www.nzherald.co.nz 24.01.2003 9.04 am

LONDON - World oil prices slipped on Thursday after a surprise build in US crude stocks but growing worries over a possible US-led war on Iraq kept prices firm.

International benchmark Brent crude futures lost 48 cents to US$29.86 a barrel while US light crude was off 75 cents at US$32.10.

Brent, which fell on the unexpected crude stock build, suffered further losses after dropping below the psychologically important US$30 level, dealers said.

The increase in stocks defied forecasts of another draw as Venezuela was mired in a long strike that has crippled production in the country, a key supplier to the United States.

The US Energy Information Administration (EIA), said US crude stocks rose 1.5 million barrels last week to 273.8 million barrels while industry group American Petroleum Institute (API) said stocks climbed 181,000 barrels .

Oil markets are fixated on Baghdad and awaiting chief UN weapons inspector Hans Blix's report on Iraq to the Security Council, due on January 27.

US President George W. Bush has turned up the rhetoric on Iraq to disarm but Washington is looking increasingly isolated in its tough stance as key powers China and Russia joined US allies France and Germany in rejecting military action.

Fears of war in Iraq combined with troubles in Venezuela have helped push world crude prices to new two-year highs.

"The price is above US$30 a barrel and it is still high. We appeal to Opec countries to lift production and to supply more to the market," Purnomo Yusgiantoro, mines and energy minister of Indonesia, Opec's only Asian member, told reporters on Thursday.

Saudi Arabia's assurances that it was willing to seek another boost in Opec oil production in the coming weeks if needed to tame prices failed to cool the market.

"Our government is ready to do more in the next two or three weeks if we see the price is not stabilising and going down below US$28," Saudi Ambassador to Washington Prince Bandar Bin Sultan told a meeting of the US Conference of Mayors.

"When our American friends catch cold, we catch pneumonia in our part of the world, so to help your economy is paramount to us," he said.

Traders said the market did not pay too much attention to the ambassador's comment because the Organisation of the Petroleum Exporting Countries has limited spare output capacity.

"How much more can the Saudis produce?," asked Nauman Barakat, a broker at Fimat International Banque in London.

Saudi Arabia, accused by some US politicians of not doing enough to fight terrorism, is trying to please its key ally and oil customer Washington by offering to lower crude prices, analysts say.

An Opec official at the group's Vienna headquarters played down the Saudi comment, saying it did not reflect the producer group's position.

Opec two weeks ago agreed to raise output by 1.5 million barrels a day (bpd) to contain oil price rises driven by a strike in Venezuela and fears of war in Iraq.

Saudi Arabia's new Opec quota from February was set at 7.963 million bpd, but it is expected to be pumping between 8.5-9.0 million bpd in the next few weeks, industry sources said.

Saudi Oil Minister Ali al-Naimi has made clear that the kingdom, the world's biggest oil exporter, is capable if necessary of ramping up flows to 10 million bpd within weeks.

The United Arab Emirates is the only other Opec country that has any significant spare capacity.

Limited idle capacity comes at a difficult time. The cartel is under growing pressure to manage prices while turmoil continues in Venezuela, the world's fifth biggest exporter.

Striking oil workers said on Wednesday that Venezuelan crude oil output rose 40,000 bpd to 714,000 bpd despite the strike. But this is well below the three million bpd the country normally produces.

canadaeast.com Lord BY KATHY KAUFIELD Telegraph-Journal

New Brunswickers will pay more for electricity starting this spring, but ratepayers will have to wait a little longer to find out how much power rates will increase.

Premier Bernard Lord confirmed Wednesday that NB Power plans to hike its rates.

"Sure the rates will go up next (fiscal) year, but it will be a very reasonable increase next (fiscal) year," Mr. Lord said. "That's what we expect. That's what we've been informed of the plans being put in place by NB Power."

NB Power spokesman Jeffrey Carleton wouldn't confirm the rate hike, but he said the corporation will make an announcement as early as this week about its rates.

He also suggested that if there is an increase, it won't be more than a 3-per-cent hike, a move that would require NB Power to appear before the Public Utilities Board for approval.

"When we look at rates, the model in the past certainly has been modest, minimal rate increases that have a minimal impact on our customers, especially our industrial customers," he said.

He said previous rate increases in recent years haven't been high enough to require an application to the PUB.

"That's been our model in the past and remember our objective is to keep our rates competitive within this region," he said.

But he added that NB Power is facing significant cost increases. "NB Power is certainly facing significant cost pressures in our operations, specifically with regards to fuels, heavy fuel oil, converting Dalhousie to heavy fuel oil from Orimulsion," Mr. Carleton said. "Our water resources are significantly lower because of the lack of rainfall and that causes you to use more heavy fuel oil which has gone up in price."

