www.abs-cbnnews.com By NEELA BANERJEE The New York Times

VIENNA, Austria - The Organization of the Petroleum Exporting Countries (OPEC) decided at its meeting here Tuesday to maintain oil output at current levels, indicating it could do little else to cope with the uncertain impact a possible war in Iraq could have upon supplies from the Persian Gulf and global demand.

At its last meeting in January, OPEC raised production levels to 24.5 million barrels a day. But industry analysts think OPEC is producing more than that, with nearly all countries, except for Saudi Arabia, pumping at maximum capacity to calm a market shaken the last few months by export shortages from Venezuela and jitters over war.

The president of OPEC, Abdullah bin Hamad al Attiyah of Qatar, acknowledged that although the 10 voting OPEC members were taking a wait-and-see approach, the group was prepared to act quickly to produce even more oil within weeks to prevent supply shortfalls and steep jumps in prices.

"We will closely monitor market developments,” Attiyah said at a news conference after the formal meeting, “and take prompt and appropriate action as and when the need arises.”

Opec does not disclose its actual production, and Attiyah and others would say only that the group’s excess production capacity is 2 million to 4 million barrels a day above the official quota. It is unclear how much of that has already been tapped, though most industry analysts estimated that perhaps only a million barrels a day of spare capacity remained within OPEC, nearly all of it in Saudi Arabia. There is negligible spare capacity outside OPEC, analysts said.

Opec scheduled an extraordinary meeting for June 11, to be in Doha, Qatar, rather than at its Vienna headquarters. But Attiyah said that if war in Iraq touched off an emergency in oil markets before June, OPEC members would confer by telephone or convene another meeting.

Right now, OPEC's most obvious challenge is an oil price that is so high that it could cripple the economy and weaken demand. Crude oil for April delivery closed at $36.72 a barrel on the New York Mercantile Exchange, an increase of 42 percent from four months ago, when the general strike in Venezuela began and its oil exports were suspended.

Attiyah said that while OPEC was doing all it could to rein in high prices, the trend was essentially out of the group’s control. He and other oil ministers said there was enough oil on the market, but that prices were buoyed by fears of war, which added a premium to the price of oil that OPEC members have variously estimated as $5 to $8 a barrel, Attiyah said.

"The price today is being driven more by psychological forces,” he said. “I wish we had the power to freeze prices at $25 but it is out of our hands.”

Yet industry analysts explained that OPEC was now reaping a volatility in oil prices born of its aggressive cuts in output throughout 2002. “Prices are driven by fundamentals that were created over a 12-month period,” one senior oil trader who insisted on anonymity said, explaining that low commercial stocks of oil and petroleum products in the United States were a result of OPEC's export reductions last year.

"It’s very good to have a management system to bolster prices, but it can get out of hand, and it did get out of hand,” the trader said.

If prices are slipping beyond OPEC's control, the only other way to halt an upward spiral would be for Europe, Japan and the United States to release oil from their stockpiles, which together total about 1 billion barrels. But OPEC and the United States both indicated Tuesday that such a decision remained distant and would be made to address an oil shortage, not a run-up in prices.

US Energy Secretary Spencer Abraham, who was in Vienna this week to talk to officials at the International Atomic Energy Agency, met with the Saudi Oil Minister Ali al-Naimi late Tuesday and later praised OPEC for its promise to meet shortfalls in supply.

"If OPEC would cover any shortage, we would welcome that,” Bloomberg News reported him saying. “We will only draw on the Strategic Petroleum Reserve if there is a severe supply disruption.”

While prices have remained stubbornly high despite OPEC's efforts, the group fears that they could fall rapidly and far too steeply, depending upon what happens in Iraq. And OPEC must be ready for that possibility as well, its members said. If a war in Iraq is brief, there is little damage to its oil sites and only a short suspension of its exports, the nervousness in the oil markets could fade and prices could decline.

