<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, June 11, 2003 By: Jose Gregorio Pineda & Jose Gabriel Angarita

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: As is to be expected, the Venezuelan government's debt restructuring strategy will focus mainly on internal debt instruments, reflecting the advantages provided to the government by the exchange control system. The authorities are announcing new debt swaps to be held next Thursday June 12.

The more intensive debt restructuring activity in the internal market is expected to prevail over the alternative of making external adjustments, whose cost would be very high. The preference for rolling over internal bonds is supported by the excess liquidity now present in the economic system as a result of the controls on the foreign exchange market. But many internal public debt maturities are highly concentrated in the 2003-2005 period, implying that the Treasury will continue to apply its domestic refinancing policy.

The composition of national public debt as a percentage of gross domestic product changed between 1998 and 2002, according to Finance Ministry figures. Total debt represented 30% of GDP in 1998 and rose to 41% by 2002. Internal debt amounted to 4% of GDP in the earlier year and soared to 12% in the later one, while external debt declined from 25% of GDP in 1998 to just 19% in 2001 before rebounding to 29% of GDP last year.

The trend of internal government borrowing has been upward in the last four years, and the National Treasury is expected to continue with that policy in the rest of 2003 and quite possibly next year as well, to gain more maneuvering room and be able to meet the budget's internal and external spending commitments.

Furthermore, until the restrictions on the national economy are relaxed, operations of this kind will be beneficial to the fiscal accounts, because the banks will have no choice but to "voluntarily" acquire public securities as their intermediation activity contract.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, June 11, 2003 By: David Coleman

Venezuelan Guayana Corporation (CVG) aluminum producing subsidiary Venalum is expecting annual production to increase to 3,000 tonnes in an expansion program just announced from CVG HQ in Puerto Ordaz.  The National Aluminum Development initiative forms part of the construction of Train 6 at Venalum and Train 5 at CVG Alcasa, included in plans for the construction of further processing plants in southeastern Bolivar State ... the new trains have an already installed capacity of 200,000 tonnes per annum but Venalum's capacity will increase to 600,000 tonnes and Alcasa to 410,000 under program details just made public.

Venezuela is attempting to secure its competitive position in world aluminum markets where it aims to achieve 6th position up from a current 10th in world rankings.

CVG Venalum is celebrating its 25th anniversary of productive operations with a 2002 balance of 17.304 billion bolivares (±US$10.8 million) and record production of 436,558 tonnes thanks to stable operations and increased foreign investment which has helped increase production, lowering costs and gaining wider sales.

• Venalum is a producer of primary aluminum in joint venture with 20% partner Japanese Showa Denko
• Alcasa in 92% CVG-owned in partnership with US Alcoa.

BY MARK SHENK <a href=www.nwanews.com>BLOOMBERG NEWS Posted on Wednesday, June 11, 2003

Crude oil rose to a 12-week high Tuesday as fires closed units at Louisiana refineries operated by Exxon Mobil Corp. and Murphy Oil Corp., raising concerns of possible limited gasoline supplies during the fuel’s busiest season.

U.S. gasoline inventories, for the week that ended May 30, were down 4 percent from a year earlier, Energy Department figures show. Refiners that week operated at 98 percent of capacity, a two-year high. "When refineries are running at such a high rate there are going to be problems," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York, a gasoline and heating oil marketer. "You can expect to see units blow up."

Crude oil for July delivery rose 28 cents, or 0.9 percent, to $31.73 a barrel on the New York Mercantile Exchange, the highest closing price since March 17.

Oil had fallen as low as $30.90 a barrel before the rally, after OPEC officials, gathering in Doha, Qatar, for a meeting today, said they saw no need to cut oil output quotas.

Meantime, gasoline for July delivery rose 2.06 cents, or 2.3 percent, to 91.71 cents a gallon in New York, the highest close since March 31. U.S. gasoline demand peaks during the vacation season, which runs from Memorial Day in May to Labor Day in early September. "Gasoline has been a steadying influence on the crude-oil market," said Tom Bentz, an oil broker at BNP Paribas Commodity Futures Inc. in New York. "When crude oil was falling flat on its face earlier today, gasoline limited the decline."

Exxon Mobil said a fire broke out Tuesday at a coker unit in its Chalmette, La., refinery. All other units at the refinery were operating normally, spokesman Kimberly Brasington said. The refinery, a joint venture with Venezuela’s state oil company Petroleos de Venezuela SA, can process 180,000 barrels of crude oil a day.

Murphy Oil, which is based in El Dorado, Ark., shut its refinery in Meraux, La., after a fire broke out in the residual-oil supercritical extraction and vacuum units about 2 a.m. Tuesday, according to a company statement. The fire in the vacuum unit was extinguished by 5:15 a.m., and Murphy said Tuesday afternoon that the fire in the extraction unit also was out.

Two employees suffered minor injuries at the refinery, which can process about 100,000 barrels of crude a day.

The Organization of Petroleum Exporting Countries is unlikely to change oil-output quotas as long as oil prices stay within a range of $22 to $28 a barrel, OPEC Secretary-General Alvaro Silva Calderon said Tuesday in Qatar. OPEC’s basket of seven crude oils averaged $27.53 a barrel Monday.

