By Hil Anderson <a href=www.upi.com>UPI Chief Energy Correspondent From the National Desk Published 4/7/2003 6:17 PM

LOS ANGELES, April 7 (UPI) -- The coalition's military progress in Iraq kept oil prices on the run Monday despite OPEC's plans to meet later this month to discuss possible cuts in crude production in an effort to shore up prices.

May crude on the New York Mercantile Exchange fell 66 cents on the day to $27.96 per barrel after hovering slightly above $28 during the morning hours while traders digested reports that OPEC ministers would meet April 24 to presumably talk about the post-war supply situation and the winding down of the "war premium" that had pushed NYMEX to nearly $40 per barrel in February.

London crude fell 10 cents to $24.85 per barrel.

Crude also appeared to be influenced by NYMEX gasoline futures, which dipped 2.78 cents to 84.25 cents per gallon.

The downturn in futures prices should deflate retail gasoline prices somewhat in the United States as the annual summer increase in demand looms. The national average price for a gallon of regular at the pump Monday was $1.637, according to AAA, compared to $1.643 the previous day and $1.683 a month ago.

OPEC officials had little comment Monday on the Vienna meeting's agenda; however, ranking energy officials in the cartel's member nations have recently spoken of a "glut" of crude rather than any shortages caused by the war.

"Things have been very fragile, which is why we've seen the prices where they've been," Daniel Yergin, chairman of Cambridge Energy Research Associates, told the Los Angeles Times. "If there are no further disruptions of supply from other countries, then we'll see the supply-demand fundamentals improving week to week."

OPEC has increased its output this month to a combined 26.3 million barrels per day despite political and ethnic strife that cut production in Venezuela and Nigeria. Nigerian exports are expected to resume in the coming days while Venezuela has gradually returned to normal export levels.

In addition, U.S. and British officials are hoping that Iraq can begin exporting in the near future as well in order to help finance its post-war reconstruction.

Iraq's southern oil fields were seized largely intact by coalition forces early in the campaign and could begin producing this summer once repairs are completed.

The impact that Iraq's return to the market will have on short-term prices is still the subject of debate. Some analysts foresee the low oil inventories in the United States acting to support prices while others opine that the psychological impact that a flush market will have on traders will cause prices to fall further.

Lefigaro.fr (Reuters.) Eric de La Chesnais [11 avril 2003]

L'Organisation des pays exportateurs de pétrole paraît aujourd'hui placée le dos au mur. L'unité affichée depuis le 29 mars 2000 est à nouveau mise à rude épreuve. Alors que la guerre en Irak s'achemine vers une victoire américaine, la réalité de la situation d'un marché pétrolier surapprovisionné éclate aujourd'hui au grand jour. «Les pays de l'Opep produisent actuellement plus de 2 millions de barils/jour au-dessus de leur quota officiel de 24,5 millions de barils par jour», expliquait hier le président de l'Opep, le Qatarien Abdallah Ben Hamad al-Attiya, lors du quatrième sommet pétrolier international à Paris. La prime de guerre, en maintenant les prix à niveau élevé, couvrait jusqu'à présent le déséquilibre. «Cette prime atteignait même jusqu'à 8 dollars sur le prix du baril», selon Nordine Aït-Laoussine, l'ancien ministre algérien du Pétrole.

Avec l'accélération des événements en Irak, la donne a changé. Le risque d'approvisionnement lié à la guerre s'est éloigné. «Le pays ne produit plus que pour ses besoins intérieurs, soit entre 300 et 400 000 barils par jour», selon un expert. «Le Venezuela produit 70% de ses capacités (2,4 mbj) et la situation s'est stabilisée au Nigeria», ajoute-t-il.

Cette situation pourrait même s'aggraver. «Le surplus pourrait atteindre 4 millions si le Nigeria et l'Irak reviennent à leur pleine capacité de production de pétrole», explique Abdallah Ben Hamad al-Attiya.

La traduction de cet état de fait sur les cours du brut ne s'est pas fait attendre. Ils sont repassés en dessous de 30 dollars. Hier, en milieu d'après-midi à Londres, le brent cotait 24,88 dollars le baril en baisse de 44 cents. A New York, en soirée, le WTI reculait de 1,39% à 27,46 dollars.

