www.nytimes.com By TONY SMITH

SÃO PAULO, Brazil, Feb. 20 — With crude prices edging toward $40 a barrel and a shortfall looming in world production, South America's two main oil producers, Petrobras of Brazil and the Spanish-owned Repsol YPF of Argentina, might be forgiven for spotting a silver lining among the clouds of war gathering over Iraq.

Remote from the potential combat zone and convenient to the United States, both companies could find ready buyers for stepped-up oil exports and give the economies of their home countries a welcome injection of fresh petrodollars.

But in fact, analysts say, neither company can expect to reap a windfall, because of economic volatility, changing government regulations and growing political pressure to keep a lid on fuel prices at home.

Energy analysts say a war in Iraq and the continuing instability in Venezuela could combine to depress world daily oil production by 3.5 million barrels, to about 73 million barrels. Most OPEC nations are already running close to full capacity, so the shortfall would have to be made up by non-OPEC suppliers.

Increased output in Russia and Norway would probably fill part of the gap; the remainder is where the opportunity lies for Latin producers like Mexico, Brazil and Argentina.

"Anyone who is producing will benefit from higher prices," said George Beranek, an analyst at PFC Energy in Washington. "Petrobras and YPF will also benefit, provided they can get the world price."

That last proviso is crucial.

With the advent on Jan. 1 of a new left-leaning government in Brazil, Petróleo Brasileiro, as Petrobras is formally known, appears likely to lose some of the autonomy it has won over the last decade, especially regarding prices. The Brazilian state owns 56 percent of the voting shares in Petrobras and names its top management.

President Luiz Inácio Lula da Silva made two political appointments that will effectively tame Petrobras: a little-known senator, José Eduardo Dutra, will take over the company's presidency from the respected, market-friendly Francisco Gros; and Sérgio Gabrielli, an academic economist with little commercial experience, will become chief financial officer.

Petrobras's refinery prices for fuel are now 23 percent lower than those in the United States, a situation that the company cannot maintain indefinitely. To run its refineries efficiently, it must import some lighter oil to mix with its own heavy crude, and pay the going world rate for the imports.

Mr. Gabrielli said today that Petrobras would "alter prices as soon as possible" but that a recent surge in inflation might prevent the government from allowing any price increases for a while.

Despite its dependence on light-crude imports, Petrobras, Brazil's largest industrial company, has grown rapidly to become an aggressive player in global markets. Last year it was Brazil's top exporter, with much of its success coming in refined products rather than crude.

In January, it was able to double its exports of gasoline, mainly to the United States, after supplies from Venezuela all but ceased because of a nationwide strike against President Hugo Chávez.

Petrobras is producing more oil than ever — 1.62 million barrels a day early this month. According to Fabiana Fantoni, oil analyst at Tendencias, a São Paulo-based consultancy, and it has room to expand its exports of 235,000 barrels a day by about 8 percent.

Doing so might bring in $500,000 a day in extra profits, Ms. Fantoni estimated — "not an extraordinary increase, but it would certainly be good for Brazil's trade balance."

Still, she said, "Petrobras could increase its profits greatly if it kept its pricing at international levels." Though it stepped up production last year, Petrobras posted an 18 percent drop in net profit, to $2.25 billion for 2002.

After years of trade deficits, Brazil recorded a $13.2 billion surplus last year, offsetting a slide in foreign direct investment, which had financed past deficits.

At the moment, though, tackling inflation seems to be the government's prime concern. The central bank has raised interest rates twice this year, despite Mr. da Silva's campaign pledges for easier credit.

Unlike Brazil, Argentina is a net oil exporter. But it is still gingerly recovering from a four-year economic slump that broke the Argentine peso loose from its dollar-pegged moorings and upended the country's politics. And like his Brazilian counterpart, President Eduardo Duhalde has pressed his country's oil companies to limit their exports and hold the line on domestic prices to nurture the fragile domestic market.

So Repsol YPF "can only export a certain part of its production," said Ian Reid, oil analyst at UBS Warburg in London, "and there's a question mark over whether it can pass on price hikes to consumers."

What oil it can ship abroad does not earn the company what it might: there is a 20 percent tax on exports, and regulations saying that at least 30 percent of export revenue must be brought back to Argentina to be spent or invested.

At one point, the central bank thought the figure should be 100 percent. According to an official at another oil company in Buenos Aires, there is widespread concern in the industry that the economy minister, Roberto Lavagna, wants to increase the export tax rate now that world crude prices are above $35 a barrel.

