www.vheadline.com Posted: Friday, January 31, 2003 - 2:50:54 AM By: Robert Rudnicki

Foreign (MRE) Minister Roy Chaderton Matos says that President Hugo Chavez Frias and his government will not accept a Coordinadora Democratica proposal for a constitutional amendment that would cut the President's term to four years from six years, which would allow early elections to take place, as under the current Constitution, the earliest a referendum can be held in mid-August, half way through the current term.

"Just because the government wants everything to happen constitutionally, doesn't mean we have to support the initiative."

Not only will the government not lend its support to the amendment, it will also not assist in activities necessary to bring the referendum about, such as the collection of signatures, of which in excess of 1.5 million are needed for the Constitution to be amended.

Opposition leaders have said they will propose the amendment during meetings with the Friends of Venezuela group which has now arrived in Caracas. However, before any vote can take place, a new National Electoral College (CNE) board will need to be appointed, which could take up to two months.

www.vheadline.com Posted: Friday, January 31, 2003 - 3:08:12 AM By: Robert Rudnicki

177 gas stations in the Greater Caracas area will receive gasoline supplies early next week as part of contingency plan organized by Petroleos de Venezuela (PDVSA), the Energy & Mines (MEM) Ministry and the National Armed Forces (FAN).

63 stations will receive permanent supplies, 56 others will receive deliveries on Mondays and the remaining 58 on Tuesdays. 

The gas stations in question have been specifically chosen for their locations, with preference being given to those in densely populated areas, near food distribution centers, on major roads, near passenger terminals and near Caracas Metro stations.

• In this way, the government hopes to ensure the delivery of food and medical supplies, as well as improved transportation services.

If this can be achieved, it will be another milestone in the government's battle against the effects of the national work stoppage, with many Venezuelans growing increasingly unhappy with the lack of gasoline available and the incredibly lengthy queues.

acs.yellowbrix.com Source: Houston Chronicle Publication date: 2003-01-31

Jan. 31--Two big chemical companies showed how their profit margins are being squeezed by higher energy prices.

Chemical makers shared a common problem -- the price of the natural gas and oil they use has surged -- forcing them to raise prices and cut costs as they struggle to come out of a long slump.

Dow Chemical Co. reported Thursday it saw a 35 percent rise in the price of feedstock and energy costs, from a year earlier. But prices of the products it sells only rose by about 6 percent.

Midland, Mich.-based Dow announced a fourth-quarter loss of $809 million. However the worst of the loss was due to a $828 million charge to set aside money to cover an increase in its expected asbestos liabilities.

Also Thursday Lyondell Chemical Co. of Houston announced a fourth-quarter net loss of $93 million, a reversal in fortunes from the third quarter when its net loss was only $2 million.

For the year it reported a loss of $148 million, little changed from the 2001 net loss of $150 million.

Exxon Mobil Corp. also reported a drop in its chemical business. The profit on its chemicals business fell by almost two-thirds to $76 million because of higher costs for oil and natural gas which are used for both feedstocks and to power the plants.

While Lyondell's performance improved mid-year, it fell back due to a confluence of events, the company said in a written statement.

These events include the yearlong climb in energy costs and the oil industry strike in Venezuela, which affected its refining joint venture with Citgo, which is owned by the Venezuelan national oil company. Natural gas prices have gone up as this cold winter cut deeply into inventories.

Both companies complain about the rising prices for crude oil and natural gas, and are compensating by raising the prices of the products they sell.

Lyondell feels pretty good about its prospects. "I think we will get a substantial increase, but not necessarily every penny," said President and Chief Executive Officer Dan F. Smith. "There seems to be more of a general push than is typical in these businesses."

Lyondell has announced price increases across virtually the entire product line, although there remains room for some negotiations with customers.

To analyst Andrew Cash of UBS Warburg in New York, the chemicals industry is caught in a confluence of negative events and basically is still "bouncing along on the bottom."

The pressure for Dow Chemical, whose biggest operation is in Freeport, has been getting more intense of late.

Dow expects its cost for feedstocks and energy to be about $400 million higher in the first quarter than in the fourth. Compared to the first quarter of 2001, this cost increase may be a whopping $1 billion, said President and Chief Executive Officer William Stavropoulos in a conference call with analysts

It isn't waiting for an industrywide comeback to restore its bottom line.

