Forbes.com-Reuters, 04.22.03, 5:38 PM ET By Manuela Badawy NEW YORK, April 22 (Reuters) - The government of Venezuelan President Hugo Chavez is seeking to attract foreign investors to help develop new oil projects following a crippling anti-government general strike that slashed oil revenues of the world's No. 5 crude exporter earlier this year, Venezuela's ambassador to the United States said on Tuesday. The OPEC nation will tender two new oil fields to foreign companies before the end of this year to oil majors from the United States and Europe, Ambassador Bernardo Alvarez told investors in New York. On the block are the Orocual field in the eastern Furrial region and Tomoporo, which has about 500 million barrels of estimated oil reserves, from the western Lake Maracaibo area. Among the companies interested in operating the fields are Exxon Mobil Corp. (nyse: XOM - news - people), ChevronTexaco (nyse: XOM - news - people), Marathon Oil Co. (nyse: XOM - news - people), Italy's ENI <ENI.MI>, France's TotalFinaElf <TOTF.PA>, Norway's Statoil <STL.OL> and Spanish-Argentine company Repsol-YPF <REP.MC>, said Alvarez, who previously served as a Venezuelan vice-energy minister. Alvarez said U.S.-Venezuelan energy relations should be strengthened as the economies of both countries are interconnected. Venezuela in the past has supplied up to 14.7 percent, about 1.7 million barrels per day (bpd), of all the oil imported by the world's largest consumer, he said. Venezuela's crude exports, which provide half of the government's revenues, were severely cut during the two-month strike started Dec. 2 by opponents of President Hugo Chavez. The loss of shipments from one of its top four suppliers sent U.S. crude prices soaring before troops and replacement workers restored Venezuela's oil production. Government officials say Venezuela's state oil firm Petroleos de Venezuela S.A. (PDVSA) is now pumping at pre-strike levels of over 3 million barrels per day (bpd) of oil. But analysts say that PDVSA may be seeking foreign investment to help compensate for losses incurred during the strike which forced cuts in the exploration and production budget of South America's largest oil firm. Venezuela's oil fields have natural depletion rates of about 25 percent per year, forcing PDVSA to invest heavily to maintain production capacity. Foreign companies have been critical of a nationalistic hydrocarbons law passed by Chavez in 2001 that increased royalty payments and the minimum level of state participation in oil developments. They say the terms are not competitive with contracts offered by other countries and need to be amended. Earlier in April Venezuela approved ConocoPhillips' (nyse: COP - news - people) $480 million development plan for the Corocoro field in country's Gulf of Paria West area, which the U.S. oil major was awarded during under a profit-sharing agreement in 1996. Corocoro is expected to reach output of 55,000 barrels per day of 24.5 degrees API oil two and a half years after development begins, ConocoPhillips said. The field partners are ConocoPhillips with Italy's Eni and Taiwan's Chinese Petroleum Corp. PDVSA also has a 35 percent stake in the field

