<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.

Reuters-Alertnet.org 23 Apr 2003 18:02:08 GMT By Magdalena Morales

PUERTO ORDAZ, Venezuela, April 23 (Reuters) - Presidents Hugo Chavez of Venezuela and Alvaro Uribe of Colombia, ideological opposites and uneasy neighbors, met on Wednesday to try to settle a war of words over border security and salvage faltering trade ties.

The two presidents held a one-day summit in eastern Venezuela amid recriminations from both sides over violent incidents along their 1,400-mile (2,200-km) border involving Colombian guerrillas and paramilitaries.

But it was all smiles when the two -- ebullient former paratrooper Chavez and straight-laced lawyer Uribe -- began their talks in the industrial city of Puerto Ordaz.

Chavez told reporters "I love Colombia" and Uribe presented his Venezuelan host with a ceremonial Colombian poncho.

Uribe's government, the United States' closest ally in Latin America, has repeatedly accused left-winger Chavez, who is portrayed by his critics as an anti-U.S. maverick, of providing a haven for Colombian Marxist rebels.

Washington has made Colombia its third-largest recipient of foreign aid, after Israel and Egypt, to help battle drug-traffickers and rebels waging a four-decade war.

Uribe wants Venezuela to help crack down on the leftist guerrillas his government says shelter over the border.

Bogota has been investigating complaints by border residents that Venezuelan military aircraft bombed a Colombian frontier hamlet on March 21, killing and wounding several people. Local residents said the aircraft supported Colombian rebels who were fighting rightist paramilitary groups.

Denying the charges, Chavez's government has accused the Colombian army of collaborating with the paramilitaries on the rugged frontier, a patchwork of mountain, jungle and savanna, where killings and kidnappings plague local communities.

"We want the best relations with Colombia, but we can't allow anyone to lie about or insult Venezuela," Venezuelan Vice President Jose Vicente Rangel said as the two presidents met in Puerto Ordaz.

Outlining the agenda for Wednesday's talks, Chavez said the meeting would focus as much on improving bilateral trade and economic cooperation as on the frontier, which has historically been a point of conflict between the two Andean neighbors.

"The greatest threat facing us is poverty," the Venezuelan leader said in Puerto Ordaz, adding that instead of squabbling over the border the two governments should concentrate on improving the living standards of their people.

The two leaders were expected to discuss proposed joint energy projects, such as one to provide Venezuelan electricity to Colombia and another for a pipeline that would carry Colombian gas to refineries and power stations in Venezuela.

<a href=ogj.pennnet.com>Oil & Gas Journal Sam Fletcher Senior Writer

HOUSTON, Apr. 23 -- Energy futures prices tumbled in profit taking Tuesday, ahead of a meeting Thursday of the Organization of Petroleum Exporting Countries at which oil ministers are expected to agree to reduce overproduction by at least 1.5 million b/d, with Saudi Arabia and Kuwait absorbing the bulk of any rollback.

"We expect the outcome of the meeting to be both a reaffirmation of the current 24.5 million b/d quota over the coming months, as well as a renewed commitment to OPEC's price band of $22-28/bbl," said Matthew Warburton, UBS Warburg LLC, New York in a Wednesday report.

"While global inventories could accommodate a less substantial reduction in OPEC volumes given their current low levels, especially in the US, we believe OPEC will undertake a measured reduction in supply of 1.5 million b/d over the next 2-3 months," Warburton said. "Such action...would overcome inherent market skepticism surrounding any reduction in (official) output when (actual) production exceeds quotas and also signal its determination to defend oil prices within its price band."

He said, "Over the last 4 years, the market has continually underestimated the cartel's determination to manage its production to adhere to the OPEC price band of $22-28/bbl (or $24-30/bbl for US benchmark West Texas Intermediate crude), and we believe that to do so now would also be a mistake."

Saudis store production

In March, the 10 active OPEC members, excluding Iraq, produced an estimated 2.5 million b/d above their cumulative quota of 24.5 million b/d.

