reuters.com Fri March 14, 2003 05:43 PM ET (The following statement was released by the rating agency)

NEW YORK, March 14 - Moody's Investors Service lowered the rating on the $72 million Series 1997A and 1999 revenue bond debt of Aruba Airport Authority to Ba1 from Baa3. This concludes the review for downgrade. The rating outlook is negative.

Approximately $43 million of the Series 1997 bonds are insured by MBIA and are rated Aaa based on the claims paying ability of the company. This rating action reflects continued weakeness in the airport's tourist based air service market, as reflected in the 13% decline in its passenger facility charge eligible enplaned passengers since 2000. Also considered was the potential for further near term stress on the airport's financial operations given the tourist based economy and the dependence on the U.S. market. While financial performance appears to have stabilized in 2002 with only a projected small decline in net revenues from 2001, this incorporates a number of non-recurring revenue increases and expenditure reductions. The 2003 budget is based on a 1% passenger growth forecast that Moody's believes may be too optimistic.Moody's also has concerns over the lack of organizational consensus on near term strategy, as has been reflected in the delayed approval of the 2003 budget.

The airport's 13% decline in passengers since 2000 has brought passenger levels to below that of 1999. Airport officials have based the 2003 budget on a forecast of 1% passenger growth in 2003. This appears to be somewhat optimistic given the potential negative impact that a war with Iraq could have on international U.S. tourism. North American tourists accounted for 70% of the tourist visits in 2002, followed by Latin Americans at 18%. The Latin American market, dominated by Venezuelans, declined 3% during 2002 reflecting the economic situation in Venezuela.

Also considered is the precarious financial state of the US airline industry. American Airlines is the dominant carrier at 27%, followed by US Airways at 10%, and the local Dutch Caribbean Airlines at 8%. Continued retrenchment by the airlines could affect lift to Caribbean destinations. KLM has added back a number of routes that it was going to cancel from Aruba which should help traffic to Europe and South America, though they won't offer the same level of service as in 2002. The 2003 adopted budget indicates preliminary financial results for 2002 showing revenues declining slightly from 2001. However, this is in part due to a number of non-recurring revenues including receipt of proceeds from a litigation settlement. Of particular interest will be whether these revenues will be considered towards calculating the 1.35 times rate covenant test for 2002. The 2003 budget, which was adopted two months into the fiscal year at the end of February 2003, projects a 1.65 times debt service coverage.

In Moody's opinion this appears to be optimistic given the projected growth in passengers and revenues and the roughly 14% in assumed additional cost reductions. Management's assessment and strategic response to any significant changes in traffic and revenues during the course of the year will be an important factor in assessing the airport's creditworthiness. To its credit the Authority has taken a number of steps to increase fees and charges to offset the decline in finances since September 11th. Thishas helped stabilize the airport's financial picture. Proactive measures include implementing a $2.50 per passenger security charge in March 2003. The airport authority's board has the power to increase the passenger facility charge if needed.

In addition, a $20.5 million court judgement against the government of Aruba, after a deal to create a motor sports complex ended in a dispute with the developers, increasingly seems unlikely to affect the Airport Authority. Bondholders also benefit from a number of reserve accounts held in the United States, including a cash funded debt service reserve totaling almost $10 million.

eastbay.bizjournals.com 2:14 PM PST Friday  Alan Doyle  

Three of the five oil companies with East Bay plants are the top importers of crude from Iraq, according to U.S. Department of Energy statistics for January, the most recent month for which figures are available.

A fourth refiner, San Ramon-based ChevronTexaco Corp. – which operates the East Bay's largest refinery in Richmond – said it is suspending purchases of Iraqi crude for its U.S. refineries. The nation's second-largest oil company said the decision was based on market conditions and uncertain continuing supplies, not because of political fallout as President Bush prepares to wage war on Iraq. ExxonMobil Corp., the nation's largest refiner, also said it had stopped loading Iraqi crude for U.S. refineries.

The three refiners still buying Iraqi crude through middlemen under terms of the embargo imposed by the United Nations in 1991 after the last war with Iraq are Valero Energy Corp., ConocoPhillips and Motiva Enterprises LLC, a joint venture between the Royal Dutch/Shell Group and Saudi Aramco. Valero and ConocoPhillips previously said none of the Iraqi crude was bought for their refineries in Benicia and Rodeo. Motiva doesn't do business in the West.

The Department of Energy reported Valero, the nation's largest independent, was the biggest U.S. purchaser of crude in January, importing 140,000 barrels per day, up from 48,000 in the fourth quarter of 2002. ConocoPhillips imported 101,000 bpd and Motiva was the fifth-largest importer at 65,000 bpd, according to the federal agency.

Total U.S. imports of Iraqi crude rose to 600,000 bpd from 366,000 bpd in December, according to the DOE. Much of that increase was thought to be attempts to offset shortages caused by the oil strike in Venezuela, normally the fifth-largest exporter of crude to the United States.

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Venezuela said has boosted production to 2.1 million bpd since the strike ended last month. Production had dropped as low as 390,000 bpd, forcing refiners to scramble for other sources of crude and persuading other OPEC nations, including Saudi Arabia and Nigeria, to increase production.

Overall, Saudi Arabia remained the top source of U.S. imports in January, with 1.82 million bpd, or 21 percent of the total 8.55 million bpd total, according to the DOE. Production rose from 1.15 million bpd in December.