Sans réactions de l'Opep, la chute des cours risque de se poursuivre. «Si le cartel ne fait rien, les prix du baril tomberont en dessous des 22-28 dollars, la fourchette de prix jugée «raisonnable» par l'Opep, ajoute Abdallah Ben Hamad al-Attiya. Il y aurait donc urgence. «Les pays membres de l'Opep doivent prendre des mesures radicales et rapides pour enrayer la surproduction actuelle et la chute des cours qui en découle. Il n'y a certes pas de risques d'implosion de l'Opep. L'Organisation a déjà survécu à des crises où le baril valait 8 à 9 dollars. Mais de sérieuses discussions auront lieu pour éviter que le scénario de 1998 ne se reproduise», assure Nordine Aït-Laoussine.

La réunion extraordinaire des membres de l'Opep, prévue à Vienne pour la fin avril ou début mai, sera donc décisive. Tous les scénarios seront passés en revue pour éliminer le surplus de pétrole. «Nous avons deux options : réduire la production ou respecter les quotas. Ce sont toutes les options ouvertes que nous avons pour stabiliser le marché et essayer d'éliminer le surplus», affirme le président de l'Opep qui se dit favorable à un baril à 25 dollars. «L'Opep a atteint une certaine maturité, agissant assez vite et arrivant à gérer le marché de manière satisfaisante», confie pour sa part Pierre Terzian de Pétrostratégies.

Reuters, 04.11.03, 7:12 AM ET By Sujata Rao

LONDON, April 11 (Reuters) - Oil prices eased on Friday as U.S. troops took control of Iraq's northern Kirkuk oilfields, ending any lingering concerns about the status of Baghdad's vast petroleum wealth. The capture of Kirkuk, capable of pumping 900,000 barrels per day (bpd), leaves U.S.-led forces protecting both Iraq's northern and southern fields. London Brent fell 32 cents to $24.15 a barrel. U.S. light crude dipped 36 cents to $27.10. "All the worries about the safety of Iraqi oil have evaporated," said Peter Gignoux, head of the London energy desk at Citigroup. "Iraq had contributed so much to a war premium on oil prices and now, in a dramatic role reversal, is contributing to a peace discount." Prices have fallen 10 percent since the war started three weeks ago as fears receded of a prolonged conflict, with major damage to Iraqi oil facilities. Some analysts think even cheaper crude could come with lower seasonal demand in the second quarter and rising production from Nigeria and Venezuela after stoppages. "With all the Iraqi oil facilities now in allies' hands, there seems to be no threat to medium or long term Iraqi supplies and the market is marking that down," said John Waterlow, oil analyst at Wood Mackenzie in Edinburgh. "I think there is more downside to the market."

OPEC DEFENDS PRICE OPEC though has other plans. The producer group is expected at an emergency meeting late this month or in early May to curb production to defend its $25-a-barrel price target. "OPEC's current production rate is creating a tidal wave of crude oil that cannot all be absorbed by current and even rising demand," said Aaron Brady, senior analyst at Boston-based Energy Security Analysis Inc (ESAI). OPEC could decide just to rein in extra supplies it pumped before the war, or go further and cut official production quotas. "What we have said is that OPEC will discuss all options: cutting production, adhering to quotas and all these options to stabilise the market to remove two million plus," OPEC President Abdullah al-Attiyah said on Thursday. The cartel for March was estimated pumping about two million bpd above official production limits of 24.5 million bpd. The International Energy Agency, adviser to consumer nations on energy, on Thursday said it saw a backlog of extra OPEC crude waiting to reach importing countries in the second quarter. "With Venezuelan production recovering, the long-expected overhang of crude is starting to show up in U.S. inventories, which have risen almost 11 million barrels in the last three weeks," Boston's ESAI said.

<a href=www.newsday.com>By Associated Press April 10, 2003, 1:53 PM EDT

LONDON -- OPEC should think twice about cutting production to boost sagging oil prices because supplies remain short and the immediate outlook remains cloudy, the International Energy Agency said Thursday.

But OPEC's president, Abdullah Hamad bin al-Attiyah of Qatar, said Thursday in Paris that the world's oil markets are glutted, and the resumption of Iraqi oil production could make that worse.

