By Alex Kennedy

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 central bank usually announces GDP results six to eight weeks after the end of a quarter.

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 Last Updated: May 9, 2003 13:47 EDT

Tue May 6, 2003 02:58 AM ET

PARIS (<a href=reuters.com>Reuters) - French oil firm TotalFinaElf posted a forecast-beating 49 percent rise in first quarter profits on Tuesday on a surge in crude and fuel prices fueled by war and civil unrest in key oil producer nations.

One dealer said the results were "top end across the board" -- reflecting similar outperformance throughout the industry in results last week.

Total's net earnings improvement to 2.12 billion euros was at the top end of analysts' forecasts but trailed those of super majors BP, Royal Dutch/Shell and Exxon Mobil which all reported record earnings doubled or more from a year ago.

Analysts expected net profit to come in at 2.04 billion euros with forecasts in a 1.9-2.17 billion euro range. War in Iraq, strikes in Venezuela and civil unrest in Nigeria disrupted supplies and forced the price of oil and fuel higher.

The company's production growth also contributed to the better result, helping to offset a poor performance from its chemicals business.

The world's fourth largest oil group by stock market value which reports in euros, is more exposed to a weaker dollar than the big three, and benefits less directly from strong crude oil.

SHORTER NAME, STRONGER GROWTH

Later on Tuesday, TotalFinaElf is set to drop the second part of its name, acquired in recent years through the acquisition by Total of Belgium's Fina and Elf of France.

With its name shortened to Total, the company is still delivering better output growth than the other three, at five percent in the quarter.

It reaffirmed its target of five percent growth for 2003 as a whole, compared with flat to three percent among the other supermajors.

Reuters, 05.06.03, 1:55 AM ET

SINGAPORE, May 6 (Reuters) - Oil prices held steady on Tuesday awaiting U.S. fuel data for signs of stocking in key gasoline supplies ahead of the peak-demand summer-holiday period, which kicks off at the end of the month.

U.S. light crude traded down three cents to $26.46 a barrel, little changed after Monday's 82-cent rise in New York.

London's benchmark Brent crude jumped 77 cents to $24.29 a barrel in catch up with the U.S. market. The International Petroleum Exchange was closed on Monday for a public holiday.

U.S. oil prices pushed higher on Monday partly on concerns of a possible gasoline supply crunch in coming months when consumption traditionally peaks.

Gasoline demand in the United States burns up about 12 percent of global oil supply and is used by traders as a barometer of overall oil demand between the end-May Memorial Day holiday weekend and September's Labor Day.

Data for the week ended May 2 from the government's Energy Information Administration are expected to show a three-million-barrel rise in crude inventories, with gasoline increasing by 1.75 million barrels, said six analysts, polled by Reuters.

U.S. oil stocks have been running at sharp deficits to levels of a year ago. The EIA's report last Wednesday showed U.S. gasoline stocks up by 4.4 million barrels but still 10.5 million barrels below levels at the same point last year.

Crude stocks rose in the week to April 25 by 1.8 million barrels to 288 million, but remained a little over 38 million barrels below a year ago, the EIA said.

"Last year we saw how susceptible the market was to a major supply disruption with the strike in Venezuela. In previous years we have seen the market rise due to stress on the refinery network in the United States," said Sydney-based oil analyst Simon Games-Thomas.

"These factors will support the oil price at, or above, current levels," he said in a daily note.

IRAQI OIL IN U.N. TANGLE

Oil prices have also found support from a lack of progress in restoring crude supplies from Iraq, where production ground to a halt shortly before the U.S.-led invasion that toppled Saddam Hussein.

Before the war, Iraq was pumping up to 2.5 million barrels per day (bpd) and exporting 1.7-2.0 million bpd, or roughly four percent of internationally traded oil.

Diplomats at the United Nations said on Monday that Iraq's exports remained stalled despite the weekend appointment of Thamir Abbad Ghadhban to run the country's oil ministry.

The U.N. Security Council, which oversaw the sale of Iraqi crude under the seven-year-old oil-for-food programme permitted under U.N. sanctions, is deadlocked over setting up a legal framework to resume sales.

Iraq has crude in storage that could be exported now, but without a competent authority to sign and certify sales oil firms are reluctant to trade the oil for fear of breaking the law.

The United States is expected to produce this week a draft resolution to lift U.N. sanctions on Iraq, in place since Baghdad invaded neighbouring Kuwait in 1990.

Diplomats said the U.S. proposal would transfer Iraq's oil wealth to a new Iraqi administration with World Bank oversight. Russia and other Security Council members want the oil sales to remain under U.N. control.

