<a href=ogj.pennnet.com>Oil & Gas journal By OGJ editors

HOUSTON, Apr. 28 -- A fire that broke out at midnight Saturday night shut down one of the four hydrodesulfurization units at the Petroleos de Venezuela SA 940,000 b/d Paraguana refinery complex 350 miles from Caracas in Venezuela's western state of Falcon, Caracas television media reported Sunday. No one was injured.

The fire occurred in the 84,000 b/d unit of the complex's Amuay refinery but it was limited to the one unit, which is expected to be back in service within 3 weeks, PDVSA's refinery spokesman said Sunday.

Meanwhile, three other hydrodesulfurization units at the complex will offset the loss in output, the spokesman said.

In another incident in western Venezuela, three refinery workers were seriously injured in an explosion Saturday at the Superoctane methyl tertiary butyl ether production unit at the Jose petrochemical complex, local media reported Sunday. Details were unavailable.

HAROLD OLMOS, <a href=www.sfgate.com>Associated Press Writer Monday, April 28, 2003
(04-28) 16:10 PDT BRASILIA, Brazil (AP) --

Brazil's leftist president pushed his idea of regional economic integration in talks with his Bolivian counterpart Monday -- the latest in a string of summit meetings reflecting Brazil's growing influence.

"Latin American integration will no longer be a sentimental" notion, Luiz Inacio Lula da Silva said after he and Bolivian leader Gonzalo Sanchez de Lozada agreed to a plan to improve roads and bridges to boost trade between the neighboring nations.

The leaders of Colombia, Peru and Venezuela have visited in the past month, and the presidents of Uruguay and Ecuador will come to the Brazilian capital later this month.

Experts say the flurry of activity represents a message to the United States: A united South America will negotiate hard over terms of a proposed Free Trade Area of the Americas trade zone.

The United States and Brazil, the largest nation in South America, will spearhead the negotiations to create the 34-nation bloc stretching from Alaska to the southern tip of Argentina.

Silva, a former union leader known for his negotiating skills with multinational firms, wants to set up a merger by December of two current Latin trading blocs -- Mercosur and the Andean Community.

Mercosur is made up of Argentina, Brazil, Paraguay and Uruguay as members. Bolivia and Chile are associate members. The Andean grouping is made up of Venezuela, Colombia, Ecuador, Peru and Bolivia.

Peruvian President Alejandro Toledo took away from his meeting with Silva the prospect of Peru becoming an associate member of Mercosur.

When Colombian President Alvaro Uribe came to Brazil, he also talked about greater economic South American integration.

"If he (Silva) assembles the Andean nations and Mercosur into one trading bloc, Brazil and its neighbors certainly will have better bargaining power," said David Fleischer, a political science professor at the University of Brasilia.

The presidential meetings also appear designed to give Brazil a higher profile on the international front. Silva said over the weekend that the United Nations should be reformed.

He said the Security Council should be expanded beyond the current five permanent members -- United States, the United Kingdom, France, Russia and China.

Venezuela's President Hugo Chavez said during his visit that "all 23 million Venezuelans will feel happy being represented by Brazil at the Security Council as a permanent member."

The visits to Brazil also show that Silva, the country's first elected leftist president, has a more aggressive approach on international relations than his predecessors.

Traditionally Brazil has been timid in conducting foreign affairs, but Silva has given a great emphasis to Latin America" since taking office, said Fleischer, the political science professor.

The discussions between the presidents symbolize a "new beginning of a new era for Brazil and Bolivia," said Marucio Balcazar, the Bolivian presidential spokesman.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Monday, April 28, 2003 By: Jose Gregorio Pineda & Jose Gabriel Angarita

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: The FTAA (Free Trade Area of the Americas) has awakened strong resistance in the current administration's regional integration strategy. The Chief Executive has gone so far as to propose that the South American countries first strengthen the trade ties among them and only then talk about the FTAA ... Chavez defined this idea as the Bolivarian Alternative for the Americas (BAA).

The principal justification for this posture is the inability of countries like Venezuela to become competitive by 2005, a period our authorities consider far too short ... this suggests the idea of the BAA as an alternative for free-market economics, whose promotion is insistently attributed to the FTAA initiative by our authorities.

Though the idea of strengthening trading ties among the Latin American countries seems necessary and positive, it goes no further than simple rhetoric because our country is now violating its commitments in the CAN (Andean Community of Nations) with the recent exchange control measures and elimination of tariffs for imports of certain top-priority products.

This is reflected in two recent CAN resolutions, dated April 23. In Resolution 714, CAN finds that the Republic of Venezuela's unilateral grant of a total import tax exemption for a list of products the Venezuelan government considers "essential or mass consumer goods" violates the country's obligations emanating from several provisions of the Andean Community's legislation ... CAN therefore gave Venezuela fifteen (15) business days from the Resolution's date of publication in the Official Gazette of the Agreement of Cartagena to put an end to these violations.

...and in Resolution 715, the CAN finds that the foreign exchange measures adopted by the Republic of Venezuela restrain Intra-sub-regional trade, in violation of Article 72 of the Agreement of Cartagena and Commission Decision 406, which governs imports of products originating in the Andean Community's member countries.

Hence, Venezuela has been given ten (10) business days to lift all restrictions on imports from the other member countries. Venezuela's reaction to these CAN resolutions will reveal just what kind of strengthening of trade ties the President is talking about.

Without a consolidation of the existing trade institutions, there is no point in forming the FTAA ... and far less in creating a BAA; the most important obstacle to an agreement of that kind would be an institutional weakness that prevents application of existing commitments.