It's tightening its operations, which will include sales of some operations and shutdowns of others, are will likely lead to 3,000 to 4,000 job reductions before the year is out. On Thursday it announced plans to close ethylene crackers that are part of its complexes in Texas City and Seadrift.

While times are tough now, the economy is growing and there are some signs of hope in this complex business.

For the quarter, Dow said its sales were up 9 percent from a year earlier to $6.9 billion, the result of a 6 percent higher price and 3 percent greater volume.

Some products look promising, such as styrene, which already is in fairly tight supply, Cash said. This tightness should help with prices.

There was an industrywide price increase for polyethylene, 5 cents per pound, announced last July but not actually implemented until Jan. 1. An additional increase of 6 cents per pound has been announced for Feb. 1.

Polyethylene rose 5 cents per pound industrywide, which went into effect Jan. 1. Another increase of 6 cents per pound will take effect Saturday.

The markets are expected to firm for some products as early as March, Lyondell believes. Its Equistar venture announced price increases across basically the entire polymer lineup.

Chemical makers may also get some significant relief on the cost side. Production is slowing rising in Venezuela, and some end to the standoff with Iraq could reduce the price premium due to fears that war would cut off exports.

"If these events occur, our operations should benefit from a rebound similar to what we saw in the second quarter of last year," said Smith.

Cash, the analyst, sees the chemical industry holding onto a portion of those better profit margins for a while, "to make up for some of the hurt" it is experiencing now.

In the meantime, dealing with tight supplies has been a trick.

Lyondell has done a masterful job of finding crude oil for its Lyondell-Citgo refining venture, said the analyst. The operation, which was set up to refine Venezuelan crude, is back to full operation after scaling back for a time due to shortages of crude.

It has also cut back because on capacity.

Lyondell last year mothballed an ethylene plant in Lake Charles, La., with about 800 million pounds capacity, which it Thursday characterized as being in deep sleep.

Lyondell's $93 million net loss for the quarter is equals to 58 cents per share, compared with the year earlier's net loss of $53 million or 46 cents per share. Sales were $2.4 billion against $1.56 billion a year earlier.

Its net loss of $148 million for the year is equal to $1.10 per share and compares with the prior years $150 million loss, equal to $1.28 per share. Sales were $8.17 billion against $7.66 billion in 2001.

Dow's announcement Thursday of closing two Union Carbine ethylene crackers will eliminate 2.5 billion pounds in capacity, which Cash says is 1 percent of world capacity.

It said it was getting rid of operations which were under-utilized or non-competitive.

The Texas City cracker will be shut down by mid-year and the Seadrift cracker by year's end. Both are parts of much larger facilities that will continue, said Dow spokeswoman Cindy Newman.

Dow has identified various facilities with a book value of $100 million for either closure or consolidation, it said, and beyond that is studying assets representing several hundred million dollars more.

Additionally, it has identified assets with 2002 revenues of approximately $1.5 billion which are candidates for sale or swap.

To see more of the Houston Chronicle, or to subscribe to the newspaper, go to www.HoustonChronicle.com

reuters.com Fri January 31, 2003 05:40 AM ET By Tanya Pang

SINGAPORE (Reuters) - Oil prices held steady on Friday, treading water as traders waited to see whether talks later in the day between U.S. and British leaders would bring war with Iraq one step closer.

U.S. light crude CLc1 eased seven cents to $33.78 a barrel and London Brent LCOc1 rose six cents to $31.27.

Low global oil stocks and limited spare production capacity to counter the severe reduction in strike-bound Venezuelan oil exports, and the potential disruption to Iraqi oil sales, have taken crude prices up more than 30 percent since late November.

Analysts see little relief for the time being to high oil costs, which are beginning to percolate into the broader global economy.

"The current environment suggests to us that a potential war with Iraq carries significant upward price risks, even from current levels, in the event of any supply hiccup that develops outside the likely interruption to Iraq's exports," said Merrill Lynch in a weekly outlook.

Iraq is eighth in world crude exporter rankings, selling up to two million barrels per day to the international market.

British Prime Minister Tony Blair arrived in Washington late on Thursday for talks at Camp David with President Bush on the next step in the showdown with Iraq.

