www.alertnet.org Jan 2003 18:53

CARACAS, Venezuela, Jan 10 (Reuters) - Efforts by the Venezuelan government to break a crippling 40-day oil strike by selling crude through through the Internet may not boost shipments from the world's No. 5 exporter, U.S. refiners said on Friday.

The Venezuelan government, which relies on oil exports for half of revenues, is trying to sell oil through Miami-based Web site Pepex.net to overcome a personnel shortage caused by the shutdown by foes of President Hugo Chavez.

The strike has strong support among managers, executives and traders from state oil firm Petroleos de Venezuela (PDVSA) as well as field workers, tanker captains and dock crews.

But U.S. refiners, which normally purchase over half of Venezuela's crude exports, said that dangerous port conditions created by government replacement workers could still hinder them from loading tankers.

"They can't load, the same security problems are there," an official with a U.S. refiner said. Loadings by unqualified and uncertified staff creates insurance risks for firms.

International markets have been denied 80 percent of the 2.7 million barrels per day (bpd) of crude and products the OPEC nation shipped before the strike started on Dec. 2.

The United States usually buys 13 percent of its imported crude from Venezuela, and refiners dependent on certain grades from the South American nation have cut runs.

Striking PDVSA executives said on Friday they do not usually use a tender system such as the one being used on the Pepex Web site to sell crude.

Regular customers said it may be best to wait until PDVSA has officially brought operations back to normal and ports were secured before attempting to lift cargoes again.

"We won't load as long as the force majeure is in place," said one U.S. refiner that buys Venezuelan crude.

PDVSA declared force majeure, meaning it could not meet its contractual obligations, in early December. Some vessels chartered by PDVSA or its U.S. refining affiliate Citgo have loaded with cargoes to the United States and the Caribbean.

Oil production problems have also kept exports choked. The government has only been able to reestablish output to about 450,000 bpd according to one PDVSA official, compared with 3.1 million bpd in November.

Attempts to restart the 130,000 bpd domestic El Palito refiner damaged the vacuum unit, striking PDVSA workers said, and they claim oil has been spilled by tankers loading at the western Lake Maracaibo production areas.

cnews.canoe.ca

WASHINGTON (AP) -- The Bush administration is engaged with other nations in the hemisphere in talks to explore ways to end the five-week strike in Venezuela that has crippled oil exports, White House spokesman Ari Fleischer said Friday.

"We remain deeply concerned about the deteriorating situation in Venezuela," Fleisher said.

He said the administration was working with the Organization of American States and member nations to explore ways to peacefully end the standoff between the government of President Hugo Chavez and his opponents.

OAS Secretary General Cesar Gaviria has been quietly discussing options with other OAS states, including formation of a "Friends of Venezuela" group "to help the Venezuelans find a solution," Fleischer said.

The Washington Post reported in Friday editions that the United States was putting aside its reluctance to get involved in Venezuela's internal affairs and readying an initiative to form a group of nations to try to end the deadlock.

The initiative may be rolled out next week, the newspaper said. It said the proposal's immediate goal would be to end the opposition-organized strike.

The group would seek to develop a compromise calling for early Venezuelan elections and building on OAS mediation efforts already under way, the newspaper said.

"It's in the early stages," Fleischer said when asked about the news account and the U.S. role in seeking a breakthrough. "An electoral solution is the direction the United States sees."

The strike has paralyzed the Venezuelan economy and brought its vital oil industry -- a top U.S. supplier and once the world's fifth-largest exporter -- to a virtual halt.

Breaking News smartmoney.com By Jehan Senaratna Of DOW JONES NEWSWIRES

CARACAS (Dow Jones)--Not conceding the slightest point, Venezuelan government and opposition groups dragged a general strike against President Hugo Chavez's leadership into its 40th day, as prospects for more deadly clashes grew.

As the government on Friday advanced efforts to revive the country's vital oil industry, most banks and supermarkets joined the strike and truckers said they would Monday. Opposition leaders also called for the nonpayment of utility bills as part of their protest.

Dismissing industry insiders' skepticism, Venezuela's perennially optimistic Planning Minister Felipe Perez outlined a schedule of oil output levels the government will achieve despite the strike, which has severely affected operations at state oil company Petroleos de Venezuela SA (E.PVZ), or PdVSA.

Perez, who once advised a press conference that "if you think positive, good things will happen," said during a televised interview that production will be at 2.4 million barrels per day in March, 2.7 million b/d in April, and "definitely," 2.9 million b/d in May.

Current output is 1.1 million b/d, he said, contradicting PdVSA president Ali Rodriguez's recent claim it was about 600,000 b/d, which in turn contradicted observers' reports it's at about 400,000 b/d. Before the strike, daily production stood at around 3 million barrels.

Meanwhile, the stock market remained shut, as did thousands of businesses, but traffic was heavy in some areas of this capital city as more Venezuelans returned to work.

But the government seems to have begun showing its frustration despite its efforts to dismiss the strike's effectiveness.

Thursday, opposition leaders canceled a planned peaceful march for fear of being attacked by Chavez supporters, who have recently initiated violent clashes at several demonstrations.

Police and National Guard troops now routinely use tear gas to disperse crowds, after two were killed last week in one such protest.

Foreigners are also affected.

A grenade was thrown at the Algerian ambassador's house Thursday, following bomb threats - which turned out to be hoaxes - at the embassies of Canada, Germany, Australia, and Uruguay.

Algeria was earlier reported to have sent technicians to help the government restart operations at PdVSA, raising the ire of opposition leaders.

