reuters.com Thu February 27, 2003 04:01 PM ET (The following statement was released by the rating agency)

NEW YORK, Feb 27 - Moody's Investors Service confirmed the Ba3 senior implied and senior unsecured long-term ratings of CITGO Petroleum Corporation, concluding a review of those ratings for possible downgrade. The outlook for those ratings remains negative.

At the same time, Moody's assigned a rating of Ba2 with a negative outlook to CITGO's $200 million senior secured Term B Loan. The ratings confirmations reflect CITGO's enhanced liquidity position following the expected completion of three financings totaling $950 million.

The financings will alleviate near-term liquidity stress stemming from the disruptions in crude deliveries under CITGO's long-term crude supply agreements with affiliates of its parent, Petroleos de Venezuela (PDVSA, rated Caa1, developing outlook). They include a $550 million Senior Note issue and a $200 million senior secured three year term loan, together providing $750 million of new cash, and a $200 million accounts receivable facility that will provide replacement funds for a similar recently canceled facility. These funds will help address CITGO's working capital needs, including the impact of shortened payment terms on third party crude purchases and maturing bank letters of credit that will need to be repaid or refinanced.

Moody's also has factored into the ratings the expectation that, to the extent CITGO maintains adequate liquidity for its own internal needs, these financings will provide cash to retire some portion of PDV America's $500 million of senior notes that mature in August 2003. The Ba2 rating for the senior secured loan, which is one notch above CITGO's senior unsecured ratings, reflects the underlying quality of the pipeline assets and liquidity of the stock being provided as collateral to lenders.

The $200 million loan will be secured by CITGO's 15.8% equity stake in Colonial Pipeline Company (rated A2/Prime-1) and 6.8% stake in Explorer Pipeline Company (rated Prime-1), two common carrier product pipelines with stable cash flows and fairly ready equity valuations based on cash flow multiples and other recent transactions. Moody's is maintaining a negative outlook on all the ratings, reflecting continuing uncertainty over the impact of reduced crude production and exports from Venezuela on CITGO's operations and working capital needs, and the possibility that future actions by CITGO to undertake additional secured financings could result in the notching down of its senior unsecured ratings. The rating agency notes that PDV America Inc. continues to be rated Caa1 with a developing outlook.

CITGO's recent financings increase the likelihood that dividends will be available to retire at least a portion of PDV America's $500 million senior notes at maturity. However, the dividend will be subject to CITGO's own liquidity needs, and PDVSA's other cash sources to retire PDV America's debt are uncertain at this time.

CITGO Petroleum Corporation is headquartered in Tulsa, Oklahoma.

www.vheadline.com Posted: Thursday, February 27, 2003 By: Patrick J. O'Donoghue

Mainstream print & broadcast media have been playing down yesterday's Coordinadora Democratica (CD) march in support of fugitive Confederation of Trade Unions (CTV) president, Carlos Ortega and Federation of Chambers of Industry & Commerce (Fedecamaras) president Carlos Fernandez currently under house arrest.

Although the opposition has been slow to supply march estimates, the size of the march was lower than organizers expected.

Starting from Petroleos de Venezuela (PDVSA) HQ in Chuao, anti-government supporters marched to Fedecamaras HQ where they were addressed by  the business sector deputy president, Albis Munoz and former Fedecamaras presidents.

The march avoided clashing with government supporters holed up at PDVSA offices in La Campina and ended in front of the CTV HQ where CTV general secretary, Manuel Cova accused the government of political ly persecuting Carlos Ortega ... calling Carlos Fernandez and rebel National Guard (GN) General Carlos Alfonzo Martinez “political prisoners.”

• Among politicos heading the march were Miranda State Governor and potential presidential candidate Enrique Mendoza, Enrique Naime, Cesar Perez Vivas, Alfredo Ramos, Rafael Narvaez, and Antonio Ledezma.

Former Libertador Mayor Ledezma challenged other opposition leaders, who did not turn up for the march, to get back out on to the streets and fight with “El Pueblo” and urged wannabe presidential candidates to drop their aspirations for a greater cause, namely opposition unity.

reuters.com Thu February 27, 2003 03:57 PM ET By Pascal Fletcher

CARACAS, Venezuela, Feb 27 (Reuters) - An opposition strike against President Hugo Chavez has cost Venezuela's oil-reliant economy an estimated $7.6 billion in lost production and fiscal revenues, inflicting severe, long-term damage, the Finance Ministry said.

In a grim report on what it called the strike's "economic sabotage," the ministry said the stoppage that began Dec. 2 and fizzled out early this month had also closed down businesses, caused shortages of goods, hiked prices, reduced salaries and destroyed jobs.

