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Tuesday, Febuary 4, 2003 03:16 AM ET  Printer-friendly version   DOHA, Qatar -- 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?"

Mr. Al-Attiyah noted that world oil demand is expected to slow by around two 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 barrels a day as of Monday, from around 1.1 million barrels a day over the weekend, dissident staff of Venezuela's state-owned oil monopoly Petroleos de Venezuela said in a daily report.

Mr. Al-Attiyah was speaking to reporters ahead of a natural-gas conference.

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

www.brudirect.com By Ariffin Bakar

The Minister of Industry and Primary Resources, Pehin Dato Seri Setia Awang Haji Abdul Rahman, has left Brunei Darussalam to attend the Third Ministerial Meeting of the Gas Exporting Countries’ Forum or GECF to be held at Doha, Qatar on February 4, 2003.

This unofficial forum will be attended by 12 major gas exporting countries, namely Brunei Darussalam, Republic of Iran, Algeria, Indonesia, Malaysia, Nigeria, Bolivia, Venezuela, Sultanate of Oman, Qatar, Russia and Libya. Algeria, Iran and Qatar will be delivering talks on a new framework on gas marketing in the European Union, as well as framework on contracts for gas technology projects and costs, related on gas consumption.

Courtesy of Borneo Bulletin

www.miami.com Posted on Mon, Feb. 03, 2003 Associated Press

NEW YORK - Crude oil futures finished sharply lower Monday as Venezuelan production continued to climb and officials of the Organization of Petroleum Exporting Countries warned of a possible supply glut.

On the New York Mercantile Exchange, nearby March crude fell 75 cents to close at $32.76 a barrel.

March heating oil fell 1.45 cents to close at 91.81 cents a gallon; March gasoline dropped 0.92 cent to close at 95.68 cents a gallon.

On London's International Petroleum Exchange, nearby March crude fell 85 cents to close at $30.25 a barrel.

February natural gas gained 16.1 cents to settle at $5.766 per 1,000 cubic feet.

"There are signs that Venezuela is returning to more normal and OPEC is showing some concern that the market could be oversupplied in the second quarter," said Tom Bentz, an analyst at BNP Paribas in New York.

Venezuela's President Hugo Chavez said over the weekend that Venezuelan crude oil output has climbed to 1.78 million barrels a day, or more than half the level Venezuela produced before the start of a strike in early December. Dissident workers at state-owned monopoly Petroleos de Venezuela estimated output at 1.22 million barrels a day.

Before the strike, Venezuela produced nearly 3 million barrels a day of crude oil.

The Venezuelan strike helped cut into U.S. crude inventories, putting upward pressure on oil prices.

But with the strike breaking down, analysts expect American inventories to rebound from a recent slump.

"We see Venezuela as less and less of a supportive factor, as output there has rebounded to about the halfway mark and refiners have had ample time now to make further adjustments to their mix of feeds," said Tim Evans, an analyst at IFR Pegasus in New York.

Evans and most other analysts surveyed by Dow Jones Newswires expect U.S. crude stocks to decline by an average of 2 million barrels in the weekly government and industry data to be released Wednesday.

The increase in Venezuelan production, and potentially, exports, comes just as OPEC's latest production hike of 1.5 million barrels a day takes effect.

OPEC members agreed to the production hike last month in response to the Venezuelan strike. Now, officials are concerned that prices could collapse if Venezuelan production returns to pre-strike levels at a time of year when demand tends to slacken.

"They're becoming a little alarmed by the possibility of a price collapse," Bentz said of OPEC officials.

OPEC President Abdulah bin Hamed Al-Attiyah said that the market could be flooded with as much as 4 million barrels a day of extra oil during the second quarter when demand tends to drop by 2 million to 3 million barrels a day. This could trigger a price collapse, he said.

Libyan Oil Minister Abdul Hafez Zlitni said OPEC will cut production at its March meeting if prices fall and supply and demand are in equilibrium.

He said current oil demand was "exaggerated," with refiners building up stocks rather than using them.

However, with the threat of a U.S. attack on Iraq looming over the market, few analysts expect oil prices to retreat dramatically in the near term. Traders worry that an attack on Iraq could lead to a large-scale oil supply disruption in the Persian Gulf.

For now, though, traders are awaiting a presentation on Iraq by Secretary of State Colin Powell to the U.N. Security Council on Wednesday.

www.ghanaweb.com

Accra, Feb. 3, GNA - Mr. Kwame Owusu, Special Adviser to the Minister of Energy, said on Monday that the current fuel pricing system might undergo a review in three months after its announcement.

The review is necessary to assess the performance of the new pricing system and to find out if the world price of crude oil would have come down to enable the Petroleum Tender Board to incorporate the amount for the payment of the debt at the Tema Oil Refinery.