He said typically rate increases come into effect at the beginning of the fiscal year.

"We are certainly aware that our industrial customers and our business customers as they do their business planning and their cost planning need to know what their energy costs are going to be," he said. In the legislature Wednesday, Opposition Leader Shawn Graham questioned Premier Lord on the government's plans to restructure NB Power and to seek private investment in Coleson Cove and Point Lepreau.

Next week, the government will finally introduce long-awaited changes to the Electricity Act that will set out the legislative framework governing any private sector investment in Coleson Cove and Point Lepreau. The act will restructure NB Power into a central holding company with four subsidiaries - generation, distribution, nuclear and transmission. Legislative changes will also allow large industrial users and municipal utilities such as Saint John Energy to purchase power directly from outside sources by April.

Mr. Graham said he's concerned the changes to NB Power will result in rate shock for New Brunswick's electricity consumers.

He said once NB Power is restructured, the province will no longer guarantee its loans and will charge the corporation taxes. As well, any private companies that invest in Coleson Cove or Point Lepreau will want a "maximum" rate of return on their investments. "All these factors combined mean that rates are going up," Mr. Graham said after Question Period.

He said New Brunswickers should be concerned about it, especially since they are also facing high gas prices, skyrocketing auto insurance rates and rising inflation rates.

"Our current Conservative government under Bernard Lord just doesn't seem to realize how difficult it is for New Brunswickers to get by day to day," Mr. Graham said. "The premier is trying to downplay the fact that rates are going up but for anyone living on limited income in this province, any increase will have an impact on their daily ability to survive."

Mr. Graham said some experts predict rates could increase as much as 20 per cent once NB Power restructures. Mr. Lord said that is "completely ridiculous."

The premier described the increase as "reasonable and fair." He pointed out that the average power rate increase since his government took office is 50 per cent less than the average rate increase when the Liberals were in office.

Mr. Graham pressed the premier for details about possible private sector investment in Coleson Cove and Point Lepreau. He wanted to know how much private control the government will accept in those two generating stations.

As far as Coleson Cove, the province wants to share the risk of the $750-million project to convert the 1,000-megawatt plant to burn Orimulsion, a cheap fuel from Venezuela.

"Are you prepared to give up on Coleson Cove, our largest generator, to big business?" Mr. Graham asked the premier.

Mr. Lord said the legislation introduced next week will clearly define what private sector investment the government will accept in NB Power.

"It will be clear the limits that are set as to what the government can do and how much equity participation we can seek in NB Power, precisely on the generation side because we have been clear that there is no plans with regards to transmission and distribution," Mr. Lord said outside the House.

The premier said negotiations are on-going with the private sector over Coleson Cove. He said it's too early to say how close the government is to hammering out a deal on that project, but if one does come together, it will happen in a matter of "weeks."

"We want a deal that works for the people of New Brunswick and we want a deal that's good for the ratepayers and the taxpayer, so our standard is quite high," Mr. Lord said. "We don't want a deal at all costs. We want an investment where there's shared risk, where the private sector assumes a fair share of the risk, that will help us reduce the risk to the taxpayers of the province. If we get that situation, we will have an agreement and if we don't, we won't."

Mr. Lord said the changes coming to NB Power will help ensure New Brunswickers pay competitive and fair power rates and the government will only accept the private sector equity participation in NB Power "if it makes sense for the people of New Brunswick."

Reach our reporter kaufield.kathy@nbpub.com

www.forbes.com Reuters, 01.23.03, 5:12 AM ET

LONDON, Jan 23 (Reuters) - Saudi Arabia's willingness to raise oil output again early next month does not reflect OPEC policy, an OPEC official said on Thursday.

Saudi ambassador to the United States Prince Bandar bin Sultan said on Wednesday that Riyadh was willing to raise production again if oil prices do not ease soon.

The OPEC official at the group's headquarters in Vienna said: "This does not reflect OPEC's position. We have just raised output effective from February 1."

OPEC, of which Saudi Arabia is the biggest producing member, two weeks ago agreed to raise output by 1.5 million barrels a day (bpd) to contain oil price rises driven by a strike in Venezuela and fears of war in Iraq.

"Our government is ready to do more in the next two or three weeks if we see the price is not stabilizing and going down below $28," Bandar told a meeting of the U.S. Conference of Mayors in Washington.

Riyadh is worried that high oil prices will slow the economies of industrialized countries, reducing their purchases of oil.

"When our American friends catch cold, we catch pneumonia in our part of the world, so to help your economy is paramount to us," he said.

OPEC seeks to keep the price for a basket of its crude in a range between $22 to $28 per barrel. Prices have been above the top end of the range since December 16.

With most in OPEC already pumping at full capacity, only Saudi Arabia and the UAE would be capable of adding supply.

