<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 05, 2003 By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: As I receive a report from the Associated Press titled "Cultivating Caracas," which deals with the attempts made by the government to "farm in Caracas," I see on TV that the Deputy Minister of Agriculture has been fired ... he is being fired because he criticized food price controls imposed by the government ... he said that price controls had produced a sharp decline in agricultural and animal production and should be revised.

• Of course, the President fired him and rightly so ... a dissenting public officer has no place in this government. However, the bureaucrat was right.

The decline in food production in Venezuela can not be reversed by means of the isolated patches of land being farmed in Caracas behind wire fences, to prevent the access of the ordinary people. As a result, what could be a welcome manner to beautify the ugly city, has become a new symbol of discrimination.

I met briefly with former Minister of Agriculture Hiram Gaviria ... a former Chavez Ambassador to France ... and he had this to say about the situation of food production in the country at this point in time:

The value of total agricultural production, which includes vegetable, animal, fisheries and forestry products, has been systematically declining. FEDEAGRO, the national association of rural producers, claims that the decline was in the order of 5.1% in 2001 and 4.8% in 2002 ... practically 10% in the last two years.

• In 2002, rice production came down 12.3%; corn a disastrous 30.2%; sorghum 29%; coffee 9.8%; milk 4.1% and beef 5.8% ... there were increases in sugar cane 7%, chickens 0.3% and pork 4%.

The area under cultivation has gone from 2 million hectares in 1998 to less than 1.6 million hectares in 2002. During the 1999-2002 period 240,000 jobs have been lost in rural areas and in the food industry at large, going from 1.2 million to 960,000.

This year, 2003, the agricultural sector is expected to shrink another 6%. We are already in the wet season and there is no action from the government to promote production, beyond speeches and vague promises. The growers, who used to plant during the winter cycle, lack seeds, fertilizers and agrochemical products which are essential to their work. Financing is very scarce and expensive, and contracts to buy the crops are practically non-existent.

Animal population is also declining ... beef cattle has gone from 13 million head in 1994 to 11.4 million in 2003.  Dairy cows have declined 3% due to increasing cost of feed, medicines, machinery and electricity. These two sectors are particularly hard hit by the dangerous living conditions in rural areas, where cattle rustling, kidnappings and land invasions have reached record high proportions. According to FENAVI, the federation of chicken producers, production has gone down 14% between Q1 2002 and the Q1 this year.

Food consumption, on the other hand, has also declined significantly, due to decreasing local production, food price controls and the impossibility to acquire foreign currency to import raw materials. Chicken consumption, for example, has gone down from 27.5 kilograms per capita in 2002 to a projected 18.5 kilograms per capita this year. Egg consumption has decreased from 117 units per capita in 2002 to some 110 units per capita this year.  Beef cattle producers in FEDENAGA say that beef consumption has declined from 18.2 kilograms per capita in 2002 to 17.2 kilograms this year ... there is evident scarcity of basic items such as pasta, bread, chicken, eggs, corn flour, vegetable oils, rice and other grains.

To face this disastrous situation the government has chosen to directly import large amounts of food, rather than promoting local production. Chicken is coming from Brazil and also from China. Wheat flour is coming from Italy. Milk from eastern Europe. Beans from China. Worse still, most of these imports are routed through Cuba and handled by Cuba ... which makes the acquisition costs unnecessarily expensive while transactions lack transparency. Some of the products are wrapped in paper printed with political slogans and are considered by the consumers to be of very low quality. Behaving in this manner, the government violates Constitution Article 299 which protects free competition, Article 301 which prohibits the State from allowing foreign companies or governments better terms than those allowed to nationals and Article 305 which reads that food security will be guaranteed through the promotion of local production.

Venezuela should not be in an agricultural crisis ... it has about 10 million hectares good for farming, rather better than the backyard of the Caracas Hilton. There are tractors, producers and rural roads. What we do not have is a reasonable agricultural policy ... a policy which could be based in no more than 5 points:

1. To determine what are our comparative advantages and concentrate on them instead of trying to produce everything, which often amounts to nothing;
2. Provide the necessary financial resources to increase production and productivity;
3. Coordinate price policies with the participation of both government and producers, not set prices unilaterally;
4. Stop invasions of private and producing land and protect private property, and,
5. Establish a true alliance between producers and government to really provide food security.

Mr. Gaviria is not optimistic about the possibility that these policy can be put together under this regime. He probably knows what he is talking about since he was a member of Chavez' close political environment up to a year or so ago, when he decided to break away on matters of principle.

The farming of Caracas is no more than a publicity stunt designed to make the ordinary citizen believe that things are being done, while very little is really being done.

