05/14/2003 By BRENDAN M. CASE / The Dallas Morning News

ALTAMIRA, Mexico – Bountiful natural gas deposits lie just a few hundred miles from this bustling port city on Mexico's Gulf Coast. But officials here are planning to import boatloads of gas from as far away as Africa.

The Federal Electricity Commission – or CFE – plans to hire a major energy company this year to build a liquefied natural gas terminal and re-gasification plant in Altamira.

The LNG project, with a price of about $500 million, would fuel a complex of power plants in this burgeoning region about 300 miles south of Texas.

"This area is seeing a lot of economic growth, and we need more electricity," said Arnoldo García González, who oversees the CFE's operations here. "To generate electricity, we need natural gas."

The LNG rush reflects Mexico's increasingly urgent efforts to shore up its natural gas supply. State-owned oil monopoly Petróleos Mexicanos, or Pemex, has neglected gas production for years. Now, however, authorities are promoting the clean-burning fuel in power plants, factories and homes – and demand is booming.

Altamira probably will get the first of several LNG projects south of the border. Texas companies and global competitors also are planning LNG projects in Baja California, which would supply customers in both Mexico and the United States.

Skeptics say Mexico should develop its own natural gas reserves instead of relying on imports. But investment remains limited. Pemex channels most spending to oil production, and Mexico prohibits private companies from developing oil and gas reserves.

"We're a country that could export gas and make a big industry out of exploring for and producing gas," said Héctor Rangel Domene, president of the Business Coordinating Council, a leading private-sector lobbying group in Mexico City. "It's absurd that we can't do that."

Mexico has already become a juicy market for Texas gas exporters. Two months ago, Houston-based Kinder Morgan Inc. opened an $87 million cross-border pipeline. Tidelands Oil & Gas Corp., a Corpus Christi company, sold its gas production business last year to build cross-border pipelines.

Within a few years, Mexico might also be welcoming ships laden with super-cooled LNG from Nigeria, Venezuela, Malaysia or Indonesia.

"There's a growing gas market in Mexico," said Barbara Blakely, a spokeswoman for Shell México, which hopes to win the LNG contract in Altamira and to build a separate plant in Baja California. "Moving gas from one part of the world to another is no longer uncommon. We do it all the time."

Appetite for imports

Mexico still is a major crude oil exporter. But the country's growing appetite for gas imports illustrates its growing industrialization.

Glass and steel companies are devouring natural gas. More important, demand for electricity is rising quickly – and gas-fired power plants are getting most new investment. Recent legal changes have created a whole new business for natural gas distribution companies. Millions of consumers are now burning natural gas in their homes instead of liquid petroleum gas, the traditional fuel.

All told, natural gas imports reached nearly 650 million cubic feet per day during the first three months of the year, nearly three times what they were in 2000, according to Pemex. Domestic gas production has failed to keep pace with demand.

"Productive capacity is not increasing, while demand is rising quickly," said Alejandro González, an analyst with Cambridge Energy Research Associates in Cambridge, Mass. "The United States is in the same situation."

Pemex is trying to lure private companies to help develop gas reserves in northern Mexico's Burgos basin, a project that would cost at least $6 billion. But it faces political opposition from critics who say it violates Mexico's strict limits on private energy investment.

So the search is on for other gas sources, including LNG. Within a few years, LNG could conceivably account for more than one billion cubic feet per day – about as much as Pemex hopes private companies would extract from Burgos.

"If you start a new program to drill natural gas, how much is it going to cost you? Ten billion dollars?" asked Mr. González. "If you build an LNG terminal, it will cost you half a billion dollars. And you'll get the gas as soon as the terminal is finished."

Many LNG projects face stiff political opposition.

In Baja California, business leaders and grass-roots activists have warned that LNG terminals would create eyesores and security risks in areas that depend on tourism. Opponents fret that such terminals might prove tempting targets for terrorists.

Mexican officials say LNG plants would be built with an eye to security concerns. Ms. Blakely, the Shell spokeswoman, says her company has never experienced a major accident with LNG.

Other critics worry that energy companies will turn Mexico into a huge LNG depot for the United States, selling gas to U.S. customers while taking advantage of weaker environmental enforcement south of the border.

"Mexico could turn into a big LNG platform for the United States," said Víctor Rodríguez-Padilla, an energy expert who advises the opposition Institutional Revolutionary Party. "One of the risks is that our environmental standards would be ignored."

Baja California's role

Energy companies say they still hope to build LNG projects in Baja California, with plans to sell gas to customers on both sides of the border. Backers include Royal Dutch/Shell Group; Houston-based ConocoPhillips; Houston-based Marathon Oil Corp., ChevronTexaco Corp., which is based in San Ramon, Calif.; and Sempra Energy, which hails from San Diego.