Speaking to the GNA in an interview, Mr Owusu admitted that the Ministry of Energy has a formula that could incorporate a total of 530 cedis on a litre of fuel to pay the TOR debt in 10 years.

He said if government had added the amount to pay the debt to the current price, it would have pushed the price of petrol to 23,000 cedis. "That would have been too much for th! e people to bear."

He said the Ministry is waiting for some time before going to Parliament for the review and possibly the addition of the debt payment, which is already incorporated in the current formula. The GNA interviewed the Special Adviser on the possibility of reducing the price of LPG to encourage its use, and Mr Owusu said if the price of any of the petroleum products has to be reduced at the time of the review, it would have to come about through cross subsidies.

He explained cross subsidies to mean a reduction in the price of one product for subsequent addition to another product. The interview by the GNA followed concerns expressed by a section of the public that there was the need for the government to reduce the price of LPG, a by-product of crude refining, to serve as an incentive for people to use the product instead of relying on fuelwood and charcoal which has been contributing to the depletion of the country's forests.

Mr Owusu said apart fro m cost recovery, the current petroleum pricing formula enables the Tema Oil Refinery (TOR) to spread the total cost of production on each of the products that comes out of the refined crude oil.

He expressed the hope that despite the situation in Iraq and Venezuela other oil producers would produce more crude oil to reduce the world market price. He said this would enable TOR to record total cost recovery and at the same time pay off the debt.

Thttp://biz.scmp.com/biztrans/ZZZMMTLYLBD.html uesday, February 4, 2003 JOSEPH LO

   For the second time in a little more than a year, the threat of a major war in the oil-rich Middle East hangs over the world with the potential to again derail the already ailing global airline industry.

Using history as a yardstick, that should mean a spike in oil prices is imminent. And, for airlines already trying to emerge from two years of global recession exacerbated by the costs of dealing with consumer fears over terrorism, an oil shock could spell further trouble.

This is scary stuff for an industry that has lost a combined US$31 billion throughout the world in the past two years. Put into perspective, that sum represents more than the total profit all International Air Transport Association (Iata) member airlines have earned since 1945.

Already, United States airlines have begun lobbying for government aid in case a war against Iraq should drag on, or evolve into a wider regional conflict throughout the Middle East.

Last week, the Air Transport Association, a coalition of the major US carriers (excluding major low-cost airlines), announced the results of a study which predicted jet fuel prices would jump by US$1 a barrel as a result of a prolonged conflict with Iraq.

At the same time, the association said international air traffic would drop by 10 per cent against the same period last year, a comparison made worse by the fact that air traffic last year was already in no great shape.

Traffic on transatlantic routes, which account for the bulk of revenue for many association airlines, would fall by 20 per cent, it said.

Yet its fears have to be looked at with a cynic's eye, especially from the vantage point of Asia.

The losses it and Iata cite do not include the US and European low-cost carriers, the strongest of which have never been stronger. Nor are they representative of the major Asian and Chinese carriers, which have recovered strongly from the past two years' global travails.

Cathay Pacific Airways, Singapore Airlines (SIA), Korean Airlines, and other Asian majors have all unveiled strong traffic figures for last year, pointing to a tremendously profitable financial year. And so far, while oil prices have edged higher since before Christmas, they have not spiked sharply.

Last week, the spot price for jet fuel in Singapore, Asia's biggest oil market, was a little more than US$35 a barrel, slightly above last year's high achieved in late autumn.

And jet fuel, while trading far above the average of the past decade, is still far from the US$45 plateau reached in late-2000, or during the Gulf War in 1991.

Investors, too, seem to be maintaining their cool. Shares in both SIA and Cathay are trading comfortably in the middle range of their cyclical bands.

Share prices for both airlines are well above their post-September 11, 2001, levels, as well as comfortably above their Gulf War depths, but below the historic highs they hit just before the slide began two years ago.

Meanwhile, there is no consensus amongst oil traders that war in Iraq will undermine global energy supplies any more so than political instability has in Venezuela, the world's fifth-largest oil exporting nation.

The hope is for a repeat of the events post-September 11, when oil prices spiked about the US$35 mark before quickly falling back to more sane levels near US$20 a barrel within weeks.

Another compelling reason for the lack of fear is the changing traffic paradigm for Asian carriers.

Travel within Asia has emerged as the strongest avenue of recovery since the bottom fell out of the global air travel market after the September 11 attacks in the US.

Even the terrorist attacks in Bali last year did little to quench the growing Asian appetite for travel, particularly outbound traffic from the mainland and South Korea.

And so, unless the US war on Iraq deepens into a lengthy conflict, let us look forward to another good year for Asia's airlines.

Kung hei fat choy.

joseph.lo@scmp.com