"The damages caused are severe and long-term ... they will permanently affect the whole population," said the report by Finance Minister Tobias Nobrega, which reviewed the 2002 year but included a summary of the effects of the strike.

The report was sent to Reuters in Caracas on Thursday.

The strike, called to try to force left-winger Chavez to resign and hold early elections, sharply cut back oil production and shipments by the world's No. 5 oil exporter, forcing the government to slash spending and introduce foreign exchange and price controls earlier this month.

Nobrega's report estimated total loss of production in the economy caused by the strike at 9.9 trillion bolivars ($6.2 billion using the government's fixed exchange rate of 1,600 bolivars to the U.S. dollar that was introduced Feb. 6).

Of this lost production, 4.3 trillion bolivars ($2.7 billion) corresponded to the oil sector and 5.6 trillion bolivars ($3.5 billion) to the non-oil sector.

In addition, loss of fiscal income for the government as a result of the strike was estimated at 2.2 trillion bolivars ($1.4 billion). Oil exports normally account for around half of total government revenues.

BLEAK RECOVERY PROSPECTS

The effects of the strike are still being felt in the strategic oil sector, where the government has sacked more than 13,000 striking employees of the state oil giant PDVSA. It says it has restored oil output to just over 2 million barrels per day (bpd), about two-thirds of pre-strike levels.

Oil strikers put output at around 1.58 million bpd.

Energy Minister Rafael Ramirez said in Washington on Thursday the government hoped production would be approaching its pre-strike level of 3.1 million bpd by the end of March.

Condemning the strike as an "act of economic irrationality," Nobrega's report said its impact would severely constrain Venezuela's recovery prospects in 2003.

The economy shrank 8.9 percent in 2002, according to the government. Economists and analysts polled by Reuters this month predicted a sharper contraction this year of more than 13 percent. The poll saw inflation rising to 42.8 percent in 2003 from 31.2 percent last year.

Negotiations between Chavez's government and its political opponents have so far failed to produce an agreement on early elections to solve the long-running and often violent feud that has shattered investor confidence in Venezuela.

Tensions have risen again this month after authorities last week arrested one of the alleged strike leaders, business chief Carlos Fernandez. He is under house arrest facing rebellion charges and arrest orders have been issued for other alleged ringleaders of the opposition stoppage.

Bomb blasts badly damaged Spanish and Colombian diplomatic buildings in Caracas early on Tuesday after Chavez accused Spain, Colombia and the United States of meddling in his country's political crisis.

Citing a deterioration in the political climate, investment banks Merril Lynch and Credit Suisse First Boston this week downgraded their recommendations on Venezuelan sovereign bonds.

The Finance Ministry report said Venezuela's foreign debt at the end of 2002 stood at $22.3 billion, a 1.16 percent decrease from the previous year.

cbs.marketwatch.com By CBS.MarketWatch.com Last Update: 4:28 PM ET Feb. 27, 2003

TULSA, Okla. (CBS.MW) -- Williams Cos. announced Thursday that it's completed the sale of its retail travel center operations to Pilot Travel Centers for $189 million. EARNINGSWATCH Gap reverses year-ago loss, hits Wall Street target Gold prices drop to one-week low on stronger dollar Novellus holds first-quarter targets steady Univision sees Q4 topping views Free! Sign up here to receive our SiteWatcher e-Newsletter!

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The deal includes 60 travel centers and their working inventories in 15 states, Williams said.

The company (WMB: news, chart, profile), which is primarily engaged in the exploration, processing and transport of natural gas, said about 1,500 people were working for Williams TravelCenters when the transaction closed.

The former corporate office for the operations will remain open for portions of March and April for certain employees providing transitional services, Williams said.

The firm's only remaining retail petroleum assets consist of 29 convenience stores in Alaska. Those stores are up for sale under Williams' plan to divest its North Pole, Alaska refining operations.

Shares of Williams closed up 13 cents at $3.85.

Valero L.P. sees Q1 profit below target

Valero L.P. said Thursday that lower refinery runs would weigh on its first-quarter earnings.

The company (VLI: news, chart, profile), a master limited partnership 73-percent owned by Valero Energy (VLO: news, chart, profile), expects first-quarter earnings of 55 cents per unit, below the current average estimate of two analysts polled by Thomson First Call for a profit of 69 cents per unit.

The San Antonio owner and operator of oil pipelines said it continues to expect a sequential decline in average pipeline and terminal throughput levels due to lower refinery runs at certain facilities in January and early February.

Valero L.P. also cited reduced crude oil availability due to the oil worker's strike in Venezuela.

It expects pipeline and terminal throughput levels to return to normal levels for the remainder of 2003. The stock closed at $37.98, down 52 cents.