No matter what sector we look at, agriculture, mining, petroleum, tourism, education, health, we see the same abysmal incompetence all across the board.

This is the reason why we can not wait patiently to change this government ... each day we wait the country dies a little ... instead of becoming more prosperous.

Governments which promote poverty and unhappiness among the people should be sent to the trash bin of history...

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email gustavo@vheadline.com

Knight Ridder - Thursday, June 05, 2003 <a href=www.menafn.com>The Dallas Morning News By Brendan M. Case

ALTAMIRA, Mexico _ Bountiful natural gas deposits lie just a few hundred miles from this bustling port city on Mexico's Gulf Coast. But officials here are planning to import boatloads of gas from as far away as Africa.

The Federal Electricity Commission _ or CFE _ plans to hire a major energy company this year to build a liquefied natural gas terminal and re-gasification plant in Altamira.

The natural gas, or LNG, project, with a price of about $500 million, would fuel a complex of power plants in this burgeoning region some 300 miles south of Texas.

"This area is seeing a lot of economic growth, and we need more electricity," said Arnoldo Garcia Gonzalez, who oversees the CFE's operations here. "To generate electricity, we need natural gas."

The LNG rush reflects Mexico's increasingly urgent efforts to shore up its natural gas supply. State-owned oil monopoly Petroleos Mexicanos, or Pemex, has neglected gas production for years. Now, however, authorities are promoting the clean-burning fuel in power plants, factories and homes _ and demand is booming.

Altamira probably will get the first of several LNG projects south of the border. Texas companies and global competitors also are planning LNG projects in Baja California, which would supply customers in both Mexico and the United States.

Skeptics say Mexico should develop its own natural gas reserves instead of relying on imports. But investment remains limited. Pemex channels most spending to oil production, and Mexico prohibits private companies from developing oil and gas reserves.

"We're a country that could export gas and make a big industry out of exploring for and producing gas," said Hector Rangel Domene, president of the Business Coordinating Council, a leading private-sector lobbying group in Mexico City. "It's absurd that we can't do that."

Mexico has already become a juicy market for Texas gas exporters. Three months ago, Houston-based Kinder Morgan Inc. opened an $87 million cross-border pipeline. Tidelands Oil & Gas Corp., a Corpus Christi, Texas, company, sold its gas production business last year to build cross-border pipelines.

Within a few years, Mexico might also be welcoming ships laden with supercooled LNG from Nigeria, Venezuela, Malaysia or Indonesia.

"There's a growing gas market in Mexico," said Barbara Blakely, a spokeswoman for Shell Mexico, which hopes to win the LNG contract in Altamira and to build a separate plant in Baja California. "Moving gas from one part of the world to another is no longer uncommon. We do it all the time."

Mexico still is a major crude oil exporter. But the country's growing appetite for gas imports illustrates its growing industrialization.

Glass and steel companies are devouring natural gas. More important, demand for electricity is rising quickly _ and gas-fired power plants are getting the most new investment.

Recent legal changes have created a whole new business for natural gas distribution companies. Millions of consumers are now burning natural gas in their homes instead of liquid petroleum gas, the traditional fuel.

All told, natural gas imports reached nearly 650 million cubic feet per day during the first three months of the year, nearly three times what they were in 2000, according to Pemex. Domestic gas production has failed to keep pace with demand.

"Productive capacity is not increasing, while demand is rising quickly," said Alejandro Gonzalez, an analyst with Cambridge Energy Research Associates, in Cambridge, Mass. "The United States is in the same situation."

Pemex is trying to lure private companies to help develop gas reserves in northern Mexico's Burgos basin, a project that would cost at least $6 billion. But that plan faces political opposition from critics who say it violates Mexico's strict limits on private energy investment.

So the search is on for other gas sources, including LNG. Within a few years, LNG could conceivably account for more than 1 billion cubic feet per day _ about as much as Pemex hopes private companies would extract from Burgos.

"If you start a new program to drill natural gas, how much is it going to cost you? Ten billion dollars?" asked Gonzalez. "If you build an LNG terminal, it will cost you half a billion dollars. And you'll get the gas as soon as the terminal is finished."

Many LNG projects face stiff political opposition.

In Baja California, business leaders and grassroots activists have warned that LNG terminals would create eyesores and security risks in areas that depend on tourism. Opponents fret that such terminals might prove tempting targets for terrorists.

Mexican officials say LNG plants would be built with an eye to security concerns. Blakely, the Shell spokeswoman, says her company has never experienced a major accident with LNG.

Other critics worry that energy companies will turn Mexico into a huge LNG depot for the United States, selling gas to U.S. customers while taking advantage of weaker environmental enforcement south of the border.

