<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, June 13, 2003 By: David Coleman

Forbes magazine reports from Doha in Qatar that "Venezuela blames America for backing a failed coup attempt last year, and some in the Pentagon question the US alliance with Saudi Arabia, linchpin of the Organization of the Petroleum Exporting Countries (OPEC) cartel."

Meanwhile OPEC has remained silent in the face of the threat to a growing number of its members, confining debate to the price of its oil ... until now.

Venezuela has put the issue of sovereignty back to the top of the agenda at a  long-term strategy meeting.  Venezuelan Energy & Mines Minister Rafael Ramirez told reporters "We need to emphasize the idea that the world has left behind the colonial era ... when one power could take by force the resources of another country ... there are several countries which could feel threatened."

The proposal is unlikely to lead to any immediate threat to world oil supplies ... but Venezuela's idea of tightening OPEC's grip over two-thirds of the world's oil reserves, and seeking to avoid military attack, has awakened interest from other members ... it's a serious concern that OPEC members with big oil reserves will become occupied by foreign powers.

While the United States is anxious to secure cheap supplies, it has increased its military and political influence in key members such as Saudi Arabia, Kuwait and recently Iraq.  Under the leadership of Saudi Arabia, OPEC has traded revolutionary rhetoric for talk of partnership with consuming countries in the west and some cartel participants believe its now leaning too far Washington favor with the invasion of Iraq war as just one more bad omen.

"The United States can't continue to invent wars ... we want to have a deal with the world powers ... we will supply oil and gas, but you can't invade my country ... after Iraq, who is next?"

Venezuela's route is to link security of oil supply to OPEC nations' national security ... if approved, it would be raised at the next OPEC Heads of State summit in 2005.  But a number of OPEC delegations believe that if OPEC does not rediscover its ideological roots ... born in Venezuela ... and assert national sovereignty over natural resources, OPEC could be wrecked by aggressive US foreign policies and the combined the financial clout of the world's top four oil companies.

Iran and Libya are welcoming the move ... they are already under unilateral US sanctions and have no time for Washington dictates, thumbing their nose at the Bush administration at every opportunity.  They are, though, tethered by Saudi Arabia, which resolutely cuts political arguments from OPEC discussions in an attempt to make the group a more focused market manager.

Given the current neocolonialist climate in Washington, any attempt by OPEC to fend off United States attack could possibly add fuel to USA critics who see the OPEC cartel as an instrument of economic warfare ... Venezuelan OPEC officials believe that Venezuela's experience with foreign investment in the 1990s, and Washington's "hairy hand" involvement in the April 11, 2002 coup d'etat could be cloned with OPEC affiliates as the primary target for unilateral US intervention.

Venezuela's deputy oil minister Luis Vierma offered a presentation of facts to OPEC earlier this month and said "We have already said that Venezuela's experience could be repeated in other OPEC members with very negative results, destabilizing countries."  As a result Venezuela has proposed that OPEC should reinforce its sovereign powers establishing a minimum royalty rate across the group ... a tax on gross production.  Non-OPEC producers, however, prefer to taxes profit while Venezuela has increased its royalty rate to 30%.

Reuters, 06.13.03, 12:47 PM ET CARACAS, Venezuela, June 13 (Reuters) - Venezuela's government said on Friday it had pushed back maturities on 49 percent of local debt bonds due Saturday -- about $188 million -- in the latest of a program of debt swaps aimed at easing a payments crunch this year. The Finance Ministry said in a statement that 301.2 billion bolivars ($188.3 million) were swapped in the operation Thursday, out of 616.4 billion bolivars ($385.2 million) worth of bonds which fell due June 14. Maturities were extended by periods of between two years and four months and three years and one month. It was the eighth internal debt swap carried out since November by leftist President Hugo Chavez's government, which is struggling to cope with the worst economic recession in Venezuela's recent history. Following a crippling opposition strike that disrupted Venezuelan oil exports in December and January, the economy of the world's No. 5 petroleum exporter contracted 29 percent in the first quarter of 2003. In Thursday's operation, the Finance Ministry offered new bonds known as VEBONOS up to a total amount of 750 billion bolivars ($468.8 million). For the first time since it began the debt swap program last November, the Finance Ministry introduced VEBONOS carrying a coupon rate based on 91-day Treasury Bills which it said more accurately reflected the country's sovereign risk. Venezuela's internal public debt stands at more than 15 trillion bolivars ($9.4 billion) and maturities are heavily concentrated over the next three years. The government is seeking to ease this payments squeeze through the swaps. In seven previous swaps carried out since November, Venezuela's government has pushed back maturities on internal debt bonds worth 4.4 trillion bolivars ($2.7 billion), according to Finance Ministry figures. The last swap was held April 10