In January, Argentine oil companies reached an agreement with the government to freeze prices for three months and to supply crude to Argentine refineries at $28.50 a barrel, well below the current world price. Repsol YPF has been leading the oil sector's negotiations with the government.

thestar.com.my

KUALA LUMPUR: The Latin American countries in NAM favour a peaceful resolution to the Iraq crisis but will agree to the use of force if Iraq does not comply with the UN resolution on the matter. 

The Peruvian Foreign Ministry's Multilateral Affairs secretary Jose Luis Perez said the common stand was adopted recently by members in the Group of Rio chaired by Peru.  

Of the 19 countries in the group, 11 are NAM members – Bolivia, Chile, Columbia, the Dominican Republic, Ecuador, Guatemala, Guyana, Honduras, Nicaragua, Peru and Venezuela.  

Perez said the countries believedIraq needed to fulfil the clauses spelt out in Resolution 1441, including disarmament and co-operation with weapons inspectors to avoid war. 

“We favour a peaceful resolution but the use of force will be inevitable if Iraq fails to comply with Resolution 1441. 

“We are against unilateral action against Iraq. Upon verifying the possession of weapons of mass destruction, any follow-up actions should go through a multilateral approach under the UN,” he said in an interview. 

Asked if the Iraq crisis had stolen the limelight at the summit, Perez said a crisis of such magnitude demanded attention. 

“We foresee a split of opinions on the issue as the NAM membership is very diversified but it is NAM's main function to provide a platform for political consultation. 

“We should place more importance on social issues such as poverty and unemployment as these are deep concerns affecting many developing countries,” he said. 

Ecuador, another Group of Rio member, is chairing the political committee for the two-day NAM Senior Officials Meeting that began yesterday.  

ipsnews.net Humberto Márquez

CARACAS, Feb 20 (IPS) - Venezuela's ongoing political crisis worsened Thursday following the court order for the arrest of two opposition leaders, Carlos Fernández, president of the Fedecámaras business association, and Carlos Ortega, president of the Confederation of Venezuelan Workers (CTV). Fernández was detained just before midnight Wednesday and Ortega decided to go into hiding -- just 30 hours after the Hugo Chávez government and the political opposition signed a pact on non-violence in an effort to defuse tensions still simmering after a nearly two-month strike. Thousands of people gathered in downtown Caracas Thursday afternoon to march in protest against the arrest. Penal judge Maikel Moreno issued arrest orders Wednesday for the two, who led the December-January strike that sought Chávez's ouster. The judge acted on a request from the Prosecutor General, which accuses Ortega and Fernández of ”rebellion, treason against the fatherland, incitement to crime, assembly for criminal ends, and destruction.” Opposition parties and trade unions are outraged by the judge's action and by the arrest of Fernández, which took place as he was leaving a Caracas restaurant. Government agents held Fernández for several hours before allowing him to contact his family and attorneys. César Gaviria, secretary-general of the Organisation of American States (OAS), who is mediating talks between the government and opposition, called on the Venezuelan judiciary to ensure that its decisions are taken with ”independence, impartiality and in strict compliance with the laws and rights guaranteed by the constitution.” Gaviria underscored the social and political stature of Fernández as leader of one of the two sides in the talks that began more than three months ago to resolve Venezuela's political crisis. Chávez commented Thursday, ”At last a prosecutor and a judge issued orders to arrest people who should have been imprisoned a long time ago.” A day earlier the president had condemned the fact that there are judges in Venezuela ”who sell their rulings for 3,000 to 30,000 dollars.” ”I was informed (of the arrest warrant) at midnight and I told the police to obey the order. And I went to bed with a smile. Later I sent for a papaya tart that my mother made so I could taste it. I don't have a grudge against anyone, I only want justice to be done,” Chávez said. According to the political opposition, there is a list of 25 people from among its ranks -- business, union or political leaders -- who the government has marked for arrest. Legislative deputy Luis Velásquez, of the ruling party, said ”justice authorities have been asked to take action against some 100 people considered responsible for the harm caused the country with the coup attempts and illegal labour strikes.” But Vice-President José Vicente Rangel said that figure ”seems disproportionate.” He added, however, ”If I were (CTV president) Ortega I'd turn myself into the court, because in Venezuela the right to due process, including the right to appeal, continues to reign.” CTV secretary-general Manuel Cova announced that Ortega had gone into hiding and that the union federation would bring the case to the International Labour Organisation (ILO) as evidence of the violation of labour rights in Venezuela. Before going underground, Ortega said in radio and television interviews that judge Moreno's arrest orders ”are just the beginning of an escalation organised by the upper government echelons to liquidate the opposition leaders.” Ortega pointed out that Moreno served last year as defence attorney to Richard Peñalver, a pro-Chávez Caracas city councillor who was among those accused of opening gunfire on an opposition march on Apr 11, killing 18 people. The incident was part of the social chaos in the days preceding the failed coup that removed Chávez from power for 48 hours. In issuing the arrest warrants, Moreno referred only to the Prosecutor General's request, which orders Ortega and Fernández to appear in court to hear the charges against them. The accusations of rebellion and treason reflect the government's stance that the two are involved in supporting the attempted coup of April 2002, and that they continued to seek his ouster, according to Chávez. The other charges are related to the two men's role in leading the strike that ended Feb 4. The work stoppage practically paralysed Venezuela's all-important oil industry and closed down factories and shops. ”We have not engaged in any actions that are not covered by the constitution,” said opposition leader Albis Muñoz, vice-president of Fedecámaras. Rafael Alfonso, a business executive in the food industry and an opposition delegate to the OAS-led talks, commented that Fernández's arrest ”is simply a provocation.” Criminal lawyer Alberto Arteaga told IPS that ”the arrest orders for Ortega and Fernández are mistaken not only in intent but in form, because the two should only be imprisoned if they are likely to flee, which prior to the arrest warrants was not the case, as day after day they appeared in public and on television.” Across the board, the opposition considers Fernández's arrest -- so soon after its representatives and government delegates signed a pact against violence and in favour of peace and democratic values -- proof that the Chávez administration lacks the political will to resolve the country's ongoing crisis. People's Defender Germán Mundaraín, who heads the so-called citizen's branch of the government created by the 1999 constitution, says ”there may have been excesses in apprehending Fernández, but above all else justice must be done. The people demand an end to impunity.” (END/2003)

