www.forbes.com Reuters, 01.13.03, 12:32 PM ET

(The following statement was released by the ratings agency) NEW YORK, Jan 13 - Standard & Poor's Ratings Services today lowered its rating on Petrozuata Finance Inc.'s $1 billion bonds to 'B' from 'B+', due to a continuing shutdown of operations that result from continuing strike action in Venezuela's oil and gas sector. The rating remains on CreditWatch with negative implications where it was placed on Dec 10, 2002. The bonds are guaranteed by Petrolera Zuata, Petrozuata C.A.

Petrozuata is a heavy oil upgrading project located in Venezuela that is owned by Conoco Orinoco (50.1%), a subsidiary of ConocoPhillips (A-/Stable/A-2), and PDVSA Petroleo Y Gas (49.9%), a subsidiary of Petroleos de Venezuela S.A. (PDVSA: CCC+/Negative/--).

Petrozuata shut down production and processing operations in December 2002 due to a lack of natural gas and hydrogen supplies at the Jose upgrader complex. PDVSA supplies natural gas to Petrozuata and supplies feedstocks to third parties who produce and supply hydrogen to Petrozuata. These developments result from a continuing national strike that includes some management and employees of PDVSA against the Chavez government. The strike action has led to a near shutdown in domestic production and refining, a large drop in exports of crude oil and refined products, and growing civil unrest between the government and opposition groups.

Standard & Poor's expects to resolve the CreditWatch as developments warrant. The rating could fall further if operations are not restored in the first quarter, an adverse government intervention into the sector or the project occurs, or the creditworthiness of the sovereign further deteriorates.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.

www.fortwayne.com Posted on Mon, Jan. 13, 2003 By CHRISTINA HOAG Miami Herald

SLOW TRADE: Xiomara Castillo decided to temporarily shutter her export firm, which sends machinery and parts to Venezuela. ANGELA GAUL/For The Herald

From airlines to oil refineries, traders to soft-drink bottlers, U.S. companies that do business with Venezuela are reeling from the effects of the South American nation's unrelenting 42-day-old national strike.

''We're all in pain,'' said Francisco González, president of the Venezuelan American Chamber of Commerce of the United States, which represents some 300 Venezuelan-linked businesses. ``It's worrisome. Some businesses have had to close, others are desperately looking for new clients.''

The strike, called Dec. 2 by opposition leaders to pressure leftist President Hugo Chávez out of power, has virtually shuttered Venezuela's commercial sector and paralyzed its vital oil exports.

Losses are now spilling over into South Florida, which has traditionally counted Venezuela as one of its top three international trading partners as well as a key source of shopping-loving tourists.

Under normal conditions, 50,000 Venezuelans come to Miami per month, typically spending $1,200 to $1,500 each. Visitors double over the December holidays, according to the Venezuelan Chamber.

But November witnessed the arrival of only 7,000 Venezuelans in Miami, González said. ''Do the math and you can see the loss in revenue for Miami-Dade County,'' he said.

New visa restrictions will choke that tourist market even further. Fearing an influx of visitors who don't want to return to a nation careening toward civil war, the State Department announced last month that the Caracas embassy will not renew or issue new visas to Venezuelan nationals as of Jan. 20.

Airlines have trimmed their operations accordingly. United Airlines shut down its office in the Venezuelan capital and canceled its daily Miami-Caracas flight, while American Airlines has suspended its routes to Caracas from Dallas/Fort Worth and San Juan, Puerto Rico, until Jan. 31.

For security reasons, the carrier has changed the schedules of its remaining four Miami-Caracas flights so crews and planes do not have to stay overnight in Venezuela.

The crisis, which shows no sign of abating, is exacting a particularly heavy toll on South Florida's trade sector.

''We have merchandise sitting in warehouses without possibility of shipping it,'' said Alberto Villegas, president of Pantrade, a Miami importer-exporter who relies on Venezuela for about 40 percent of his business. ``The shipping lines don't want to go there.''

The trade flow has dried up so completely that Xiomara Castillo decided to temporarily shutter her Hialeah export firm, Transoceanic Trade, which sends heavy machinery and parts to the country's state oil company Petróleos de Venezuela and mining firms.

''It's not safe to send the shipments,'' she said. ``The situation is very volatile, you don't know if the ports and customs are working or if there's gasoline for the truckers to deliver the goods.''

