www.sfgate.com Verne Kopytoff, Chronicle Staff Writer Tuesday, March 11, 2003

Facing a possible war in the Persian Gulf, ChevronTexaco said it has stopped loading oil directly from Iraqi ports in favor of more-reliable sources.

The decision marks a big U-turn for the San Ramon petroleum giant. Until recently, Iraq was an important spigot for the company, despite the escalating tensions there and condemnations by some politicians. ChevronTexaco buys Iraqi oil from third-party suppliers, but does not have its own pumping operations there.

Chris Gidez, a spokesman for ChevronTexaco, said the reversal in company policy "has everything to do with reliability of supply," not public relations.

He insisted that "it's strictly an economic, business-driven issue."

Despite the change, ChevronTexaco left open the possibility of buying Iraqi oil exported by others in the future. Just last week, the company bought part of a shipment of Iraqi crude that was sitting in the Gulf of Mexico.

ChevronTexaco stopped loading oil in Iraq in mid-February, according to Gidez. During the month prior, the company had taken two shipments of Iraqi oil to its Bay Area refinery in Richmond and three more shipments to its refinery in El Segundo, near Los Angeles, according to the Energy Information Agency, an arm of the Energy Department.

ChevronTexaco's California refineries are specially configured for high- sulfur oil, the kind found in Iraq.

Other oil companies, including Valero, ConocoPhillips, Marathon-Ashland and CITGO Petroleum, also bought Iraqi oil recently. They did not return telephone calls Monday seeking comment.

Analysts said ChevronTexaco switched strategies regarding Iraq because it was trying to avoid taking a financial hit in the event of a U.S.-led war in the region. The company would have to pay for tanker ships already en route and be left scrambling for alternate supplies to keep its refineries functioning.

Any disruption could send gasoline prices even higher than their current record levels. The average cost in California for a gallon of unleaded is at an all-time high of $2.08, according to the Energy Information Agency.

Importing Iraqi oil is legal under the United Nation's oil-for-food humanitarian program. Implemented in 1996, the program allows Iraq to sell oil and use the money for items such as food, medicine, irrigation and housing. A portion of the proceeds must also go toward war reparations for Kuwait.

Oil companies such as ChevronTexaco aren't allowed to buy oil directly from Iraq. Rather, they must deal with trading firms that first buy the oil from Baghdad under U.N supervision.

In the past, some politicians have called for prohibiting U.S. companies from importing what they call Iraqi "rogue oil." They said the proceeds support terrorism and contradict the U.S. goal of becoming more energy self- reliant.

Since last year, U.S. oil companies have gradually reduced their dependence on Iraq, mostly because of the tensions there. Average daily imports declined from nearly 800,000 barrels in 2001 to around 200,000 in the fall of 2002, according to IHS Energy Group, a consulting firm in Engelwood, Colo.

A strike in Venezuela's oil fields that started in December renewed demand for Iraqi oil. But production in Venezuela has recovered somewhat since then, providing ChevronTexaco with an alternative, analysts said.

Iraq supplied 4.2 percent of all U.S. crude imports in December, according to IHS Energy. "The loss of Iraq represents a potential pinch, but OPEC, as a whole, will make up for any shortfall of Iraqi exports," said Pete Stark, vice president of industry relations for IHS Energy.

The Organization of Petroleum Exporting Countries is meeting this week in Vienna, partly to discuss increasing oil production in the event of a war in Iraq.

Gidez, from ChevronTexaco, said his company may indeed return to Iraq when the situation there is more stable. In the meantime, he said, the firm will rely on other sources, which he declined to identify.

"If we can ensure alternative sources, that's fine," he said. "In the future, if Iraq offers a reliable economical supply, that's fine too."

E-mail Verne Kopytoff at vkopytoff@sfchronicle.com.

www.voanews.com VOA News 11 Mar 2003, 09:10 UTC

OPEC oil ministers preparing to meet Tuesday in Vienna say there are adequate supplies of oil to sustain the market despite the looming threat of war in Iraq.

OPEC President Abdulllah bin Hamad al-Attiyah said late Monday he does not believe there is a shortage in the market. However, he added that the 11-nation cartel will do all it can to stabilize world oil markets, including raise prices if necessary, if a new Gulf war disrupts production.

Most OPEC ministers are expected to agree at today's meeting to maintain the cartel's overall output ceiling of 24.5 million barrels per day.

