<a href=reuters.com>The World Bank Wed April 2, 2003 10:59 AM ET

WASHINGTON, April 2 (Reuters) - The World Bank on Wednesday predicted Latin America would see a small 1.7 percent bounce in real GDP this year, closing the book on a gloomy 2002 when an Argentine recession weighed the region down.

The projection assumes Argentina will swing into positive growth territory this year. That country's 11-percent drop in gross domestic product was mainly responsible for Latin America's economy shrinking 0.9 percent in 2002, the Bank said.

Excluding Argentina, the region would have grown a modest 0.8 percent.

Looking ahead "the forecast assumes that challenging external financial markets will remain a headwind against the region for the next couple of years, although the worst of the credit cycle is now behind us," the World Bank stated in its latest Global Development Finance report.

For 2004, the World Bank forecasts 3.8 percent growth.

Latin America was the world's worst-performing region last year, pounded by big recessions in Argentina, Venezuela and Uruguay and election uncertainty in Brazil. Sharp drops in capital flows also hurt as investors shunned what the bank calls the "heavily indebted economies of Latin America."

This year, Argentina's GDP should rise 2.6 percent, even though the World Bank cautions the country is a "wild card."

"There is now clear evidence that the economy has moved off its lows and that banks have recovered sufficiently for the payments system to be up and running again," the report says.

"What is unknown is how enduring this phase will be."

If Argentina's presidential elections in April produce a strong government that strikes an early deal with the IMF and external creditors, "then there should be substantial scope for growth."

Argentina and the IMF tried over 11 months to strike a deal for that country to obtain much-needed aid, as both sides haggled over issues that ranged from bank restructurings to utility rates.

Both sides then opted for a more modest agreement that reschedules payments to multilateral lenders until a new government takes over at the end of May.

The report says "gross market-based financial flows" to the region fell by $31 billion, down 40 percent. Net foreign direct investment dropped to $42 billion from $69 billion in 2001, "with declines evident across all countries."

"Sluggish growth and a slowdown in economic and political reforms are expected to continue to hold back FDI flows to Latin America."

Foreign Investment, Remittances Outpace Debt As Sources of Finance For Developing Countries: World Bank

SkyePharma PLC Preliminary Results Announcement for the Year Ended 31st December 2002 Wednesday April 2, 7:31 am ET

LONDON, April 2 /PRNewswire-FirstCall/ -- SkyePharma PLC (Nasdaq: SKYE - News; LSE: SKP - News) today announced the Company's financial and operating results for the year ended December 31, 2002. ......Our 2001 strategic collaboration with Astralis Ltd (Astralis) covers the development of Psoraxine(TM), a unique injectable treatment for psoriasis, a chronic skin disorder that affects approximately 3% of the world population. There is no approved cure for psoriasis and most approved treatments provide only temporary or incomplete relief and may also cause serious side effects. Psoraxine(TM) is a protein that stimulates cells from the patient's immune system to reverse the inflammatory process responsible for psoriasis symptoms. Astralis has completed clinical studies in Venezuela using first generation Psoraxine(TM) to treat nearly 3,000 psoriasis patients, the vast majority of whom responded positively with few side effects. We are working with Astralis to develop a second-generation product, now being produced in the USA, and to validate the promising results from Venezuela in US clinical studies that will be used for regulatory and marketing approval. Following the recent completion of toxicological studies, Astralis expects authorisation to commence US clinical trials later this year.

Chris Varcoe <a href=www.canada.com>Calgary Herald Wednesday, April 02, 2003

After a decade of booming growth in Canadian energy exports to the United States, the era of sending additional oil and gas supplies south is likely ending, says a new report by the C.D. Howe Institute.

In a study released Tuesday, the Toronto-based think-tank said the energy industry will face a new challenge of "sustaining current (production) levels, rather than adding appreciably to them."

"A more assertive U.S. administration will challenge Canadian understanding of the significance of continental energy integration," said the report, written by former University of B.C. professor Paul Bradley and economist Campbell Watkins.

"The rapid growth in Canadian oil and gas exports is probably over; indeed, growing strains on capacity foreshadow higher prices, especially for electricity."

Since the deregulation of Canada's energy business in the 1980s, the

$50-billion-a year industry has expanded rapidly due to a burgeoning appetite south of the border for more oil, natural gas and electricity.

About 60 per cent of all crude oil pumped in Canada now heads south, while more than half of the natural gas production is exported to the United States.

Canada is now the largest supplier of energy to the U.S., topping Saudi Arabia, Venezuela and Mexico.