PG&E posts $2.2 billion loss in Q4

PG&E Corp. lost $2.2 billion in the fourth quarter, as revenue fell and operating expenses leaped 60 percent, the utility operator said Thursday.

PG&E (PCG: news, chart, profile) said it lost $5.75 a share, the result of $2.4 billion worth of asset impairments in the merchant power-generation unit of the PG&E National Energy Group. In the comparable period a year ago, the utility earned $520 million, or $1.45 a share.

See full story.

Oil prices ease back from 12-year high

Crude futures soared to a fresh 12-year high before easing back Thursday, as traders maintained a high degree of wariness over the latest developments regarding a possible war with Iraq.

The pull-back in prices also weighed on many oil company shares.

See Futures Movers and Energy Stocks.

www.forbes.com Reuters, 02.27.03, 3:29 PM ET

NEW YORK (Reuters) - NYMEX crude oil futures tumbled Thursday as profit-taking set in after an early attempt to crack the $40-a-barrel mark failed. Speculative funds led the sell-off in volatile trading, traders said, with the day's highs spurred by rising Iraq war fears and thin U.S. petroleum inventories. NYMEX April crude fell 50 cents, or 1.3 percent, to settle at $37.20 a barrel. April crude earlier soared $2.29 to $39.99, the highest level since October 1990 when NYMEX crude hit an all-time high of $41.15, just prior to the U.S.-led Gulf War to liberate Kuwait after an Iraqi invasion. A suspected squeeze on the April contract intensified volatility, traders said. "The market couldn't move past $40 and the sell-off began at that point... but remember $37 is still a very high price," said a NYMEX floor trader. NYMEX prompt crude oil prices remain more than 50 percent higher from mid-November levels, a premium built in amid growing fears of a war in Iraq. A strike in major U.S. supplier Venezuela and a very cold winter have also propped up prices. In London, April Brent crude settled 3 cents lower at $33.04 a barrel, moving $32.80 to $33.80. A U.S. move to lower its terror threat level helped pare oil's move higher, traders said. A delay until the weekend of the Turkish parliament's vote to allow the use of Turkish territory as a possible launchpad for military action against Baghdad was also bearish, they added. The market remained nervous amid tough talk on Iraq by President Bush, who on Thursday said any Iraqi plan to destroy banned missiles was part of "a campaign of deception." He called for Baghdad to disarm completely. "The discussion about these rockets is part of his campaign of deception," Bush said. "See, he'll say 'I'm not going to destroy the rockets, and then he'll have a change of mind this weekend and destroy the rockets and say, 'I've disarmed."' U.N. arms inspectors said the al-Samoud 2 rockets violate the 93-mile (150-km) range limit imposed after the 1991 Gulf War and called for Iraq to start destroying them by March 1. Bush's comments to White House reporters followed a speech on Wednesday in which he reiterated his intention to disarm Iraq, which the U.S. accuses of having weapons of mass destruction, with or without approval of the U.N. Security Council. Earlier on Thursday, an Iraqi official said Iraq would respond to U.N. chief arms inspector Hans Blix's order that Baghdad destroy its al-Samoud missiles. News that Iraqi Republican Guard troops and equipment were moving from their base in northern Iraq toward Baghdad raised concerns that Iraq was preparing for a U.S.-led attack. A divided U.N. Security Council on Thursday discussed a U.S.-British-Spanish draft resolution that lays the groundwork for war. France, Germany and Russia are pushing for more time for U.N. inspectors to search for Iraq's alleged weapons of mass destruction. No vote is expected for about two weeks. Saudi Ambassador to Britain Turki al-Faisal told BBC radio his country would not back a U.S.-led war in Iraq if there is no new U.N. resolution explicitly permitting the use of force. Meanwhile, OPEC Secretary-General Alvaro Silva said the cartel could cover any stoppage of Iraqi oil if war erupts and consumer countries need not release emergency reserves. On Wednesday U.S. officials said Saudi Arabia had agreed to increase output by 1.5 million barrels per day if Iraqi oil flow is interrupted by war. Temperatures across much of the United States and Canada are forecast to stay below normal through early March, Salomon Smith Barney meteorologists Jon Davis and Mark Russo said on Thursday. Ahead of Friday's expiration for March refined products contracts, NYMEX March heating oil settled 0.06 cent lower at $1.1543 a gallon, trading $1.125 to $1.1770. The April contract ended 0.58 cent down at $1.0601. NYMEX March gasoline ended 0.03 cent lower at $1.018 a gallon, moving 99.25 cents to $1.04. April gasoline finished up 0.27 cent at $1.0938. Copyright 2003, Reuters News Service