Officials at the Organization of Petroleum Exporting Countries said Monday that oil ministers planned to meet April 24 in Vienna, Austria, whether or not the war in Iraq has ended.

Most OPEC members have been producing at maximum capacity to keep supplies plentiful during the war. However, oil ministers fear that OPEC might be oversupplying the market just as demand starts falling to its seasonal low.

The Paris-based IEA, which represents the world's wealthiest countries, said stocks were low in member nations, and there were doubts about the export situations in Iraq, Nigeria and Venezuela. "Significant production curbs ... may impact upon the industry's ability to rebuild stocks," the report said.

Al-Attiyah said the current crude oil excess totals more than 2 million barrels a day.

The IEA said OPEC may find that managing falling oil prices will be as tricky as controlling recent high prices.

On London's International Petroleum Exchange, North Sea Brent futures for May delivery fell 50 cents to $24.75 a barrel in late trading. At the New York Mercantile Exchange, light, sweet crude for May delivery fell 75 cents to $28.10 a barrel in afternoon trading.

With oil prices over $25 a barrel, the incentive for some OPEC members to cut output may fade, the IEA said.

Saudi Arabia pumped an extra 450,000 barrels per day in March compared to February, raising daily output to 9.32 million barrels, the IEA said. The Saudis have reportedly turned down requests for extra volumes of oil from customers, and there were unconfirmed signals that "the recent sharp ramp-up in production may be drawing to a close," the IEA said.

The report said supplies are uncertain because of unrest in Nigeria's main oil-producing region, which has cut the country's output by 40 percent. However, production is increasing in Venezuela following civil disturbances there.

The IEA cut its forecast for average demand in the second quarter, which it now sees at 76.38 million barrels per day, down 2 million barrels daily in the first quarter.

