ogj.pennnet.com Sam Fletcher OGJ Senior Writer

HOUSTON, Feb. 5 -- Oil futures prices rebounded Tuesday in anticipation that US. Secretary of State Colin Powell would present convincing evidence Wednesday to members of the United Nations that Iraq has stockpiled weapons of mass destruction. That should help US officials overcome domestic and international opposition to military action against Iraq, traders said.

Meanwhile, the US Department of Energy reported early Wednesday that US commercial oil inventories increased by 1 million bbl to 274.3 million bbl last week, while total US distillate stocks plummeted by 10.3 million bbl to 112.1 million bbl. US inventories of gasoline fell by 3.4 million bbl to 209.6 million bbl.

But of top concern is that total US commercial inventories of crude and petroleum products are showing a rapid decline, noted Paul Horsnell, head of energy research for JP Morgan Chase & Co. in London.

Total US commercial inventories of crude and petroleum products fell by 15.5 million bbl in just 1 week to 65 million bbl below the 5-year average, down 98.7 million bbl from year-ago levels.

"Implosion" possible "The US oil products system is on the verge of an implosion, and it will take quite some time to get things back to normal," Horsnell warned. "The pressure is almost entirely on oil products, which have gone from 5 million bbl below normal 3 weeks ago to now stand 30 million bbl below normal. It's not just the scale of the gap that is of concern, but the rapid momentum it has shown in opening up."

He said, "Distillates are under particular stress. Heating oil inventories are now lower than their usual end-of-season level, and normally they should continue falling until the end of March."

Based on DOE numbers, Horsnell said, "Implied oil demand for the (past) week was a massive 20.819 million b/d. Distillate demand ran at 4.926 million b/d in the week, the highest ever recorded."

In order to respond to that market demand, he said, "Production is going to have to swing back towards distillates, threatening to frustrate the necessary seasonal rise in gasoline inventories. The threat is then of a return to the cycle of dislocations in heating oil and gasoline that characterized the market from 1999 to 2001. All this from a base where futures prices for gasoline and heating oil are already above $40/bbl."

Meanwhile, Horsnell sees the possibility for more disruption of world oil supplies even as the US moves closer to a potential war with Iraq.

"The nightmare scenario is one where Venezuela's slow production ramp up is not complete, where there is a war in Iraq, and where something else goes wrong," he said. "Nigeria is high on the list of potential candidates for the position of 'something else.' (Tuesday's) rioting in the key oil city of Warri does not augur well for the future."

Futures prices The March contract for benchmark US light, sweet crudes gained 82¢ to $33.58/bbl Tuesday on the New York Mercantile Exchange. The April position advanced by 75¢ to $32.91/bbl. Unleaded gasoline and heating oil for March delivery jumped by 4.38¢ each to $1.0006/gal for gasoline and 96.19¢/gal for heating oil.

However, the March natural gas contract dipped by 0.4¢ to $5.76/Mcf, after posting a contract high of $5.88/Mcf during trade Tuesday on NYMEX.

The market "rose early in very volatile trading as it followed (the) cash (market) higher but dipped suddenly just before noon on limited profit-taking," reported analysts at Enerfax Daily. "It traded near 2-year highs, supported by a soaring cash market and near-term cold weather as the bullish tone of the market remains in place. Without any precipitous sell-down recently, it reinforces the bulls thinking they can continue to buy high-end numbers."

Gas demand grows Enerfax analysts anticipate "some more profit-taking in the natural gas market," ahead of an anticipated report Thursday by the US Energy Information Administration of another large withdrawal of gas from US underground storage in response to low temperatures last week.

"Inventories are getting relatively low as the sustained cold weather is diminishing storage. Some utilities are worried they may not have enough gas and are adding on spot supply," they said.

Robert Morris with Salomon Smith Barney Inc., New York, reported Wednesday that, "Composite spot natural gas prices surged to their highest level in almost 2 years in January as some of the coldest weather since 2000 enveloped much of the country."

Consequently, the November through January period was nearly 5% colder than normal, he said.

As a result, if weighted heating degree days for the rest of February and March "just match the 10-year average," he said, "then the full (2002-03) winter will end up being just over 3% colder than normal."