Forbes.com-Reuters, 04.22.03, 5:18 PM ET   CHICAGO (Reuters) - Gold edged up to another three-week high Tuesday, piggybacking off a weaker dollar that drew in European demand before a rally in Wall Street stocks diluted investor interest in the safe-haven metal. In other commodity markets, oil prices closed lower as the May crude oil contracts expired at the end of the day. Cocoa prices spiked higher as speculators dove back into the market but grain prices closed mostly lower on cash market signals. At the COMEX, gold for June delivery closed up 90 cents at $334.80 an ounce, trading down from an early peak at $336.80, which was its best price since April 2. On Monday, New York gold traders had pushed the contract up by $6.30 while London, Sydney and Hong Kong were out of the liquidity pool on a four-day Easter holiday break. Gold bullion closed at $334.00/70, up from Monday's late quote at $333.20/95. London bullion dealers had earlier fixed their afternoon spot reference price at $334.90. World financial markets are back to worrying about economic growth and profits now that the United States has shifted from waging war in Iraq to rebuilding, hunting for suspected weapons of mass destruction and searching for former Iraqi officials. The euro rose to $1.1002 Tuesday, the highest since it neared a four-year peak March 12, which made dollar-priced gold more affordable to European investors. But the euro trimmed gains on rumors that former Iraqi leader Saddam Hussein had been captured, which also helped the Dow Jones industrial average bounce from a 60-point morning loss to close 156 points higher at 8,484. Wall Street's recovery also allowed silver -- more sensitive to industrial demand than gold -- to grab the baton and sprint to its best level in more than five weeks. May silver closed 6.2 cents higher at $4.597 an ounce. "As long as you see the dollar continue to remain pressured, then I think you can continue to see upside in gold," said analyst David Meger at Alaron Trading in Chicago. "One of the things that could stop that would be a strong continuation of the equity market rally." At the New York Mercantile Exchange, May crude oil futures closed 3 percent lower as speculators exited before expiry. A sharp drop in oil product prices and squaring ahead of weekly U.S. petroleum inventory data also added to the day's slump. NYMEX May crude oil closed 96 cents lower at $29.91 a barrel. In London, Brent June crude fell 42 cents at $25.46. Gasoline futures sank as the cash market at the Gulf of Mexico weakened, with traders reporting Gulf refiners selling, not buying, gasoline. Venezuelan state oil firm Petroleos de Venezuela also lifted a force majeure, or suspension, of gasoline exports, weighing on gasoline prices. May gasoline closed 3.24 cents lower at 87.74 cents a gallon. May heating oil fell 2.22 cents a gallon at 77.86. The main event of the week remains the Thursday meeting in Vienna of the Organization of Petroleum Exporting Countries. OPEC producers are worried that American oil firms will follow U.S. tanks into Baghdad, spurring sharp rises in crude output under a new Iraqi government. For years, OPEC could rely on Saddam's sanctions-hobbled production to prop up prices. Now it must brace for a resurgent Iraqi oil industry with the potential to join leading OPEC player Saudi Arabia and non-OPEC Russia in the world's top three "swing" producers. Iran has already raised the prospect of an OPEC price war, music to the ears of economies hamstrung by soaring oil costs. "Iraq for many years has been a huge factor supporting oil prices," said Gary Ross at the PIRA Energy consultancy. "That's no longer the case. Now Saddam has gone, the perceptions of how OPEC can manage the market have changed." At the New York Board of Trade, cocoa soared as a wave of buying based on chart-watching speculators began in London and carried over "across the pond" to New York. Cocoa for May delivery closed $87 higher at $2,008 per metric ton, the first close over $2,000 since April 9. Physical cocoa supplies keep tightening after months of civil war in top producer Ivory Coast. There were no delivery notices tendered against the May contract Tuesday, leaving the cumulative total at just 7 lots. At the Chicago Board of Trade, wheat and soybeans closed lower on cash market signals. Soybean barges traded 2-3 cents a bushel lower at the U.S. Gulf of Mexico export gateway Tuesday, pressuring futures. In Toledo, Ohio, more wheat was registered as eligible for delivery against May CBOT futures, surprising a market worried about tight old-crop supplies. Wheat for May delivery closed 2 cents a bushel lower at $2.88-1/4 and May soybeans fell 6-1/2 cents at $6.10 a bushel. Corn for May delivery closed unchanged at $2.38-3/4.

Forbes.com-Reuters, 04.22.03, 4:49 PM ET

(Adds Giordani's return, analyst's quotes, background) By Silene Ramirez CARACAS, Venezuela, April 22 (Reuters) - Venezuelan President Hugo Chavez Tuesday brought back a veteran left-wing soulmate to serve as his Planning Minister after firing the previous minister for disagreements over economic policies.

Former paratrooper Chavez, whose oil-rich nation is facing its deepest recession in recent history, demanded 48-year-old economist Felipe Perez resign after sharp differences had emerged among members of the president's economic team.