Article in Spanish

<a href=ogj.pennnet.com>Oil & Gas journal By OGJ editors

HOUSTON, Apr. 28 -- Intevep, the research and development subsidiary of Venezuela's state oil firm Petroleos de Venezuela SA, is evaluating its strategy regarding how to best fulfill the needs of the Venezuelan oil industry.

Argenis Rodríguez, adviser to Intevep Pres. Fernando Puig, told OPEC News Agency that Intevep's s 2003 research budget is $77.5 million.

"PDVSA's technological arm is more alive that ever," Rodríguez said during a recent visit to the 195,000 b/d Puerto de la Cruz refinery. He discounted suggestions that Intevep might disappear or be annexed by the Science and Technology Ministry.

Despite Venezuela's general labor strike, Intevep maintained constant support to the country's refining complexes, Rodríguez said.

<a href=ogj.pennnet.com>Oil & Gas Journal By an OGJ correspondent

RIO DE JANEIRO, Apr. 28 -- Brazil's President Luiz Inácio Lula da Silva and Venezuela's President Hugo Chávez reported that negotiations have been renewed to establish wide-ranging partnerships between state-owned oil firms Petroleo Brasileiro SA (Petrobras) and Petroleos de Venezuela SA.

The former administration of President Fernando Henrique Cardoso had started more modest negotiations, but they were never formalized.

The announcement was made after a meeting between the two presidents Friday in Recife, the capital of Brazil's northeastern state of Pernambuco. Chávez's visit to Brazil was his third since Lula took office on Jan. 1, but was the first meeting specifically used to discuss business, and not politics.

For years, Brazil was little more than a customer for Venezuelan oil, but after the meeting, the presidents stated they had "interests in common in the oil sector" and they "intend to expand cooperation."

Commercial partnerships The commercial alliance ratified a mutual cooperation agreement between the two countries for the development of the petroleum industry. It was decided that the areas of cooperation would occur in refining and commercialization of heavy crude, exploration and production in Venezuela, technological exchange of ideas, and joint activities in the areas of petrochemicals and natural gas.

"We want to refine oil in or as close to Venezuela as possible in the Caribbean, in the Andes, or here in Brazil," Chávez said, adding, "We can refine all this oil here and sell gasoline not only in South America but also in the Caribbean and Africa."

Brazil's Foreign Relations Ministry said that under Lula's administration, negotiations took place in Caracas during Mar. 27-8. On Apr. 14, a Venezuelan mission headed by Venezuela's Mines and Energy Minister Rafael Ramirez, including PDVSA Pres. Alí Rodríguez Araque, met with Brazil Mines and Energy Minister Dilma Roussef and Nestor Cerveró, Petrobras's international director, and inked a protocol of intentions to expand business in the sector.

Representatives from PDVSA and Petrobras organized groups to carry the decisions made at the meeting. The exchange of ideas and information will enhance the potential and synergies already identified by the two companies, according to a Petrobras source.

New refineries Petrobras also announced the construction, either alone or in partnership with PDVSA, of a new refinery in northeast Brazil with an output of 150,000 b/d of oil. The refinery is expected to cost some $2 billion.

The refinery is a long-standing economic development idea to meet the needs of Brazil's north and northeast, a vast poverty-stricken region with a population of 40 million.

The refinery is expected to come on stream in 2007. According to Rogerio Manso, Petrobras director of supply, the refinery will be the first in Brazil to have the capacity to process heavy crude oil, which is currently being exported.

Eleven of the 13 refineries in Brazil are owned by Petrobras and were built at a time when Brazil imported most of its crude from the Middle East; most of the oil produced in Brazil is heavy.

Even before the construction of the refinery, Petrobras intends to increase its refining capacity by 200,000 b/d by 2007, with investments of some $5.5 billion to upgrade refineries already operating.

Brazil processes some 1.62 million b/d of crude oil and Petrobras is working to increase this figure to 1.82 million b/d of refined products by 2007. Petrobras is importing about 190,000 b/d of oil products.

Line of credit Brazil's National Economic and Social Development Bank (BNDES) has opened a 2-year, $1 billion line of credit for Venezuela to use to purchase from Brazil oil platforms, turbines, locomotives, machinery, engineering services, and irrigation technology, plus other equipment.

The BNDES had previously provided financing for construction works such as an Orinoco River bridge in Venezuela.

Last December Petrobras shipped 82 million l. of gasoline to Venezuela, as requested by the Venezuelan government, by outgoing President Cardoso, to ease the fuel's shortage caused by the months-long PDVSA strike.

Venezuela's economy has slipped into sharp recession after a year of political conflict between Chávez and opponents demanding early elections in the world's fifth largest oil exporter. The nation's economy contracted nearly 9% in 2002 and many economists are forecasting a double-digit contraction for this year after a grueling opposition strike disrupted the oil shipments that account for half of the government's revenues.

The BNDES loan is based upon a solid collateral: Venezuela's vast oil reserves, analysts reported.

The Venezuelan and Brazilian governments are negotiating other deals for the downstream sector. Either Petrobras purchases or associates itself with one of PDVSA's refineries in the US or PDVSA associates itself with a Brazilian refinery.

The state of Pernambuco itself has inked a protocol of intentions with PDVSA to build a $2 billion refinery with an output capacity of 200,000 b/d.

Sources close to Brazil's mines and energy ministry told OGJ that Venezuela is interested in closing partnerships worth some $3 billion within Brazil's petrochemical sector, which is on firmer ground than Venezuela's.

The two governments also are discussing the possibility of Venezuela transporting natural gas to Carajas in Brazil's northern state of Para. Brazil is one of the world's largest exporters of iron ore, most of which comes from Carajas through Cia. de Ferro Vale do Rio Doce.