<a href=www.voanews.com>VOA News 23 Apr 2003, 21:53 UTC AP

Venezuelan President Hugo Chavez, right, with Colombian President Alvaro UribeVenezuelan President Hugo Chavez and Colombian President Alvaro Uribe have met in eastern Venezuela for talks aimed at smoothing over relations strained by a dispute concerning border security.

President Uribe flew to Puerto Ordaz for Wednesday's talks, which followed weeks of tension fueled by accusations that Venezuela harbors Colombian leftist rebels.

Earlier this week, Colombian Attorney-General Luis Camilo Osorio said in published remarks that Venezuela has become a refuge for what he called "Colombian criminals" trying to topple Mr. Uribe's government.

President Chavez denies his government has ever aided Colombian guerrillas or knowingly allowed them to slip into Venezuelan territory.

Colombia also has demanded information about reports that Venezuelan military aircraft bombed a Colombian frontier hamlet in March in support of leftist rebels battling rightist paramilitaries. Venezuela denies those reports.

Officials in both Venezuela and Colombia say the border between the two countries has been the scene of numerous skirmishes between various military and paramilitary groups.

In addition to border security, Presidents Chavez and Uribe were set to discuss bilateral trade and economic cooperation.

The Moscow Times Thursday, Apr. 24, 2003. Page 8 By Christopher Weafer To Our Readers

OPEC member countries meet on Thursday with a view to reducing the current high production levels that, if allowed to persist, threaten a sharp fall in the oil price over the summer months.

On the face of it, it's easy to simply agree to stop cheating on official production quotas to restore supply-demand equilibrium to the market. However, as always with the oil market, it is not that simple and any decision will be based more on political considerations than on economics. At stake is OPEC's future relationship with its major customers (particularly the United States), the balance of power within OPEC itself and the possible reintegration of Iraq into the quota system. In all likelihood, the member countries will issue a vaguely worded statement of intent to comply with the existing quota regime but with a "get out clause" based, for example, on a need for supply to reflect changing demand.

For Russia, the stakes are equally high. Russia has lived very handsomely on the back of OPEC for the past four years, earning some $70 billion more in oil and gas exports than it did in the previous four-year period. If the OPEC-centered price and control structure remains in place, by 2010 Russia's combined corporate cash flows and budget revenues will probably be close to $100 billion annually -- assuming that planned production growth and pipeline capacity increases take place.

However, the time is fast approaching when Russia's "free ride" may come to an end and -- at a minimum -- Russia may have to choose between lending political support to the OPEC structure, which will help ensure a high level of future export revenues, or to side with the consumer countries in exchange for broader economic benefits elsewhere.

OPEC countries are currently supplying about 3 million barrels per day (bpd) in excess of underlying demand. That was a deliberate decision forced by the Saudi-led moderate faction in order to keep the market well-supplied in case of a major supply disruption due to war -- which could have caused a sharp upward price spike with the attendant risk of a political backlash from the United States and EU.

The fact that there has been no such disruption and that U.S. army engineers are now pushing very hard to restore Iraqi exports places OPEC at a critical crossroads. Add to that the fact that last year's surplus production went into building global strategic supplies to historic highs and Thursday's meeting has all the ingredients of being a historic turning point for OPEC.

If member countries cut current production too aggressively, then the oil price will stay above the targeted price average and this will force the United States to accelerate the rehabilitation and extension of Iraqi production while probably keeping Iraq outside the quota system. That could result, in two to four years, in the destruction of OPEC's central role in the global oil market. On the other hand, keeping the present level of over-production in place would suit the consumer countries but could expose the fragile political unity within OPEC and ultimately set it on a course either for radical change or self-destruction. This is especially so given that most OPEC countries are predominantly Islamic and right now none of those regimes wants to risk criticism for being openly too pro-Western.

While member countries clearly have a huge incentive to avoid risking either potentially destructive event, it is by no means certain that they will be able to.

Total world demand for crude oil is 78 million bpd. But, the important number is the residual demand, i.e. the amount of extra oil that net consumer countries require from net exporters. Right now it is 36 million bpd with the biggest residual demand coming from the United States (11.8 million barrels), the EU (8.6 million), Japan (6 million), South East Asia (5.2 million) and China (2 million). OPEC countries supply 75 percent of the total, while Russia supplies 11 percent (or 4 million bpd).