But the biggest surprise came when Chavez named his successor, bringing back 62-year academic Jorge Giordani, who had been the president's first Planning Minister for the first three years of his rule in the world's No. 5 oil exporter.

The announcement came as a shock to many analysts, who had welcomed Giordani's substitution by Perez back in May last year, soon after a dramatic military coup that briefly toppled populist Chavez. They saw Giordani as closely associated with Chavez's left-leaning statist economic policies which have been fiercely opposed by business and labor opponents.

"It was a surprise to a lot of people. I don't think that people expected this," Jose Cerritelli, Andean economist with Bear Stearns in New York, told Reuters.

He recalled that Chavez, who has spooked many investors with his fiery, revolutionary and anti-capitalist rhetoric, had praised Giordani recently for being "an anti-IMF policy maker". Giordani's return was likely to lead to an even wider divergence between Chavez's government and Washington-based lending agencies, Cerritelli added.

"Felipe (Perez) made a great effort in a very difficult period. Now Jorge (Giordani) is coming back to take up again all the main objectives of the great national development project that he used to direct," Chavez said.

POLITICS OVER ECONOMICS

Perez, who has a Ph.D from Chicago University, had publicly disagreed with Chavez's decision, backed by most of the rest of the government economic team, to decree tight foreign exchange and price controls earlier in the year.

Perez had also had differences over forecasts and polices with Finance Minister Tobias Nobrega and directors of the country's Central Bank.

His departure came at a time when Chavez's government was struggling to cope with the deep recession triggered by months of political turmoil and an opposition strike that slashed oil output in December and January. The strike, which fizzled out in early February, severely cut government revenues.

Many local analysts were aghast over the return of Giordani. "It's incredible. This is a minister who left because he failed in the first three years when the economy was quite prosperous. And now Chavez brings him back when the situation is worse," Orlando Ochoa, an economist from Caracas's Andres Bello Catholic University, told Reuters.

"It shows that Chavez's priority is politics, not the economy," he added.

Perez had also been seen as a follower of Chavez's self-styled "revolution" in Venezuela. Under Giordani, the Planning Ministry had been the leading voice in Chavez's economic team.

But Perez's influence, and his credibility among local and foreign investors, waned quickly as he became known for unrealistic forecasts and eccentric public pronouncements calling for "positive thinking" to turn around the economy.

Appearing on his "Hello Economy" show on state television, Perez regularly berated local businessmen for what he called their negative attitude and recommended a change of heart.

BATTLE FOR INFLUENCE

Finance Minister Nobrega, a banking and finance specialist has been spearheading the government's efforts to negotiate voluntary debt swaps with local and foreign bankers to ease a payments crunch.

But analysts said the return of Giordani, who had dominated the government's economic policy when he was in office, could lead to a confrontation with Nobrega.

"I think there could be trouble with Nobrega as they are both strong figures," said Benito Berber, an analyst with New York-based consulting firm IDEAGlobal.

Venezuela's already faltering oil-reliant economy went into a nosedive after the grueling opposition strike, which failed to force Chavez to resign and hold early elections.

Opponents of Chavez accuse him of ruling like a dictator and of dragging oil-rich Venezuela towards economic ruin by trying to install Cuba-style communism.

The strike caused the government to slap tight foreign exchange and price controls onto the economy to stem heavy capital flight and halt a sharp slide in the bolivar currency.

The International Monetary Fund, which urged Venezuela to ditch the currency curbs, has forecast a huge 17 percent contraction for the economy this year following a fall of nearly 9 percent last year. (Additional reporting by Pascal Fletcher, Patrick Markey)

<a href=news.ft.com>Financial Times By Andrew Webb Vidal Published: April 22 2003 21:33 | Last Updated: April 22 2003 21:33

Trembling with fear, Juana points to a Venezuelan army helicopter thudding overhead, its down-draught peeling apart the dense jungle that blankets the no-man's land between Colombia and Venezuela.