Bush said on Thursday that he would give diplomacy "weeks not months." Secretary of State Colin Powell is due to present evidence on Wednesday to the U.N. Security Council to show that Baghdad is pursuing programs to build biological, chemical or even nuclear weapons.

Washington and its staunchest ally, London, are massing a huge military force in the Gulf, and Bush has vowed to disarm President Saddam Hussein, with or without United Nations backing.

VENEZUELA TALKS CONTINUE

Talks were set to continue in Venezuela on Friday to try to find a resolution to the eight-week-old strike, which has slashed oil sales to the United States, where fuel inventories are hovering close to historic lows.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal gathered in Caracas on Thursday to bolster talks between President Hugo Chavez and his opponents.

Ali Rodriguez, president of state oil firm Petroleos de Venezuela, said on Thursday crude production should be back to about 2.8 million barrels per day by the end of February, but opposition leaders dispute the claims.

Ciro Izarra, PDVSA's former head of trading, who was fired for going on strike, said the company was unlikely to be able to meet contractual deliveries for the rest of 2003 due to problems with output, refining and management.

Authorities have fired more than 5,000 PDVSA managers and technicians to try and break the strike, which began on December 2 and is aimed at forcing the resignation of Chavez.

Izarra said he expected Venezuela to export an average 1.7 million bpd this year, one million bpd below pre-strike levels, if Chavez continued to operate the industry without the majority of its skilled workers and managers.

OPEC president Abdullah al-Attiyah said on Thursday that the producers' group had done all it could to control prices.

"OPEC has no magic wand to solve the political problems and stop the rise in price," Attiyah, who is also Qatari oil minister, told Reuters.

www.suntimes.com January 31, 2003 BY ANA MENDIETA STAFF REPORTER

When Johnner Londono flew to Colombia on Thanksgiving Day, he still hoped to work out the release of his father, kidnapped by Marxist guerrillas five months earlier on Father's Day.

But the 22-year-old analyst for CNA Financial Corp. said Thursday he barely got back to Chicago with his own life.

Londono was ready to pay $15,000 cash of the $50,000 demanded as ransom by the Revolutionary Armed Forces of Colombia, known as FARC. That was all the money he was able to collect through his own savings and a second mortgage on a family home in Colombia.

He not only lost that money, but is giving up hope of seeing his father, Jose Londono, alive again.

On Dec. 12 Londono met with hitmen hired by his father's abductors in Guacari, a town about 30 miles outside his family's home in Palmira. He says he was punched in the stomach several times, and they poured about a gallon of gasoline on him and threatened to set him on fire if he didn't pay the ransom.

"He asked me if I wanted to go to hell,'' Londono says of one of his attackers. "'If you don't give me that money, I'm going to set you on fire and leave you right here,' the man said. So I told him: 'Then finish me up because I don't have the money,' '' Londono recounted.

The FARC hitman then spat on Londono and said he would only see his father again if he paid the ransom. The abductors knew the family only had $15,000 available, Londono said.

Londono went back to his family's home in Palmira, located in southwestern Colombia about several hours southwest of the capital Bogota, to wait. A memo sent by FARC to Londono's family in Colombia on Jan. 9 warned they would be in danger if they didn't pay.

So when Londono met again with the hit squad Jan. 20, he took his only money with him. But the hitmen grabbed the money and said his father wouldn't be released until they received $35,000 more to make up the full ransom.

"They lied to me,'' he said. "They asked me to give the money in exchange for information on my father, and they didn't tell me anything else. They just said my father was OK and ordered me to shut up when I asked more questions."

Londono said he cried and pled for his father's release, to no avail.

"They don't like begging, the more you beg the more agitated they get,'' Londono said.

More than 3,000 people are kidnapped every year in Colombia, a country with one of the highest kidnapping rates in the world. Colombia's civil war pits the 18,000-member FARC and the National Liberation Army or ELN against the government and the paramilitary groups. About 3,500 people, mainly civilians, die in the fighting each year.

Londono returned to Chicago on Jan. 21 and is now prepared for the worst. His only regret is that he last saw his father seven years ago. Jose Londono was living in Venezuela before he was abducted June 16 with 20 others at a roadblock about eight hours northwest of Bogota. Londono's parents were divorced 14 years ago.

"I'll have to wait for whatever the kidnappers decide to do. They will either release my father's body, or I'll never see him again."