However, if normal oil demand growth resumes, then by 2010 this residual demand will have increased to 70 million bpd (partly due to an expected decline in North American and North Sea production rates) and even if Russia is exporting 7 million bpd by then, OPEC countries will see demand for their oil rise to about 50 million bpd. That will allow OPEC a significantly more powerful position than it occupies even today. And that is the main reason why OPEC must now tread very carefully. Its next moves could be the most decisive in determining whether it survives and if so in what form.

When you cut away all the hype, OPEC, an illegal cartel, owes its existence to the fact that it has in the past been a reliable partner to Western energy consuming countries. Despite the normal price volatility -- mainly influenced by the level of cheating by the more aggressive smaller OPEC countries -- OPEC has been able to guarantee stability of oil supplies within the framework of an agreed long-term average oil price. Both certainty of supply and price are critically important for Western economies that generally remain very vulnerable to both the availability and price of energy.

If the United States decides that OPEC is either no longer willing or able to continue its role as guarantor of supply at a reasonable price, then it now finds itself with the perfect weapon with which to ensure the destruction of the cartel: Iraq. Iraq's current reserve base, which is certainly underestimated due to the lack of modern exploration equipment in the past 20 years, could easily support production of about 6 million bpd. All it would require is cash and know how, both of which the United States has in abundance.

Anybody who thinks that developments will have to wait for UN permission and other legal niceties has only to look at what a determined United States can and has done recently when its national interests are at stake.

Iraqi oil could be a very significant part of the world supply within two or three years if the moderate OPEC countries, such as Saudi Arabia, bow to the pressure from smaller producers including Nigeria, Algeria and Venezuela to slash production now. That would send a clear signal to Washington that the reliable cooperation that has lasted for the past 20 years is now over.

If, on the other hand, Saudi Arabia refuses to bend to the wishes of the more aggressive members and keeps the pumps open (something that will become clear over the summer), the internal pressure, which is already quite high due to a growing quota allocation dispute, could become uncontainable.

Over the past four years, OPEC countries have earned about $1 trillion from supplying global residual demand. That is $300 billion more than they earned in the previous four years. This represents a very significant transfer of capital from Western economies to OPEC producers and is hardly a trend that the United States, EU or Asian economies -- all of which are in need of growth stimuli -- will be happy to see continue, never mind be extended. By 2010, that annual capital transfer could be $550 billion, not a sum that U.S. legislators, who will determine the immediate course of developments in Iraq, will be happy to contemplate going into predominantly Islamic countries.

Normally Russia attends OPEC meetings as a detached observer -- this time, however, the stakes are much higher.

Christopher Weafer, chief strategist at Alfa Bank, contributed this comment to The Moscow Times.

<a href=news.independent.co.uk>news.independent.co.uk By Philip Thornton Economics Correspondent 24 April 2003

Oil prices slumped 5 per cent yesterday as record import volumes boosted US crude stocks, increasing pressure on the producers' cartel Opec to reduce production at today's emergency meeting.

The drop came as Saudi Arabia, the world's largest oil producer and an Opec member, warned of the prospect of a glut in supply and urged a cut in production quotas.

Prices slumped after the US said stocks jumped 9 million barrels, or 3 per cent, last week as crude imports hit the highest level on record at 10.6 million barrels per day.

News of rising supply in the world's biggest consumer came as Opec prepared to reduce its production ahead of the return of Iraqi crude exports to the world market.

Opec, which holds an emergency session in Vienna today, increased output to prevent a price surge during the war in Iraq, but is now trying to stop crude dropping beneath the floor of its target range of $22 (£14) to $28 a barrel. Oil prices in New York dropped $1.54 to $26.45 a barrel yesterday, the lowest level in a month and taking falls this week to $4 or nearly 13 per cent. In London Brent prices fell $1.24 to $24.22 a barrel.

Saudi Oil Minister Ali al-Naimi, said: "We are concerned if we don't take some steps, an oil glut may form. This meeting is to make sure we keep the market where it is."

Abdullah bin Hamad al-Attiyah, the Opec president, has said the surplus may be more than 2 million barrels a day – 8 per cent of the current 24.5 million quota.

Obaid bin Saif al-Nasseri of the United Arab Emirates said Opec should tackle the 1.7 million barrels that the 10 nations pump out every day on top of the quota – a position backed by Venezuela. "I think we have to tackle first compliance," he said.

Iran has called for a cut in the headline quotas as well as tightening compliance.

Iraq will not be represented at the meeting, as the US has not yet set up an interim authority to govern the country.