www.forbes.com Reuters, 02.20.03, 5:50 PM ET

WHITE PLAINS, N.Y., Feb 20 (Reuters) - CITGO Petroleum Corp., U.S.-based unit of Petroleos de Venezuela S.A., sold $550 million of eight-year senior notes in the 144a private placement market, said market sources on Thursday.

Credit Suisse First Boston and J.P. Morgan were the lead managers for the sale, the sources said.

BORROWER: CITGO PETROLEUM CORP. AMT $550 MLN COUPON 11.375 PCT MATURITY 2/1/2011 TYPE SR NOTES ISS PRICE 99.380 FIRST PAY DATE 8/1/2003 LAST MOODY'S Ba3 YIELD 11.50 PCT PAY FREQ SEMI-ANNUAL
LAST S&P B-PLUS SPREAD 794 BPS/ NON-CALLABLE 4 YEARS*

            5.00 FEB 2011

*3-YEAR EQUITY CALL FOR 35 PCT AT 111.375

usinfo.state.gov 20 February 2003

Washington – The U.S. trade deficit jumped 21.5 percent in 2002 to a record $435,200 million, reflecting continued weakness in the global economy and a strong U.S. dollar.

Throughout the year rising imports, particularly for such consumer goods as pharmaceuticals and video equipment, combined with slumping U.S. exports to set the stage for the widening gap, the Commerce Department reported February 20. Services exports, long a strong sector in the U.S. economy, rose just 4 percent during the year.

The growing trade gap was led primarily by higher bilateral deficits with Western Europe, China and Mexico. The largest increase, $24,481 million or almost 38 percent, to $89,218 million was with Western Europe. The imbalance with China jumped $20,019 million, or 24 percent, to $103,115 million. Imports from China increased to $125,200 million, only exceeded by goods coming in from U.S. neighbors Canada and Mexico.

The department also reported a new record monthly deficit -- a seasonally adjusted $44,200 million in December -- up 10.5 percent from the previous month. The December gap showed a goods deficit of $48,400 million and a services surplus of $4,100 million. Exports decreased 2.6 percent to $81,200 million while imports increased 1.7 percent to $125,400 million. A $2,200 million plunge in capital goods exports was the largest factor contributing to the December export decline.

Economists say that continued large U.S. deficits are yet another sign that the United States remains the engine for global growth. Despite repeated calls by Bush administration officials and by the previous U.S. administration for actions in Europe and Japan to spur growth, U.S. expansion continues to outpace that of its major trading partners.

The department reported that in 2002 U.S. exports of goods were down $35,600 million, or 5.5 percent, from 2001. Imports of goods were up $22,600 million, or close to 2 percent, from 2001. Among the exports that have declined most were capital goods, primarily computer accessories, telecommunication equipment and semiconductors; consumer goods; and industrial supplies and materials. The largest increases in the imports were registered in consumer goods, mostly pharmaceuticals, household goods and video equipment, and cars and auto parts and engines.