Asis Times On line By Humberto Marquez

CARACAS - United States-based oil companies will get the lion's share of the petroleum business in Iraq once the war there is over, undermining the interests of OPEC (Organization of Petroleum Exporting Countries), say oil industry experts, who also warn that an end to the war will not immediately translate into abundant supplies of inexpensive crude. "There is no doubt that the military occupation of such an important oil exporting country, with a nationalist government, is creating cracks in OPEC and affecting the mid- and long-term interests of its other members, like Venezuela," says Víctor Poleo, a professor of graduate studies in oil economics at the Central University (UCV), in Caracas. After the war "there will be a substantial increase in Iraqi oil production, and I wouldn't be surprised if schemes emerged to weaken, if not destroy, OPEC", said Humberto Calderon, a former Venezuelan minister of energy and of foreign relations, in a conversation with Inter Press Service. The US has been trying for some time to reduce its dependence on oil supplies from the Persian Gulf region, home to the dominant members of OPEC, an 11-country cartel comprising Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. That was the aim of the controversial energy plan that George W Bush brought with him to the US government, in which he has sought to expand oil exploration and exploitation within his country's own territory, even in the protected natural areas of Alaska. But control of Iraqi oil wealth could turn into alleviation for US oil worries and a key to reducing prices - and to wielding influence over OPEC. However, not all experts believe that after the war it will be easy for petroleum investments in Iraq to flourish. "It would be a mistake to assume that immediately after the US occupation there would come a prolonged period of political stability in Iraq and surrounding areas," warns another graduate professor at UCV, Mahzar al-Shereidah, an Iraqi-Venezuelan. The "stability factor", al-Shereidah told IPS, "is fundamental for the materialization of oil industry projects". "The big oil companies are very aware of the rich subsoil in Iraq, but an occupying regime creates additional risks to dealing with political, ideological, cultural and religious factors. And the corporations are going to take that into account," he added. Iraqi territory holds 112 billion barrels of petroleum in proven reserves, the second largest volume within OPEC, after Saudi Arabia's 260 billion barrels. And Iraq's crude is relatively easy to extract from the ground. Each oil well represents major output because production costs are just US$2 per 159-liter barrel. Because it is light, sweet crude it is easily refined and has little sulfur or metal residue. But "the extreme cruelty of this invasion, which has affected entire peoples, awakens deep sensitivities in a nation that is proud of resisting the conquerors. We are going to witness the allotment of war booty and the United States will take the lion's share - but it will not be effortless," al-Shereidah commented. According to former oil minister Calderon, Iraq could double its output of 2.4 million barrels daily within a short time. Prior to the war, total production was limited through the "oil for food" program, overseen by the United Nations in the context of the embargo imposed against Baghdad for invading neighboring Kuwait in 1990. As Iraq's role as a supplier increases, "the OPEC countries will be elbowing each other out of the way" to win markets, pushing prices down, Calderon predicts. Fadhil Chalabi, an Iraqi national and former OPEC secretary general, goes even further. He believes his country could even double its proven reserves through intense oil exploration, becoming a "super-giant producer", like Saudi Arabia, putting as much as 10 million barrels on the international market each day. In addition to its oil output potential, Iraq has geographic advantages that reduce the cost of reaching global markets. Its petroleum can be shipped via its port on the Persian Gulf and, to bypass the vulnerability of the Straits of Hormuz between the Gulf and the Arabian Sea, through the pipelines connecting Iraqi oil fields to the Mediterranean and Red seas. Iraq as a super-giant producer of crude oil managed by US-based companies would crown the dearest dream of the leaders of the governing Republican Party: "to bring OPEC to its knees," forcing the cartel - through competition from Iraq - to sell its oil at lower prices, says Chalabi. In the opinion of the former OPEC official, the depression of prices and the abundance of oil in Iraq will prompt investors to shift their focus away from higher-cost areas, like the North Sea, where Britain and Norway extract oil. They will turn to areas with lower production costs, precisely those of OPEC and the Persian Gulf region, he says. UCV professor Poleo believes the "US empire will want to hold the keys to all major oil sources, and that will ultimately include the Andean-Amazon oil reserves, which extend from Trinidad-Tobago, through Venezuela, Colombia, Ecuador, Peru and Bolivia." Venezuela is the fifth leading OPEC member in terms of conventional crude reserves, at 77 billion barrels, but it also holds 270 billion barrels of unconventional, extra-heavy and bituminous crudes. The 11 OPEC countries have managed their output during the past two decades to maintain stability in the average price of the cartel's "basket" of seven crudes. They consider the optimal price range for consumer and producer nations alike to be $22 to $28 a barrel. OPEC "rejects the notion of using petroleum as a political weapon", stressed a former secretary general of the organization, Ali Rodriguez, current president of Venezuela's state-run oil firm PDVSA. As such, OPEC has made an effort prior to and during the war in Iraq to ensure a consistent supply of oil to its clients in the industrialized world. The markets have seen petroleum prices decline from a mean of $32 per barrel before the war to fluctuating around $26 a barrel two weeks after the invasion of Iraq began. The situation kept in step with the advances of the US-British forces in Iraq, though OPEC suggested on Tuesday that its members might cut back production in order to buoy up prices. Another major factor influencing the oil markets is the potential for fat profits for the companies winning contracts for the reconstruction of a country emerging from years of war and economic embargo. The Bush administration - which Poleo describes as "an oil directorate" because of the links between US officials and energy and aerospace firms - has already made clear that it will control the reconstruction contracts, which are estimated to be worth $30 billion to $100 billion. US Secretary of State Colin Powell said Iraqi revenues, particularly those from the oil industry, would serve as resources for rebuilding the country. The first companies to win some of these contracts were International Resources Group, to coordinate humanitarian aid efforts, Stevedoring Services of America, to run the Um Qasar petroleum shipping terminal, and Kellogg Brown & Root, to control oil wells that have been set on fire. The latter is a subsidiary of Halliburton, a major petroleum industry construction firm, which until 2000 was headed by US Vice President Dick Cheney. For the exploitation of the Iraqi oil fields, "It is certain that US and British firms will have priority, and will try to make up for their absence in Iraq during the 12 years of the embargo, and Baghdad to back down from partnership contracts with oil companies from China, France and Russia," said al-Shereidah. Firms from the three countries signed letters of intent for oil development that would require investments of more than $40 billion. The big question now is to what extent those contracts will be respected in the allocations of post-war Iraq. As far as the Iraq National Oil Company, the government enterprise that managed the petroleum industry until now, "it is very possible that it will remain, though it might be partially privatized to facilitate the distribution of percentages the United States will collect for the costs of the war and those earmarked for expenses and investment in Iraq," said al-Shereidah. (Inter Press Service)