OPEC, which produces a third of the world’s oil, had considered cutting output to make room for renewed exports from Iraq, where the U.S.-led invasion in March halted shipments.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, June 11, 2003 By: David Coleman

Venezuela has warned of the destructive potential of rebels who attempted to overthrow the government of President Hugo Chavez Frias in an April 11, 2002 coup d'etat and says that they are still trying to overthrow democracy.  Speaking at the 33rd Organization of American States (OAS) General Assembly in Santiago de Chile, Venezuela's OAS Ambassador Jorge Valero highlighted the interim dictatorship of Pedro Carmona Estanga, who had moved immediately to dissolve the constitution, congress and the judiciary ... "OAS member nations should not disregard the reappearance of Latin American dictatorships."

Analyzing democratic governability in the Latin American region, Ambassador Valero qualified Venezuelan Foreign Minister (MRE) Roy Chaderton Matos' Monday attack on the opposition-controlled Venezuelan print & broadcast media saying "there are anti-national sectors in Venezuela who obstinately, audaciously and irrationally defend privileges which have been seen in all kinds of anti-democratic actions to interrupt the process of democratic, peaceful  and constitutional transformation the government puts forward."

"In Venezuela we have had to counter enormous obstacles in the exercise of democratic government ... the coup d'etat of April 11-12, 2002, the calling of a series of illegal strikes, the criminal sabotage of our petroleum industry."

"We must not fail to recognize that authoritarian regimes and officious dictatorships can easily return to our continent ... we must make every effort to construct a more equitable society and in solidarity to face-off covert resistance to necessary democratic reforms."

June 11 (<a href=quote.bloomberg.com>Bloomberg) -- The Organization of Petroleum Exporting Countries, pumping at near-record levels, agreed to leave its oil quotas in place as delays in Iraqi sales drive up prices, the group's president said.

``There is an agreement now to keep the oil production and the quotas unchanged,'' said OPEC President Abdullah bin Hamad al- Attiyah in Doha, Qatar, where the group is meeting today. The group will reconvene on July 31, an OPEC spokesman said.

Ministers from the United Arab Emirates, Kuwait, Iran and Libya earlier today said the group has no need to make changes. Cutbacks may come in the third quarter, ministers said, as Iraqi shipments rise to near prewar levels of 2.5 million barrels a day, 3 percent of the world's total.

OPEC is lobbying non-members including Norway and Mexico for support in restraining output later this year, seeking to keep prices within the cartel's target range of $22 to $28 a barrel. OPEC's price index was at $27.53 a barrel, up 22 percent in the past year. Crude oil was down 20 cents at $27.90 a barrel as of 10:06 a.m. in London on the International Petroleum Exchange.

Ministers instead of reducing quotas have called for greater compliance with the existing targets. OPEC's 10 members outside of Iraq in May pumped 26.4 million barrels a day, according to Bloomberg estimates, above the group's goal by 1 million barrels.

Iraqi exports stopped when U.S. and British forces invaded on March 20 to oust President Saddam Hussein over allegations he was amassing weapons of mass destruction. Looting since then has hampered efforts to restore production. The nation is now producing 700,000 barrels a day, which may rise to 1.5 million this month, officials have said.

`Balanced Market'

There is now almost a balanced market,'' said Abdulhasid Mahmoud Zlitni, Libya's top oil official, in Doha. Looking ahead to the arrival of Iraq oil on the market, if members do not cut supply to the level of production agreed to in Vienna, there will be 600,000 to 800,000 barrels of oversupply,'' he said.

Oil officials in Iraq have said the nation will take months to get to normal. The head of Iraq's northern oil fields said the export pipeline to Ceyhan, Turkey, may be shut for eight weeks because theft has disabled control systems. The southern manager said output will peak this month at 800,000 barrels a day, barely a third of prewar levels, until security resumes.

The situation in Iraq is a lot worse than people are being led to believe,'' said Tony Zafar, a trading manager at 5D Ltd., an oil-trading company. There is no way production will be up and running in two month's time, so OPEC doesn't need to worry about an oil glut anytime soon.''

Russia

In addition to its own reductions, OPEC is lobbying non- members Russia, Norway, Mexico and Oman for cutbacks. Norway this week has said it may consider such a move if prices drop. The nations have in the past cooperated with OPEC to restrict supplies and keep prices high.

The interests of Russia and OPEC concur in many ways,'' said Russian deputy minister of fuel and energy Alexander Voronin in Doha. But making decisions on how much oil to export, Russia, as it did before, will proceed from the needs of the Russian economy and the necessity of increasing the living standards of our population.''

Oil inventories are falling in the U.S., the world's largest energy consumer, also bolstering prices. Supplies are at 289 million barrels, according to government estimates, down 11 percent in the past year.

Oil inventories in industrialized countries are relatively tight for this time of year,'' al-Attiyah said. This may serve to support oil prices in the coming months.''

OPEC's 11 members are Saudi Arabia, Iran, Iraq, Kuwait, the United Arab Emirates, Qatar, Algeria, Nigeria, Libya, Indonesia and Venezuela.