By Bradley Brooks UPI Business Correspondent

     RIO DE JANEIRO, Brazil, Dec. 30 (UPI) -- Brazil's president-elect is widely expected to name a relatively unknown Workers' Party senator to head the state-run oil giant Petrobras, as talk of reinstating price control swirls about the country. Top Stories • Powell insists N. Korea not a crisis • A sad ending and a happy one • Kim Jong-il a schemer in shadows • Panama wins in China-Taiwan spat • 'Total chaos' awaits travelers at airports

     President-elect Luiz Inacio Lula da Silva said Monday he won't unveil the name the new leader of Petrobras until Tuesday or after he takes office on Wednesday, but market chatter and the consensus in the local press is that Sen. Jose Eduardo Dutra will get the nod.

     Dutra -- who has served in the Senate since 1994 -- worries market players because few know much about him. And what they do know they don't necessarily like.

     A geologist by training, Dutra, 45, raises red flags for many because of his lack of experience on the business side of the oil industry. The fact that he will likely take over one of the country's most profitable companies and a heavyweight on the local stock index doesn't lessen concerns.

     The handling of Petrobras is being closely watched by many in Brazil for its clues as to how Lula -- as the president-elect is known -- and his team will shape economic policies.

     Some fear that Petrobras will be used by the government as a means of artificially holding down inflation by not allowing the company to implement price increases.

     Over the weekend, Dilma Roussef, tapped by Lula to be his mines and energy minister, said that price controls were being considered by the next government.

     "To define pricing policies, the petroleum policy, the policy of Brazil's electric energy ... is the role of the ministry, of the state," Roussef told reporters on Sunday.

     It was just in January that Brazil tentatively gave Petrobras the freedom to increase the prices of its products. Before that, the government set prices every few months on cooking gas and gasoline.

     Petrobras has come under fire this year for raising prices, spurring inflation in Brazil, which will be more than 10 percent for the first time since 1994.

     As for the electricity sector, companies can increase prices but only with the approval of Aneel -- the country's energy regulator -- and without the blessing of the ministry of mines and energy, a situation Roussef has criticized.

     While there was no official word from Lula, the local press also reported Monday that a professor and physicist was offered the presidency of Brazil's energy holding company, Eletrobras.

     Luiz Pinguelli Rosa told a local news agency that he had accepted the offer to head Eletrobras. He said he wanted to make the energy sector in Brazil attractive and a low-risk bet for investors, but gave no details on how that might happen.

     The bid for the presidency of Petrobras has been politically charged as smaller parties in Lula's nascent coalition government have pushed to have one of their own officials in the post.

     Rank and file members of Lula's Workers' Party, though, have demanded they take control of the company, and it was never too much in doubt that this would be the case.

     It has long been known that Lula would replace the current Petrobras head, Francisco Gros, whom the future president has criticized.

     During his campaign, Lula made an issue out of the fact that Petrobras had extended a contract for the construction of a $500 million sea-drilling platform to the Singapore-based Jurong Shipyard.

     In a campaign television ad, Lula said that the building of the platform would "be done in Brazil, period."

     Lula said the project could create about 25,000 jobs in Brazil and could mean some $1 billion in business.

     Earlier there were rumors that Anthony Garotinho -- who made an unsuccessful run for the Brazil's presidency -- would be named to head Petrobras in exchange for throwing support to Lula in the second round of the presidential vote.

     Investors were worried about the possibility of Garotinho -- or any official without solid CEO credentials -- taking over Petrobras. While the markets seem to have more trust in Dutra than the populist Garotinho, most are still quite concerned about the direction of the company.

     On Monday, Petrobras stock was up more than 3 percent, with investors' concerns about Dutra offset by the company's Sunday implementation of a 12.8 percent increase in the price of gasoline and a 7.7 percent increase in the price of cooking gas.

From the National Desk Published 12/30/2002 7:15 PM View printer-friendly version

NEW YORK, Dec. 30 (UPI) -- Crude futures tumbled Monday after Venezuela again vowed to gets its strife-ridden oil industry back in operation and OPEC ministers indicated that an increase in crude production was possible in the coming weeks.

The bearish news was by no means set in stone, however it was real enough to prompt a busy pre-New Year's sell-off that sent February prices down $1.35 to $31.37 per barrel after gaining as much as 75 cents earlier in the day and reaching a two-year high of $33.65 per barrel.

The sudden turnaround after a week of gains wrapped around Christmas was also seen in the NYMEX refined products pits where January gasoline fell more than 5 cents per gallon and heating oil fell 4 cents per gallon.

February crude closed 50 cents lower at $29.66 per barrel on London's International Petroleum Exchange.

