www.arabnews.com Habib F. Faris

“In energy, investors have typically benefited from consistently strong returns provided by the large integrated oil companies, such as ExxonMobil, Royal Dutch/Shell and British Petroleum.”

LONDON, 3 March 2003 — Energy is the lifeblood of the modern economy and its growth is related to global GDP. The energy sector involves companies engaged in hydrocarbon exploration, transportation, transmission, processing, trade and distribution, as well as companies providing goods and services. In energy, investors have typically benefited from consistently strong returns provided by the large integrated oil companies, such as ExxonMobil, Royal Dutch/Shell and British Petroleum. Three sub-sectors of energy that are attractive are oil refining, US natural gas, and oil field services.

Over the last fifteen years, global oil demand (excluding the former Soviet Union) has grown at a compound rate of 2.3 percent or 1.3 million barrels/day. Demand growth during this period was split nearly evenly between OECD, the developed countries, and non-OECD countries. Oil supply during this period was characterized by OPEC’s growing market share — more than 60 percent of the incremental oil supply.

Several OPEC countries faced capacity constraints in meeting their 2000 production quotas. Additional investments will be required to meet future demand growth. A combination of growing market share, as well as capacity constraints in several countries, should allow OPEC to exercise greater influence on oil prices. OPEC has been very successful at managing oil prices in the $20-$30 a barrel range over the last three years.

Today, the global oil and gas industry is in the midst of important changes which can be described as the end of an era of overcapacity. Virtually all segments of the energy value chain were plagued with over-capacity during the last two decades. The supply overhang was a consequence of the industry’s demand growth expectations, which proved to be too optimistic. As a result of tightening supply/demand conditions, several large segments within energy, such as oil and US natural, have benefited from higher margins over the last several years.

In 2003, OPEC will be challenged in maintaining stability in the oil market due to the strike in Venezuela and a possible war with Iraq. Any downturn in oil prices beyond 2003 is likely to be short-lived. Also, fiscal pressures are likely to force individual OPEC countries to exercise production discipline.

Our medium-term view is that oil prices are in the midst of a secular upturn. From 1989 through 1999, oil prices averaged $19 a barrel; from 2000-2002, they have averaged $25 a barrel. This upturn was due to OPEC’s desire for higher revenues, which it achieved by relinquishing market share. Our expectation is for oil prices to average around $25 a barrel over the next several years. In this environment, many companies have assets and reinvestment opportunities, which will allow them to create shareholder value. Companies such as ExxonMobil, Royal Dutch/Shell, and BP benefit from profitable legacy assets and the ability to reinvest the cash flow from these assets into new areas such as the deep-water provinces of West Africa and the Caspian Sea.

Natural gas is one of the fastest growing components of world energy consumption, and is expected to almost double by 2002, with an average annual growth rate of 3.2 percent. Developing countries as a whole within Central and South America and Asia will likely account for the largest incremental increase in natural gas consumption.

Both US natural gas prices and oil refining have also recently witnessed profit margins above historical levels. The industry responded by increasing drilling activity. However, as the following chart illustrated, US gas production barely increased despite record drilling activity.

Looking ahead, our expectations are for prices to be higher. US natural gas, at around $3/thousand cubic feet is an attractive price for many North American independent producers.

The improvement in the US refining environment is due to growing demand and closure of some marginal refining capacity. The US and European Union regulations call for cleaner products in 2005. Refiners’ compliance is expected to result in additional capacity closures, which, in turn will further tighten the supply/demand balance and result in healthy margins.

The oil field service sub-sector conducts initial seismic studies and then drills, completes and maintains oil and gas wells for its clients, the major national and integrated oil companies. Several major themes characterize this subsector:

• Need for a strong global presence with industry-leading technologies. The “big three” international majors are Schlumberger, Baker Hughes and Halliburton.

• Ownership of important new technologies that permit a steady reduction in industry finding and development costs. Schlumberger, IHC Caland and Technip-Coflexip are examples.

• Participation in the inevitable recovery of US natural gas drilling and production. Three leading offshore drillers are GlobalSantaFe, ENSCO and Rowan plus the best onshore natural gas driller – Helmerich & Payne.

• Participation in deep offshore oil drilling. Companies such as Transocean and Noble will drill while the leading product lines of Varco International and Cooper Cameron will produce the required sophisticated equipment.

• Purchase undervalued or misunderstood securities through intensive research.

Oil field service earnings were under severe pressure in 2002 due to a significant decline in US natural gas drilling. The sub-sector will rally as investors look beyond current earnings to a more normal 2004.

