www.vheadline.com Posted: Tuesday, February 04, 2003 - 5:56:43 AM By: PETROLEUMWORLD

Organization of Petroleum Exporting Countries President Adbullah bin Hamad al-Attiyah said Tuesday that Venezuela's increasing oil production is a sign that may prompt OPEC to consider a production cut when it meets March 11.

Asked about the possibility of a reduction in the group's overall ceiling in the coming months, given Venezuela's higher production, he said "why not?"

Al-Attiyah noted that world oil demand is expected to slow by around 2 million barrels a day in the second quarter, and this will combine with increasing Venezuelan output, so OPEC will try to strike a balance between supply and demand.

Venezuela's crude output rose to 1.22 million b/d as of Monday, from around 1.1 million b/d over the weekend, dissident staff of Venezuela's state-owned oil monopoly Petroleos de Venezuela said in a daily report.

Al-Attiyah was speaking to reporters ahead of a natural gas conference due to open shortly.

Abdulla Fardan; Dow Jones Newswires; 00973-965-865-6; Abdulla.Fardan@Dowjones.com

afr.com Feb 5 07:42 AFP

The recent surge in world oil prices amid war jitters over Iraq remain a source of concern as to their impact on economic growth, the European Commission said on Tuesday.

But a strengthening of the euro is offsetting the impact of the crude price increase, which is also being tempered by a resumption of production by Venezuela, said the EU executive.

Oil price rises "remain a concern" but are "compensated for, to a certain extent, by the increase" in the value of Europe's single currency, said a spokesman for Monetary Affairs Commissioner Pedro Solbes.

The latest commission forecasts, which predicted an average of 1.8 per cent growth in the 12 member eurozone, were based on the assumption of an average crude price of $24 a barrel.

If crude prices were to rise by $10, to an average of $34, growth would be reduced by 0.2 percentage points this year and by the same amount next year, said the spokesman.

Around midday on Tuesday a barrel of reference Brent crude for March delivery stood at $30.20, amid continuing tension ahead of a presentation by US Secretary of State Colin Powell to the UN on Wednesday of new evidence concerning alleged Iraqi weapons of mass destruction.

The euro has surged against the dollar in recent months, with dealers selling off the greenback as sabre rattling by Washington appeared to bring the prospect of a Gulf conflict closer.

news.ft.com By Carola Hoyos in London and Andy Webb-Vidal in Caracas Published: February 4 2003 20:34 | Last Updated: February 4 2003 20:34

The return of Venezuelan exports is prompting the Opec oil cartel to consider reining in crude oil production, despite the advancing beat of Washington's war drums.

Bijan Namdar Zangeneh, Iran's oil minister, said on Tuesday: "If we have Iraq and Venezuela sustaining production, I'm sure we will have to reduce production in the second quarter."

World oil seasonal demand usually drops 2m barrels a day in the second quarter of the year, a factor - together with Iraq and Venezuela - that Opec ministers will have to take into account when they meet to review their 24.5m b/d output quota next month.

Crude oil production from Venezuela has recovered at a faster pace than many analysts expected, following the strike by managers at Petróleos de Venezuela (PDVSA), the state oil company.

Venezuela was producing 3.2m b/d in November, and the stoppage left output as low as 150,000 b/d at one point in December.

Ali Rodriguez, head of PDVSA, said output had now reached 1.8m b/d, and "near-normal" levels would be reached by the end of February.

But there is scepticism about the current figure, and even more about the chances of PDVSA being able to raise output much above present levels in the coming weeks, due to the lack of experienced technicians for the maintenance of oil wells and facilities. Dissident PDVSA managers, several thousand of whom have been dismissed and appear unlikely to return, say crude production currently stands at 1.2m b/d and is close to reaching a "technical ceiling" of 1.5m.

Cashflow problems are likely to prevent PDVSA from carrying out vital investment to keep up capacity, particularly from its heavier oilfields, analysts say.

"We don't see them reaching 2.5m before the end of the year - it's going to ramp up quite slowly here," said Fareed Mohamedi, chief economist at PFC Energy, a Washington-based consultancy.

Local oil industry sources estimate that exports currently stand at about 500,000 b/d, almost all of which is crude oil. So far PDVSA has been using its own vessels to carry its exports, but Dow Jones news wires reported yesterday that a major international shipping company had received the green light from insurers to again load oil and products from Venezuela.

The situation within the country continues to look bleak, however. PDVSA has so far been unable to restart its Paraguaná refinery, the world's largest, and fuel shortages, still acute in many parts of Venezuela, look set to continue for some time. The government said yesterday that it would import 12m barrels of petrol to meet demand in February - enough to satisfy daily consumption levels.

www.nzherald.co.nz 05.02.2003 8.30 am

LONDON - Oil prices rose on Tuesday as differences of opinion between France and Britain over Iraq unnerved traders already edgy ahead of a US presentation to the UN that could press the case for war against Baghdad. Benchmark Brent crude was up 65 cents by 1730 GMT (6.30am NZDT) at US$30.90 a barrel while New York light crude was 62 cents higher at US$33.86.

British Prime Minister Tony Blair, Washington's closest ally in the Iraq crisis, on Tuesday failed to coax French President Jacques Chirac into softening his opposition to swift military action against Iraq.

Both leaders said differences remained over how to ensure Iraq does not possess weapons of mass destruction, but they agreed disarmament should take place through the UN Security Council.

