www.bday.co.za

VIENNA - The Organisation of Petroleum Exporting Countries (Opec) ministers meet on Tuesday in Vienna after trying to soothe the nerves of febrile oil markets, which they said were adequately supplied despite the looming threat of war in Iraq.

The president of Opec, Abdullah bin Hamad al-Attiyah of Qatar, said late on Monday: "So far, for the time being we don't feel there is a shortage in the market."

He explained that after speaking with clients they also considered that enough oil was currently available. Saudi Oil Minister Ali al-Nuaimi had earlier had also signalled the oil market was not lacking supply.

Asked when he arrived for an Opec meeting to be held on Tuesday if the market was adequately supplied, Al-Nuaimi said "very much so".

Opec ministers are expected to agree on Tuesday to maintain the cartel's overall output ceiling of 24.5 million barrels a day, rolling over a 6.5% increase introduced at the start of February to compensate for disruption to supplies from strike-hit Venezuela.

The Qatari minister said that Opec currently had additional capacity of "about three million" barrels a day.

Commerzbank analyst Jon Rigby said in London that sticking with the standing arrangement was the most likely outcome because "there isn't a great deal of new capacity to be introduced".

"The second thing is that the market is probably reasonably well supplied at the moment, simply because we are now moving towards the second quarter when demand typically falls for seasonal reasons," he said, referring to spring in the northern hemisphere.

However, despite Opec ministers' assurances the market is adequately supplied, oil prices climbed to a new two-and-a-half-year high in London on Monday before falling prey to profit-taking.

The price of a barrel of benchmark Brent North Sea crude oil for April delivery climbed to as high as $34.55, before easing back to $34.12 in late trading, up two cents from the previous close.

In New York, the reference light sweet crude April-dated futures contract dipped 16 cents to $37.62 a barrel in early deals.

Bin Hamad al-Attiyah said that the threat of war in Iraq was adding from $6 to $7 a barrel.

www.chron.com March 11, 2003, 12:37PM By DAVID IVANOVICH

VIENNA, Austria -- Just days before missiles could be flying again in Baghdad, the OPEC producers are wrangling over how to respond to a possible U.S.-led invasion.

RESOURCES • Graphic: OPEC members' outputWhile the cartel members are united in their desire to avoid an oil supply crisis, they are split politically.

Despite sharply higher oil prices, some OPEC members argued today that the world has enough crude to meet demand and blamed the threat of a U.S.-led war against Iraq for fears of a supply disruption.

Before arriving for today's meeting of OPEC oil ministers, Iran's oil minister was telegraphing his opposition to a plan that would suspend the group's production quotas if war breaks out. The plan is backed by Saudi Arabia, OPEC's de facto leader.

Iran is warning the United States' allies within the group that it will oppose any measure that suggests support for "a U.S. military assault against one of OPEC's member states."

"Iran will not back politically motivated decisions," Iranian Oil Minister Bijan Zangeneh told the Iranian news agency Monday, Reuters reported from Tehran.

While Zangeneh's comments may cause some consternation within OPEC, Iran's objections will have little real impact on oil supplies.

The OPEC countries already are pumping far more crude than their official quotas allow. They are earning top dollar for their crude and fear a supply disruption will prompt the United States and other industrialized nations to release oil from their strategic petroleum reserves, which could lower prices.

Despite their supply efforts, the price of crude oil and other fuels are at near record levels.

In New York, crude oil for April delivery fell 51 cents, or 1.4 percent, to $37.27 a barrel in trading on the New York Mercantile Exchange. April heating oil fell 2.28 cents to close at $1.0857 a gallon.

At the International Petroleum Exchange in London, April Brent fell 35 cents to close at $33.75 a barrel.

Natural gas for April delivery plunged 47.8 cents to settle at $6.515 per thousand cubic feet.

The average pump price of gasoline nationally is just short of the record, while it has hit $1.58 per gallon in the Houston area, up 45 percent from this time last year according to AAA's daily fuel gauge report.

Those oil prices currently include a "war premium" of perhaps $6 to $7 a barrel, Qatari Oil Minister and OPEC President Abdullah al-Attiyah said. That premium could evaporate quickly if a war is won quickly and send prices falling.

With war looming, al-Attiyah vowed the OPEC members "will try to do whatever we can." But he warned that even the OPEC producers have limits.

Agreeing to suspend the production ceilings would send a signal to the markets that the OPEC producers are serious about avoiding a shortage.

Tehran's support of Baghdad is striking, considering Saddam Hussein's 1980 invasion of Iran and the bloody, eight-year war that ensued.

