Caracas, May 9 (<a href=quote.bloomberg.com>Bloomberg) -- Venezuela's economy probably had its biggest contraction ever in the first quarter as an unsuccessful strike to oust President Hugo Chavez crippled oil production and consumer spending.

Gross domestic product probably shrank 29 percent in the first quarter from the same period a year ago, according the median forecast of seven economists in a Bloomberg survey. That loss almost matches oil's one-third contribution to the Venezuelan economy. The previous worst contraction was 17 percent in the fourth quarter of 2002.

``Chavez is still popular with a lot of the poor, but this economic depression is really going to test that popularity,'' said Benito Berber, an analyst with research firm IDEAglobal in New York.

The shrinking economy may accomplish what Chavez's opponents failed to get with the two-month strike: a new president. Chavez may face a binding referendum on his mandate later this year, which if he loses would lead to new elections. The strike, which cost the economy $7.4 billion, helped drive unemployment to 21 percent, and polls show about 60 percent of Venezuelans want Chavez to leave.

The economy has contracted two of the four years the former army lieutenant colonel has been in office.

The country's oil industry, whose production and revenue usually account for about 30 percent of GDP, fell 45 percent in the January-March period, according to Alejandro Grisanti, an analyst at Santander Investment in Caracas.

Oil Production

Oil production, which fell to 150,000 barrels a day in the first week of January, rose to 3 million barrels a day by the end of March, or back to pre-strike levels, according to the government. Oil output averaged 1.8 million barrels a day during the first three months of the year, down about 35 percent from the year before, the government said.

The strike and concern that a war in Iraq would cut production from that country boosted crude oil prices to $34.67 a barrel on March 12 from $23.63 on Nov. 13. Prices fell to $26.98 yesterday.

``The productive apparatus has been hit by everything that has happened recently -- the strike, the social and political conflict, the uncertainty, the lack of currency,'' said Domingo Maza, one of seven central bank directors.

Chavez restricted foreign currency trading in January to bolster international reserves depleted by falling confidence in the bolivar.

Since then the government has authorized the sale of only $105 million, compared with daily sales of about $60 million before the restrictions. The lack of dollars has stifled production in a country that imports 60 percent of consumer goods and where many companies rely on foreign parts and raw material to operate.

The government fixed the exchange rate at 1,600 bolivars a dollar in February. Companies and individuals scrambling for dollars have pushed the unofficial rate to about 2,200 bolivars.

Provisions

It's not just that we're running out of food, there are no car parts, tools, chemicals for companies, fertilizers for farmers,'' said Albis Munoz, president of Fedecamaras, the largest business association. When you attack private business, when you cut off dollars, you're cutting off the Venezuelan people.''

The government says it will import essential goods to avoid shortages.

Chavez's relations with many of the country's business people have been tense since he decreed 49 laws in October 2001 that included one allowing the government to confiscate private property.

There must be an agreement between the government and private sector over resources and the division of labor,'' Maza said. Without it, there's no possibility of overcoming the economic crisis we're in.''

Inflation quickened to 31 percent last year, a five-year high, from 12 percent in 2001.

The following chart provides a breakdown of forecasts for first quarter and 2003 GDP growth by firm:

T* Firm First Quarter 2003 IDEAglobal -19 -9.1 J.P. Morgan -24 -15 Santander Investment -35.2 -9.3 Banco Mercantil -27.1 -11.3 Deutsche Bank -38.5 -15.3 UBS Warburg -29 -15.5 BBVA -36 -12.3 Bear Sterns -15 Morgan Stanley -16.9 Veneconomy -16.8 IMF -17

Median -29 -15 T* Last Updated: May 9, 2003 10:10 EDT

<a href=www.voanews.com>VOA News-AP 09 May 2003, 12:37 UTC

Hugo ChavezNegotiators for the Venezuelan government and opposition groups say they have reached a tentative agreement to hold a referendum on President Hugo Chavez's rule, although the government objects to international observers overseeing the vote.

Opposition members have been pushing for a referendum for some time. During talks in Caracas Thursday, government representatives said they would allow a referendum to go forward, but only if there would be no monitoring by international observers, on the grounds this would threaten Venezuelan sovereignty.

Government and opposition officials met separately Thursday with diplomats from the so-called Group of Friends of Venezuela - comprising Brazil, Chile, Mexico, Portugal, Spain and the United States.

Since January, the six-member diplomatic group has supported efforts to negotiate a peaceful solution to the long-running turmoil that triggered a brief military coup last year against President Chavez. The latest negotiations come three months after an opposition-led general strike failed to force Mr. Chavez to resign and call early elections.