However, Warburton said, recent tanker tracking data triggered "material downward revisions" in the amount of oil that Saudi Arabia was thought to supply to world markets. "While overall Saudi production had increased to 9.2-9.5 million b/d," he said, "the increased volumes have not been exported but rather produced into domestic storage. Based on the difference of up to 750,000 b/d between production estimates and Saudi supply into world markets, this would imply volumes of 12-24 million bbl have been placed into domestic Saudi storage in March."

By increasing production in conjunction with the US-led invasion of Iraq, the Saudis reassured world markets that they could make up any supply shortages and forestalled the need for US officials to release oil supplies from the Strategic Petroleum Reserve. But by storing that oil in Saudi Arabia instead of shipping it, the Saudis also negated a major increase in tanker rates and avoided paying third-party storage costs, said Warburton.

Iraq's role undecided

Meanwhile, US officials reported Tuesday that US and Iraqi engineers worked together to resume production from 4 wells back in southern Iraq. Other US and Iraqi workers may bring some northern wells back on stream later this week.

The timing for recovery of Iraq's oil production is among the uncertain "supply-side issues" that OPEC ministers are likely to discuss Thursday, said Warburton. "Even though initial supplies (of Iraqi oil) to world markets could be made rapidly available from storage in Ceyhan, Turkey, uncertainties over the legal framework of any such sales or additional production volumes in excess of (Iraq's) internal requirements of 500,000 b/d are likely to complicate OPEC's decision-making at this week's meeting," he said.

Meanwhile, United Nations Sec. Gen. Kofi Annan is agitating for the UN to have a bigger role in rebuilding Iraq, and France is calling for an end of all UN sanctions against that country, including the UN-administered oil-for-aid program.

Venezuela still a factor

Despite repeated claims by Venezuelan government officials that the country's oil production has recovered to November levels after the recent 63-day general strike in that country, Venezuela's current production is estimated at 2.5 million b/d, down from its OPEC quota of 2.82 million b/d.

With refineries in Venezuela resuming operations "primarily to satisfy export opportunities to the US as the driving season commences," said Warburton, "external availability of Venezuelan crude is likely to remain static or even decline temporarily in coming months."

Other OPEC members may be sympathetic to Venezuela's loss of revenue during the long strike, but they're not likely to grant Venezuela's request to set aside its production quota while it makes up that loss, Warburton said. OPEC also is unlikely to grant requests from Algeria and Nigeria for increase in their production quotas.

Unrest in Nigeria

Although recent elections in Nigeria proceeded with less turmoil than some anticipated, Shell Nigeria Exploration & Production Co. Ltd. still is prevented from restarting some 300,000 b/d of oil production previously shut in because of violence, Warburton reported Wednesday. He said Chevron Nigeria Ltd. appears to have restored most of its production previously disrupted in the Warri area of the Niger Delta.

"Given allegations over recent election irregularities, we believe it is conceivable that further civil unrest may emerge once the election process has been completed and the results announced, resulting in further erratic availability," Warburton warned. Delays in production recovery in Iraq, Venezuela, and Nigeria at the same time that other OPEC members are reducing their current overproduction "could further aggravate the already tight global inventory situation and take effect just at the time that OPEC should be increasing production (later this year) ahead of the seasonal uplift in winter demand," he said.

Market prices

The expiring May contract for benchmark US light, sweet crudes fell 96¢ to $29.91/bbl Tuesday on the New York Mercantile Exchange, while the June position lost 84¢ to $27.99/bbl. Unleaded gasoline for May delivery plunged 3.24¢ to 87.74¢/gal. Heating oil for the same month dropped 2.22¢ to 77.86¢/gal.

The May natural gas contract declined by 6.8¢ to $5.65/Mcf on NYMEX. "Although the market retreated, some analysts see bullish signals in the market that point away from the downward trend," Enerfax Daily reported Wednesday. "A cold spell in the Northeast has already started to drive prices higher there. And while cool midweek forecasts have helped support the cash this week, physical prices are still 10¢ under the futures, a factor that could weigh on futures as the May expiration approaches."

In London, the June contract for North Sea Brent oil dropped 42¢ to $25.46/bbl on the International Petroleum Exchange. The May natural gas contract dipped by 2.1¢ to the equivalent of $2.60/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes slipped 40¢ to $26.24/bbl Tuesday.