Some members worry that such a decrease could be accelerated if demand for oil falls by about two million barrels a day in the second quarter, as has historically occurred. But OPEC has little choice but to wait to react to such a trend, rather than try and head it off.

"There is no doubt that demand in the second quarter will fall,” said Chakib Khelil, Algeria’s minister of energy. “In a normal situation, we would lower supply. But this isn’t a normal situation.”

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www.miamitodaynews.com By Susan Stabley    Miami's luxury real estate market may get a boost from foreign investors now that a proposal to further limit the length of stay for international visitors has been withdrawn.    Gov. Jeb Bush applauded last week's decision by the Bureau of Citizenship and Immigration Services, formerly known as INS, to withdraw a rule that could have limited foreigners to 30-day visits instead of up to six months.    According to the Governor's Office, in 2001 more than 8 million international visitors came to Florida. Tourism is the state's top industry, comprising 20% of Florida's budgeted general revenue and generating more than $50 billion in economic impact annually.    Just this month, the Immigration and Naturalization Service, was disbanded and absorbed by the new US Department of Homeland Security. The Department of Justice dropped the rule change before making its official transition, though it is still unclear whether the new department will try to revive the limitations.    Alex Sanchez, CEO for the Florida Bankers Association, said the proposed rule could have cause a major divestiture of Florida holdings by foreigners.    International visitors generated more than $500 million in sales tax revenue, Mr. Sanchez said. Substantial portions of the 8 million international visitors are part-time residents, he said, and own property, buy cars and invest in local businesses.    "That's a big part of the economic diversity in the state of Florida," Mr. Sanchez said. "This is important news for us."    The immigration proposal has also been a serious issue for real estate insiders like Jean-Charles Dibbs, a real estate partner at the law firm of Shutts & Bowen, who represents domestic and foreign clients who buy and sell luxury waterfront single-family homes and condos.    In the wake of 9/11, Mr. Dibbs said, he has had to move a significant amount of foreign-owned real estate - both vacation homes and income-producing properties. But balancing the demand to sell is a surge of buyers predominantly from Argentina, Colombia and Venezuela, many who move here with large investments.    International clients make up 75% of Mr. Dibbs' business.    In the past six months, Mr. Dibbs said, he has handled transactions of properties valued from $2.7 million to more than $5 million. Most are in Key Biscayne, South Beach or the islands along the Venetian Causeway and the demand for waterfront property has cause a "feeding frenzy," he said.    Toni Schrager, a long-time high-end real estate agent and one of the founders of Avatar Real Estate Services, agrees that many luxury buyers are from Argentina, Colombia and Venezuela, as well as Brazil and Mexico. Attitudes are split, though, with as many buyers and sellers taking a conservative stance, as are those who are operating like it's "business as usual," she said.    For real estate agents, the visa issue created "nervousness," Ms. Schrager said.    "We didn't see mass selling, but there was an undercurrent," she said. "Realtors talked about a concern."    Still, among property owners a greater concern revolved around the ramifications of selling.    "Many are afraid that they won't be able to get back in the market if they sell, that prices would become much higher than they are comfortable with."    "There's a lot of uncertainty," she said. "But Miami seems to have its own economy. You can't compare us to other places."    "It's a microcosm here. Miami is already the capital of Latin America," Mr. Dibbs said. "The economy is largely dependant on South American investment. We can be in a recession countrywide and my business will not feel it because of the investment coming from South America."    Mr. Dibbs said he keeps asking himself when the bubble might break.    "So far, it hasn't slowed down. Interest rates are low and Miami is positioning itself as a world-class city and a cultural Mecca... It's causing a lot if people to take notice."