"It was one of those," says Juana, a Colombian peasant who fled across the Río del Oro river into Venezuela after, she claims, Venezuelan aircraft strafed two Colombian villages, dispersing warring rightwing and leftwing Colombian paramilitary and guerrilla factions. "They flew low, there were explosions, and the paramilitaries ran into the forest."

Juana and several hundred other refugees are witnesses to the latest and most acute case of mounting tension between Colombia's pro-US government, led by Alvaro Uribe, and the militaristic leftwing Venezuelan administration of President Hugo Chávez.

Conflicting official accounts of last month's incident provide a backdrop for a summit meeting on Wednesday at which the two men - Mr Uribe, a workaholic, Mr Chávez a bombastic former paratrooper - will try to resolve their differences.

But any accord may only paper over the cracks in the countries' worsening relations. This would complicate Plan Colombia, the US-sponsored anti-narcotics and counter-insurgency programme, which would be dealt a blow if guerrillas and coca crops continued to seep out of Colombia into neighbouring countries.

Intelligence reports suggest the presence of Colombian guerrillas in Peru and Brazil, while drug crop cultivation has risen in Peru and Bolivia. But the situation on Colombia's border with Venezuela is the most critical. Mr Uribe's government is investigating what witnesses say were air strikes last month close to the villages of Tibú and La Gabarra in Colombia's Norte de Santander province, a seemingly unprecedented hostile act.

Martha Luca Ramrez, Colombia's defence minister, said the incursion appeared to have been a "potentially grave" incident in which the Venezuelan military came to the rescue of the 18,000-strong Revolutionary Armed Forces of Colombia (Farc).

At the time, Mr Chávez said he had ordered the air force to bomb an area "close" to the border after "irregulars" fired a missile at a helicopter and engaged with troops "inside" Venezuela. Local National Guardsmen said the air strikes occurred on Colombian soil a week after rightwing paramilitaries from the United Self-Defence Forces of Colombia (AUC), who were pursuing Farc units into Venezuela, clashed with the Venezuelan army.

Both countries have engaged in a war of words. This month Bogotá protested at accusations by José Rangel, Venezuela's vice-president, that the Colombian army colludes with the AUC.

"There are areas where Venezuela borders a de facto paramilitary state," said Mr Rangel, who has appealed for national unity in support of the Venezuelan military. "Colombia cannot continue dumping all of its delinquents and paramilitaries on its frontier."

Colombian officials suspect the Chávez government is stoking tensions to divert attention from growing economic difficulties and to rally nationalist sentiment, perhaps to cow and divide domestic opposition. The Venezuelan economy is expected to shrink 15-20 per cent this year, and opposition groups are seeking a referendum to unseat Mr Chávez. But the tensions are also being driven by opposing political sympathies.

"Uribe and Chávez are not naturally predisposed to be friendly to each other, and any spark on the border can exacerbate tensions," says Miguel Diaz, analyst at the Center for Strategic and International Studies.

Mr Uribe, the US's staunchest ally in South America, is launching a military offensive against the Farc, and wants to pursue the rebels "across borders" - which the AUC already appears to be doing.

Mr Chávez, a former army officer who sees his Bolivarian revolution spreading across Latin America, strongly opposes Plan Colombia, on the grounds that it will push refugees and the warring combatants into Venezuela. A breakdown in relations between Bogotá and Caracas would all but terminate already limited cross-border security co-operation, analysts say, probably increasing the ease with which the Farc uses Venezuela as a sanctuary.

Top Venezuelan military officers deny allegations by Bogotá that they are turning a blind eye to Farc training camps in Venezuela, but concede that irregulars may, occasionally, cross the border. "Do Colombian subversives cross into Venezuela? It's possible," says General Julio Quintero, commander of the army's 2nd Infantry Division, in San Cristóbal. "However, our mission is to expel them back to Colombia."

But Venezuelans in the border region are already alarmed by the growing presence of the Fuerzas Bolivarianas de Liberación (FBL), a leftwing paramilitary group that, cattle-ranchers say, has been created with help from Chávez officials as a kidnapping and extortion "franchise" of the Farc. "There is no doubt the guerrillas are here," says Genaro Méndez, president of the local ranchers' association. "The issue is that other groups have now been formed, such as the FBL, trained by the Colombian guerrillas."