Saudi Arabia's new OPEC quota from February was set at 7.963 million bpd, but the kingdom is expected to be pumping between 8.5-9.0 million bpd in the next few weeks, industry sources said earlier this week.

Saudi Oil Minister Ali al-Naimi has made clear that Riyadh is capable if necessary of ramping up flows to 10 million bpd within weeks.

www.thestar.com Jan. 23, 2003. 01:00 AM

Fourth-quarter profit more than doubled for Imperial Oil Ltd. because of sky-high crude and natural gas prices that are fuelling rich returns across the energy industry, the company said yesterday.

Imperial, Canada's biggest oil producer, refiner and retailer, also said better profit margins at its refining and marketing division helped drive the better-than-expected results.

The company, which is majority-owned by U.S. oil giant Exxon Mobil Corp., earned $454 million, or $1.19 cents a share, up from year-earlier $194 million, or 51 cents a share. That beat an average estimate of 91 cents among analysts polled by Thomson First Call.

Revenue was $4.8 billion, up from $3.5 billion in the fourth quarter of 2002.

Full-year profit was $1.21 billion, down from $1.24 in 2001, although earnings per share rose to $3.19 from $3.15 as Imperial cut the amount of stock outstanding under a buyback.

That represented the company's third-highest annual profit, Imperial chief executive Tim Hearn said.

"As a result, we were able to successfully complete one of our largest capital programs ever, while retaining a very strong financial position," Hearn said in a statement.

The stock closed up 59 cents at $44.99 yesterday, continuing a nearly flat performance since the start of the fourth quarter.

Imperial, known for its national chain of Esso service stations and dominant position in western Canadian heavy oil and oil sands, has the biggest stake in the Syncrude Canada oil-sands venture in Alberta and owns the province's Cold Lake bitumen project. Both are undergoing major expansions.

It is also leading a consortium of major oil companies planning a $4 billion pipeline to tap huge gas reserves in the Mackenzie Delta of the Northwest Territories.

Imperial's jump in fourth-quarter earnings follows a strong showing Tuesday from rival Suncor Energy Inc., and analysts expect similar results throughout the industry thanks to sizzling oil and gas markets.

In the quarter, crude prices jumped 38 per cent from 2001 on fears of a Middle East war, and after a strike in Venezuela that cut shipments from the world's fifth-largest exporter.

Canadian natural gas prices soared 67 per cent from the fourth quarter of 2001 amid cold weather in major U.S. consuming regions and lower-than-average inventories.

Earnings at Imperial's resources division surged 160 per cent to $312 million even as oil production slipped by 1,000 barrels a day to 255,000 and natural gas sales fell by 50 million cubic feet a day to 475 million.

REUTERS NEWS AGENCY

www.forbes.com Reuters, 01.23.03, 12:23 AM ET

JAKARTA, Jan 23 (Reuters) - Indonesia's Mines and Energy Minister Purnomo Yusgiantoro called on Thursday for OPEC to increase oil supply to try to bring down soaring world oil prices.

He said Indonesia, Asia's only member of the Organisation of the Petroleum Exporting Countries, wanted prices to return to within OPEC's target band of $22-$28 a barrel as measured by the cartel's basket of crudes.

"The price is above $30 a barrel and it is still high. We appeal to OPEC countries to lift production and to supply more to the market," Purnomo told reporters.

"As long as the price remains above the OPEC range, we will support an increase in supply from OPEC," he added.

On Wednesday, Saudi Arabia's ambassador to the United States said the kingdom, OPEC's biggest producer, was willing to seek an increase in the cartel's supply.

"Our government is ready to do more in the next two or three weeks if we see the price is not stabilising and going down below $28," Prince Bandar Bin Sultan told a meeting of the U.S. Conference of Mayors.

The price of OPEC's basket of seven crude oils fell to $30.90 a barrel on Tuesday from $31.21 on Monday, the OPEC news agency said on Wednesday.

Oil prices have surged on growing fears of war in Iraq, an OPEC member and the eighth biggest exporter in the world, at the same time that the oil industry in Venezuela -- a major supplier to the United States -- has been crippled by a general strike.

Benchmark NYMEX crude hit $35.20 a barrel on Tuesday, its highest price since November 2000.

Purnomo did not say whether Indonesia could increase its supply to the market but mines and energy officials have said the country does not have additional production capacity beyond current output levels.

Indonesia produced 1.05 million bpd of crude oil and 149,000 bpd of condensate in December.

At an emergency meeting in Vienna on January 12, OPEC agreed to increase production by 1.5 million barrels per day (bpd) to 24.5 million bpd, to help quell rising oil prices. The output increase is effective February 1.

Indonesia on Monday succumbed to pressure of nationwide protests and cut price hikes on some domestic oil products.

"We will defend current domestic oil products prices until the world crude oil price is stable," Purnomo said.