In conclusion, energy is and will continue to be an attractive sector for investors. The sector is dominated by large, integrated firms, which have a demonstrated record of delivering competitive shareholder returns. Historically, the sector has provided superior returns. We believe that the various sub-sectors in the industry offer opportunities for capital appreciation in their respective investment cycles. Investment professionals are best suited to identify these areas.

(The information contained herein is for information only and should not be construed as an offer or a solicitation to purchase, subscribe, sell or redeem any investments. While Clariden Bank uses reasonable efforts to obtain information from sources, which it believes to be reliable, Clariden Bank makes no representation or warranty as to the accuracy, reliability or completeness of the information)

reuters.com Sun March 2, 2003 04:00 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - A car bomb exploded early on Sunday in the western Venezuelan oil city of Maracaibo, destroying three cars and damaging homes and a local office of the U.S. oil company Chevron Texaco, police said.

Hours after the blast, President Hugo Chavez said his country's security forces were on an anti-terrorist alert.

It was the third bomb attack in less than a week in Venezuela, where a long-running political feud between left-wing populist Chavez and his opponents has raised fears of violent upheaval in the world's No. 5 oil exporter.

Chavez, who is resisting opposition calls for early elections, Sunday blamed political foes for bomb blasts in the Venezuelan capital Caracas Tuesday which badly damaged Spanish and Colombian diplomatic buildings, injuring five people.

"We're on the alert in the whole country," the former army paratrooper said on his weekly "Hello President" television and radio show.

He did not mention Sunday's blast, which blew bits of masonry from the fronts of several private houses in the Richmond residential estate of Maracaibo's San Francisco district. Debris was scattered over a wide area.

The explosion also shattered windows of a nearby administrative office of the U.S. oil giant Chevron, one of several major foreign oil companies operating in oil-rich Venezuela. Police said Chevron did not appear to be the target.

They were working on the theory that the attack was part of a personal feud against a well-known local family, the Melians, whose house suffered the most damage. A car reported stolen by police and containing the bomb had been parked outside.

CHAVEZ SLAMS "DESPERATE" FOES

There was no apparent connection between Sunday's blast and Tuesday's bomb attacks against the Spanish embassy cooperation office and the Colombian consulate in Caracas. No one has claimed responsibility for these attacks, although leaflets signed by a radical pro-Chavez group were found at the scene.

But Chavez laid the blame Sunday on opponents he said had already unsuccessfully tried to oust him through a brief coup last year and in a two-month anti-government strike in December and January that disrupted Venezuela's strategic oil sector.

"Some desperate sectors, since they failed in the coup and failed in the oil sabotage, have now opted for terrorism and are going around setting off bombs," he said.

Opposition leaders have linked Tuesday's attacks to a speech by Chavez a week ago in which he sharply criticized Spain, Colombia and the United States, warning them not to meddle in his country's crisis.

The president, who condemns his opponents as rich "oligarchs," said Sunday privately-owned gas stations that took part in the stoppage could have their concessions withdrawn. He said his government would encourage the setting up of cooperatives jointly run by managers and workers.

Chavez is accused by opponents of ruling like a dictator and of trying to install Cuban-style communism in Venezuela. He portrays his foes as a rich, resentful elite opposed to his self-styled "revolution" he says is aimed at helping the poor.

The recent bomb blasts are unusual in Venezuela. Although it has suffered an increase in political violence caused by feuding between supporters and foes of Chavez, bomb attacks of the kind experienced in neighboring Colombia are rare.

Colombia said Saturday its security forces, in a joint operation with Venezuelan armed forces, had foiled an attempt by leftist Colombian guerrillas to blow up a border crossing bridge using a tanker truck packed with explosives. (Additional reporting by Magdalena Morales)

news.ft.com Observer - US Published: March 2 2003 20:20 | Last Updated: March 2 2003 20:20

US and European links continue to fray. Observer hears the Transatlantic Business Dialogue, set up in 1995 to get businessmen and policymakers together to resolve bilateral trade conflicts, is fighting for its life.

In its day, the TABD attracted backing from some heavy hitters. The brainchild of Leon Brittan, then European Union trade commissioner, and the late Ron Brown, then US commerce secretary, its past chairmen include Jürgen Schrempp of DaimlerChrysler and Phil Condit of Boeing. But interest has since dwindled, particularly in the US.

One reason is the organisation's slow progress in removing transatlantic trade barriers. But Europeans say the real problem is lack of commitment in the White House, which has caused top American executives to lose interest. The TABD's Brussels office has been closed and staff are deserting its Washington operation.

Observer hears that Pascal Lamy, Brittan's successor, and enterprise commissioner Erkki Likkanen are keen to relaunch. But, says one onlooker: "It all looks like a desperate effort to revive the embers of a dying fire."

Still Gaulling

The Pentagon is not helping matters either. It just can't let France and Germany alone.