Much of the selling on NYMEX appeared to be profit-taking ahead of the holiday and was based in part on media reports from the Middle East that OPEC was inclined to increase its output of crude next month by some 500,000 barrels per day to offset shortfalls in Venezuela caused by political unrest and a stubborn strike against the nation's oil industry.

Venezuelan President Hugo Chavez vowed Sunday to break the strike and get the state oil company, PdVSA, back to its full production capacity of nearly 3 million barrels per day of crude and refined fuels by the end of January. Venezuela is the world's fifth-largest oil exporter.

"My plans are for an offensive and an attack," Chavez said in a broadcast address.

As they had with Chavez's past demands that the strike end, opposition leaders showed no signs of giving in Monday on their demands for early elections -- something that Chavez has repeatedly refused to agree to.

Horacio Medina, president of a group of striking oil managers, told The New York Times Sunday that the opposition would urge protestors to keep up the pressure on Chavez in January, possibly by refusing to pay taxes.

"People are still willing to stay out of work for many more days," Medina said.

Meanwhile, tensions between the United States and Iraq continued to simmer Monday. While additional U.S. forces moved into the Persian Gulf region, a senior Iraqi military official Monday told a sympathetic group of visitors from Spain that the U.N. arms inspections would uncover no signs of an underground weapons of mass destruction development program.

"My country stands on a solid ground and we do not fear any military confrontation with the U.S. and Britain, which claim that we still possess weapons of mass destruction," said Brig. Gen. Amer Rashid al-Saadi. -0- (Reported by Hil Anderson, UPI Chief Energy Correspondent)

Mon December 30, 2002 07:21 PM ET By Jason Webb

CARACAS, Venezuela (Reuters) - Venezuelan police on Monday detained a dissident general, goading the opposition who have blocked massive oil exports with their strike but failed to force President Hugo Chavez to resign.

The leftist leader has thumbed his nose at a 29-day-old strike that has closed down shipments from the world's fifth-largest oil exporter and at huge marches, one of which brought a million demonstrators onto the streets of Caracas.

Police did not say why they had taken away National Guard Gen. Carlos Alfonso Martinez, a prominent member of a group of dissident armed forces officers who have been camping out in a Caracas square since October calling for Chavez to step down.

But the government accuses Martinez and other officers of involvement in an April coup which briefly toppled the leftist president before he was restored to power by loyalist troops.

A lawyer speaking for Martinez said the general had not been charged and that his detention was illegal.

"Whoever is responsible for this, whether it's Hugo Chavez, the interior minister or the head of the National Guard, we'll identify and charge them," said lawyer Cipriano Heredia.

The opposition, backed by business and unions, accuses Chavez of authoritarianism, corruption and economic incompetence in what they say is a quest to establish a Cuban-style dictatorship.

Chavez has kicked many of the renegade officers out of the armed forces and threatened to chase them from the square, but detaining Martinez is the toughest act against them so far.

A few dozen opposition sympathizers gathered outside a police station where Martinez was being held, and were pelted with rocks by supporters of the populist president.

One man, standing with the opposition militants, fell to the ground, bleeding and twitching as blood poured from his head. He was holding a pistol.

Opposition leaders earlier threatened to add a tax revolt to its strike which has sapped an already recession-bound economy of its petroleum lifeblood. Oil normally provides 80 percent of exports and 50 percent of state income.

OPPOSITION WANTS IMMEDIATE VOTE

Strikers demand immediate elections and have refused Chavez's offer of a referendum on his rule in August, saying that if they wait that long he will wreck the country. Chavez says under the constitution August is the earliest date an election may be held to assess popular support for his rule.

The president, a former paratrooper who was jailed after a botched coup in 1992 but was then elected in 1998, has fired bosses from state oil giant PDVSA and ordered troops onto oil tankers.

"We're bashing up against a wall," one of the protest leaders, Carlos Fernandez, president of Venezuela's main business chamber, Fedecameras, told Reuters.

The president, whose term is due to run until 2007, has seen his popularity plunge, even among his core constituency, Venezuela's poor majority. But, with about 30 percent support, he is more popular than any individual opposition figure.

In a major role-reversal for his oil-rich nation, he has imported gasoline to ease lines at filling stations. The government said that oil output would climb back to a third of normal next week, but PDVSA rebels said efforts to kick-start petroleum production were failing.

The squeeze on Venezuelan exports, which normally provide 13 percent of U.S. oil imports, has spooked markets already fretting about possible war in Iraq. U.S. crude futures jumped to a two-year high early on Monday before sliding sharply to $31.37 a barrel as the OPEC cartel indicated its readiness to come to consumers' rescue by boosting output.

Strike leaders are organizing a nonbinding referendum in early February, although Chavez says he will pay no attention to the result even if 90 percent vote against him.

Talks between the opposition and the government brokered by the Organization of American States have made little progress.