Ports are in fact technically open, said Bruce Brecheisen, vice president of Seaboard Marine in Miami, but that did not keep the shipping line from suspending sailings. ''We had to divert Venezuela-bound cargo to Cartagena, Colombia, and Río Haina in the Dominican Republic,'' he said. ``We're waiting for the situation to improve.''

The one item that Venezuelans are sending abroad is money. Coral Gables-based Commerce Bank, owned by Caracas' Mercantil Servicios Financieros, has recently seen a 25 to 50 percent spike in deposits from Venezuelan clients.

''The purchase of dollars by individuals has gone up,'' bank Chairman Guillermo Villar said. ``We're seeing more flow [of money] coming in.''

Oil companies wish that were the case. The strike has slowed the flow of petroleum from the world's fifth-largest oil exporter from 2.5 million barrels per day to 400,000.

The situation is difficult at Tulsa, Okla.-based Citgo Petroleum, which is wholly owned by Petróleos de Venezuela and receives about half of its crude from Venezuela. The company's four U.S. refineries process 865,000 barrels of oil a day to supply 14,000-plus gasoline stations across the United States.

The company has so far managed to keep pipelines flowing thanks to the spot market, but the crude crunch may get so severe that the U.S. government, a favorite target of Chávez's incendiary rhetoric, may have to bail it out as a matter of national security.

''We talked with the Department of Energy early on and told them we may reach a point where we may need to borrow from the Strategic Petroleum Reserve and repay it at a later date,'' spokesman Kent Young said. ``The DOE hasn't made a decision yet.''

Foreign companies operating in Venezuela are in a bind. They don't want to be seen as actively getting involved in domestic politics, but at the same time if they start operating, they run a risk of violent attacks.

Most multinationals are at a standstill simply due to practical reasons. Operations at Venezuela's Coca-Cola bottler, Miami-based Panamco, are involuntarily paralyzed as most employees cannot report to work due to scarce gasoline supplies, Chief Financial Officer Annette Franqui said.

''It's not feasible to operate,'' she said. ``We sold one day during the beginning of the strike, but right now plants are not operating. We don't want to produce because product becomes obsolete as we cannot guarantee delivery.''

With Venezuela's gross domestic product predicted to plummet a stunning 12 percent in the first quarter of 2003, Venezuelan business people -- such as Ariel Acosta-Rubio, president of the Churromanía fast-food franchise -- are looking to the United States for salvation.

Acosta-Rubio is set to open five new churro outlets throughout Florida by April. His 35 Venezuelan stores are under lock and key.

''The losses are gigantic. The franchisees call me every day, they don't know what to do,'' he said from his Brickell Avenue office. ``The business here is going to have to help the businesses there get back on their feet. Thank God for the United States!''

news.ft.com By Jennifer Hughes

Published: January 13 2003 16:10 | Last Updated: January 13 2003 16:10 Venezuela's central bank raised interest rates on Monday in a bid to stem depreciation of its bolivar currency which has been weakened by the strikes that have crippled the country's economy.

The bank raised its key discount rate to 42 per cent from 40 per cent, its first rate hike since October.

The bolivar, which was freely floated in 2002, ended last year down 45 per cent against the dollar and has fallen more than 13 per cent already this year as capital movement was hampered by the strike and Venezuelans sought to transfer bolivar holdings into dollars.

The dollar was worth Bs1,580 on Monday, off an all-time high of Bs1,602 reached last week.

But, as the strike continued, analysts questioned the likely impact of the central bank's move.

"The longer this goes on, the longer Venezuela is missing a major source of export revenues," said Peter West, economist at Poalim Asset Management. "The more dire the situation gets, the more difficult it become to contain those pressures."

Since early December Venezuela has been crippled by a general strike which has severly limited everyday activity and virtually shut down the country's oil industry, the key to both its hard currency income and its tax receipts.

"With very little oil production, the government is in a huge fiscal bind which in turn creates depreciation pressures," added Rafael de la Fuente, emerging markets economist at BNP Paribas.

Even if the strikes were resolved soon, it would be some time before the return to normal levels of oil production fed though to the economy.

"The currency has only one way to go for now - down," added Mr de la Fuente.

www.miami.com Posted on Mon, Jan. 13, 2003

CARACAS - (AP) -- President Hugo Chavez threatened to revoke the broadcasting licenses of Venezuela's main TV and radio stations, accusing them of supporting opposition efforts to overthrow him through a 6-week-old strike.