<a href=www.voanews.com>VOANews.com Melanie Sully Vienna 23 Apr 2003, 17:08 UTC

OPEC headquarters, ViennaThe Organization of Petroleum Exporting Countries is holding a special meeting intended to prevent a surprise crash in global oil prices. Also being discussed is who, if anyone, will represent Iraq at the session.

OPEC ministers meet in Vienna on Thursday to decide how best to react to what one source called a dangerous fall in prices on the world market. OPEC's announced aim is to stabilize prices at around $25 per barrel.

Ehsan Ul-Haq, an analyst for PVM Oil Associates in Vienna, says the cartel is considering a cut in production to 24.5 million barrels per day. "But as always it will be Saudi Arabia that will be acting as a swing producer," he said. "They produced more in the past few months; firstly because of problems in Venezuela and then after because of problems in Nigeria and in Iraq and they have been producing more than nine million barrels per day."

Saudi Arabia is being urged by countries such as Indonesia to stick to agreed production limits.

Another problem facing OPEC is how to reintegrate Iraq without destabilizing the market. Iraq is a founding member of the oil cartel, but has been excluded from OPEC's quota export system for the past 11 years because of U.N.-imposed sanctions.

On the eve of OPEC's Thursday session, there still was no indication as to who, if anyone, would attend as Baghdad's representative.

OPEC sources said an invitation to attend the meeting in an observer capacity had gone out to the Iraqi embassy in Vienna. The head of the embassy had attended the last two OPEC meetings.

Meanwhile in Iraq, oil began flowing through that nation's pipelines for the first time since the start of the war. U.S.-led engineers started the flow at a storage facility outside the southern city of Basra.

But hundreds of wells across Iraq remain inactive and could take weeks or even months to come back online.

Time is becoming important. Analysts say Iraq needs to resume oil production to pay for reconstruction costs that could run into billions of dollars.

<a href=www.latintrade.com>LatinTrade.com

04/23/2003 - Source: Business News Americas (BNamericas.com) (BNamericas.com) - US-based Armentrout Roebuck Matheny Consulting Group (ARMCG) has submitted a finalized definitional mission to the US Trade & Development Agency (TDA) on water-related projects in Colombia, Ecuador and Venezuela, a consultancy source told BNamericas.

The TDA will now review the report, and decide whether to fund grants that would move certain drinking-water and sewerage projects forward, the official said. The consultancy recommended a series of grants after analyzing projects presented by government agencies in the three countries.

COLOMBIA

Ranking the project a "high priority," the consultancy recommends TDA fund a US$482,000 grant to support Colombian water regulator CRA's water loss improvements program. The grant would finance labor and travel costs, according to the report, a copy of which was obtained by BNamericas.

The project would implement water and wastewater sector improvements designed to reduce water loss (which reaches 40%), and introducing tariff increases to fund the changes.

ECUADOR

Contingent on project financing, ARMCG also recommends the TDA support an US$884,000 feasibility study (which includes a 35% cost-share) for the country's eastern rivers, designed to provide drinking water and electrical energy to Ecuador capital Quito.

The eastern rivers project carries a US$614mn price tag, and entails developing 67km of water piping, 42km of tunnels, three dams with storage volume of 115M cu. m, two drinking water plants and four hydroelectric generating facilities with 170MW of capacity.

"ARMCG's review indicates that this project is a major priority of the government and can be funded," reads the report.

VENEZUELA

The consultancy also recommends the TDA support a US$452,000 grant to study development of the Lake Maracaibo wastewater treatment plant project in western Venezuela's Zulia state.

This project calls for a US$103mn wastewater treatment plant and US$2mn in associated piping designed to treat waste that is currently dumped untreated in the lake.

In addition, the report recommends TDA move forward with studies on two projects managed by waterworks sector administrator Hidroven that were approved from an August 2000 definitional mission conducted by ARMCG. The first entails a US$7.71mn project to modify the Araya aqueduct, separating it from the Turimiquire pipeline system that supplies Nueva Esparta state.

The consultancy studied related plans for a new pipeline to the Cariaco Gulf and a 10km submarine pipeline across the gulf to the Araya peninsula in its 2000 report. Project sponsors are asking for US$93,000 to conduct studies for the revised work.

Separately, the consultancy recommends the TDA deliver a previously-approved US$173,000 grant for studies on a 600 l/s wastewater treatment plant. The US$22.1mn project, which also involves expanding collection and pumping stations, would diminish contamination along the Tuy, Aragua and Acuiferos rivers as well as the Valencia lagoon.