Crude prices have skyrocketed since January because of fears of a war in Iraq, which has the world's second-largest oil reserves, and a general strike in Venezuela that crippled production there.

World oil prices are creeping towards the all-time record of $41 a barrel reached during the 1991 Gulf war.

www.middle-east-online.com First Published 2003-03-11, Last Updated 2003-03-11 16:13:44 By Leigh Thomas - VIENNA   Al-Nuaimi sees no need to change OPEC's production quota, says high oil prices are due to war threats.

OPEC heavyweight Saudi Arabia said the organisation would do its best to stabilise oil markets rattled by threats of war in Iraq, as oil ministers prepared to meet Tuesday in Vienna.

Saudi Oil Minister Ali al-Nuaimi said global oil markets had adequate supplies and pledged the Organisation of Petroleum Exporting Countries would ensure there remained enough to cover demand.

"There is enough oil on the market and we will make sure there is enough," Nuami told reporters ahead of the meeting.

OPEC President Abdullah bin Hamad al-Attiyah of Qatar echoed that analysis.

"For the time being we don't feel there is a shortage in the market," he told reporters late Monday.

Al-Attiyah explained that after speaking with clients he understood they also felt enough oil was currently available.

OPEC ministers are expected to agree Tuesday on maintaining the cartel's overall output ceiling of 24.5 million barrels per day, rolling over a 6.5-percent increase introduced at the start of February to compensate for disruption to supplies from strike-hit Venezuela.

The Qatari minister said OPEC currently had additional capacity of "about three million" barrels per day.

But since oil markets were adequately supplied, al-Nuaimi said there was no need to change OPEC's production quota system.

"There is no reason to lift the quotas," he told reporters ahead of the meeting.

Commerzbank analyst Jon Rigby said Monday in London that sticking with the standing arrangement was the most likely outcome because "there isn't a great deal of new capacity to be introduced."

"The second thing is that the market is probably reasonably well supplied at the moment, simply because we are now moving towards the second quarter when demand typically falls for seasonal reasons," he said, referring to spring in the northern hemisphere.

Despite the OPEC assurances, oil prices climbed to a new two-and-a-half-year high in London Monday before falling prey to profit-taking.

The price of a barrel of Brent North Sea crude oil for April delivery fell 26 cents to 33.77 dollars a barrel after spiking to a two-and-a-half year high of 34.55 dollars.

New York's benchmark light sweet crude April-dated futures contract dipped 51 cents to 37.27 dollars a barrel.

Bin Hamad al-Attiyah said that the threat of war in Iraq was adding between six to seven dollars per barrel.

Al-Nuaimi said oil prices would stabilise once the threat of war was lifted.

"Eliminate the drummings of war and the price will moderate," he said.

OPEC would do its part to stabilise volatile oil markets to underpin global economic growth, he said.

Al-Nuaimi said OPEC's goal was to "make sure we have a fair price for everybody".

"And that fair price should allow reasonable world economic growth so that demand is not killed," he added.

www.vheadline.com Posted: Tuesday, March 11, 2003 By: Robert Rudnicki

Colombian foreign affairs committee vice president Jimmy Chamorro has called for an urgent meeting between Colombian President Alvaro Uribe and his Venezuelan counterpart President Hugo Chavez Frias following recent comments by Venezuelan Foreign (MRE) Minister Roy Chaderton Matos. 

The call comes after Chaderton's comments about Colombian Defense Minister Martha Lucia Ramirez at the weekend, during which he said "when she is in a good mood she sees Venezuela as a rival, but when she is in a bad mood she see Venezuela as an enemy."

Chaderton also refused to classify Colombian guerilla groups as terrorist as Colombia had called for, "because that would be interference in Colombia's domestic affairs.

Chamorro has called on the Colombian government to remain quiet on the comments until a presidential summit can be organized.

www.vheadline.com Posted: Tuesday, March 11, 2003 By: Robert Rudnicki

Venezuela's Attorney General's Office has summoned Confederation of Trade Unions (CTV) secretary general Manuel Cova, however the reasons for the summons are so far unknown. 

The call follows an arrest warrant being issued for CTV president Carlos Ortega several days ago, and as a result Ortega remains in hiding. 

Although Cova was not told why he was summoned he insists "it forms part of the government's political persecution campaign with the help of the judiciary against opposition leaders."

His lawyers will now be seeking additional information on the summons before he decides whether or not to attend.

Cova also said that the CTV will inform international trade union groups of the situation in Venezuela when they arrive later today.