www.forbes.com Reuters, 03.12.03, 10:52 AM ET CARACAS, Venezuela, March 12 (Reuters) - Venezuela's largest state-run aluminum smelter, Venalum, produced 33,321 tonnes in February, meaning it is on track to achieving annual output similar to the record 436,558 tonnes in 2002, a smelter spokeswoman told Reuters Wednesday. Venalum, operated by the state industrial holding Corporacion Venezolana de Guayana (CVG) in mineral-rich southeast Bolivar state, suffered no serious effect on its production from a two-month anti-government general strike that fizzled out early in February. The smelter's February output figure was below the 36,954 tonnes produced in January but roughly the same as the 33,256 tonnes registered in February, 2002. The fall in February compared with January was due to the smaller number of days in the month of February, the spokeswoman said. Venalum, which has a nominal capacity of 430,000 tonnes a year, has said it hopes to repeat this year the output level achieved in 2002, The opposition strike, called by foes of leftist President Hugo Chavez to try to force him to resign and call early elections, slashed oil output in the world's No. 5 petroleum exporter and reduced natural gas supplies to some strategic basic industries in Bolivar state. Venalum is 80 percent owned by a wholly owned subsidiary of CVG. The remaining 20 percent is held by six Japanese firms -- Showa Denko K.K. <4004.T> , Kobe Steel Ltd. <5406.T> , Sumitomo Chemical Co. Ltd. <4005.T>, Mitsubishi Materials Corp. <5711.T>, Mitsubishi Aluminum Co. Ltd. and Marubeni Corp. <8002.T> No data were availbale for CVG's smaller Alcasa smelter, which produced 14,206 tonnes in January.

www.forbes.com Reuters, 03.12.03, 10:14 AM ET By Jonathan Leff VIENNA, March 12 (Reuters) - The Organisation of the Petroleum Exporting Countries does not have enough spare capacity to cover a twin supply disruption from Iraq and Kuwait in the event of war, the head of Nigeria's OPEC delegation said on Wednesday. OPEC has at least two million barrels per day of available output, excluding Venezuela, where the effects of a strike have reduced output, Presidential Advisor on Energy Rilwanu Lukman told Reuters in an interview. Asked if OPEC could cover an outage of Iraqi oil, he said: "Yes, but then it would be stretching it a bit tight." If Kuwait or another Middle East producer were affected he said: "Then nobody can do anything; the SPR will come in and bring the prices down while people are putting their houses in order. This is what they did last time around. We expect them to do the same thing again if producers can't make it up." Washington has said it will use its SPR, Strategic Petroleum Reserve, as a last resort if OPEC cannot cope, under the umbrella of the 26-nation International Energy Agency. The IEA last released emergency reserves during the 1990-1991 Gulf crisis. OPEC agreed on Tuesday to leave formal output limit of 24.5 million bpd in place despite fears that a potential U.S.-led attack on Iraq could cut off its 1.7 million bpd of exports. Kuwait has said it may need to shut up to 700,000 bpd of production from fields near its northern border with Iraq, where U.S. troops are poised to invade. OPEC heavyweight Saudi Arabia has said it would pump to the extent of its capacity if needed to prevent any shortage, but even Lukman is worried that may not be enough. "Saudi has at least one million, the rest of the OPEC nine is at least another million and you have Venezuela still to go back to normal," he said. In case of war, Lukman said the cartel stood ready to "drop everything" and hold a meeting, but could also agree to raise production via telephone if required. OPEC's next scheduled meeting is June 11 in Doha, Qatar. One of several members pushing to raise its share of overall cartel output, could sustain 2.5 million bpd in the space of a few weeks, from about 2.1 million now, Lukman added. "We have the potential to increase to 2.8-2.9 million bpd, but this is not immediate," he said, adding that it could take three to six months to reach this level. The West African producer was planning 3.0 million bpd capacity by year's end, he said. The sensitive task of redistributing output quotas among members began last year and members are now debating what formula to use, although Lukman said there was no timetable for the new divisions. "The sooner the better," he said.

www.latintrade.com March, 2003

María Elena Carrero had been out of work for a year when she found a job in Venezuela’s fastest-growing underground industry—telecommunications. A friend hired the former secretary to sit at a table on a busy pedestrian boulevard and charge passers-by for the use of a pair of cellular telephones.