Contact Sam Fletcher at samf@ogjonline.com

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, April 23, 2003 By: David Coleman

President Hugo Chavez Frias has recalled 62-year academic Jorge Giordani as Economic Coordination & Planning (Cordiplan) Minister in the latest Cabinet reshuffle after Felipe Perez (48) was sacked on the heels of what are described as "sharp differences" between members of Chavez Frias' economic council.

The announcement came as a surprise to insiders who had thought that Giordani and the President had had an ideological parting of the ways after three years in Planning after Chavez Frias came to power in February 1999.  It was not so for Chavez Frias who says "in reality, Jorge never left here ... how can someone leave who has spent a decade thinking, analyzing, proposing ideas that become projects."

Nevertheless, the news caught many financial analysts on the hop after they had welcomed Perez as Giordani's substitute last May last year just weeks after Chavez Frias had been returned to power after the 2-day dictatorship of now-exiled Pedro Carmona Estanga.

Giordani has been seen as the intellectual author of most of Chavez Frias economic policies which have sparked vitriolic opposition from largely corrupt business leaders and labor mafia bosses who claim that he frightened away many foreign investors by praising Giordani as an "anti-IMF policy maker."  Before he's even had a chance to get warm in the seat, opposition radicals are insisting that Giordani's return is only going to heighten the diplo-economic chasm between Caracas and Washington.

Giordani, however, says he will make recovery of Venezuela's opposition-crippled production levels a priority.

Meanwhile Felipe Perez ... a Chicago University Ph.D ... has had publicly disagreements with the President's decision to tighten foreign exchange and price controls backed by most of the remainder of the government economic cabinet ... he had also had "policy differences" with Finance (Hacienda) Minister Tobias Nobrega and Central Bank of Venezuela (BCV) directors over how to tackle a deep recession caused by months of economic sabotage by a corrupt opposition which refuses to abide by the nation's Constitution.

Opposition analysts are quick to highlight Giordani's alleged failures during the first three years and claim that now that Chavez Frias brings him "back into the fold when the situation is worse ... it shows that Chavez' priority is politics, not the economy."

Finance (Hacienda) Minister Nobrega ... a banking and finance specialist in civilian life ... has been heading government's efforts to negotiate voluntary debt swaps to ease a payments crunch but watchers say that Giordani's return could lead to confrontation since both strong figures.  The International Monetary Fund (IMF) has urged Venezuela to ditch currency controls and has forecast a 17% GDP contraction following a fall of nearly 9% last year.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, April 23, 2003 By: Patrick J. O'Donoghue

Analyst Romero forecasts Chavez Frias will opt for radical line over elections

Opposition analyst, Anibal Romero says President Chavez Frias has but two options open to him ... "while it is true that the opposition is facing a difficult period so is the government and it has limited options." 

The first option is to go for elections. 

Opposition Romero says he is convinced that President Chavez Frias will lose, even with several opposition contenders (unless he resorts to fraud). 

The economy of the vote, he claims, will ensure that the national will to be rid of Chavez Frias will prevail ... losing the referendum means defeat for the "Project." 

"It will be a serious upset for the radical left, as happened to the Sandinistas in Nicaragua and the idea to handover power freely is anathema to a group of people that have been pushing people around, committing abuses, crimes and other misdemeanors ... they won't be able to defend themselves form the courts and international tribunals after losing the elections." 

For the above reasons, Romero is of the opinion that the government will avoid elections like the plague and that Chavez Frias will embark on the only option left to him ... to radicalize the situation,  moving from a "soft" to "hard" authoritarianism, closing opposition media, rounding up and imprisoning opposition leaders and intellectuals, breaking with the Organization of American States (OAS) and Washington, and accelerating union with Fidel Castro and the Colombian guerrilla movement in an attempt to close the circle of absolute power. 

Taking a step backwards, Romero allows for the possibility that Chavez Frias will go for elections, if international and domestic pressure is applied and if the President realizes that his chances of "closing the circle" are slipping through his fingers. 

Romero says he thinks Chavez Frias will opt for the second option. 

"It will not last long and carry a high price ... his regime will lose international support and internal legitimacy ... Venezuelans will not allow society to be transformed into a second Cuba."

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