Additional reporting by James Wilson in Bogotá

Forbes.com-Reuters, 04.22.03, 4:04 PM ET (The following statement was released by the rating agency)

NEW YORK, April 22 - Standard & Poor's Rating Services today removed its ratings on PDVSA Finance Ltd.'s US$3.3 billion and Eur200.0 million rated debt from CreditWatch, where they were placed Dec. 10, 2002 (see list).

The rating action reflects the recent improvement in the rating outlook (to stable from negative) for the Bolivarian Republic of Venezuela (CCC+/Stable/C) and Petroleos de Venezuela S.A. (PDVSA; CCC+/Stable/-). The rating action is also based on a number of recent credit developments specific to the PDVSA Finance transaction, including:

-- A significant recovery in daily oil production by PDVSA;

-- Improvements in the invoicing of exported production after a lengthy interruption;

-- A sharp increase in the amount of funds flowing through the PDVSA Finance collection account; and

-- Certification by PDVSA of its compliance with all transaction performance covenants.

Standard & Poor's met with the management of PDVSA twice in recent weeks to discuss the company's progress in recovering from the labor strikes that have negatively affected its ability to produce, export, and bill its customers since late 2002. PDVSA indicated that production has recovered to approximately 2.5 million barrels per day after having fallen sharply in the December 2002 to February 2003 period. The company is steadily working through its invoicing backlog so that it can collect payment for product that was previously shipped, but for which it was unable to bill its customers due to damage inflicted on its billing systems by striking workers. PDVSA was able to resume billing customers for current shipments beginning in March 2003. The company indicated that it has currently eliminated about half of the backlogged invoicing volume related to previous oil shipments.

As a result of the production increases and improved billing, cash flowing through the PDVSA Finance collection account has increased sharply. Prior to the strikes, approximately $700 million to $1.1 billion in monthly payments flowed through the PDVSA Finance collection account, with the value of the shipments fluctuating based on the quantity of oil delivered by PDVSA to the designated customers and the price of the oil at the time of delivery. Reflecting the impact of the strike on production and export volumes, these collection flows dropped to as low as $200 million in January 2003 before recovering slightly in February to $350 million and to a much stronger level of $960 million in March. Matching the declines in production and deliveries, the debt service coverage ratio for the PDVSA Finance transaction dipped to a low of 4.50 for the month of February 2003 before recovering to 5.81 in March. The terms of the PDVSA transaction allow investors to demand an early amortization of the rated notes if the debt service coverage ratio falls below 4.0.

PDVSA Finance made its February 2003 debt service payment on the rated securities out of collection account funds and without recourse to the transaction liquidity facility. Based on the recovery in production and collections, Standard & Poor's anticipates PDVSA Finance will be able to maintain timely payment of debt service due without recourse to this fully funded liquidity facility in the near future. In addition, PDVSA has certified to Standard & Poor's that it is-and remained during the January 2003 through March 2003 period-in compliance with all PDVSA Finance transaction performance covenants. RATINGS REMOVED FROM CREDITWATCH PDVSA Finance Ltd. Class Rating

                         To             From

A 6.45% notes due 2004 B- B-/Watch Neg B 6.65% notes due 2006 B- B-/Watch Neg C 6.80% notes due 2008 B- B-/Watch Neg D 7.40% notes due 2016 B- B-/Watch Neg E 7.50% notes due 2028 B- B-/Watch Neg F 8.75% notes due 2004 B- B-/Watch Neg G 6.25% notes due 2006 B- B-/Watch Neg H 9.40% notes due 2007 B- B-/Watch Neg I 9.75% notes due 2010 B- B-/Watch Neg J 9.95% notes due 2020 B- B-/Watch Neg K 8.50% notes due 2012 B- B-/Watch Neg