<a href=www.business-standard.com>The Business Standard, India Pradeep Puri in New Delhi Published : April 3, 2003

With the war in Iraq threatening to enter the third week, the petroleum ministry has decided to review its contingency plans to meet the country's oil requirements.

"The plans will be reviewed every 15 days to fine-tune them according to the situation on the ground," Petroleum Minister Ram Naik said today.

The government will look for suppliers outside the war zone if the war spreads and blocks the supply routes.

In case the supply of oil is disrupted, the petroleum ministry will explore the alternatives for crude imports, including spot purchases from sources outside the Gulf region.

In the case of a crisis, the government will also try to source crude from countries outside the Persian Gulf, including Egypt, Yemen, Nigeria, Russia, Malaysia, Norway, Angola, Venezuela, Oman and Australia.

The minister said some contracts had already been signed with suppliers far away from the conflict zone. He, however, refused to divulge the names of the suppliers or the quantity of crude to be sourced from them.

Naik said the war had not yet affected the availability of oil in the country. Crude supplies had not been disrupted and the oil tanks were full, he said.

The country would start getting ONGC Videsh Ltd’s 25 per cent share of oil production from the Greater Nile project in Sudan from next month, the minister added.

ONGC Videsh, a subsidiary of the Oil and Natural Gas Corporation, is also trying to buy out the other two partners in the project—the National Oil Company of China and Petronas of Malaysia.

India has 12 days’ stock of crude and another 11 days’ requirement in transit. It imports less than 5 per cent of its crude requirement of 78.7 million tonnes from Iraq.

The country also has a stock of petrol to last 33 days, diesel 29 days, kerosene 32 days, aviation turbine fuel 47 days and liquefied petroleum gas (LPG) 15 days.

<a href=ogj.pennnet.com>By OGJ editors

HOUSTON, Apr. 2 -- The Paraguana Refining Complex (CRP) in northwestern Venezuela was expected to restart its exports from the Amuay refinery with a shipment of 360,000 bbl of unleaded gasoline destined for the US, OPEC News Agency reported.

Quoting state news agency Venpres, OPECNA said CRP General Manager Ivan Hernandez said the tanker Nico Cuarto was in the process of loading and was scheduled to depart Wednesday.

He said this was the first export shipment from Amuay since the reactivation of production operations that were disrupted as a result of Venezuela's general labor strike that started in December.

It was anticipated that two more export shipments would be made in coming days via a shipment of 250,000 bbl and another of 300,000 bbl, he said.

"The production destined for export from the Amuay center was in the order of three tankers a month. However, sometimes two shipments departed a month. We cannot determine that amount because it depends on national consumption, but it was somewhere around 600,000 bbl of gasoline that was sent to the foreign market," Hernandez said.

Silicon Valley Business Journal 9:56 AM PST Wednesday 

There are no evildoers skulking behind closed doors plotting to send California gasoline prices to record highs, the California Energy Commission says in a report released Wednesday.

Instead, the high prices are due to a confluence of demand, converting refineries to make summer-grade gasoline and crude oil price increases prior to the state of the Iraq conflict, the commission says.

"The Energy Commission has found no evidence that distribution problems or delays ... were intentionally planned to manipulate gasoline prices. An investigation by the Attorney General does not appear warranted at this time," the report says.

What primarily drove this year's increases to record-setting levels was the unusually high cost of crude oil on the world market, the CEC says. The price of crude oil nearly doubled in the past year due to market uncertainty about the threat of war in the Middle East, it notes.

Other factors included an oil strike in Venezuela that drastically cut supplies and a cold winter in the Eastern United States that increased the need for heating oil, it says.

"As long as demand for transportation fuels continues to grow, California's gasoline supply will be subject to price spikes," the report says. The statewide average retail price of regular gasoline jumped 36 percent, climbing from $1.58 a gallon on Jan. 1 to a record-setting $2.15 a gallon on March 17, an increase of 57 cents. The average on April 2 is $2.16, with San Francisco still boasting the nation's highest average at just over $2.26.

With Californians consuming nearly 1.1 billion gallons of gasoline each month, a 57-cent-per-gallon increase costs consumers more than $20 million per day.

At maximum production, in-state refineries make more than 44 million gallons of gasoline a day. But to meet demand, gasoline retailers import an estimated 100 million gallons of gasoline and blend stocks each month, according to the commission.

"Unanticipated production difficulties or distribution problems can tighten the market and drive up prices before additional supplies can arrive by ship from distant refineries, which can take three to six weeks," the commission's report says.

Bangkok Post Nikhil B. Srinivasan

Regular readers of this column will note that I have not written about the markets for a few weeks. It should not be too surprising. What's the point? The war _ fed to us non-stop by ``embedded'' journalists _ dominates all trading activity.

