Reuters, 04.29.03, 12:02 PM ET

WASHINGTON, April 29 (Reuters) - A top United States oil executive on Tuesday urged Mexico, Brazil and other Latin American nations to ditch "unstable fiscal and regulatory systems" that discourage more oil investments in an energy-rich region that supplies one-third of U.S. oil imports.

Even though progress has been made, David O'Reilly, the chairman of ChevronTexaco Corp. (nyse: CVX - news - people), said "many countries in the region still have unstable fiscal and regulatory systems from our perspective, and for our investors. This raises risk and reduces confidence."

O'Reilly spoke before the annual Council of the Americas conference on Latin America, which brings together top business and political leaders to discuss prospects for the region. Council members usually back lower trade barriers with Latin America, which is slowly emerging from economic hard times.

The ChevronTexaco executive said Latin America's "future challenges" range from export taxes in Argentina to foreign ownership limits in Venezuela. These regulations, O'Reilly said, discourage "the very large and long-term investments that are industry's mainstay."

O'Reilly, whose company has invested around $4 billion in the region, said he is "closely watching" Argentina's export tax -- a key source of government revenue for that country -- and how "Brazil handles the local content issue."

"Some countries have deliberately erected barriers to foreign investment, at least in our business," the executive said, noting Mexico's ban on foreign oil investments and Venezuela's 49 percent cap on foreign ownership of new oil investments.

The Venezuelan regulations deny the country access to "a new effective form of private investment, and that is project financing," he said. "Governments must weigh the consequences of actions such as these and their impact on trade and foreign investment."

Tuesday, April 29, 2003 11:00 AM ET  

WASHINGTON, D.C. -(<a href=www.quicken.com>Quicken.com-Dow Jones)- The chairman of ChevronTexaco Corp. (CVX, news) said Tuesday the company is optimistic about future investment prospects in Latin America, but warned that key conditions must be addressed to enhance the possibility of further investments.

Speaking at a Council Of the Americas-sponsored conference at the U.S. State Department, David O'Reilly said that Latin America has 125 billion barrels of estimated oil reserves; and not only do new discoveries await, but also, thanks to technology, heavy oil can also be developed. But certain conditions must prevail before companies such as ChevronTexaco, which has $4 billion invested in the region, increase their investments.

Nationally and internationally recognized legal structures must be in place, economic structures must provide for a return on risk, and social structures must provide for the assurance of security to company employees and the broader society, O'Reilly said.

On specific countries, O'Reilly said, "if Argentina is to maintain investor confidence, it must not raise artificial barriers to trade and investments." It should rethink raising taxes on oil and other commodities exports, he said.

In Brazil, he said, local-contents requirements "must not endanger investments." He noted that ChevronTexaco's partners in many countries are local in any event and said that for one job created in the petroleum industry, an additional five jobs are generated in ancillary industries.

Turning to Venezuela, O'Reilly said that the new hydrocarbons law requiring the national oil company to take a 51% stake in new upstream oil projects denies the country access to new forms of financing.

Mexico's constitutional ban on foreign investment in the upstream industry severely limits Mexico's ability to offset declines in reserves, he said.

Given that the investments of the oil industry are long-term in nature and may take 20 to 30 years to mature, "we must have confidence in the long-term stability and growth in the region."

Free trade accords, O'Reilly noted, help to encourage investment and growth, which in turn raise the standard of living and lessen social inequality in countries. "That's why we support free trade agreements," as they accelerate economic reforms, he said.

-By Charles Roth, Dow Jones Newswires; 201-938-2226; charles.roth@dowjones.com

Dow Jones Newswires 04-29-03 1100ET

By Todd White

Madrid, April 29 (<a href=quote.bloomberg.com>Bloomberg) -- The following summarizes first-quarter earnings expectations for Banco Bilbao Vizcaya Argentaria SA, Spain's second-biggest lender and the owner of Mexico's largest bank.

Expected Earnings:

The Bilbao-based bank probably will say first-quarter profit declined 12 percent to 515 million euros ($566 million), or 16 cents a share, from 587 million euros, or 18 cents a share, in the year-ago quarter, according to the median forecast of seven analyst estimates collected by Bloomberg News.

Profit was reduced by the Mexican peso's slide against the euro and lower investment income. Those more than offset higher Spanish consumer bank profit and savings from cutting expenses, analysts said.

Personnel and administrative costs probably fell about 11 percent to 1.4 billion euros, after the bank shed 5,500 jobs worldwide in 2002.

Time

The Bilbao-based bank plans to report earnings Wednesday, sometime in the afternoon Madrid time.

Behind the Numbers:

Banco Bilbao and domestic rivals all had to lower rates charged on loans to track falling benchmark interest rates. That eroded gains from higher mortgage lending and leasing, Bilbao's fastest-growing loan categories in 2002.

Euribor 12-month interest rates fell to about 2.4 percent on March 31 from 4 percent one year earlier.

The bank sold more than 650 million euros of stakes in profitable companies last year, including Metrovacesa SA and Acerinox SA, reducing investment income in the first quarter.