Donald Rumsfeld's infamous crack about "old Europe" started it. He followed it up with putting Germany in the same category as Libya and Cuba when it comes to helping with the Iraqi campaign. And now Paul Wolfowitz, his deputy at the Defence Department, has stepped in: discussing the costs of war, he predicts that the countries currently opposed to an invasion would join in once a war was won.

"We're talking about one of the most important countries in the Arab world," Wolfowitz says. "I would expect even countries like France will have a strong interest in assisting Iraq's reconstruction."

Not content with just France, he speculates that some countries may be putting economic interest ahead of security: "Germany is one of the largest exporters to Iraq in the world today. Maybe that has something to do with their current position."

Carpe diem

Of course, George W. Bush and Jacques Chirac have not set a good example: The way they've been forming cliques, some might say they've been acting like schoolchildren.

If so, how would America's best-known teacher straighten them out? "I'd spank them," Sam Pickering tells Observer.

As the private school teacher played by Robin Williams in the film Dead Poets Society, Pickering inspired his students to think for themselves and move beyond their petty rivalries. Could he do the same with those at the centre of the Iraq debate? "I'd have a dunce cap for Bush," he says. "I'd give As to the French and the Germans. Some of those who have been bought off, such as Turkey, I'd recommend they go straight to business school."

How does he feel about Bush's supporters, such as Tony Blair? "I can't think what I'd do with Tony Blair," Pickering says. "He'd be trying to win 'most popular in the class'."

Lest Pickering be seen as the woolly sort, he has little time for Iraq's leader: "I think Saddam would probably drop the class. I don't think he'd get along with anyone."

And what about Kim Jong-il, who has been grabbing attention on the periphery of the Iraq crisis, like the obnoxious kid? "He'd be at another school, where I wouldn't take a job."

Peaceniks

Luckily, the US and Europe can agree on one international issue: Transdnistrian peace.

In a statement, they say: "We express our continued concern over the Transdnistrian conflict in Moldova, which constitutes a serious risk for stability and security in this part of Europe."

The issue at hand is a separatist movement along the Ukrainian border that is threatening to break away from the tiny post-Soviet republic.

However, the unity of purpose does not end there. The US and the EU have agreed to slap a travel ban on the Transdnistrian leadership, who were "primarily responsible for the lack of co-operation into promoting a political settlement to the conflict." See, agreeing wasn't that hard.

Carnivalesque

Rio de Janeiro's growth has doubled. But at Carnival at the weekend, revellers saw it was confined to one sector: breasts. Plastic surgeons say the average size of silicon breast implants in Brazil has nearly doubled in two years, to as much as 300ml.

But bigger breasts have created a crisis apart from the country's economic woes: many of the larger implants have been sold out for weeks.

"Without a doubt Carnival heats up the market," says Isabel Coelho, manager with Connections, a firm that imports implants. "This year there's even been a shortage for certain implants that are particularly trendy: the bigger ones."

Brazilian men are also catching on to the trend - though they prefer to augment their buttocks and pectorals.

Naturally, in the era of anti- globalisation protests, a local company is pushing authentic Brazilian beauty: its shop has cornered the market in "boobs made in Brazil".

Time bend

As Rio's carnival rages into the wee hours, Caracas' days are growing longer. Literally.

Since protests began against President Hugo Chávez last year, a power shortage in Venezuela has caused clocks to tick more slowly - at the rate of 2? minutes a day.

"Everything that has to do with timekeeping has slowed down," the general manager of the national power grid reputedly said.

So far the slowdown has cost the country 14? hours over the past year. Too bad they couldn't export longer days to Brazil.

observer@ft.com

www.thenation.com Posted February 20, 2003 by Arundhati Roy

Following is an excerpt from Arundhati Roy's talk at the closing rally of the World Social Forum in Porto Alegre, Brazil, on January 27. The full text will appear in her book War Talk, to be published in April by South End Press. --The Editors

So how do we resist "Empire"? The good news is that we're not doing too badly. There have been major victories. Here in Latin America you have had so many--in Bolivia, you have Cochabamba. In Peru, there was the uprising in Arequipa. In Venezuela, President Hugo Chávez is holding on, despite the US government's best efforts. And the world's gaze is on the people of Argentina, who are trying to refashion a country from the ashes of the havoc wrought by the IMF.

In India the movement against corporate globalization is gathering momentum and is poised to become the only real political force to counter religious fascism. As for corporate globalization's glittering ambassadors--Enron, Bechtel, WorldCom, Arthur Andersen--where were they last year, and where are they now? And of course here in Brazil we must ask, Who was the president last year, and Who is it now?