But relations between the United States and Iran have been bitter since the fall of the Shah, the taking of American hostages and the United States' tacit support of Saddam during the Iran-Iraq war. President Bush didn't settle any old grievances when he listed Iran among the "Axis of Evil."

But the OPEC producers are not likely to throttle back now because of Tehran's political sensibilities.

Al-Attiyah tried to downplay the discord Monday in his comments suggesting the OPEC countries are committed to ensuring supplies are adequate.

Saudi Oil Minister Ali al-Naimi said little upon his arrival Monday evening, but his countries commitment to making up for any lost production is well known.

"The Saudis already are producing well over quota," noted Raad Alkadiri, an analyst with Washington-based PFC Energy. "They'll reaffirm that commitment at this meeting."

U.S. Energy Secretary Spencer Abraham, who is in Vienna for another, unrelated conference, planned to meet with OPEC oil ministers, but no details of these meetings were available Monday. Abraham will not -- per longstanding U.S. policy -- attend the OPEC conference.

To avoid release from the U.S. Strategic Petroleum Reserve and other emergency stockpiles, OPEC producers know that if war breaks out they must make up for the lost production in Iraq, as well as in parts of Kuwait and anywhere else where the fighting may spread.

Iraq has been exporting about 2 million barrels of oil a day, 1.7 million under the official United Nations' controlled oil-for-food program and another 300,000 or so smuggled out through Jordan and Syria.

Kuwait, meanwhile, has already acknowledged it may be forced to shut down wells producing 700,000 barrels a day in areas bordering Iraq. It is trying to make up for that loss by boosting production elsewhere in the country.

OPEC also is trying to make up for losses in Venezuela, where political opposition to President Hugo Chavez brought oil production to a virtual halt in January. Despite recovery, its output is still less than it was before the strike.

The 10 OPEC producers supposedly controlled by quotas are pumping as much as 25.3 million barrels a day, according to the U.S. Energy Information Administration. That's about 3 percent more than their official limits allow and about 700,000 barrels more than they were cranking out prior to the Venezuelan strike.

Saudi Arabia, OPEC's largest producer, has increased output to 9.2 million barrels a day, up from 8.5 million in January, sending a strong signal of support to Washington. And the kingdom could continue to increase its production to near 10.5 million barrels a day if the war causes major disruptions.

All the concern about a supply disruption caused by a war is in sharp contrast to last December, when OPEC officials were obsessed about the advent of spring and its resulting seasonal drop in demand. "Today, those calculations are different," Qatar's al-Attiyah said.

Overall, OPEC officials are pleased with their own progress. "We're in good shape," Algerian Oil Minister Chakib Khelil declared Monday. "Supply is pretty good."

If supply disruptions do result from the invasion, "OPEC should not be blamed."

While not party to the quota agreement, Iraq still usually sends a delegation to OPEC meetings. But Iraq will not be represented here today. Saddam has ordered all of his European-based diplomats to return to Baghdad, a diplomatic source said.

Besides the OPEC countries, a number of nonaligned producing nations -- Mexico, Russia, Angola, Oman and Syria -- are here to show their support for the cartel's efforts.

icwales.icnetwork.co.uk Mar 11 2003 The Western Mail - The National Newspaper Of Wales   OIL and gas services provider John Wood Group yesterday said the looming war in Iraq was unlikely to have a significant impact on its operations.

The company, which designs and manages oil and gas projects in 34 countries, said it only expected to be hurt by the conflict if war spread across the wider Gulf region.

The company had been hit by the continuing general strike in Venezuela.

But both Iraq and Venezuela could provide medium-term growth opportunities, Wood Group said.

Wood, which said its markets were expected to grow by 5% in 2003, said it looked to the future with confidence after unveiling a 36% rise in 2002 pre-tax profits.

Sales in the year to December 31 rose by 14% to $1.7bn (£1.1bn) with pre-tax profits up $114.7m (£71.8m) from $1.5bn (£0.9bn) last time.

Chairman Sir Ian Wood said, "These results confirm the success of our strategy, with our broad geographic coverage, business spread across the energy sector and focus on less cyclical activities within oil and gas providing both growth and financial resilience.

"We are well positioned to continue the very successful Wood Group story and we look to the future with confidence."

Based in Aberdeen, Wood Group listed on the London Stock Exchange in May 2002 in what was the largest Scottish flotation for nine years.

Shares gained 6p yesterday, or more than 4%, to 148p. Shareholders will also receive 1.2p a share final dividend, making a maiden total dividend of 1.8p.

www.globeandmail.com Globe and Mail Update

— OPEC will increase its oil production and possibly even suspend its current output quotas to keep the world supplied with ample supplies of crude in the event of a war with Iraq, the group's president said Monday.