Chavez said Sunday the stations were abusing their power by constantly broadcasting opposition advertisements promoting the strike, which has dried up oil revenue in the world's No. 5 oil exporter but hasn't rattled the president's resolve to stay in power.

Venezuela's main television stations have not broadcast any commercials during the strike except the opposition ads. Media owners say they adopted that stance because Chavez incites his supporters to attack reporters.

''They are worse than an atomic bomb,'' Chavez said during his weekly radio and television show Sunday. ``If they continue to use their licenses to try to break the country or oust the government, I would be obligated to revoke it.''

He spoke as tens of thousands of his opponents marched on Los Proceres park outside the Fort Tiuna military base in Caracas, seeking military support for the strike. Troops lobbed tear gas at the protesters but they quickly regrouped, shouting ''cowards'' at hundreds of soldiers facing them with armored personnel carriers.

Troops also kept back dozens of Chavez supporters demonstrating nearby.

The first marchers to arrive at Los Proceres park stomped down barbed wire blocking the entrance but they did not try to break security lines.

Hector Castillo, a photographer for El Mundo newspapers, was injured by rubber bullets that some soldiers fired into the air, Caracas Fire Chief Rodolfo Briceno said.

Eighteen other people were treated for tear-gas asphyxiation, he said.

The park is one of eight security zones in Caracas decreed by Chavez. Protests are banned in those areas unless authorized by the Defense Ministry.

The military -- purged of dissidents after a brief April coup -- has supported Chavez during the strike, with troops seizing oil tankers, commandeering gasoline trucks and locking striking workers out of oil installations.

Top commanders have professed their loyalty to the government.

In Colombia, Venezuela's foreign minister, Roy Chaderton, dismissed the possibility that Venezuela was heading toward civil war.

''To have a civil war, two [sides] are needed, and the government doesn't want that,'' Chaderton said. ``We are not preparing ourselves for civil war but to preserve peace and reconciliation.''

Venezuela's largest labor confederation, business chamber and opposition parties began the strike Dec. 2 to demand that Chavez resign or call early elections if he loses a nonbinding referendum on his rule.

The National Elections Council scheduled the referendum for Feb. 2 after accepting an opposition petition signed by two million people.

Chavez says the vote would be unconstitutional, and his supporters have challenged it in the Supreme Court.

He was elected in 1998 and reelected in 2000, and his term ends in 2007. Venezuela's constitution allows a recall referendum halfway through a president's term -- August, in Chavez's case.

Chaderton said the government would consider providing funds for the vote if the Supreme Court upheld it.

''An opposition that contributes . . . to strangling the country's economy and calls for tax evasion . . . is demanding funds for a vote. How curious,'' he said. ``But at an opportune time, after the judicial institutions make their decision, we will decide.''

sg.biz.yahoo.com Monday January 13, 9:19 PM

CARACAS -(Dow Jones)- Venezuelan President Hugo Chavez said over the weekend that he'd punish striking locally owned bank Banesco (E.BNS) by withdrawing all military funds deposited in the bank.

Military deposits make up about 10% of Banesco's 2.4 trillion bolivars ($1=VEB1,513.25) in deposits, the bank's president, Juan Escotet, said in a televised interview.

Banesco, Venezuela's fourth largest bank, has a market share of about 11.3%, according to the Banking Superintendent.

ADVERTISEMENT Escotet said he hoped to meet with Chavez and work the problem out.

Meanwhile, the Banking Superintendent said it's opening "administrative procedures" against all banks that are ignoring its order to maintain normal operating hours between 8:30 A.M. (1230 GMT) and 3:30 P.M.

Banks have mostly been open just three hours a day in support of a 43-day-old general strike against Chavez's leadership, and many shut completely Thursday and Friday but reopened with the restricted hours Monday.

Other local banks include subsidiaries of Citigroup Inc.'s (C) Citibank and Spanish conglomerates Banco Santander Central Hispano SA (STD) and Banco Bilbao Vizcaya Argentaria SA (BBV).

Opposition leaders are demanding that Chavez agree to call elections in 30 days if he loses a Feb. 2 nonbinding vote on whether he should remain president.

Chavez has thus far maintained the constitution only requires him to accept the results of a possible recall referendum next August, the midpoint of his term.

Chavez's critics blame his left-leaning policies for country's deepening economic crisis with a likely 8% contraction in 2002, amid 17% unemployment, and 31% annualized inflation sparked by a 46% devaluation of the bolivar.

Chavez has said the problems are due to an "economic coup" led by his opponents.

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com