One area of future growth for Canada will come from the Alberta oilsands, the report contends. While conventional oil reserves in Canada would last about nine years without future additions -- similar to U.S. levels -- the 176 billion barrels of oilsands reserve boost that figure to almost 80 years.

Yet, huge investment dollars, along with long lead times, are required to build new projects and produce additional synthetic oil from the Athabasca oilsands, the report notes.

"Remaining steps toward freeing markets will be more contentious as consumers face higher commodity prices and perhaps sacrifice some direct sharing of the lower costs that are attributable to Canada's natural endowments," it states.

Industry insiders disagree, saying there will be strong growth of oil and gas exports as petroleum output increases from Canada's East Coast, the North and in the oilsands.

The National Energy Board predicts oil production will rise to 3.1 million barrels per day by around 2005, up from about two million barrels in 1999.

The Canadian Association of Petroleum Producers expects overall oil output to hit 3.5 million barrels a day by 2010, a 46 per cent jump from the 2.4 million barrels currently pumped.

Gas production is expected to increase by two to four per cent annually, according to CAPP.

"It's not the doubling in the gas industry we saw in the 1990s, but it's still very strong growth. But it's on the oil side, not the gas side," said CAPP vice-president Greg Stringham.

The report's authors also say terrorist attacks in the U.S. have increased concerns about security of energy supply in the United States, boosting the momentum for Washington to reduce its reliance on Middle East oil.

"More emphasis on energy security by the U.S. provides a platform that could enable Canada to better press its interest in securing favourable access to the U.S. market and in sharing benefits and costs of further market integration," the 33-page study said.

"Energy is one sector where Canada can negotiate from a position of strength."

cvarcoe@theherald.canwest.com

<a href=quote.bloomberg.com>Bloomberg.com By Stephen Voss

London, April 2 (Bloomberg) -- Crude oil fell as much as 5 percent in London on expectations a push by coalition troops toward Baghdad is bringing closer the end of a war that's halted oil exports from Iraq, the Middle East's third-biggest producer.

U.S. soldiers have taken Karbala, southwest of Baghdad, and moved to within 25 miles (40 kilometers) of the Iraqi capital, Cable News Network reported, citing correspondents. Forecasts of an increase in U.S. oil stockpiles and the possibility that shut- down Nigerian fields may soon reopen, also weighed on prices.

``It looks as if the assault has started on Baghdad, so inevitably it's just a question of time'' before the war ends and oil starts pumping again, said Rob Laughlin, a director of energy broker GNI Ltd. in London. Iraq in February produced almost 2.5 million barrels a day, or 3 percent of the world's oil.

Brent crude oil for May settlement fell as much as $1.31 to $25.05 a barrel on London's International Petroleum Exchange, the biggest drop in six days. It traded 86 cents down at 2:15 p.m. Prices have slid 21 percent in the past month.

U.S. Marines seized a bridge over the Tigris river in central Iraq, the last needed for an assault on Baghdad, and took control of the main Highway 6 leading from Kut north to the capital, Reuters reported, citing an unidentified Marine officer.

A decisive engagement'' is beginning with the Republican Guard, Air Marshal Brian Burridge, the commander of U.K. forces in the Persian Gulf, said in an interview with the British Broadcasting Corp. Burridge said he wouldn't want to give the impression that within a day or two this is going to be over.''

In New York, crude oil for May delivery was down $1.02 at $28.76 a barrel in electronic trading on the New York Mercantile Exchange. New York futures dropped below the moving average for the past 200 days, helping reinforce the slide, brokers said.

Jittery

``Now we're getting reports that the war is going more in the U.S.'s favor in the advance toward Baghdad, and that triggers a bout of selling in this jittery market,'' said Keith Morris, oil equity analyst at BNP Paribas in London.

Price swings have been common as traders use war reports as reasons for buying or selling, he said. ``One day the oil market thinks the war will last forever, and then it's just a few days.''

In Nigeria, international oil companies have halted production of about 800,000 barrels a day in the past two weeks, or more than a third of the country's output, because of fighting between government troops and ethnic Ijaw militants before presidential elections on April 19.

``The general impression is that this is all orchestrated ahead of the elections,'' said BNP Paribas's Morris.

No Nigerian Strike

Brent crude fell 82 cents yesterday after the Nigerian Labour Congress, the country's biggest labor federation, called off a planned three-day strike over pay, easing concern the country's exports would be cut further.

``With Nigeria, there are rumblings that we may see more exports starting next week,'' GNI's Laughlin said.