Members of the Organization of Petroleum Exporting Countries can pump an additional three million to four million barrels of oil a day, and they are prepared to exhaust this spare production capacity if a war seriously disrupts exports from the Persian Gulf, said OPEC President Abdullah bin Hamad al-Attiyah.

OPEC's secretary general and oil ministers from Iran, Algeria and Venezuela played down the possibility that the group might suspend its output ceiling, currently set at 24.5 million barrels a day. Mr. al-Attiyah indicated he favours a greater degree of flexibility, without actually endorsing a temporary suspension.

"OPEC will do the most it can to avoid any shock in the market," he told reporters ahead of a policy meeting Tuesday at OPEC headquarters in Vienna, Austria.

OPEC, which pumps about a third of the world's crude, is already exceeding its target as members cash in on prices that have soared to 12-year highs amid fears of a war-induced supply shortage from Iraq.

A conflict would almost certainly disrupt Iraq's daily shipments of two million barrels, but at least one OPEC member — the United Arab Emirates — expressed doubts about the group's ability to cover a larger shortfall if fighting spreads beyond Iraq's borders.

"OPEC should not be blamed," Mr. al-Attiyah said as he arrived at a Vienna hotel. "We will do whatever we can, but this is in accordance to our capacity. When we reach a level that we cannot exceed, then we cannot do anything."

Mr. al-Attiyah said the market was already well supplied with crude. Saudi Arabia's oil minister Ali Naimi, speaking to reporters upon his arrival at a different hotel, agreed but gave no further details.

However, the United Arab Emirates' oil minister, Obaid bin Saif al-Nasseri, warned it would be "very difficult" for OPEC to pump enough oil to cover a simultaneous shortfall in crude exports from Iraq and northern Kuwait.

Kuwait, which hosts most of the U.S. troops that are poised to attack Iraq, has said that in the event of war it would shut down its northern oil fields as a precaution against a possible Iraqi counterstrike. Such a step would reduce Kuwait's output by around 700,000 barrels a day, or about a third of its current production.

Mr. al-Nasseri's comments suggested that the United States and other major oil-importing countries would need to rely on their own strategic petroleum reserves as a cushion against a serious disruption in oil supply.

The United States and other major importing countries want OPEC to maximize production if a war threatens supplies and causes prices to spike. U.S. Energy Secretary Spencer Abraham, due in Vienna Tuesday on separate business, said in London that he might meet here with oil ministers from leading OPEC producers. Mr. al-Attiyah said Abraham had so far not requested to meet with him.

Some analysts have suggested that large importing countries and OPEC — two often opposing camps — might be trying to coordinate an increase in OPEC output with a release of crude from importers' strategic reserves in an effort to head off a war-induced disruption.

Despite Mr. al-Attiyah's claim that OPEC has " three to four million barrels" in daily spare capacity, it was not clear how much higher the cartel could go in satisfying U.S. demands. Mr. al-Nasseri said the United Arab Emirates' capacity of about 2.5 million barrels a day was already "about full." Aside from Saudi Arabia and perhaps Nigeria, most other OPEC members are already believed to be producing at their limits.

OPEC heavyweight Saudi Arabia, which by some estimates is pumping at a rate of nine million barrels a day, could raise its output to 9.5 million barrels a day within a month and 10.5 million barrels a day within three months.

Yet, not all of OPEC's extra capacity is likely to be available right away. Mr. al-Attiyah's figure for OPEC's production potential appeared to include Venezuela's nominal capacity of 2.35 million barrels a day, yet Venezuelan exports are still recovering from a crippling strike and analysts have suggested it could be months before that country resumed pumping at its earlier levels.

OPEC raised its output target by 6.5 per cent in January, in an unsuccessful effort to keep a lid on rising prices. Prices for U.S. light, sweet crude have since reached a post-1991 peak of $39.99 (U.S.).

April contracts of U.S. crude were tradin.g Monday at $37.25 a barrel in New York, down two cents from Friday's close. Brent crude futures for April delivery closed 35 cents lower at $33.75 US in London.

sg.biz.yahoo.com Tuesday March 11, 5:56 AM By Adam Smallman Of DOW JONES NEWSWIRES (This updates a story from 1253 GMT with additional comments from ministers and further diplomacy news.)

VIENNA (Dow Jones)--There is no consensus among OPEC ministers gathering in Vienna ahead of Tuesday's policy meeting, because there appears to be no big idea on the table.

