsored talks between the government and a loose opposition alliance - supported by business and trade union groups, and Venezuela's middle class - have been under way since November but have failed to make much progress.

Mr Gaviria said the two sides had agreed to look at ways to reduce growing violence and this week for the first time explicitly discussed an electoral solution to the crisis. "They are focusing on the same things. The time when they were just underestimating each other has gone," he said.

Even so, several obstacles stand in the way of further progress. Roy Chaderton Matos, Venezuela's foreign minister, told the Financial Times on Tuesday that both government and opposition leaders must "tone down" their language and rhetoric if negotiations between the two sides are to have any chance of success.

Mr Chaderton Matos said "hate and irrationality" were making it more difficult to reach a peaceful resolution of the deadlock. "We have to take the poison out of the atmosphere," he said.

www.bangkokpost.com Market sees war on the horizon

Oil prices edged lower yesterday but kept their firm tone after US President George W. Bush promised to deliver new intelligence on Iraq's alleged weapons programmes.

In his State of the Union address on Tuesday night, Bush said his Secretary of State Colin Powell would reveal the information on Baghdad's weapons of mass destruction to the UN Security Council next week.

US light crude slipped 15 cents to $32.68 a barrel and London Brent blend lost 17 cents to $30.10 a barrel.

``The market has completely accepted that there will be war and that's already in the price,'' said Sarah Emerson, managing director at Boston-based Energy Security Analysis (ESAI).

``The timetable was set months ago by troop deployments. They will all arrive by the end of February.''

The threat of war in the Gulf region that supplies 40% of world crude exports and a strike that has cut exports from Venezuela have pushed up crude prices nearly 30% since late November.

Bush accused Iraqi leader Saddam Hussein of showing ``utter contempt'' for the United Nations by producing chemical and biological weapons and plotting to use them to dominate the Middle East.

He said Saddam had failed to account for 30,000 munitions capable of delivering chemical agents, 38,000 litres of botulinum toxin and materials that could produce as much as 500 tonnes of sarin, mustard and VX nerve gas.

The United States will ask the Security Council to convene on February 5 to hear fresh evidence of these and other intelligence findings.

``It was interesting that he was so explicit on the February 5 date. The market has a new date to think about, until that time everyone's going to be reading the tea leaves for what Powell's going to present,'' Emerson said.

The intelligence would form one part of the US push to persuade key countries _ including permanent Security Council members France, Russia and China _ that military force is necessary to disarm Iraq.

Washington and London are building forces in the Gulf region and are expected to be ready for combat in the latter part of next month. Chief UN weapons inspector Hans Blix is due to update the Security Council on weapons inspectors' findings on February 14.

Bush said secret communications and statements from suspects now in custody reveal Saddam ``aids and protects terrorists'' including members of al-Qaeda and could provide them with weapons of mass destruction.

Earlier on Tuesday, Washington received strong backing from its main ally against Iraq when Britain said Baghdad was in ``material breach'' of UN disarmament demands. On Friday, Bush meets British Prime Minister Tony Blair, who is expected to urge further patience with the UN approach for now.

Britain has consistently backed the US but had until now avoided directly alleging a ``material breach'' of November's UN resolution 1441 demanding Iraqi disarmament, which Washington argues is the trigger for war.

The US president's arguments in favour of toppling Saddam by force if necessary have left many countries unconvinced that Iraq poses an immediate threat. Many US allies have called for the inspectors to be given more time to work in Iraq.