www.forbes.com Reuters, 01.14.03, 4:00 PM ET

(The following statement was released by the rating agency) NEW YORK, Jan 14 - Standard & Poor's Ratings Services today further downgraded its ratings on U.S. refining and marketing company PDV America Inc. and its indirect, wholly-owned subsidiary CITGO Petroleum Corp. The ratings remain on CreditWatch with negative implications where they were placed on Dec. 10, 2002.

Tulsa, Okla.-based PDV America has approximately $2 billion in debt and capital lease obligations outstanding.

"The ratings downgrade reflects the deterioration in PDV America's credit quality as a result of the crippling of the oil export capacity of its ultimate parent, Petroleos de Venezuela S.A. (PDVSA), the national oil company of Venezuela," said Standard & Poor's credit analyst Bruce Schwartz.

As its crude oil production has fallen from about 2.8 million barrels per day to less than 500,000 barrels per day, PDVSA has declared force majeure on crude supply arrangements with CITGO that contain margin stabilization provisions that fortify CITGO's credit quality. (CITGO purchased about half of its crude oil under these arrangements.)

The reduced volume of crude supplied under these contracts is diminishing the profitability and cash flow generation of CITGO's refineries by forcing it to refine alternate crude oils that have less attractive margins. Crude runs, to date, have not been affected at CITGO Lake Charles and Corpus Christ refineries, although runs at its Lyondell-CITGO joint venture have been cut.

In addition, the purchasing of alternate supplies is increasing working capital requirements at CITGO because the trade credit terms on open market purchases are worse than those on purchases under its crude supply agreements with PDVSA. Given the nature of the political conflict within Venezuela and the capital and lead times required for PDVSA to restore PDVSA's crude oil production, Standard & Poor's believes that crude shipments may not normalize for some time. Furthermore, CITGO's working capital requirements could increase in the interim if oil prices were to rise due to events surrounding a likely war with Iraq.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.

Standard & Poor's will be hosting a seminar titled, "Determining Corporate Credit Quality in a Volatile Environment," on Feb. 2-4, 2003, at the Grand Floridian Resort & Spa, Orlando, Fla. Standard & Poor's senior analysts and invited industry leaders from the corporate, banking, and investment communities will discuss trends and current issues related to corporate credit quality.

www.sabcnews.com January 14, 2003, 23:00

Hugo Chavez, the President of Venezuela Six people, including four children, were killed in Venezuela today in the explosion of a family's gasoline cache, apparently stockpiled because a nationwide work stoppage has disrupted fuel supplies, officials said.

Four children between the ages of 9 and 15 were among those who died in the explosion in the western Andean state of Merida, Luis Martin, the state governor's secretary, told local radio. Four men and a woman were also injured. Martin said they suffered second-degree burns on 90% of their bodies.

Many Venezuelans have started storing gasoline in their homes to offset shortages caused by the 6-week-old strike called by opposition leaders to press leftist President Hugo Chavez to resign and hold early elections.

The shutdown has crippled vital oil production and exports, causing an unprecedented scarcity of gasoline in the world's No. 5 petroleum exporter. Long lines of cars and trucks have formed daily at gas stations around the country and authorities have prohibited the sale of gasoline in containers. - Reuters

www.cbc.ca Last Updated Tue, 14 Jan 2003 17:54:13

CARACAS - Soldiers have taken some weapons from police in Caracas, where the force is loyal to a mayor opposed to embattled Venezuelan President Hugo Chavez.

The army seized submachine-guns and anti-riot rifles that can fire rubber bullets and tear gas early Tuesday, but left the officers' pistols, said Cmdr. Freddy Torres, the department's legal consultant.

Venezuelan soldier (AP Photo-File)Chavez had complained that the 9,000-member force suppressed pro-government demonstrations.

He threatened to take over the department after government officials accused the police of killing two government supporters during a demonstration. The investigation is continuing.