"Mexico could turn into a big LNG platform for the United States," said Victor Rodriguez-Padilla, an energy expert who advises the opposition Institutional Revolutionary Party. "One of the risks is that our environmental standards would be ignored."

Energy companies say they still hope to build LNG projects in Baja California, with plans to sell gas to customers on both sides of the border. Backers include the Royal Dutch/Shell Group; Houston-based ConocoPhillips; Houston-based Marathon Oil Corp., ChevronTexaco Corp., which is based in San Ramon, Calif.; and Sempra Energy, which hails from San Diego.

Analysts say Baja California could probably only support one or two such projects, adding that it's hard to tell which company is winning the race to obtain all necessary permits.

In May, however, Mexican authorities issued Baja California's first LNG permit to Marathon Oil. Marathon executives envision a $1.5 billion "Tijuana Regional Energy Center," which would include LNG facilities, a power plant and a desalination plant to provide fresh water.

"The Tijuana area is seeing tremendous growth," said Paul Weeditz, a spokesman for Marathon. "Without these basic infrastructure elements, developing the economy is tough to achieve."

The Altamira LNG project could be the first to move forward.

Unlike the Baja projects, which would seek their own customers, the Altamira terminal would sell its gas to the Federal Electricity Commission, the CFE. The CFE would burn the gas in several power plants providing much-needed electricity to the national grid.

Companies such as Mexico's Petrocel-Temex, Germany's BASF AG and U.S.-based General Electric Co. have major plastics and petrochemical plants in Altamira. Local power plants also can transmit power to customers in Monterrey, the northern business capital, and elsewhere in Mexico.

Altamira's LNG plant would need to supply up to 500 million cubic feet of gas per day. The price would be tied to Henry Hub benchmark prices on the New York Mercantile Exchange. At current prices, which are historically high, 500 million cubic feet of gas is worth nearly $3 million.

CFE officials originally had said they would announce the winner in April. Now they say a winner could be announced this summer. Officials said in January that companies interested in the project included Shell, BP, Spain's Iberdrola and other major competitors.

Would-be suppliers would have to show that the total price Mexico pays for LNG would be less than what it would pay to import gas through a pipeline. The CFE would agree to buy the gas for 15 years.

"This area is going to be one of the most important power generation areas in the country," said Garcia, the local CFE director in the Tampico-Altamira area. "With all the new development in gas and electricity, we'll be able to satisfy demand."

<a href=www.menafn.com>MENA-FM.com - Khaleej Times - 05/06/2003

ABU DHABI - Ministers from member states of the Organisation of Petroleum Exporting Countries will hold the annual meeting of the Opec Fund in Abu Dhabi next week. "This will be the first time the Opec Fund meeting is hosted by the UAE and this region," a spokesman for the UAE ministry of finance and industry said.

Ministers from the UAE, Saudi Arabia, Qatar, Kuwait, Venezuela, Algeria, Libya, Indonesia, Iran and Nigeria will be present for the June 11 meeting, which will discuss, among other things, funding new projects. A representative from Iraq is likely to participate. With a capital of $3.435 billion, the Opec Fund granted 953 loans totaling $ 5.146 billion until the end of last year.

Meanwhile, a Qatari oil source said in Bahrain that Opec won't change its production level of 25.4 million barrels a day, which took effect June 1, when it meets next week in Qatar because Opec basket price is within its set range and Iraq situation is still unclear. "There's no point in changing production now... there's no talk about increasing or cutting production," he said. Opec is scheduled to hold an extraordinary meeting in Doha on June 11 to set its production policy and to review the situation in Iraq.

Posted on Thu, Jun. 05, 2003

Dublin-based Sybase Inc. (SY) plans to invest $25 million to bring wireless fidelity, or Wi-Fi, applications to businesses.

The company said it will launch a network of Wi-Fi competency centers, including one at the Research and Technology Park at the University of Waterloo in Ontario, a technology-research institution.

The software provider will also collaborate with customers and partners to accelerate mobile-application development and deliver database-powered business services to mobile devices.

Natural gas

ConocoPhillips, the third-largest U.S. oil company, bought 40 percent of a Venezuelan natural gas tract from ChevronTexaco Corp. (CVX), ChevronTexaco said in a release.

ChevronTexaco, the second-largest U.S. oil company, retained 60 percent of Block 2 in Venezuela's offshore Deltana Platform tract, South America's largest natural gas reserve. The tract is located between Venezuela and Trinidad and Tobago. ChevronTexaco spokeswoman Monica Davila in Caracas would not disclose the terms of the ConocoPhillips purchase.