By Thom Calandra, <a href=cbs.marketwatch.com>CBS.MarketWatch.com Last Update: 1:19 PM ET June 13, 2003

SAN FRANCISCO (CBS.MW) - Beleaguered Canadian miner Crystallex International Corp., grasping rights to a world-class gold asset, is likely to be sold before it ever develops the vast Las Cristinas deposit.

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That's the view of some of the hedge funds and other investors who recently were lining up behind the company's shares. Trading in Crystallex shares (KRY: news, chart, profile) on the American Stock Exchange is running four to six times average daily volume.

The same brisk activity this week also applies to the company's Toronto-traded shares.

Crystallex shares rose more than 20 percent earlier in the week after The Calandra Report, a subscription service owned by CBS MarketWatch, quoted a mining analyst as saying he expects a bid for the entire company in the next month.

Other fund managers quoted in the report said the company's Las Cristinas deposit, awarded to Crystallex by the Venezuelan government after years of bungled negotiating and political strife, will almost certainly see development. The question is: by whom?

"I think the executives realize this thing has become so mispriced that it will become irresistible to a company looking to replace reserves," Robert Bishop of Gold Mining Stock Report told me Friday morning.

Crystallex CEO Marc Oppenheimer, in an interview this week, said Crystallex will release a feasibility study conducted by engineering group SNC-Lavalin in the late summer or early autumn. The study will examine costs for a 20,000-tonne-per-day facility at Las Cristinas. Some observers say the first phase of such a project could require $200 million or more, far more than the company would be able to raise, even with the help of newly hired banker Deutsche Bank.

Fund managers tell me several companies are busy auditing Crystallex's activities and financial statements this week in preparation for a possible bid or a 50-50 licensing or development agreement for Las Cristinas, which is estimated to hold about 10 million proven and provable ounces of gold. The company, of course, declines comment.

At this week's San Francisco gold conference, more than a dozen small to mid-sized hedge funds were inquiring about Crystallex and its Venezuela efforts. Las Cristinas is one of the world's largest known untapped gold deposits, and major gold producers are desperate to replace diminishing bullion reserves on their balance sheets.

Several fund managers tell me they expect to see an outright purchase or at least a large corporate backing of the company or its Las Cristinas venture within the next month. The Venezuelan government awarded full rights for Las Cristinas to Crystallex in September of last year.

This week, an auditing committee of Venezuela's legislative body approved a report that probed the September contract between Crystallex (CA:KRY: news, chart, profile) and the country's state-owned holding company, CVG (Venezuelan Corporation of Guayana).

"We are pleased to see the news in Venezuela regarding the National Assembly's review and support of the Crystallex CVG agreement and the cancellation of the Minca agreement," Crystallex spokesman Richard Marshall told me. "We are waiting to see a final copy of the resolution."

Minca is a previous joint venture between CVG and Vannessa Ventures Ltd (CA:VVV: news, chart, profile), a Canadian company.

To be sure, some say the recent Crystallex trading activity might be tied to unwarranted speculation by small investors, alongside the conversion of debentures into equity by large holders.

The convertible bonds, issued by the company to raise much-needed cash, are priced for conversion into stock at 15 percent below the Crystallex market price. According to The Calandra Report, some owners of those so-called toxic converts are more than likely shorting the stock and delivering their converted shares against the short for an instant payday. These convert holders are "monetizing their investment," as they say in the business.