As the tension in Venezuela persisted, some were comforted by reports the U.S. may be considering firmer measures to induce a solution to the crisis.

With concerns about an oil shortage mounting as a war with Iraq looms, the Bush administration is preparing a major initiative, to be launched in the next week, that would help end a deadlock in the talks between the government and the opposition and put an end to the strike, The Washington Post reported in its Friday editions, citing U.S. and foreign diplomatic sources.

U.S. government officials weren't immediately available to comment on the report.

But analysts were encouraged, and said Chavez may soon be forced into early elections, something the embattled president has rejected saying the constitution only requires him to abide by a possible recall vote in August, halfway through his term, which runs until early 2007.

"Of course, for the opposition (which is clamoring for early elections) it's very good news, and bad news for the government," said Alfredo Keller, head of a respected Caracas-based polling and economic research firm.

The U.S. effort will reportedly be channeled through the Organization of American States, which has been brokering unsuccessful negotiations between opposition and government representatives since November.

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com

news.bbc.co.uk Some banks have remained open despite the strike Friday, 10 January, 2003, 19:36 GMT

Venezuela's currency has recovered some lost ground, despite a second day of action by bank workers in support of the country's general strike.

The bolivar gained 5.3% against the US dollar to stand at 1,511 to US$1 on Friday, the country's central bank said.

The increase saw the bolivar regain much of the ground lost earlier this week when bank staff announced their strike in support of efforts to unseat Venezuela's president, Hugo Chavez.

The strike call prompted a rush for dollars by individuals and firms fearing that the government might, while banks were closed by industrial action, order a devaluation of the bolivar.

A devaluation would help the government balance budgets hit by a reduction, caused by the general strike, in tax and oil revenues.

But while leaders of finance unions proclaimed the success of the bank strike, many branches have remained open.

Strike 'to harden'

Some 80% of bank workers participated in the bank strike on Thursday, the union Fetrabanca said.

And Fetrabanca president Jose Elias Torres predicted that the strike would harden as non-striking workers followed the example of protesting colleagues.

"Some workers who went to work [on Thursday] because of a certain fear have committed to observing the strike [on Friday]," he said.

Many stores closed after shoppers were left unable to pay by credit or debit cards, the National Association of Supermarkets said.

But some observers reported that many Venezuelans were tiring of action, with an increase reported by agency Associated Press in levels of traffic and street commerce.

And the government has said that oil output, reduced by industrial action to 15% of pre-strike levels, will return to normal levels next month, a claim questioned by protesters.

reuters.com Fri January 10, 2003 02:41 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - A grenade attack and bomb threats against foreign embassies in Caracas pulled the international community deeper into Venezuela's crisis on Friday as a 40-day-old opposition strike dragged down the country's oil-reliant economy.

A grenade exploded late Thursday at the residence of the ambassador from Algeria, which has offered to assist President Hugo Chavez in his fight to beat the strike.

The shutdown, now in its sixth week, has crippled oil output and exports in the world's No 5 petroleum exporter, jolting world markets and pushing up oil prices.

Venezuelan banks and supermarkets closed their doors for the second consecutive day on Friday in support of the grueling strike, called by opposition leaders to press the leftist Chavez to resign and call early elections.

Chavez refuses and has vowed to beat the strike, which has cut off millions of dollars of oil income.

Fitch Ratings lowered Venezuela's credit standing by two notches on Friday, downgrading its sovereign debt rating deeper into "junk bond" territory, to 'CCC-plus' from 'B'.

The blast at the Algerian ambassador's residence, which caused damage but no injuries, followed bomb threats Thursday against the German, Canadian and Australian embassies in Caracas.

No one claimed responsibility for the attack. But Algeria and other members of the Organization of Petroleum Exporting Countries (OPEC) have offered to help Venezuela counter the effects of the strike.

Chavez's government blamed the blast on hard-line "terrorist" political opponents supporting the strike. "This is the coup-mongering face of the Venezuelan opposition," Foreign Minister Roy Chaderton told Reuters.

EMBASSY SECURITY TIGHTENED

Government officials said security at foreign embassies would be increased. The grenade attack and threats may galvanize international efforts to resolve the crisis, which has disrupted Venezuelan oil shipments to clients as different as the United States and communist-ruled Cuba.

The United States and other members of the Organization of American States are studying the idea of creating a "Friends of Venezuela" group of nations to support current OAS efforts to broker a negotiated, electoral solution to Venezuela's conflict. Brazil has also been working on such an initiative.

"We remain deeply concerned about the deteriorating situation in Venezuela," White House spokesman Ari Fleischer told reporters in Washington.

The United States normally receives more than 13 percent of its crude oil imports from Venezuela.

Chaderton welcomed the idea of foreign support. "All this contributes to strengthening our democracy and the recognition of Venezuela's legitimate institutions," he said.

Chavez was elected in 1998 and survived a brief coup by military officers in April. He says his opponents are trying to topple him through the strike. His foes accuse him of ruling like a dictator and trying to implant Cuban-style communism.

In recent months, there have been grenade attacks against the offices of anti-Chavez union and business groups and media organizations critical of the president, which the opposition has blamed on the government.

Two people were killed in clashes a week ago involving anti- and pro-government demonstrators and troops and police.

Some foreign embassies, including those of the United States and Britain, have evacuated nonessential personnel and warned their nationals not to travel to Venezuela unless absolutely necessary.

Rangel said oil output and refining was recovering. But oil industry sources said government efforts to raise oil production have met with little success so far. They put production this week at about 450,000 barrels per day (bpd), compared with 3.1 bpd in November before the strike.