Morris said, "Thus, it would appear at this juncture that, if anything, our official $4.10/MMbtu composite spot natural gas price forecast for the full year could prove conservative."

That's "particularly true," he said, if the average price of oil fails to drop to around $20/bbl in the second half of 2003 to encourage a switch from natural gas to residual oil for fuel. At this point, he said, only 2 bcfd of natural gas demand has been lost to fuel switching, out of a potential 4 bcfd.

On the other hand, Horsnell claimed, "With natural gas prices looking ominously strong, the possibility remains that fuel substitution could help prop distillate demand up further, even as the cold weather effect falls way."

He said, "In total, the supply side is struggling, the US refinery system is under severe stress, and demand is posting some impressive numbers. If you happen to be a US oil refiner with the luck of having spare crude to run and a refinery that is not in maintenance, then you are probably grinning from ear to ear. Oil product prices are moving up very rapidly relative to crude oil."

London market In London, the March contract for North Sea Brent oil jumped by 84¢ to $31.09/bbl Tuesday on the International Petroleum Exchange. The March natural gas contract inched up 2.02¢ to the equivalent of $2.80/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes lost 31¢ to $29.98/bbl Tuesday.

Contact Sam Fletcher at samf@ogjonline.com

www.financialexpress.com Prachi Verma

New Delhi The contribution of Latin America, Africa and Middle East to the Indian IT exports is likely to grow by 40 per cent in the fiscal ending March 2004 to $1.16 billion from $800 million in this fiscal, according to National Association of Software and Services Companies (Nasscom).

Sunil Mehta The countries in Latin America, Middle East and Africa are showing keen interest in outsourcing their IT work to India.

“So far these countries have contributed 8 per cent of the total Indian IT exports (about $10 billion) and we expect that their contribution will rise to 15 per cent of total IT exports by 2006. Non-traditional outsourcers (besides US and UK) are clearly focusing more on India for fulfilling their IT outsourcing requirement,” Nasscom vice president Sunil Mehta told eFE.

Electronics and Computer Software Export Promotion Council (ESC), which is organising a three-day event Indiasoft 2003 in the Capital later this month, also confirmed this trend.

“There is an encouraging interest from the non-traditional countries, (that have not been outsourcing work to India so far) especially Latin America and Africa compared to previous years,” ESC director DK Sareen said.

According to him, African companies like My Computer Tanzana Ltd, Mega System Company Ltd and Matrix Consulting are looking at outsourcing their hardware and software requirement to India.

He said that countries like Chile, Brazil, Venezuela, Mexico, Singapore, Japan, Thailand, China are sending strong delegations for Indiasoft 2003.

There are over 150 foreign companies participating in Indiasoft conference starting from February 20.

Almost half of the participating companies are from Africa and Latin America, claimed Mr Sareen.

Nasscom expects Italy to contribute $50 million over the next three years to India’s IT industry.

“Indian IT companies should invest in the Italian customers and promote the concept of offshoring as there is a huge outsourcing potential for India,” Mr Mehta said.

The Italian companies are looking at an offshore development opportunity in India in areas like financial services, telecommunication, manufacturing and utilities.

“Malayasia is a good alternative location for the animation production centre as the country already has experience in this field. Indian companies could easily locate their animation production centres in this country,” Mr Mehta said.

Nasscom is expecting over 150 potential customers to participate in the Nasscom 2003 from the US, Europe, Malayasia and Asia.

“African and Middle East companies are keen on outsourcing their IT requirement in the banking sector to India,” Mr Mehta said.

www.financialexpress.com    Recent assurances regarding the country’s energy security in the event of a war in West Asia notwithstanding, the government seems to have finally come to terms with the need to create a strategic petroleum reserve (SPR). This is not only to tide over a potential supply crisis, but also the resultant impact on international crude prices. Since the majority of the country’s 70 per cent crude imports are located in that region, the decision was no doubt spurred by unpleasant memories of a possible recurrence of the economic distress experienced during the 1990-91 Gulf crisis. Although supplies from Iraq are currently at an all-time low and can be replaced at short notice by other producers, particularly Saudi Arabia, should the war prolong and spread to other countries in the region, it would develop into a real supply crisis. Not even Riyadh would be able to swing more than two million barrels a day (mbd) of excess production. Moreover, the impact of a supply disruption on prices would be prohibitive. Neither would the policy of supply diversification, being actively mooted by energy strategists, serve as an alternative. The recent crisis in Venezuela, which saw almost three mbd of crude being removed from the market, is a case in point. Under these circumstances, the decision to maintain a 15 million tonne SPR covering 45 days of consumption, revised from an earlier proposal of maintaining stocks of five million tonnes covering 15 days only, is welcome.