Critics said it was an effort to reduce the power of Mayor Alfredo Pena, who backs the groups which have disrupted Venezuela in their fight with Chavez.

Opposition parties, unions and business leaders called a general strike – now 44 days old – to force Chavez to resign or call early elections.

Chavez is resisting the pressure, and on Monday, Energy and Mines Minister Rafael Ramirez said the strikers are committing "acts of terrorism."

Many stores and schools are closed, and the state-owned oil company has been forced to slash production, costing the country tax revenue and foreign exchange.

Chavez told the army to take over police stations in Caracas in November, but the Supreme Court later overturned the order.

www.forbes.com Reuters, 01.14.03, 2:17 PM ET

CARACAS, Venezuela, Jan 14 (Reuters) - Venezuela's bolivar currency <VEB=>, battered by the nation's political and economic turmoil, fell 3.2 percent against the dollar on Tuesday as an opposition strike against President Hugo Chavez extended into its seventh week.

The bolivar, which has shed about 13 percent of its value since the start of the year, fell 51.75 bolivars on Tuesday to 1,612.50 bolivars to the U.S. dollar, according to the Central Bank reference rate.

The interbank rate <VEB=><VEB2=> dipped to 1,637.50 bolivars, down 4 percent from 1,572.25 bolivars to the dollar on Monday.

"People are paying whatever price for dollars because they see the situation in the country getting worse and that the bolivar is going to go through the floor," one trader told Reuters.

Traders said the bolivar slipped on strong demand for dollars as people looked to the U.S. greenback for safehaven as the national strike erodes confidence in Venezuela's economic future.

The strike has nearly ground Venezuela's vital oil production and exports to halt. The oil industry accounts for about half of government revenues. The opposition shutdown began Dec. 2, and strikers have vowed to stay out until Chavez resigns.

Chavez, a former paratrooper elected in 1998, faces increasing opposition to his left-wing reforms from foes who accuse him of driving the oil-rich nation toward economic and political turmoil. The strike has cost Venezuela about $4 billion so far, officials said.

news.ft.com By Andy Webb-Vidal in Caracas Published: January 14 2003 18:49 | Last Updated: January 14 2003 18:49

Venezuela this year faces the most serious economic collapse in its history because of lost oil output and escalating political tension, bankers and analysts warned on Tuesday.

BSCH, the Spanish bank, said that it expects the economy to contract by 40 per cent in the first quarter and by at least 9 per cent this year. It described the situation as the "biggest [example of] wealth destruction in Venezuelan history".

The contraction could potentially be as deep as 30 per cent, BSCH added, given that for every month that passes without a political solution to reactivate the oil industry the economy will shrink by an additional two percentage points. There is no sign as yet of a settlement between President Hugo Chávez and opposition groups, in particular workers at Petróleos de Venezuela (PDVSA), the state oil company, now in their sixth week of a protest strike against the government.

Oil output in what was the world's fifth-largest exporter dropped from just over 3m b/d at the start of December. By Tuesday, government efforts to restart production with loyal personnel had produced 400,000 b/d, industry sources said.

Alí Rodríguez, the PDVSA chief, said this week that oil production would return to pre-strike levels by the end of February. Most oil industry observers say such a forecast is unrealistic, however. In the most optimistic of scenarios it will take two to four months from the day PDVSA employees return to work to ramp up output to 90 per cent of previous levels.

Bankers said Tobías Nóbrega, the finance minister, offered a more realistic official forecast when he said oil production would recover to 2.5m b/d at the end of April. A severe fiscal adjustment is likely to be accompanied by a sharp depreciation of the bolívar, which has already dropped by 16 per cent against the dollar since January 1.

This year's deep recession follows what preliminary figures suggest was a contraction of 9 per cent last year, a decline already being reflected in rising poverty and a deterioration in other key social indicators.

Datanálisis, a local research firm, estimates that after four years in government, Mr Chávez has presided over an 18 per cent economic contraction, while the percentage of families living in poverty has risen from 60 to 70 per cent.