Earnings from its Grupo Financiero BBVA-Bancomer SA unit, Mexico's No. 1 bank, were undercut when translated into euros by the Mexican peso's 31 percent slide from the year-ago quarter.

That held profit in Mexico, before financing and other charges, to a gain of 16 percent to 116 million euros, Jose Luis de Mora, a Merrill Lynch & Co. analyst in London estimated.

Profit from Colombia and other Latin American countries fell about 37 percent to 38 million euros, he estimated. BBVA owns the second-largest bank in Venezuela, where the bolivar fell 58 percent against the euro from the year-earlier quarter.

The currency declines also hurt asset management income, as Banco Bilbao is Latin America's largest pension manager based outside the continent, analysts said.

Chairman Francisco Gonzalez has said he's looking to make acquisitions. Target candidates are most likely in Portugal or the U.S., analysts said.

What the Experts Say:

``Mexico's results will be impacted by good volume coming from economic growth,'' Merrill Lynch's de Mora said in a report.

Bancomer is benefitting from a rebounding economy in which new mortgage lending by local banks likely will triple this year, officials at the unit have estimated.

Bancomer expects to maintain its 25 percent share of the Mexican mortgage-lending market, helped by government subsidies for low-income housing and more powers to repossess defaulted properties.

The Mexican government recently predicted the nation's $600 billion economy will expand by 3 percent this year, or triple last year's pace.

``There was a negative effect from repricing'' that reduced interest earned on loans more than what the bank paid on deposits, said Vicente Gonzalez, an analyst at Ibersecurities in Madrid.

Previous Market Reaction:

Banco Bilbao shares rose 1.7 percent, below the 2.7 percent gain of the Bloomberg Europe Banks and Financial Services Index, on Jan. 30 when it reported an 88 percent decline in fourth- quarter profit on Latin American write-offs.

The shares have climbed 4.6 percent this year.

HAROLD OLMOS, <a href=www.sfgate.com>Associated Press Writer Monday, April 28, 2003
(04-28) 16:10 PDT BRASILIA, Brazil (AP) --

Brazil's leftist president pushed his idea of regional economic integration in talks with his Bolivian counterpart Monday -- the latest in a string of summit meetings reflecting Brazil's growing influence.

"Latin American integration will no longer be a sentimental" notion, Luiz Inacio Lula da Silva said after he and Bolivian leader Gonzalo Sanchez de Lozada agreed to a plan to improve roads and bridges to boost trade between the neighboring nations.

The leaders of Colombia, Peru and Venezuela have visited in the past month, and the presidents of Uruguay and Ecuador will come to the Brazilian capital later this month.

Experts say the flurry of activity represents a message to the United States: A united South America will negotiate hard over terms of a proposed Free Trade Area of the Americas trade zone.

The United States and Brazil, the largest nation in South America, will spearhead the negotiations to create the 34-nation bloc stretching from Alaska to the southern tip of Argentina.

Silva, a former union leader known for his negotiating skills with multinational firms, wants to set up a merger by December of two current Latin trading blocs -- Mercosur and the Andean Community.

Mercosur is made up of Argentina, Brazil, Paraguay and Uruguay as members. Bolivia and Chile are associate members. The Andean grouping is made up of Venezuela, Colombia, Ecuador, Peru and Bolivia.

Peruvian President Alejandro Toledo took away from his meeting with Silva the prospect of Peru becoming an associate member of Mercosur.

When Colombian President Alvaro Uribe came to Brazil, he also talked about greater economic South American integration.

"If he (Silva) assembles the Andean nations and Mercosur into one trading bloc, Brazil and its neighbors certainly will have better bargaining power," said David Fleischer, a political science professor at the University of Brasilia.

The presidential meetings also appear designed to give Brazil a higher profile on the international front. Silva said over the weekend that the United Nations should be reformed.

He said the Security Council should be expanded beyond the current five permanent members -- United States, the United Kingdom, France, Russia and China.

Venezuela's President Hugo Chavez said during his visit that "all 23 million Venezuelans will feel happy being represented by Brazil at the Security Council as a permanent member."

The visits to Brazil also show that Silva, the country's first elected leftist president, has a more aggressive approach on international relations than his predecessors.

Traditionally Brazil has been timid in conducting foreign affairs, but Silva has given a great emphasis to Latin America" since taking office, said Fleischer, the political science professor.

The discussions between the presidents symbolize a "new beginning of a new era for Brazil and Bolivia," said Marucio Balcazar, the Bolivian presidential spokesman.

The usual suspects Apr 28th 2003 From <a href=www.economist.com>The Economist Global Agenda

CONSIDERING the mess that Argentina’s Peronists and Paraguay’s Colorados have made of their countries, and given the grinding poverty, high unemployment, endemic corruption and decrepit public services that each country has suffered under the misrule of its main political party, one might expect that voters would relish an opportunity to dump them and give a chance to someone new. Indeed, until recently, Argentina’s streets were resounding to the chants of protesters shouting “¡Que se vayan todos!” (“Kick out the lot of them!”) But in Sunday’s elections, Argentines and Paraguayans decided to stick with the devils they know. Argentina’s flamboyant ex-president Carlos Menem came top in his country’s first-round presidential vote, and will go into the second round with Néstor Kirchner, a rather colourless candidate from a rival faction of the Peronist party. In Paraguay, where there is only one round of voting, the Colorados’ candidate, Nicanor Duarte Frutos, was elected president, maintaining the party’s 56-year grip on power.