Canada remained second at 1.62 million bpd, up from 1.49 million bpd in December; Mexico dropped to 1.57 million bpd from 1.73 million bpd. Nigeria remained fourth, at 798,000 bpd, up from 625,000 bpd in December.

Reach Doyle at adoyle@bizjournals.com.

www.voanews.com VOA News 14 Mar 2003, 21:18 UTC

Costa Rica has granted political asylum to Venezuelan opposition leader Carlos Ortega, who faces treason charges for organizing Venezuela's recent two-month general strike.

Costa Rica's Foreign Ministry said in a statement Friday that Mr. Ortega received asylum for humanitarian reasons. The statement also said Mr. Ortega entered the Costa Rican Embassy in Caracas earlier in the day because he feared for his safety.

Mr. Ortega had been in hiding since last month, when Venezuelan authorities issued a warrant for his arrest.

The Venezuelan government says he responsible for the lengthy strike, which had its greatest effect on the country's key oil industry. The labor action was aimed at forcing President Hugo Chavez to resign and call early elections.

Another strike leader, Carlos Fernandez, is under house arrest on charges of treason and other crimes related to the protests.

Mr. Ortega is the head of the country's largest labor union. He now becomes the third major opponent of President Chavez to seek asylum outside the country.

Last year, Colombia granted asylum to business leader Pedro Carmona. He briefly replaced Mr. Chavez as president during last April's coup that briefly ousted the populist leader.

El Salvador granted asylum to retired naval officer Carlos Molina, who faced an investigation for his role in the coup.

news.ft.com By Carola Hoyos in Paris Published: March 14 2003 22:12 | Last Updated: March 14 2003 23:55

The International Energy Agency, which co-ordinates oil stock releases, has given its first indication that its 26 members will tap into their strategic reserves in the event of war in Iraq.

Claude Mandil, head of the IEA, said consuming countries, as well as members of the Organisation of Petroleum Exporting Countries, would release stocks if military action disrupts oil production in the region.

"What we need to convey to the market is that the shortfall will be offset by both consuming countries and producing countries," he told the Financial Times.

Oil prices, up to almost $40 a barrel last month, have been falling sharply in recent days as it emerged that the campaign would start later than expected.

By Friday evening, April Brent crude was $1.27 lower at $30.38. The May contract fell $1.63 to $30.14. Any suggestion that the IEA members could release part of their 4bn barrels of stock could drive prices lower.

Mr Mandil insisted that the IEA would seek to counter the effects of any supply disruption. "If the market is tight, if the stocks are very low and if you have a sharp decrease of 2.5m barrels per day - which will be the case if Iraq and northern Kuwait were stopped - I would call it a supply disruption."

The fact that the agency appears ready for only the second time in history to release its oil stocks points to the imminence of war, analysts said.

In January 1991, the announcement that the IEA would release 2.5m b/d of oil from its strategic reserves coincided with the start of the air campaign. It prompted a record-breaking free fall in oil prices to $10.56 a barrel.

Friday's price fall was aided by comments from Spencer Abraham, US energy secretary. He said Washington reserved the right to make a unilateral release from its Strategic Petroleum Reserve without reference to the IEA. The US has about 600m barrels at its disposal.

The IEA said it did not believe the Opec cartel had enough spare capacity to offset the interruption caused by war. Conflict would affect Iraqi production of about 2m-2.5m b/ d and would probably cause a precautionary reduction of Kuwaiti output.

It warned of a potential shortfall of 1.68m b/d if the US went to war in Iraq in the second half of this month. That deficit would, however, drop to only 580,000 b/d if the Bush administration waited until April, when demand for heating oil is expected to drop as winter ends in the northern hemisphere. Saudi Arabia could also bring on stream its more inaccessible spare capacity.

How much oil the consuming countries will release will therefore be calculated on the basis of these assumptions and will depend on the timing of any war.

www.arabnews.com Agence France Presse

MOSCOW, 15 March 2003 — Saudi Arabia and Russia are coordinating their efforts to stabilize oil prices despite the Iraq crisis and maintain prices at levels desired by OPEC and Moscow, Minister of Petroleum and Mineral Resources Ali Al-Naimi said yesterday.

Riyadh and Moscow are both seeking “to ensure the stability of the world oil market and fair prices,” Al-Naimi said after talks with his Russian counterpart Igor Yusufov, as quoted by the Interfax news agency.

“We favor a fair level for oil prices, defined by OPEC (the Organization of Petroleum Exporting Countries) at 22 to 28 dollars a barrel, and that in no way contradicts the price level set by the Russian Federation of $20 to $25 per barrel for benchmark Ural,” Al-Naimi said.

Fears regarding the uncertainty surrounding a possible war in Iraq have seen oil prices rise sharply, with the current price standing at $33 a barrel.

“Halt the war situation and the prices will fall,” Al-Naimi said.

The minister hinted that Saudi Arabia might not be able to make up the market shortfall in supplies of crude if Iraqi production should be halted because of a war.

“Until now Saudi Arabia has been able to compensate for oil shortages on world markets, but I can only speak about hard facts,” he said.

“When there was a strike in Venezuela and oil supplies on the world market dropped, we were able to make up the difference. I can’t say what would happen in the hypothetical case” of a war in Iraq,” he stressed.

On Thursday, the first day of his visit, Al-Naimi noted that Saudi Arabia in February used 90 percent of its current 10.5 million barrels a day capacity.

Like Saudi Arabia, Russia is a major oil producer, but it is not a member of OPEC.