Analysts say Baja California could only support one or two such projects, adding that it's hard to tell which company is winning the race to obtain all necessary permits. Last week, however, Mexican authorities issued Baja California's first LNG permit to Marathon Oil. Marathon executives envision a $1.5 billion "Tijuana Regional Energy Center," which would include LNG facilities, a power plant and a desalination plant to provide fresh water.

"The Tijuana area is seeing tremendous growth," said Paul Weeditz, a spokesman for Marathon. "Without these basic infrastructure elements, developing the economy is tough to achieve."

Hopes for Altamira

The Altamira LNG project could be the first to move forward.

Unlike the Baja projects, which would seek their own customers, the Altamira terminal would sell its gas to the Federal Electricity Commission, the CFE. The CFE would burn the gas in several power plants providing much needed electricity to the national grid.

Companies such as Mexico's Petrocel-Temex, Germany's BASF AG and U.S.-based General Electric Co. have major plastics and petrochemical plants in Altamira. Local power plants also can transmit power to customers in Monterrey, the northern business capital, and elsewhere in Mexico.

Altamira's LNG plant would need to supply up to 500 million cubic feet of gas a day. The price would be tied to Henry Hub benchmark prices on the New York Mercantile Exchange. At current prices, which are historically high, 500 million cubic feet of gas is worth nearly $3 million.

CFE officials originally had said they would announce the winner in April. Now they say a winner could be announced this summer. Officials said in January that companies interested in the project included Shell, BP, Spain's Iberdrola and other major competitors.

Would-be suppliers would have to show that the total price Mexico pays for LNG would be less than what it would pay to import gas through a pipeline. The CFE would agree to buy the gas for 15 years.

"This area is going to be one of the most important power generation areas in the country," said Mr. García, the local CFE director in the Tampico-Altamira area. "With all the new development in gas and electricity, we'll be able to satisfy demand."

Research librarian Darlean Spangenberger contributed to this report.

E-mail bcase@dallasnews.com

Caracas, May 14 (<a href=quote.bloomberg.com>Bloomberg) -- Venezuela's Supreme Court ruled that dissident General Carlos Alfonzo Martinez, who was arrested in December after leading an anti-government protest, must stand trial for rebellion.

The court ruled 12-to-8 to deny a defense motion that Martinez had been detained illegally and should be set free.

This is an unjust decision,'' Alberto Arteaga Sanchez, the general's lawyer, told reporters. This is condemning an innocent man to a trial where a predetermined judgment awaits.''

Martinez was one of 14 high-ranking officers who led the October takeover of a capital city plaza that has become a rallying point for opponents of President Hugo Chavez. About 100 officers joined the protest, which called for civil disobedience against Chavez.

No date for a trial has been set.

Martinez, who has been under house arrest at the Fuerte Tiuna military base in Caracas, may face as many as 20 years in jail under Venezuela law if convicted of rebellion.

The government refused to act on a lower court's order on Dec. 31 that Martinez be should be freed because he wasn't charged within 12 hours of his arrest as required by law. Last Updated: May 14, 2003 14:19 EDT

The Advertiser From correspondents in Lima 15may03

A JUDGE in Peru's highest court has recommended exiled former President Alberto Fujimori face a murder trial for allegedly authorising two massacres carried out by paramilitary death squads a decade ago.

Supreme Court Justice Jose Luis Lecaros had made his recommendation in a report filed after a year-long investigation into the massacres during Fujimori's rule, his legal assistant Jorge Medina said today.

Under Peru's criminal law, a Supreme Court bench must now decide on Lecaros' recommendation.

Medina said the court would not make that decision until Fujimori returned or was extradited to Peru and could face a trial.

Fujimori fled to Japan in November 2000 amid a corruption scandal that toppled his decade-long regime.

Japan has so far refused to extradite him, and Peruvian prosecutors are piling up charges against the former president in hopes of pressuring Tokyo to turn him over.

Lecaros said he found evidence supporting allegations that Fujimori gave the leader of the so-called Colina Group hit squad the go-ahead to murder suspected sympathisers of the now nearly defunct Maoist Shining Path guerrilla movement.

The Colina Group killed 15 poor people during a raid on a cookout in Lima's squalid Barrios Altos district in 1991. A year later, the group murdered nine students and a professor at La Cantuta University.

For years, human rights groups have suspected that Fujimori and his ex-spy chief, Vladimiro Montesinos, masterminded the killings.