Many Argentine voters seem to have bought Mr Menem’s proposition that they should forget all the various scandals of his ten years in power, in 1989-99, and overlook his spending-and-borrowing binge, which contributed to Argentina’s subsequent debt default and economic meltdown, and instead remember the economic boom that the country enjoyed while he was running it. With his playboy image and his glamorous new wife—a former Miss Universe—Mr Menem personifies those good times, which Argentines yearn to have back. Until their country’s economic collapse, they lorded it over their South American neighbours, revelling in their higher incomes and “European” lifestyles. But now, so far has the country fallen that almost 60% of Argentines live in poverty (defined as a monthly income of less than 750 pesos, or $242, for a family of four) and around a fifth of the workforce is unemployed.

While Mr Menem did not achieve his dream of sailing to a first-round victory (which would have required at least 45% of the vote, whereas he only got 24%), his showing in the polls is rather better than might have been expected in mid-2001, when he was briefly put under house arrest, accused of involvement in an alleged scheme to sell illegal arms to Croatia and Ecuador in the early years of his government (Argentina’s Supreme Court later freed him). In late 2001, Mr Menem’s incompetent successor, Fernando de la Rúa, resigned amid violent public unrest, after which Argentina defaulted on about $60 billion of foreign debt and the peso collapsed. Following various short-lived caretaker presidents, Mr Menem’s arch-rival within the Peronist movement, Eduardo Duhalde, was chosen as president by the Congress. Mr Duhalde put up Mr Kirchner, hitherto a little-known provincial governor, as his chosen successor, but could not unite the Peronist party around him. Other factions of the party, founded in the 1940s by Juan Domingo Perón and his wife Evita, backed either Mr Menem or a third Peronist candidate, Adolfo Rodríguez Saá, who had a brief stint as stand-in president in 2001.

In total, 19 candidates stood for president, including Ricardo López Murphy, a free-market economist who was briefly Mr de la Rua’s economy minister until his cabinet colleagues decided they lacked the stomach for his tough remedies (a pity, because they might have averted Argentina’s collapse and the suffering that resulted) and Elisa Carrió, a congresswoman standing on an anti-corruption ticket. Now Mr Menem and Mr Kirchner must scrabble for the unsuccessful contenders’ votes in the run-off on May 18th. Though Mr Menem got the most votes, he also suffers from a higher rejection rate than any of the other main candidates.

Argentina’s business leaders—who had given generous backing to Mr Menem’s campaign—will be relieved that Mr Rodríguez has been knocked out of the contest. He had called for the abandonment of the free-market reforms brought in by Mr Menem and a return to the traditional Peronist policy of heavy state intervention, including the renationalisation of Argentina’s utilities and railways. Mr Kirchner spouted some leftish-sounding rhetoric during the campaign but is believed at heart to be a centrist. His flagging campaign was lifted towards the end by gaining the backing of Roberto Lavagna, Mr Duhalde’s economy minister, who has begun restoring some signs of life to Argentina’s moribund economy.

Mr Menem insists his free-spending days are over, and pledges tough controls on the government’s finances. However he is also promising big cuts in tax rates—value-added tax would fall from 21% to 13%—which he says will be paid for through a crackdown on tax exemptions and evasion. He also pledges to honour all of Argentina’s debts, though he will ask lenders for more time to pay, and lower interest rates. Amid rising optimism about the prospects for an economic recovery and a market-friendly election winner, Argentine shares and bonds have risen sharply.

In Paraguay’s election, Mr Duarte, despite coming from a party that has misruled the country for half a century, has projected himself as a bringer of change, a firm leader who will clamp down on corruption and revive the long-stagnant economy. That he won, with about 37% (with more than nine-tenths of the votes counted), is more down to a divided and feeble opposition and the strength of the Colorado party machine. He will take over from President Luis González Macchi, who barely survived impeachment earlier this year over fraud accusations. Mr Duarte’s main opponent, Julio César Franco of the Liberals, had been ineffectual as Mr González’s vice-president, and got only 24% of the vote on Sunday, with Pedro Fadul, a pro-reform businessman, coming third with 22%.

In all, those hoping to see new faces and sweeping changes will have been disappointed by the outcomes of the Argentine and Paraguayan elections. But things could have been worse. Both elections were free and fair, despite each country having only a short democratic history and a past marred by military dictatorships. Following Brazil’s successful election last October, which led to a smooth transition from centre-right to centre-left administrations, it may safely be concluded that democracy has firm roots in South America, even though it faces challenges in some parts of the region, such as Venezuela. This should come as some comfort to America as it struggles to introduce the concept to the Middle East. Furthermore, despite much rhetoric critical of “neoliberal” reforms, there seems little sign of going back to the failed statist policies of the past.