Others, speaking to me at the San Francisco gold show this week, said the stock rise may be because of "significant short covering or a big acquisitive buyer" looking to close the gap between the company's $1.50 U.S. share price and a possible offer of $3 or more.

Oppenheimer, the chief executive, said he would decline at this time to comment on any M&A speculation. See: Crystallex CEO says shares are mispriced. Oppenheimer also told me he expects continued support from Venezuela authorities in Crystallex's efforts to develop Las Cristinas.

"Deustche Bank has met with the Venezuela government. I think that speaks for itself," Oppenheimer said this week about the company's new banker.

Industry leaders say Las Cristinas cannot remain undeveloped for long. The government of Venezuela hopes to raise billions of dollars to further efforts to exploit offshore natural gas deposits, and some of that money would come from gold sales. The project would deliver an approximately 3 percent royalty to the government and another, smaller royalty to state-controlled CVG.

In addition, the world's major producers of gold, such as Barrick Gold (ABX: news, chart, profile), are nearly all losing part of their gold reserves as mines get tapped out or as environmental restrictions reduce output. Gold reserves are a fundamental Wall Street measure for evaluating the worth of a miner's shares.

"This deposit is clearly at the top of everyone's list," says John Clarke, chief executive of Nevsun Resources (CA:NSU: news, chart, profile), a Canadian company that is exploring for gold in Africa. Nevsun was the world's best performing gold stock in 2002.

"Many companies are very challenged on the issue of reserve replacement," says Richard Sacks, an asset manager at Phoenix Advisory Management in Chicago and large Crystallex shareholder. "It is the most critical issue. Can an ore body of this size be overlooked forever?"

If Gold Mining Stock Report's Bishop, considered one of the deans of mining strategists, is correct, Crystallex will see a transforming corporate event sometime very soon.

It just may be the Crystallex board that paves the way for an outright purchase or 50-50 Las Cristinas partnership. The Crystallex board of directors is led by Robert Fung of mining investment house Yorkton Financial, which is a Toronto powerhouse in the gold business.

Board members, in the opinion of some observers, may be watching a class-action shareholder lawsuit filed against Barrick Gold this week. "Barrick assured the markets that it was improving its operations by keeping its production costs in check and that the company expected to earn $0.42-$0.47 per share in 2002, even taking into account the phasing out of several mines and decreasing ore quality (which increases costs) in several of its mines," according to the complaint.

The lawsuit concerns a period of the company when Barrick's Randall Oliphant was chief executive of the gold giant, roughly from February through September 2002. Oliphant, who has since resigned, first promised a $2 billion, five-year growth plan, then did a stunning about-face. See: Barrick CEO describes timing snafu.

In my opinion, Crystallex shareholders - if there is no major Las Cristinas financing for the company, or an outright sale of the company or joint venture -- will start to wonder just what they can do to extract more value from their depressed shares.

(I'm not predicting legal action, and I am not saying that any legal complaints against the company would be warranted. But after years of political and corporate strife, including two government coups and a pending review by the Toronto Stock Exchange on the company's eligibility for continued listing, shareholders are ready for a sizeable return on investment.)

Oppenheimer, the CEO, says he is confident of his company's strategy. "Our objective is to build the project," he told me. Few CEOs at this point would say anything different, even if they were on the verge of an outright sale.

On Friday, Crystallex shares in U.S. trading were unchanged at $1.46.

The Calandra Report

Read subscription service The Calandra Report for more on the Crystallex story and for more about a natural-gas company poised for further explosive gains. See: The Calandra Report. Thom Calandra's StockWatch is CBS MarketWatch's flagship column. The regular report is in its eighth year at CBS.MarketWatch.com. Thom Calandra is also author of subscription service The Calandra Report.

Fri June 13, 2003 12:44 PM ET NEW YORK (<a href=reuters.com>Reuters) - Oil prices fell more than 5 percent on Friday after the International Energy Agency said major consumers were more comfortably supplied than it previously thought.