However, before a policy announcement to that effect can be made, the issue of who will pay for the SPR will have to be sorted out. While storage facilities are expected to cost Rs 4,350 crore, inventory costs would be around Rs 1,800 crore. The government has commissioned a study on the most feasible and cost-effective options, based loosely on the SPR models in the US, Japan and Germany. Either the capital cost of the storage facilities be borne by a one-time grant by the government, while inventories, or carrying costs, be funded by a cess imposed on crude through the Oil Industry Development Board. Alternatively, the entire cost, both capital as well as inventory costs, be borne by a special cess imposed on petroleum products. The second option — and the one which the government seems to be more inclined towards — would see the consumer being burdened with an additional cess of 50 paise per litre of petrol and diesel or a slightly lower cess being imposed on all petroleum products. Despite the evident disadvantages of the second option, the fact remains that security concerns must transcend price concerns. That, after all, are what strategic stocks are about.

www.granma.cu Havana. February 5,  2003 BY MARIA VICTORIA VALDES-RODDA —Granma International staff writer—

• AFTER two months of trying to bring down Venezuelan President Hugo Chávez, the country’s opposition released an official communiqué on Sunday, February 2 announcing an end to the so-called strike, but not before insisting on other anti-governmental actions, including new elections by mid-2003.

The opposition alliance Coordinadora Democrática (CD) acknowledged the ineffectiveness of the strike given that it has been unable to oust Chávez from power before the end of his term in 2006.

According to press cables from various international agencies, on Monday, February 3 in Caracas — the nation’s capital and the center of the controversy — commercial sectors re-opened as did banks, and private elementary and high schools.

Froilán Barrios, a member of the Confederation of Venezuelan Workers (CTV) leadership whose group participated in the strike along with the CD, told AP that "it’s understandable that people would want to re-open their businesses after two months of strikes," but confirmed that opening times would be restricted, which he described as part of the new anti-Chávez strategy.

However, in Venezuela and abroad attention is mainly focused on evaluating the drop in oil exports due to the recent crisis provoked by the opposition forces’ sabotage of the country’s most productive sector and the world’s fifth largest exporter of crude.

NORMALIZATION MEASURES FOR INTERNAL MARKETS

Rafael Gómez, public relations manager for the Petroleos de Venezuela Corporation (PDVSA), told Prensa Latina that the company plans to import 12 million barrels of oil during the month of February in an effort to slowly reestablish gasoline distribution for the internal market.

Similarly, he revealed that the PDVSA is "on the right track and advancing in refinery production, and imports will cover more than 50 days of regular consumption, in order to constitute, as Gómez himself stated, "a strong blow to speculators who are currently hoarding it to resell at inflated prices."

Trinidad and Tobago and other Caribbean countries, as well as Saudi Arabia and the United States, are among the providers.

A recent PDVSA report confirmed losses of over $1.35 billion USD due to its activities being paralyzed since December 2, 2002.

News agencies AFP and EFE published comments from the current PDVSA administration stating that production in refineries under its jurisdiction would return to pre-crisis levels and it is counting on staff support for this.

During a speech on Sunday February 2, Chávez qualified "the reactivation of PDVSA and its increased production to 1.8 million barrels per day" as a triumph for the people.

"We’ve combated and defeated the terrorist and coup plotters’ sabotage plans, and the oil industry is still in the hands of the people, now more than ever before." He then commented that more progress had been made in the past two months than in the past four years.

OTHER STRATEGIC GOVERNMENT ACTIONS

From Miraflores Palace, Chávez spoke to the nation via the radio and television microphones of "Aló Presidente," ratifying his decision to initiate a strategic offensive addressing the unavoidable issues of internal politics, economics, law, international issues and communication.