Pay phones a few feet away are several times cheaper than what Carrero charges, but she says many Venezuelans don’t carry prepaid pay phone cards—sold by dominant telecom Compañía Anónima Nacional Teléfonos de Venezuela (Cantv)—nor can they afford their own cellular phones. Venezuelan pay phones do not take coins.

“What can one do?” Carrero says of her work, at which she clears US$30 a week. “I was in the house all day long.”

A virtual army of the unemployed provide rent-a-phones on sidewalks across the country, cutting pay phone use in half in less than two years. Such is Venezuela’s changing telecom business, where cable TV companies aspire to lop off the top residential consumers, wireless handsets hide inside home-phone units and long distance is under attack from a dozen by-the-minute discounters. Through it all, ex-monopoly Cantv—now controlled by a consortium led by former U.S. baby bell Verizon—fights to stay on top.

Cantv competitor TelCel, owned by another U.S. baby bell, BellSouth, seized the lion’s share of Venezuela’s cellular market when it launched a decade ago. Today, TelCel controls 45% to Cantv-unit Movilnet’s 38%. (Telecom Italia-controlled Digitel has the rest of the market.) Meanwhile, BellSouth’s ‘Telcel fijo’ units, which use wireless technology in a standard desk-style phone, have taken a 15% bite out of the residential market in less than two years. Venezuela has 3.2 million fixed lines for a population of 24 million, plus 6 million wireless lines.

More threatening still are a dozen new companies determined to skim off the 10% of customers that provide more than half of revenues. One is NetUno, a cable-television provider that offers home-telephone service in the upscale Caracas neighborhoods where its cables already run. Chile’s Entel, a subsidiary of Telecom Italia, also says it will invest $80 million in Venezuela by 2007 and expects to win 20% of the Internet and long-distance markets.

“In the areas where we are, we are taking many clients away from Cantv,” says NetUno publicity manager Jorge Parra. “It’s not much now, but there will come a time when it will be tremendous.”

In response, Cantv has cut long-distance rates, though not enough to match the competition, and it is offering new services such as home surveillance and medical diagnosis via Internet, as well as spending US$190 million to upgrade its cellular system to permit wireless Internet service. And it has introduced a popular tarjeta única, a single pre-paid card for home telephone, Internet and long-distance services.

A pack of start-ups, too, now offer monthly and call-by-call long-distance deals at substantially lower rates. The new long-distance carriers have stolen away between 5% and 7% of the market. “The competing companies are going to go after the large customers, so Cantv has to be prepared,” says Gartner Dataquest analyst Marta Kindya.

Cantv is still in the driver’s seat in most segments, including home telephony, long-distance, Internet and data transmission services. Through its Caveguías subsidiary, it also publishes Venezuela’s telephone books, and it has nearly 400 ‘Communication Center’ franchises, where the public can make calls, use the Internet and send and receive faxes. Calls from the centers have taken off even as the economy weakened.

Fighting back. Cantv reported net income down nearly 4% in the first nine months of 2002, even as it added income from services like broadband Internet and business data services. It blamed a weak economy but also pricing pressure in long-distance.

“We’re worried, but we’re not terrified,” says Chief Operating Officer Vicente Llatas, who says the company is fighting back with discounted rates and its own version of TelCel’s fijo wireless home phone.

The winner in phone privatization has been ordinary Venezuelans. Cantv once obliged customers to wait 15 minutes for a dial tone and an average of eight years for installation. During the 1990s, the company reduced its workforce 30% and slashed its debt load, a move which helped it fend off a 2001 hostile takeover bid by AES Corp., a U.S. energy company. Today, dial tones come in seconds and new phones are installed in days.

Cantv may have another advantage. In the minds of many Venezuelans, the company is still synonymous with basic telephone service. Being big has proven best in many markets in Latin America, most clearly in countries like Mexico, where the former state monopoly continues to rule the roost. Converting itself into the next Telmex, however, will take some serious focus.

Author: Mike Ceaser • Caracas