(Additional reporting by Ana Isabel Martinez)

Tuesday, December 31, 2002 Posted: 8:11 AM HKT (0011 GMT)

LONDON (Reuters) -- OPEC will raise oil output quotas in mid-January in a bid to contain a price surge that has lifted crude to a two-year high, a senior OPEC delegate said on Monday.

The oil producers' cartel will trigger at least an extra 500,000 barrels a day, or 2.0 percent, under a mechanism that stipulates supplies be raised if prices for a basket of OPEC crudes stay over $28 a barrel for 20 days, the delegate told Reuters.

"There is a clear commitment that the mechanism will be implemented immediately," said the delegate.

"The 500,000 barrels a day is for sure. More than that is subject to ministerial consultations which are already underway."

The comments undercut oil prices that had hit a fresh two-year peak in Monday trade as dealers bet on a U.S. attack against Iraq in the New Year.

Output from OPEC member Venezuela is near to a standstill because of four-week-old strike with no sign that President Hugo Chavez will be meet opposition demands for an early election.

Prices settle

U.S. crude reached $33.65 a barrel and Brent touched $31.02 before the OPEC news triggered heavy profit-taking. Brent ended down 50 cents on the day at $29.67 and U.S. crude settled Monday at $31.37.

OPEC's crude basket was last valued at more than $31 a barrel and, unless prices fall sharply, will have stayed over $28 for 20 working days by January 15.

The OPEC delegate said oil ministers would not necessarily have to hold an emergency meeting to raise output quotas by more than the minimum 500,000 bpd.

"If they want to do more than that they can agree the volume by phone," he said.

Ministers in December raised output quotas by 1.3 million barrels a day to 23 million bpd from January 1 in a bid to legitimise quota-busting that means actual output has been running at some 24.5 million bpd.

What impact higher quotas will have on prices remains to be seen.

Of the 10 countries bound by quotas, only OPEC's leading producer Saudi Arabia and its Gulf ally the United Arab Emirates have any significant spare capacity.

Monday, December 30, 2002 Posted: 6:46 PM EST (2346 GMT)

CARACAS, Venezuela (CNN) -- Several people were injured Monday in clashes between supporters and opponents of President Hugo Chavez, and police fired tear gas to disperse the crowds.

Such clashes have been a daily occurrence in Caracas and other parts of the country.

Monday's violence in the capital followed an anti-government demonstration demanding the release of Carlos Alfonso Martinez, a National Guard general.

Martinez is a controversial figure who rebelled against the government several months ago. He and other members of the military have been holding out at a plaza in Caracas, appealing to other members of the military to join the opposition to Chavez' leftist government.

Police detained Martinez suddenly Monday. It was not known what the charges against him will be.

In the ensuing clashes, the two sides threw stones and bottles at each other, and riot police followed with tear gas.

Chavez opponents have been staging demonstrations since December 2, when the opposition declared a national strike aimed at forcing him to resign or call early elections.

Workers at the state-run oil company, Petroleos de Venezuela S.A., have defied government orders to return to work.

Chavez said his government has managed to keep PDVSA open and hoped to return production to normal levels within 15 days.

Before the strike, Venezuela produced about 3 million barrels of oil a day. Since the walkout began, government officials said, production dropped to 200,000 barrels a day before climbing back up to its current rate of between 600,000 and 700,000 barrels per day.

The strike is costing Venezuela about $50 million a day in lost oil revenue.

"We think that by mid-January we will normalize the operations of PDVSA," Energy Vice Minister Bernardo Alvarez said Friday.

Government officials said the Puerto la Cruz refinery east of Caracas was running at about 70 percent of its capacity, but the refinery is one of Venezuela's smallest. And striking workers said the government lacks the manpower to resume normal production levels.

Police officer separates Chavez supporters, left, and opposition demonstrators Monday in Maracaibo in western Venezuela.

"They're trying to run the company, but they are not enough," said Alfredo Gomez, a PDVSA technical analyst who has joined the strikers. "They are not qualified or skilled enough to do that."

Chavez, a former paratrooper who led an unsuccessful coup attempt in 1992, was elected president in 1998.

His fiery populism has polarized Venezuelans. Much of the country's poor support him, but he has antagonized wide segments of the middle class and was forced from office in April in an abortive coup that lasted two days.

Cesar Gaviria, secretary-general of the Organization of American States, has been trying to mediate between the government and its opponents. Talks between the sides are continuing, but Gaviria is not scheduled to rejoin them until Thursday.

The strike, coupled with fears of a war in the Middle East, has pushed oil prices above $30 a barrel in the United States.

Three protesters have been killed this month, and government troops have used rubber bullets to break up crowds of protesters who have been blocking highways.

CNN Correspondent Lucia Newman contributed to this report.