Ali Naimi, the oil minister for the Organization of Petroleum Exporting Countries' de facto leader Saudi Arabia, was tightlipped on arrival, in sharp contrast to the two meetings since December, at which members signed off on output hikes.

That increased production was intended to cool prices, but it failed.

This time, the world seems a little more complex. A conflict in Iraq may now only be a week away, OPEC's spare capacity - normally used to assuage oil price fears - is wafer thin and ministers fear an oil glut within weeks that could see prices tank.

OPEC Secretary General Alvaro Silva and oil ministers from Iran, Algeria and Venezuela have also dismissed talk that a suspension of the group's output ceiling, currently set at 24.5 million barrels a day divided among 10 OPEC members, excluding Iraq, might make it onto the agenda of the meeting.

It was left to Algeria's Oil Minister Chakib Khelil to give shape to the oil price fears sliding to the front of delegates' minds, even if OPEC's public front may be to issue soothing words over the security of crude flows on the cusp of war.

In an interview with Dow Jones Newswires, Khelil - who thinks OPEC should leave things unchanged at Tuesday's meeting - said oil prices will rise on the start of war, though he believes there's a possibility of a collapse to below $22/bbl thereafter.

Concerns "might last a week or two weeks, but the prices will go down even without...the use of (strategic) stockpiles," Khelil said.

With OPEC's failure to manage prices, the market is fixated on government-held oil stockpiles and whether they will be released to cover any disruption to oil flows.

A man with a hand on the taps of those stocks is U.S. Energy Secretary Spencer Abraham, due in Vienna late Monday. He's likely to meet with some OPEC ministers, though he's ostensibly here to attend an International Atomic Energy Agency meeting.

Doubts Growing Over Spare Capacity

With a deadline for OPEC member Iraq to comply fully on weapons inspections or risk war just a week away, there are serious doubts over the amount of spare capacity OPEC can bring to bear.

United Arab Emirates Oil Minister Obaid bin Saif al-Nasseri said most members of OPEC are currently producing at maximum capacity.

Al-Nasseri added the UAE, previously considered to be one of the few members with significant spare capacity, actually has a "limited" ability to produce more and that additional capacity from Saudi Arabia will take "some time" to be readied for export - by which time the seasonal fall in consumption may have happened and a clearer picture of the progress of war in Iraq emerged.

OPEC President Abdullah bin Hamad al-Attiyah said "around 3 million barrels a day," could be added to the market to ease supply concerns.

Mike Fitzpatrick, energy analyst at New York-based Fimat USA Inc., said: "I'm guessing they won't be adjusting quotas, because of the (opinion on the) Arab street." But additional Saudi oil would help take the sting out of a price spike. Fitzpatrick also predicts a release of IEA reserves.

Arab newspaper al Hayat reported Monday that a Gulf source said a proposal to suspend production quotas will be submitted to OPEC members Tuesday, "but if it faces strong opposition from some countries it will be delayed until there is an actual halt of supply."

But Iran's Oil Minister Bijan Namdar Zangeneh said OPEC shouldn't adopt any decision that would look as if it supported a U.S. invasion of Iraq, Iran's state-run IRNA news agency reported.

The 11 members of OPEC account for a third of global oil production and the world would normally look to the group to keep sufficient oil flowing in the event of war in Iraq.

The price of the April Brent futures contract on London's International Petroleum Exchange was $33.69/bbl, down 41 cents from Friday's close. The April Nymex contract was down 51 cents at $37.27/bbl.

International diplomacy continued Monday. The split within the U.N. Security Council has widened, with Russian Foreign Minster Igor Ivanov warning Monday that Russia will vote against the current U.S. and U.K. resolution that gives Iraqi President Saddam Hussein a March 17 deadline to disarm. French President Jacques Chirac also said France would veto it.

France also lobbied undecided council members - Guinea, Angola and Cameroon - to vote against the second resolution that may trigger conflict.

U.K. Prime Minister Tony Blair also faced internal dissent when a senior member of his government, International Development Secretary Clare Short, said she would quit if the U.K. goes to war without U.N. backing. Blair, she said, was being deeply reckless.

In Vienna, Tuesday begins with the arrival of the Iranian oil minister, to be followed by a breakfast meeting between OPEC and non-OPEC countries such as Angola, Mexico, Russia and Egypt.

OPEC will meet in the afternoon to decide on its policy.

Meanwhile, U.S. Energy Secretary Abraham will speak at an IAEA conference Tuesday morning and will hold a press conference around 1300 GMT.

-By Adam Smallman, Dow Jones Newswires; 44-20-7842-9343; adam.smallman@dowjones.com