"We will strengthen, consolidate and accelerate the development of this process in the different areas of national life as a way of confronting terrorism and fascism and thus defending peace, democracy and national unity," the leader emphasized.

According to the Venezuelan leader, the new official U.S. dollar-bolívar exchange rate that came into effect on February 5 is aimed to end the ban on hard-currency dealings, a measure that was imposed to stop the dollar’s flight abroad.

That situation was caused by individuals "trying to destabilize the nation’s financial system," he commented.

Notimex reported that in line with the financial panorama, the Venezuelan government is planning to enforce the constitutional obligation placed on banks to invest part of their credits in agriculture and to reaffirm the state role of assigning foreign currency to national companies for their imports and payments, giving preference to those in favor of economic development.

YEAR OF THE REVOLUTIONARY OFFENSIVE

In another public speech early this month, Chávez qualified as excellent "the statement by countries in the Friends of Venezuela Group calling for solution to the political crisis within the constitutional framework," ANSA reported.

Likewise, during his "Aló Presidente program," Chávez pointed to similarities in foreign and national positions, adding: "I urge that any country wishing to help Venezuela starts by recognizing that we have a legitimate government here."

The leader later highlighted that "none of these countries can accept the president of a Republic being treated disrespectfully, or his/her authority not being recognized, and this refers both to the president and to state institutions."

He asked his opponents to abandon their hope that someone from "outside" could change the will of the people.

In terms of the huge popular support for Chávez’ leadership, marches in favor of the Bolivarian process took place all last week.

www.vheadline.com Date: Wed, 5 Feb 2003 13:22:06 -0500 From: Justin Delacour jdelac@unm.edu To: Editor@VHeadline.com Subject: Re: Janet Kelly

Dear Editor: Hello, my name is Justin Delacour.  If you've ever checked out the NarcoNews website, you might have seen an article that I wrote about two highly-tainted Venezuelan pollsters, Jose Antonio Gil Yepes and Alfredo Keller.

Anyway, I'm here to comment about your recent posting at VHeadline.com.

You shouldn't be surprised to see your name creeping into an exchange between Phil Gunson and Al Giordano.  For those of us who critically analyze US press coverage of Venezuela, folks like you and Eric Ekvall symbolize the scandalously cozy relationship between the press and Chavez's business-led opposition.

Janet, the problem is not that you are a Chavez opponent.  Nor is the problem that you are quoted in the English-language press. The problem is that people like you, Eric Ekvall, Michael Schifter, Riordan Roett, Alfredo Keller and Luis Vicente Leon have a virtual monopoly on the press' account of what's going on in Venezuela.  That's the problem.

Let me ask you some questions, Janet.  Why do you think the correspondents love to quote you?

I read articles in the alternative press by people who -- like you, I suppose -- have vast knowledge of Venezuela.  I'm sure you have little or no familiarity with the people that I'm talking about; they don't run in your elite circles.

There's a historian at la Universidad de Oriente named Steve Ellner who has lived in Venezuela for probably twenty years.  He is an expert on the ins and outs of the Venezuelan labor movement.  Now, one might think that someone like Ellner, a specialist on Venezuelan labor, would be a worthwhile source for a correspondent who wants to learn and inform his or her readers about the recent "general strike" in Venezuela.

However, I've literally never ever seen any mainstream correspondent quote Ellner.  Not one measly quote.  Why do you think that is, Janet?  Could it be that maybe a guy like Ellner could blow the cover off this whole story you folks have been peddling about a "general strike"?

Has anyone ever heard of a "general strike" led by businessmen?

Has anyone ever heard of a "general strike" that is relegated to the affluent neighborhoods of a city?

Gee, that kind of "strike" doesn't sound very "general" to me.  In fact, it doesn't even sound like a "strike."

We here on planet earth call that a business lockout.  But the funny thing is that I never heard you or any one of your journalistic buddies ever mention the word "lockout."  Why is that, Janet?

Why is it that a prominent labor leader like Ramon Machuca of Venezuela's Iron and Steel Workers doesn't get quoted when he says that CTV leader Carlos Ortega is a fraud, a corrupt tool of the bosses, a person who doesn't enjoy the support of the majority of Venezuelan workers?