The opposition charges the Venezuelan president is ruining the economy by trying to model the country after Communist Cuba. Mr. Chavez says his adversaries are responsible for the economic downturn.

themilwaukeechannel.com POSTED: 8:48 a.m. EDT May 9, 2003 UPDATED: 10:12 a.m. EDT May 9, 2003

SHAWANO, Wis. -- A Wisconsin mother is heartened to learn that a man accused of killing her daughter has become the first leftist Colombian rebel extradited to the United States.

Colombian President Alvaro Uribe ordered Nelson Vargas Rueda Wednesday to face murder charges in the 1999 slaying of three American activists in Colombia, including Ingrid Washinawatok, 41. She's a Keshena native and member of the Menominee Tribe.

Ingrid's mother, Gwen Washinawatok, says it's good news for the family because she didn't think anything more was going to happen, other than to get her home.

Vargas is one of six members of the Revolutionary Armed Forces of Colombia, indicted in April 2002 in federal court in Washington.

The three killed were in northeastern Colombia to help set up a school system for the 5,000-member Uwa Indian tribe when FARC rebels kidnapped them in February 1999.

Days later, the kidnappers shot the victims. Their bullet-riddled bodies were found across the border in Venezuela.

Chris Varcoe <a href=www.canada.com>Calgary Herald Friday, May 09, 2003

Canada's second-largest oilfield services firm rode the wave of high commodity prices and drilling activity to post a one-third jump in first-quarter profits.

Calgary-based Ensign Resource Service Group reported Thursday that net income in the first quarter rose to $38.9 million, or 52 cents a share. During the same period a year earlier, Ensign made $29.2 million, or 40 cents per share.

Revenues during the first quarter jumped 40 per cent to $281 million, while cash flow increased 37 per cent to $62 million, or 83 cents per share.

"It was the second-best quarter in the history of our company," Ensign's chief financial officer Glenn Dagenais said in a conference call.

Ensign operates across Western Canada and the United States, and is one of the companies in the stable of oilpatch entrepreneur Murray Edwards.

Demand for oilfield services shot up this winter drilling as petroleum producers gained access to frozen land and searched for new oil and natural gas reserves.

Ensign said the number of wells completed in Western Canada has increased 14 per cent so far this year from 2002 levels.

More important, the number of well licenses issued -- reflecting intentions to drill wells -- has soared almost 55 per cent.

In Canada, Ensign's drilling fleet of 144 rigs operated at 69 per cent capacity during the quarter, compared with 53 per cent of rigs working a year earlier.

"The good news is that operators did not get all of the wells they wanted to drill in the first quarter, therefore we had a backlog going into the second quarter," said Ensign vice-president Bob Geddes.

Across the sector, Canadian oil companies are enjoying the benefits of strong commodity prices.

Crude oil averaged $33.80 US per barrel during the quarter, up 56 per cent, due to strife in Venezuela and the Middle East.

Tight inventory levels pushed spot prices for western Canadian natural gas up 129 per cent to $7.15 per gigajoule.

With oil and natural gas prices remaining relatively high, this trend should spur additional work for service firms such as Ensign and rival Precision Drilling Corp., analysts say.

"If the weather co-operates and gas prices get near where we expect them to be, the oilfield service sector is going to be a big winner," said analyst Todd Kepler of Griffiths McBurney Partners.

cvarcoe@theherald.canwest.com

Caracas, May 9 (<a href=quote.bloomberg.com>Bloomberg) -- About two-thirds of Venezuelans living in the capital, Caracas, would vote for the ouster of President Hugo Chavez if a binding referendum were held, El Universal reported, citing a poll by Mercanalisis.

The poll of 300 Caracas residents taken between April 21 and April 27 found 66 percent would vote for Chavez to leave office, while 16 percent would vote for him to remain. Thirteen percent gave no response and 4 percent said they wouldn't vote. No margin of error was given.

Seventy-five percent said they were opposed to the government's economic policies, while 19 percent said they supported them. Six percent gave no response. Caracas, a city of 4 million, accounts for about 16 percent of the country's population.

Venezuela's opposition has said it plans to seek a binding referendum on Chavez's presidency after Aug. 19 when the former paratrooper passes the halfway point of his term in office. Negotiations over holding the vote continue.

(EU 5/9 1-7) (To see El Universal's Web site, click on {EUDC })

Last Updated: May 9, 2003 08:57 EDT