Exports of services went up $11,100 million from 2001, propelled mostly by increases in "other private services" such as business, professional, technical, insurance and financial services, and in royalties and license fees. Imports of services also went up $30,900 million, or 14 percent, boosted mostly by surges in other private services, direct defense expenditures and royalties and license fees.

Following are some key figures:

U.S. GOODS AND SERVICES EXPORTS, IMPORTS AND TRADE BALANCE Millions of dollars, on a balance of payments basis, seasonally adjusted

                  Trade
                balance        Exports         Imports

Jan.-Dec. 2000 -378,681 1,064,239 1,442,920 Jan.-Dec. 2001 -358,290 998,022 1,356,312 Jan.-Dec. 2002 -435,216 972,995 1,408,211

December 2001 -27,279 77,477 104,756 December 2002 -44,242 81,186 125,427

U.S. GOODS EXPORTS, IMPORTS AND TRADE BALANCE Millions of dollars, on a balance of payments basis, seasonally adjusted

                  Trade
                balance        Exports         Imports

Jan.-Dec. 2000 -452,423 771,994 1,224,417 Jan.-Dec. 2001 -427,165 718,762 1,145,927 Jan.-Dec. 2002 -484,353 682,586 1,166,939

December 2001 -31,534 54,991 86,525 December 2002 -48,366 55,575 103,940

U.S. SERVICES EXPORTS, IMPORTS AND TRADE BALANCE Millions of dollars, on a balance of payments basis, seasonally adjusted

                  Trade
                balance        Exports         Imports

Jan.-Dec. 2000 73,742 292,245 218,503 Jan.-Dec. 2001 68,875 279,260 210,385 Jan.-Dec. 2002 49,137 290,409 241,272

December 2001 4,255 22,486 18,231 December 2002 4,124 25,611 21,487

U.S. GOODS EXPORTS, IMPORTS AND TRADE BALANCE, BY COUNTRY Millions of dollars, on a Census basis, not seasonally adjusted

              Bilateral        2002            2002
                balance        exports         imports

Total -470,104 693,517 1,163,621

North America -86,962 258,360 345,322 Canada -49,760 160,829 210,590 Mexico -37,202 97,531 134,732

Western Europe -89,218 157,080 246,298 Euro Area -66,878 105,844 172,722 European Union -82,368 143,747 226,115 Austria -1,394 2,424 3,817 Belgium 3,508 13,343 9,835 Finland -1,907 1,537 3,444 France -9,389 19,019 28,408 Germany -35,852 26,628 62,480 Italy -14,201 10,089 24,290 Netherlands 8,471 18,344 9,864 Spain -452 5,226 5,678 Sweden -6,133 3,154 9,287 United Kingdom -7,617 33,253 40,870 Other EU -17,401 10,741 28,142

European Free Trade Association -6,324 9,422 15,746 Norway -4,423 1,407 5,830 Switzerland -1,600 7,782 9,382 Other EFTA -300 233 533 Other Western Eur. -526 3,910 4,437

Eastern Europe, Former Soviet Reps. -8,283 6,599 14,883 Hungary -1,951 688 2,639 Poland -414 687 1,101 Former Sov. Reps. -4,503 4,113 8,615 Russia -4,426 2,399 6,825 Other FSR -76 1,714 1,791 Other E.Europe -1,416 1,112 2,528

Pacific Rim -215,005 178,561 393,567 Australia 6,606 13,084 6,478 China -103,115 22,053 125,168 Japan -70,055 51,440 121,494 Newly Industrialized Countries -22,073 69,823 91,896 Hong Kong 3,283 12,612 9,328 South Korea -12,979 22,596 35,575 Singapore 1,429 16,221 14,793 Taiwan -13,805 18,394 32,199 Other Pacific Rim -26,369 22,162 48,531

South/Central -17,902 51,643 69,544 America Argentina -1,595 1,591 3,185 Brazil -3,403 12,409 15,812 Colombia -2,018 3,589 5,606 Other S/C America -10,886 34,054 44,940

OPEC -34,482 18,852 53,334 Indonesia -7,063 2,581 9,644 Nigeria -4,907 1,057 5,964 Saudi Arabia -8,364 4,778 13,143 Venezuela -10,662 4,447 15,108 Other OPEC -3,486 5,989 9,475

Other countries -36,397 28,956 65,353 Egypt 1,514 2,866 1,352 South Africa -1,502 2,525 4,027 Other -36,410 23,564 59,974

NOTE: Data on a Census basis reflect movement of goods into and out of the United States through U.S. Customs Service stations. Balance-of-payments basis data adjust Census data to include products that bypass Customs, such as exports of military aircraft and imports of electricity from Canada.

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

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