Why is it that no journalist ever bothered to ask anybody besides Ortega about how most Venezuelan workers truly felt about the so-called "strike"?

Could you tell me that, Janet?

So, once again, why do they quote you, but not Ellner or Machuca or the sociologist Greg Wilpert or the freelance writer Charles Hardy or the Venezuelan historian Samuel Moncada or the Venezuelan-born historian Miguel Tinker Salas or the Venezuelan anthropologist Fernando Coronil or the US economist Mark Weisbrot or, for that matter, any Venezuela analyst who is either sympathetic to Chavez and/or very suspicious of the opposition?  Why?

Could it be that the correspondents who love to quote you work for newswires and newspapers that are structurally tied to the interests of global finance and the "Washington Consensus"?

Could it be that these correspondents have been brainwashed throughout their entire lives to believe that insufficient subservience to Uncle Sam constitutes "communism" and "totalitarianism" or whatever other horrible sacrilege they can dream up?

Could it be that they quote you not because you are of any greater intrinsic worth as a source than any of these other people but rather because you regurgitate every cherished piece of neoliberal propaganda that has been pounded into our brains for as long as we can remember?

Could it be that, like you, these correspondents believe that the only road to economic development is to grovel before your cherished investor class, a class that is obscenely wealthy relative to the majority of people in Latin America, the most inequitable region on the planet? 

So Janet, why is it that you fell for the news reports of April 11?

And if these news reports about Chavez's "resignation" and orders to kill people turned out false, what does that say about you, a person who these same ignoramuses-cum-correspondents love to quote?

You say that anyone can make a mistake.  But I'll tell you something, Janet; I'm no genius and I didn't make that mistake.  I've paid a little attention to history, and what the record shows is that the rich of Latin America and their foreign backers -- whether in Chile, Guatemala, El Salvador, Argentina, Brazil, Venezuela or wherever -- have always been ruthless about ridding any perceived threat to their economic interests, no matter what the costs to rest of the population and no matter how many lies they have to tell to achieve their goals.

And why is it, by the way, that your admirers in the press corps have never written a story about Otto Neustald, the CNN video photographer who confessed to taping anti-Chavez Generals rehearsing their statements about Chavez's supposed sniper shootings before the shootings had ever taken place?

I have multi-angle footage of the shooters on the Llaguno Bridge, and what the footage shows is that the only people who were on the avenue below the bridge while the shootout took place were Alfredo Pena's Metropolitan Police, who were also "firing away."

Given that the majority of the shooting victims on April 11 took direct hits -- at medium to long range -- to the head and chest, don't you think it's a bit crazy to think Chavistas with handguns could be responsible for the bulk of the bloodshed?

Oh, and by the way, rather than talk about Gunson's little road-runner plagiarism, why don't we discuss the actual analogy that you dreamed up in the first place?  Chavez was standing beyond the edge of a cliff, with nothing but air below his feet, just like Bugs Bunny, right?  So what happened to the impending fall, my dear friend?

I find it fascinating that correspondents can run to people like you or Riordan Roett for these oh-so-prescient predictions, and when the events turn out oh-so-differently than you predicted, you and the correspondents go on as if you never made total fools of yourselves in the first place, and when the next crisis hits the correspondents come running back to you again to record your latest imaginings.

My God, Janet, are you really going to quibble over whether or not you're "partisan" or not?  Let's be serious.  The issue is that you're anti-Chavez.  We don't have a problem with that, per se, but we do have a big problem with the near Orwellian press coverage in Venezuela that tailors almost every story to the interests of its business and financial overlords, whom you dutifully serve.

And, by the way, Gaviria is no mediator.  He's a US puppet, a neoliberal just like yourself, a former President who stood idly by as paramilitaries slaughtered an entire leftist political party in Colombia, the Patriotic Union.  If you favor Gaviria, then you are indeed very partisan.

• Eventually, you and your ilk may wake up to the fact that you've been totally discredited among those who don't buy into the barrage of propaganda.

Don't flatter yourself into thinking that correspondents quote you for any other reason than that you bow down before the powerful, just as they do.

Justin Delacour jdelac@unm.edu