A U.N. diplomat representing one of the five permanent U.N. Security Council members -- Britain, China, France, Russia and the United States -- said it was "still too early" to say whether Washington's proposal would face resistance similar to earlier this year when it sought authorisation to invade Iraq.

May 5, 2003, 10:36PM By MICHAEL DAVIS Houston Chronicle

Venezuela is back to its pre-strike oil production level, and now the national oil company says it plans to increase production 2 million barrels a day by 2008.

Officials from Petroleos de Venezuela SA, including Chief Executive Ali Rodriguez, were in Houston on Monday as part of a series of conferences the national oil company is holding aimed at restoring investor confidence following the devastating strikes that began in December and virtually shut down the Venezuelan oil industry for three months.

Many dispute the current production figures coming out of Venezuela. A Bloomberg Survey released Monday pegged the country's production at 2.59 million barrels per day, up 340,000 a day over March production.

Rodriguez challenged those estimates, saying oil production is back to 3.2 million barrels per day and said Venezuela has recently made some significant new discoveries including a giant field south of Lake Maracaibo that could hold as much as 1 billion barrels.

The goal of the strikes was to oust President Hugo Chavez, but he remains in office. Strikers tried to use oil as a political weapon, something that had never been done before in a country that garners a majority of its revenues from oil.

Rodriguez referred to the strikers as people who abandoned the company and country. Some 18,000 PDVSA strikers were fired.

"The crisis we endured in late 2002 and early 2003 was not only unusual but also unprecedented in the history of the Venezuelan oil industry," Rodriguez said at a news conference.

Restarting the nation's oil industry was a "daunting task," Rodriguez said. The company used retirees and volunteers to replace workers who left their jobs. The military was used to prevent sabotage and keep order.

OPEC quotas will likely rise as demand increases, meaning Venezuela will not find itself at odds with other OPEC members as it increases its production to a desired 5.1 million barrels per day over the next five years, he said.

Most OPEC countries are producing as much oil as their infrastructure can support. Venezuela is one of six cartel countries that can expand production capacity, Rodriguez said.

Of the $43 billion the country expects to spend over the next five years to increase its production, 46 percent of that will come from the national and international private sector, Rodriguez said.

The country is preparing to offer some offshore blocks for natural gas exploration, a large element of the company's new business plan. Venezuela has an estimated 148 trillion cubic feet of natural gas. It plans to begin exporting liquefied natural gas to the United States once processing facilities are complete.

Five offshore natural gas blocks have been identified so far, two of which have been awarded to Statoil and ChevronTexaco. The other three blocks will likely be offered later this year, officials said.

The Jamaica ObserverRickey Singh Tuesday, May 06, 2003

BRIDGETOWN -- Caribbean Community foreign ministers will undertake a general overview of critical international political and economic developments of importance to the region during a two-day meeting scheduled for this week in Kingstown, St Vincent and the Grenadines.

Issues for consideration and action would include international challenges such as the post-war situation in Iraq and its consequences for the Caribbean; emerging global security and social threats, as well as "threats to multilateralism" and what really constitutes "humanitarian intervention".

According to the draft agenda, a copy of which was obtained by the Observer, other matters for general review by the foreign ministers meeting which gets under way this Thursday, will also include:

"Democracy and governance; global trade negotiations that will embrace the state of preparedness by the region's governments and the Caribbean Regional Negotiating Machinery RNM), and problems and challenges peculiar to small states with disadvantaged economies.

The meeting, being hosted by the government of prime minister Ralph Gonsalves, comes at a time when there continues to be international controversy over concepts of "pre-emptive war" without endorsement of the United Nations and the shift away from multilateralism to a unilateralist approach in international affairs as demonstrated in the war against Iraq.

Implementation of the "revised strategy" on the coordination of the foreign policies of the 14 independent member states of Caricom is high on the agenda for the meeting at which all of the community countries are expected to be represented.

Trade, economic and other relations with states and regions, including Canada, Japan, the European Union, Central America and the Association of Caribbean States will be addressed based on information and analyses submitted by regional technocrats and the Community's Secretariat.

Human rights and democracy issues as well as the ongoing political impasse in Haiti over arrangements for new general election, and the political situation in Venezuela, based on presentations by the Caricom Ambassadors Group to the Organisation of American States (OAS) have also been placed on the agenda for this Sixth Meeting of the Council for Foreign and Community Relations (COFCOR).

Hemispheric bilateral relations between Caricom and selected states, to be addressed by the foreign ministers will include preparations for the inaugural meeting of the Caricom-Chile Joint Commission and recommendations on Cuba's proposed agreement for closer cooperation with the Community.