In March, Interpol placed Fujimori on its most wanted list, issuing a "red alert" for his arrest on a Peruvian warrant charging him with death squad murders.

Peru's judiciary has opened six cases against the fallen president, including authorising the death squad murders, abandoning his office, corruption and bribery.

Fujimori denies any wrongdoing. On his "From Tokyo" website, he claims to be the target of political persecution and says the accusations lack proof and credible witnesses.

Montesinos slipped out of Peru in 2000, but was captured in Venezuela in 2001. He has been in a high security prison since and faces more than 70 trials on charges ranging from corruption to murder.

BW5699 MAY 14,2003 12:07 PACIFIC 15:07 EASTERN     Business Editors

    NEW YORK & LONDON--(<a href=www.businesswire.com>BUSINESS WIRE)--May 14, 2003--Fitch Ratings has today affirmed the Republic of Colombia's long-term foreign and local currency ratings of 'BB' and 'BBB-', respectively. The Rating Outlook remains Negative. The short-term foreign currency rating is 'B'.     Colombia's sovereign credit fundamentals have been deteriorating since the recession of 1997/1998, yet the strong leadership and ambitious agenda of President Alvaro Uribe, who took office in August 2002, have helped to stem further weakness. The president successfully advanced several key fiscal, labor, and pension reforms which helped to improve public finances and domestic confidence. Even though several of the fiscal adjustments have begun to dampen household purchasing power through new taxes and public sector wage freezes, and although unemployment remains high, the president has generally sustained his initial popularity and is now pushing for a constitutional referendum for spending freezes and political reform. The outcome of the referendum, and the government's ability to deliver stronger sustained economic growth and improved security will be key factors in determining whether Colombia has truly reached the nadir of its credit deterioration and is repositioned for a rebound, or whether its mounting vulnerabilities will outweigh the considerable progress from the first five months of the president's term.     The risks to a scenario for government debt stabilization are considerable. Even under the government's base case scenario, debt would continue to rise in 2003, and remain stable in 2004 before declining in 2005. Lower than expected growth and higher than expected spending could impact fiscal outturns, however, as they have in recent years. Declining projections for U.S. and world growth could weigh on expectations for Colombia in the months to come. The new course of the Colombian internal conflict also raises new uncertainties about domestic confidence this year and next. The dramatic contraction of the economy in Venezuela, Colombia's second trading partner after the U.S., is another source of potential pressure on exports and investment levels. Finally, should the referendum fail, confidence in the fiscal position of the government could weaken, dampening the current mood of cautious optimism. In light of these uncertainties, many of which will be resolved over the course of the year, Fitch affirmed its Negative Outlook.

--30--AM/sf*

CONTACT: Fitch Ratings, New York
         Morgan C. Harting, 212/908-0820 (CFA)  
         Roger M. Scher, 212/908-0240
         Matt Burkhard, 212/908-0540 (Media Relations)

KEYWORD: NEW YORK
INDUSTRY KEYWORD: BANKING BOND/STOCK RATINGS
SOURCE: Fitch Ratings

By Myra P. Saefong, <a href=cbs.marketwatch.com>CBS.MarketWatch.com Last Update: 10:00 AM ET May 14, 2003

WASHINGTON (CBS.MW) -- Crude-oil imports for April rose to their highest monthly level in almost two years, indicating that the nation's oil industry successfully offset the loss of oil from Iraq, the American Petroleum Institute said Wednesday.

  CBS MARKETWATCH TOP NEWS Who wants to be a retailer? Not Disney anymore U.S. stocks rise as tobacco, biotech shares surge Executives sell stock in May, go away In sharp move, mortgage rates again fall to new lows Free! Sign up here to receive our SiteWatcher e-Newsletter!

Sign Up!

U.S. crude imports were up nearly 6 percent in April, at 9.7 million barrels per day on average, compared to the year-ago period.

So "it appears that the war in Iraq, which could not export oil during the fighting, did not create a negative impact on global supplies as feared, or at least the ability of American importers to secure adequate supplies," API said in a monthly report.

The API said preliminary data from the Energy Department show that the foreign oil came from increased shipments out of Saudi Arabia and Venezuela and that other major exporters included Canada and Mexico.

Total imports, which include petroleum products, reached 12.3 million barrels a day last month -- the highest in nearly two years, the API said.

About 1.1 million barrels per day of that was imported gasoline and blending components, equating to a 32 percent rise over a year ago. And at 13 percent, it represented the highest recorded monthly import share of the U.S. gasoline market as well as the biggest monthly imported product volume, according to the API.

By contrast, gasoline refined in the U.S. totaled 8.3 million barrels per day in April, down 3.3 percent from a year earlier.