U.S. light crude CLc1 tumbled $1.66 to $29.85 a barrel, extending sharp losses on Thursday and pulling prices away from recent 12-week highs above $32. London August Brent crude LCOQ3 fell 99 cents to $26.23 a barrel.

Prices fell as the Paris-based IEA, energy adviser to 26 industrialized nations, said it had undershot by 79 million barrels in its previous estimate of oil stock levels.

The agency's revised estimate put oil stocks in the industrialized world for the end of April at 2.439 billion barrels,

"Stocks are still below normal and can absorb some surplus in the third quarter, but I think we have entered a stage when more supply is coming on the market and will impact prices." said Geoff Pyne, oil market consultant to Sempra Energy Trading.

The IEA said the revision did not change its view that global markets were tight. Stocks are still 157 million barrels, or 6.5 percent, below 2002.

"The market is obviously better supplied than we thought as little as two weeks ago, but stocks are still low and fundamentals are still tight, so we need to build more stocks," said Klaus Rehaag, editor of the IEA monthly oil market report.

"The increase in crude stocks may, however, signal some relief for an otherwise tighter heating oil situation later this year," he added

Oil stocks have been drawn down this year by a harsh northern winter and supply disruptions from a strike in Venezuela, ethnic strife in Nigeria and the war in Iraq.

Iraq on Thursday sold its first oil since the U.S.-led invasion nearly three months ago, but looting and sabotage at oil facilities are expected to keep Iraq's exports well below prewar levels for several months.

The delays in Iraq's postwar export resumption enabled the OPEC producer cartel to postpone fresh supply cuts at Wednesday's meeting in Qatar.

OPEC, which controls about half the world's oil exports, decided to meet again in just seven weeks, on July 31, in case the return of Iraqi shipments undermines high prices.

OPEC sets a $22-$28 target range for its basket of seven grades of crude oil. The basket was last valued at $27.48.

Inside Joong Ang Daily-Bilingual News The isolated Yanomami, living in the Amazon basin near the Venezuela border, are the last tribe on earth that preserves their indigenous culture. This belligerent tribe maintains its ties with other tribes through trade.

The Yanomami's tradition of barter is unique. After providing a good, they demand reciprocity in goods, but they do not want immediate return. They accept whatever is the recompense at a later time. During the wait, they visit several other tribes to exchange goods.

For someone not familiar with the Yanomami culture, the goods received from them can be easily mistaken as gifts. But, there is no such thing as a gift among the Yanomami. Almost always they demand in return more than what they gave, according to °?Yanomamo: The Last Days of Eden,°± written by Napoleon Chagnon.

In studying the culture of the Yanomami, one concludes that giving gifts is contrary to human instinct. As civilization developed, the culture of gift-giving probably took root as those above others in a hierarchy demanded tribute.

Wise men taught us not to expect a gift in return for what we give. Aristotle said the best of us believe that giving a gift is more blessed than receiving one. The Bhagavad Gita, the Hindu scriptures, state that a pure gift comes from the heart, with no expectations of anything in return.

Today, we need gifts more than ever. The most beautiful stories are those of hard-earned wealth donated to scholarship funds. These acts of philanthropy stand out for selfless goodwill as a growing number of schools close on Teachers Day to clear up the misunderstanding that part of the observance is presenting gifts to teachers. Such a practice erodes the true meaning of gifts.

Recently, credit card companies began selling gift cards, a sort of debit card. Samsung Card Co. sold 60 billion won ($50 million) worth of gift cards last year, and more card companies are entering the business. The cards come in 50,000 won to 500,000 won denominations; only the name of the purchaser of the card is recorded.

Because the gift cards can be used at any store that accepts credit cards, they are virtually cash. Card companies advertise that the gift cards can be used as allowances for children and gifts for friends. If the companies persist in calling them gifts, the cards are probably best referred to as presents the Yanomami would relish.

The writer is a deputy business news editor of the JoongAng Ilbo.