Still, many of us have dark moments of hopelessness and despair. We know that under the spreading canopy of the War Against Terrorism, the men in suits are hard at work. While bombs rain down on us, and cruise missiles skid across the skies, we know that contracts are being signed, patents are being registered, oil pipelines are being laid, natural resources are being plundered, water is being privatized and George Bush is planning to go to war against Iraq.

If we look at this conflict as a straightforward eyeball to eyeball confrontation between Empire and those of us who are resisting it, it might seem that we are losing. But there is another way of looking at it. We, all of us gathered here, have, each in our own way, laid siege to Empire. We may not have stopped it in its tracks--yet--but we have stripped it down. We have made it drop its mask. We have forced it into the open. It now stands before us on the world's stage in all its brutish, iniquitous nakedness.

Empire may well go to war, but it's out in the open now--too ugly to behold its own reflection. Too ugly even to rally its own people. It won't be long before the majority of American people become our allies. In Washington this January, a quarter of a million people marched against the war on Iraq. Each month the protest is gathering momentum.

Before September 11, 2001, America had a secret history. Secret especially from its own people. But now America's secrets are history, and its history is public knowledge. It's street talk. Today, we know that every argument that is being used to escalate the war against Iraq is a lie--the most ludicrous of them being the US government's deep commitment to bring democracy to Iraq. Killing people to save them from dictatorship or ideological corruption is, of course, an old US government sport. Here in Latin America, you know that better than most.

Nobody doubts that Saddam Hussein is a ruthless dictator, a murderer (whose worst excesses were supported by the governments of the United States and Britain). There's no doubt that Iraqis would be better off without him. But then, the whole world would be better off without a certain Mr. Bush. In fact, he is far more dangerous than Saddam Hussein. So, should we bomb Bush out of the White House?

It's more than clear that Bush is determined to go to war against Iraq, regardless of the facts--and regardless of international public opinion. In its recruitment drive for allies, the United States is prepared to invent facts. The charade with weapons inspectors is the US government's offensive, insulting concession to some twisted form of international etiquette. It's like leaving the "doggie door" open for last-minute "allies" or maybe the United Nations to crawl through. But for all intents and purposes, the New War against Iraq has begun.

What can we do? We can hone our memory, we can learn from our history. We can continue to build public opinion until it becomes a deafening roar. We can turn the war on Iraq into a fishbowl of the US government's excesses. We can expose George Bush and Tony Blair--and their allies--for the cowardly baby killers, water poisoners and pusillanimous long-distance bombers that they are. We can reinvent civil disobedience in a million different ways. In other words, we can come up with a million ways of becoming a collective pain in the ass. When George Bush says "Either you are with us, or you are with the terrorists," we can say "No thank you." We can let him know that the people of the world do not need to choose between a Malevolent Mickey Mouse and the Mad Mullahs.

Our strategy should be not only to confront empire but to lay siege to it. To deprive it of oxygen. To shame it. To mock it. With our art, our music, our literature, our stubbornness, our joy, our brilliance, our sheer relentlessness--and our ability to tell our own stories. Stories that are different from the ones we're being brainwashed to believe. The corporate revolution will collapse if we refuse to buy what they are selling--their ideas, their version of history, their wars, their weapons, their notion of inevitability.

Remember this: We be many and they be few. They need us more than we need them.

www.vheadline.com Posted: Sunday, March 02, 2003 By: Roy S. Carson

President Hugo Chavez Frias says the hour has come for the transformation of Venezuela's economic model ... the government is focusing all its forces on concrete details in a plan to generate employment, investment and to generate a superior quality of living for the whole of Venezuela's 23.4 million population.

Chavez Frias was speaking after a Council of Ministers meeting with Venezuelan Guayana Corporation (CVG) president Major General (ret.) Francisco Rangel Gomez , representatives of the Bolivar State Federation of Chambers of Commerce & Industry, the State Governor and regional private company executives to formulate decisions to boost small and medium industries throughout the southeastern region.

The National Executive is to contribute 20 billion bolivares as well as subsidies for the purchase of productive machinery this year and an important quantity of seed maize ... a mill and factory for the production of pre-cooked maize and flour is to be opened.

"The time has arrived for the transformation of our economic model," Chavez Frias said.  "We must transcend the 20th century economic model, which only generated wealth and riches for a minority, a model based on inequality which has generated unemployment and poverty through exclusion."

During his visit to Ciudad Guayana, President Chavez initiated a series of workshops in which the national government, together with the CVG and regional government will work with local federations and chambers of commerce under the direction of  Special Economic Zones Minister Francisco Natera to kick-start businesses between Santa Elena de Uairen on the Brazilian border all the way up to the Orinoco delta region in parallel with a similatr project in northern Brazil to stimulate economic integration.