"As far as Iraq is concerned, we have different approaches but first and foremost we have two convictions which are fundamental and are shared," Chirac told a news conference after talks with Blair.

"The first is that we have to disarm Iraq, and the second conviction that we share is that this has to be undertaken within the Security Council of the United Nations. Regarding that, we are entirely in agreement," he said.

But Chirac went on to say that war was the worst possible solution.

"(The price rise) is all from the Blair-Chirac talks," said analyst Mark Head of brokers Fimat Banque in London. "The market wants to make something bullish out of it, that's what it boils down to."

US Secretary of State Colin Powell has said he would provide "sober and compelling proof" that Baghdad is hiding banned weapons from UN arms inspectors when he addresses a session of the UN Security Council beginning at 4.30am Thursday (NZDT).

The US has vowed to disarm Iraq, by force if necessary, action which traders say could disrupt supplies not only from Iraq but also from other producers in the oil-rich Middle East.

Nervousness over Iraq outweighed the effect of rising crude output from oil exporter Venezuela as the protracted strike there starts to unravel.

Opec officials are now starting to fret over a possible oil surplus in the second quarter.

Cartel President Abdullah al-Attiyah said today a recovery in exports from strike-bound Venezuela meant the cartel might need to cut supplies in the second quarter, despite the threat of war in Iraq.

"Given the scenario as it is today, we could have a three-million barrel-per-day glut," Attiyah said, adding that demand usually declines by two million bpd in the second quarter on the 77 million bpd world market.

Opec ministers meet in Vienna on March 11.

Iran's Oil Minister Bijan Zanganeh said Opec faced two choices at its March meeting, to maintain its official production ceiling or cut output.

Venezuelan President Hugo Chavez said at the weekend Venezuela was pumping close to 1.8 million bpd, up from a low of 150,000 bpd after the strike began in December and more than half of the 3.1 million bpd pumped in November.

Strikers said today that crude output was running at 1.2 million bpd.

Data from shipping agents indicated Venezuela's oil exports rose to 890,000 bpd in the week to February 1 from 550,000 bpd the previous week.

ogj.pennnet.com By OGJ editors

HOUSTON, Feb. 4 -- Forecasts of colder weather pushed natural gas prices toward a new 2-year high in the New York market Monday, while oil prices retreated as traders accepted claims by Venezuelan President Hugo Chávez that Venezuela's oil production has rebounded to at least 1.5 million b/d.

There were even indications of market fears of an oversupply of oil if Venezuela's production returns to its prestrike level of 3 million b/d during a seasonal decline in world demand for oil during the second quarter of this year. An agreement this week among Chávez's opponents to end the nonoil segment of a general strike aimed at forcing him from power apparently convinced traders that the 65-day crisis will not last much longer.

However, some industry analysts and political experts have predicted that it will take from 4 months to 2 years for Venezuela to return its oil production to prestrike levels (OGJ Online, Jan. 27, 2003). Some project that 400,000 b/d or more of Venezuela's production may have been permanently lost because of damage to wells and formations while production was shut in (OGJ Online, Feb. 3, 2003).

Meanwhile, Abdullah bin Hamad Al Attiyah, Qatar's minister of energy and conference president of the Organization of Petroleum Exporting Countries, said OPEC ministers have no plans to meet prior to their scheduled Mar. 11 gathering in Vienna. "Only at OPEC's March meeting will we discuss all options and how to react to the market situation then," he told Gulf News at the 2003 Environment and Energy Exhibition and Conference that opened Sunday in Abu Dhabi.

The March contract for benchmark US sweet, light crudes lost 75¢ to $32.76/bbl Monday on the New York Mercantile Exchange. The April position declined 58¢ to $32.16/bbl. Heating oil for March delivery fell 1.45¢ to 91.81¢/gal. Unleaded gasoline for the same month was down 0.92¢ to 95.68¢/gal.

However, the March natural gas contract jumped by 16.1¢ to $5.77/Mcf on NYMEX. "The market opened substantially lower around $5.50(/Mcf) but quickly rallied to about $5.70(/Mcf) by mid-morning and above $5.80(/Mcf) shortly after noon. Prices in the afternoon settled back somewhat, but with a steady close. Heavy fund and technical buying pushed the market through buy-stops at $5.61 and $5.75(/Mcf)," said analysts at Enerfax Daily.

They said a rupture Sunday night of a 24-in. segment of El Paso Corp.'s ANR Pipeline near Viola, Ill., helped boost gas futures and cash prices Monday. El Paso officials reported the rupture is being repaired and is under investigation (OGJ Online, Feb. 3, 2003). No breach of service was reported.

Meanwhile, colder-than-normal weather last week is expected to lead to an Energy Information Administration report Thursday of another large withdrawal from US underground storage, analysts said. "Look for a draw of about 200-210 bcf, compared with a withdrawal of only 78 bcf a year ago, and a 5-year average draw of 120 bcf," Enerfax analysts said. "According to Lehman Brothers, weather-normalized draws averaged 6 bcfd, or 42 bcf/week, more than the 5-year average. But a lot of additional volumes are also flowing out of storage to take advantage of the high prices. Futures volume (Monday) was about 85,000 contracts, with 35,000 spreads. Volume on Friday was 77,778 contracts."

In London, the March contract for North Sea Brent oil lost 85¢ to $30.25/bbl Monday on the International Petroleum Exchange. The March natural gas contract retreated 2.8¢ to the equivalent of $2.77/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes lost 42¢ to $30.29/bbl Monday.