It makes predicting expectations and price movements based on anything else virtually impossible. Macro fund managers (the only people making money in markets in the past few months) I know in London and the US all had very light portfolios going into the conflict. And for good reason.

Before the war began, you may recall that everyone had a view. Analysts and fund managers, in Thailand and elsewhere, all had their sound bites to provide. It will be short war'', markets will rally when it starts''.

It was not worth jumping on the bandwagon for a simple reason _ I did not know. I did not feel I possessed any particular edge or knowledge about a situation that was difficult to understand and make a call on. Even US Defence Secretary Donald Rumsfeld _ who knows more than any of us _ has perhaps been wrong-footed.

And as for market rallies, as noted before in this column, when everyone feels the same way about something, it is probably not a bad idea to go the other way. Despite all the talk about war and the market rallying, the SET has not risen since the war began. As I write, it is at 361 _ where it was the day hostilities started.

The war and now the Sars outbreak do help to put things in perspective. First, we live in uncertain political times. The war in Iraq will likely be won soon and with that, oil will drift lower and people may perhaps feel relieved. But there is an equally likely chance the tensions in the Middle East will continue to simmer remaining a distraction for the world. As for the price of oil, whatever happens in the Middle East, problems in Nigeria and Venezuela will mean prices are not going to simply collapse to levels of a year ago.

As for Sars and its impact, it is hard to underestimate the sort of visceral panic that the outbreak is creating. There is no doubt that this is a serious situation compounded by the fact that reaction and preventive measures were slow in coming. Tourism is suffering.

The impact on the markets borders on the irrational, as some would say. Or is it perhaps the most rational behaviour to expect from markets digesting so much simultaneously.

I can tell you this: when it comes to investing in stocks, fundamentals become even more meaningless in such times. I have been harping on this for a while (the fact that uncertain economic situations mean typical methods of stock analysis are not very useful) _ the war and Sars just amplify that point.

It's no use saying a stock is cheap and worth buying _ it just gets cheaper the next day on no particular news. Moreover, earnings numbers for companies become harder to estimate as there are changes in the macro-economic situation _ and if one cannot quickly react to macro changes, the micro picture is not worth looking at. To illustrate: you cannot properly value a stock on an earnings basis if the company itself cannot give you any visibility on its earnings beyond the next, say, six months.

In Thailand, we had good economic data in what was a decent first quarter. The economy can continue to grow at the pace of last year. But for the markets to move out of their current trading range to the upside, two things are required: 1) a return to a more reasonable global environment; 2) some policy move directly affecting the market (e.g. a major privatisation) or a new, large and successful private-sector IPO.

• The author can be reached at nibsri@hotmail.com

<a href=www.upi.com>By Hil Anderson UPI Chief Energy Correspondent From the National Desk Published 4/2/2003 5:47 PM View printer-friendly version

LOS ANGELES, April 2 (UPI) -- The final push by coalition troops into Baghdad got under way in Iraq Wednesday although oil traders appeared to be more focused with the latest weekly supply reports showing an equally dramatic jump in U.S. oil inventories.

May crude prices fell more than $1 per barrel on the New York Mercantile Exchange for the second consecutive day following the release of the U.S. Energy Information Administration's inventory report that this week included a major increase in the amounts of crude imported into the country and run through the refinery stream.

"With the high level of imports, U.S. commercial crude oil inventories ... increased by 6.8 million barrels," the EIA reported. "Over the last two weeks, crude oil inventories have increased by 10.5 million barrels."

The growing inventories coupled with continued coalition successes on the battlefield sent crude down by $1.22 to $28.56 per barrel. May Brent crude on the International Petroleum Exchange in London was down $1.15 at $25.21 per barrel.

May NYMEX gasoline lost a hefty 5 cents and dipped to 86.39 cents per gallon while heating oil, which reflects diesel prices, fell 2.23 cents to 71.86 cents a gallon.

The other closely watched weekly inventory report, which is issued by the American Petroleum Institute, pegged the build in crude stocks at more than 9 million barrels.

Saudi Arabia and Venezuela were the primary sources of the higher import flow. Ethnic turmoil in Nigeria's oil-rich Niger Delta appeared to be relatively quiet this week, although some 800,000 barrels per day of production remained shut down with no indications the major oil companies planned to restart their operations in the region any time soon.

The supply growth comes at an important time of the year for U.S. refiners who try to build up their supplies of gasoline in the spring in anticipation of higher summer demand. In addition, urban areas where cleaner-burning reformulated gasoline, or RFG, is sold are in the process of their annual switch from winter-formulated RFG to the summer formula.

Refined fuel supplies remained a concern, the EIA reported, as production of gasoline and jet fuel remained flat and diesel fuel production declined by around 100,000 barrels per day.

"Motor gasoline inventories rose by 1.7 million barrels last week but remain below the low end of the normal range," the agency reported.