The U.S. Department of Energy is expected to report today that U.S. crude oil inventories rose by about 2.15 million barrels last week from 273.9 million barrels, according to the average estimates of eight analysts surveyed by Bloomberg. The weekly report is due at 10:30 a.m. New York time.

The survey also predicted an increase in U.S. distillate supplies, although analysts were split on whether gasoline inventories rose or fell.

Venezuelan Gasoline

Venezuela's state oil company said it resumed gasoline exports, four months after an oil strike shut down shipments. A Petroleos de Venezuela SA spokesman said the first shipment of leaded gasoline will leave later today from the Paraguana refinery complex for the U.S. East Coast, where distributors are busy building up supplies before the U.S. summer driving season.

The state news agency said 360,000 barrels will be shipped. Exports won't be affected by the shutdown yesterday of a gasoline- producing unit at Venezuela's El Palito refinery, the spokesman said.

Gasoline futures for May delivery were down 2.52 cents, or 2.8 percent, at 88.9 cents a gallon on the New York exchange. Last Updated: April 2, 2003 08:23 EST

<a href=www.sfgate.com>SFGate.com Verne Kopytoff, Chronicle Staff Writer Wednesday, April 2, 2003

An investigation ordered by Gov. Gray Davis into California's escalating gasoline, diesel and natural-gas prices has found no evidence of illegal manipulation.

Rather, the probe attributed the higher costs this year primarily to tensions over the war in Iraq, a strike in Venezuela and an unusually cold winter on the East Coast.

The conclusion, to be officially released today, is a setback for those who believe that the soaring gas prices and heating bills this year are due to collusion. But it is an obvious victory for the oil and natural-gas industries,

which have maintained all along that market forces, not manipulation, were responsible.

"The governor was rightly concerned about prices," said Steven Maviglio, a spokesman for the governor. "Just because they can't find anything, that doesn't mean it doesn't exist. We're going to keep our eyes on it."

Dave Fogarty, a spokesman for the Western States Petroleum Association, an industry trade group, applauded the findings. "We understand consumers are angry about the increase in gas prices, and we are pleased that the report validated what many other investigations have validated."

Davis ordered the probe on March 13 when the average price for a gallon of unleaded was about to hit a state record of $2.15. Natural-gas prices had also increased, but were still lower than during the 2001 energy crisis.

Davis said any evidence of wrongdoing would be forwarded to state Attorney General Bill Lockyer for further investigation and possible legal action.

The California Energy Commission, the state agency that oversees energy planning and policy, completed the gasoline and diesel portion of the investigation. The Public Utilities Commission, the state energy regulatory agency, focused on natural gas.

The report found that higher gasoline prices are being driven mostly by a big surge in oil costs. The price for a barrel of crude on the spot market leaped nearly 40 percent to a high of $37.96 last month, compared with $26.80 in December.

But some of the responsibility also lies with California's peculiar gasoline market, the investigators found. Prices here usually rise in March when refiners perform maintenance and retool their equipment to produce a summer blend of fuel.

This year, the process was complicated by a change in additives to reduce smog. MTBE is being phased out in favor of ethanol.

The overall effect was tight gasoline supplies, the probe found.

Investigators noted that refiner margins had reached unusually high levels. Margins are the refiners' combined costs -- not counting oil -- and profit.

The seven-year average margin for each gallon of gas sold is between 29 and 32 cents. But since the beginning of the year, the margin has ranged from 19 to 76 cents.

The conclusions reached in Davis' investigation aren't new. Many of the problems were cited in a probe by Lockyer of a gas price spike in 1999.

No criminal charges or civil suits came out of that probe. The investigation is still open.

"This pretty much verifies what we've been saying in our report issued in 2000," said Tom Dresslar, a spokesman for Lockyer. "That there's some market conditions in California that make us susceptible to price swings."

Gasoline prices have ebbed modestly since their peak last month. They're down 1.5 cents per gallon during the past two weeks, though they are poised to go far lower, according to William Keese, chairman of the California Energy Commission.

He said retail prices should fall below $2 across much of the state by the end of the week because wholesale gas prices have dropped 42 cents per gallon since mid-March.

Maviglio and Keese stressed that this investigation was done in only 15 days and that the investigation will continue until June, at which time recommendations will be made to stabilize the state's volatile market.

Possibilities include encouraging the development of alternative fuels or building a state fuel reserve that can be tapped in emergencies.

Charles Langley, gasoline project manager for Utility Consumers Action Network, a public interest group in San Diego, said he is disappointed that the investigation didn't uncover any wrongdoing. But he added that any legal action would have to come from the federal government.

"I was hoping there would be some positive news here," Langley said. "But there's not a lot that can be done at the state level."

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