ChevronTexaco, which won development rights to Block 2 in February, said in April it plans to spend as much as $1 billion to develop the tract. Venezuela's state oil company, Petroleos de Venezuela SA, retained the right to acquire as much as 35 percent of the project, the release said.

Venezuela is counting on natural gas from Deltana to reduce its dependence on revenue from oil exports. The Deltana Platform is divided into five blocks and comprises 27,000 square kilometers. Venezuela estimates the area holds up to 40 trillion cubic feet of natural gas.

Natural gas produced at Block 2 will be processed into liquefied natural gas and exported to the United States, the release said.

Merger

Shareholders of Larscom Inc. and Newark's Vina Technologies Inc. (VINA) approved the agreement for the two companies to merge.

Biotechnology

Toronto Medical Laboratories has acquired technology developed by Fremont-based Ciphergen Biosystems Inc. (CIPH) to identify new protein characteristics that can be converted into commercial diagnostic tests. Financial and other terms were not disclosed.

Subsidiaries of Baxter International Inc. and Concord-based Cerus Corp. (CERS) have reached agreement with the U.S. Food and Drug Administration on steps for regulatory approval for their system that could potentially protect patients by reducing the risk of transfusion-transmitted diseases. The system is designed to go a step beyond current blood-safety measures. The two companies said they expect to complete the additional steps in the next 15 to 18 months, with regulatory submission to follow shortly thereafter.

Trading

Emeryville-based Ask Jeeves Inc. (ASKJ) closed its sale of $100 million in convertible subordinated notes.

Appointments

Shareholders of Pleasanton's Lipid Sciences Inc. (LIPD) re-elected two directors: William Pope, president and CEO of SunChase Holdings and president and a director of Sun NMA Inc., and S. Lewis Meyer, president and CEO of Lipid Sciences. The remaining four directors were not eligible for re-election. The board of directors also appointed Deloitte & Touche LLP to continue as the company's independent auditors for the 2003 fiscal year.

Compiled by Ellen Lee from company and wire reports. A new column is posted weekdays at the Business site on www.contracostatimes.com at 12:30 p.m. Got East Bay business news? Reach Lee at 925-952-2614 or at elee@cctimes.com.

Reuters, 06.05.03, 5:52 AM ET By Tom Ashby

LONDON, June 5 (Reuters) - OPEC may pull back from a heavily signalled output cut at a meeting next week because prices have stayed higher than ministers expected, but many oil market analysts still see the cartel tightening its belt soon.

Prices have pushed up towards the upper end of OPEC's target range of $22-$28 per barrel over the past few weeks, but analysts see OPEC oil flows sparking a price-busting stock-build in the third quarter unless it cuts output soon.

OPEC ministers said in April they were ready to trim their output ceiling of 25.4 million barrels per day (bpd) by up to two million bpd at the June 11 meeting in Qatar to make room for Iraq, but the rally has dampened the likelikood.

"Our numbers point to a needed cut of 1.4 million bpd in the third quarter, but prices being where they are, we don't think they will do anything," said Leo Drollas at London's Centre for Global Energy Studies.

Indonesia and Venezuela have both said this week that OPEC need not cut while its export basket remains towards the top end of the target range of $22-$28 per barrel. The basket stood at $26.72 on Wednesday.

Tor Kartevold, special adviser on trading strategy to Norway's Statoil <STL.OL>, said this could be too short-term an outlook. Including a modest stockbuild of 600,000 bpd to 1.0 million bpd in the third quarter, Kartevold pegged the demand for OPEC crude excluding Iraq at 24-24.5 million. OPEC output, excluding Iraq, stood at 26.6 million bpd in May, according to a monthly Reuters survey.

"OPEC needs to cut by about 1.5 million barrels per day to avoid an excessive stock build in the third quarter," Kartevold said, forecasting a recovery of Iraqi output to 1.5 million bpd in the third quarter, versus current output at half that level. If prices stay where they are, Drollas said OPEC might stay its hand on June 11, and call an additional meeting in July when Iraqi output is more certain.

However, not all analysts shared this view.

Mike Rothman at Merrill Lynch expects demand on OPEC oil to be much stronger in the latter half of the year, partly to replenish low inventories.

"OPEC quotas will need to be left as is, with the 25.4 million bpd ceiling basically meeting market requirements for the third quarter period, provided Iraq does return to the market on the order of 1.5 to 2.0 million bpd," he said.

Iraq announced its first post-war crude oil exports on Thursday, and Iraq's de facto oil minister, Thamir Ghadhban, expects to reach a production of 1.5 million bpd by mid-June. Heavy looting and suspected sabotage at Iraqi oilfields has delayed the recovery of the industry.