www.chron.com Jan. 24, 2003, 10:42PM Copyright 2003 Houston Chronicle News Services

To keep oil flowing to U.S. refineries and consumers at the gasoline pump, the Bush administration will likely approve requests from energy companies to postpone scheduled deliveries of crude owed to the Strategic Petroleum Reserve, Energy Department officials said on Friday.

The department has been talking with oil companies about delaying up to 4.4 million barrels of crude to the stockpile and will likely approve requests from firms that want to defer March shipments, the officials said.

An announcement on delaying any March crude deliveries could come as early as next week.

In New York Friday, crude oil futures rallied above $33 a barrel amid fears that Saddam Hussein may destroy Iraqi oil fields in the event of a U.S.-led attack.

Concern about Iraqi oil supplies comes at a time when Venezuela's crude remains largely off the market. A strike that began in early December has severely disrupted Venezuela's oil industry.

Also Friday, OPEC said it could do no more to rein in runaway world oil prices. Alvaro Silva, secretary-general of the Organization of the Petroleum Exporting Countries, said the group already was pumping enough but could not counter the impact of the threat of war on oil prices.

On the New York Mercantile Exchange, light, sweet crude for March delivery jumped $1.03 to $33.28 a barrel.

February heating oil rose 3.49 cents to close at 95.02 cents a gallon. February gasoline ended at 92.25 cents a gallon, up 2.44 cents.

In London, March Brent rose 77 cents to close at $30.49 a barrel.

February natural gas rose 6.6 cents to $5.524 per thousand cubic feet in New York trading.

www.chinapost.com.tw 2003/1/25 DAVOS, Switzerland, Agencies

The secretary general of the Organization of Petroleum Exporting Countries said on Friday he believed the world was not on the verge of an oil crisis but the threat of a U.S.-led war on Iraq could change that.

"We are in a transitory situation and not on the edge of an oil crisis," Alvaro Silva-Calderon told the World Economic Forum in the Swiss ski resort of Davos.

Asked what would happen to global oil prices if the United States launched military strikes against Iraq, Silva-Calderon said: "We don't know. It's out of our control."

OPEC agreed on Jan. 12 to increase oil production by 1.5 million barrels per day (bpd) in a bid to curb price surges triggered by a strike in Venezuela and the threat of war on Iraq, which has the second biggest known oil reserves in the world after Saudi Arabia.

The move will raise the oil cartel's output to 24.5 million bpd from 23 million bpd starting on Feb. 1. But the promised output hike so far has failed to contain prices, which OPEC aims to keep within a price band of between US$22 and US$28 a barrel.

The price of benchmark Brent North Sea crude oil for March delivery stood at US$29.80 per barrel in midday trading on Tuesday. In New York, light sweet crude March-dated contracts closed down 60 cents at US$31.90 per barrel.

Oil prices could soar further if there is a war in the near term because demand for heating is still high in the wintry northern hemisphere, the chief executive of oil giant Saudi Aramco, Abdallah Jum'ah, told the forum of political and business leaders in Davos.

Former Saudi oil minister Sheikh Ahmad Zaki Yamani said on Tuesday the price of crude could more than triple to 100 dollars a barrel if Iraq set oilfields ablaze in the event of a U.S.-led war.

And Algerian Oil Minister Chakib Khelil warned on Wednesday OPEC would not be able to compensate an expected shortfall of supplies of around five million bpd in case of war on Iraq, because only two of the oil cartel's members °X Saudi Arabia and the United Arab Emirates (UAE) °X had genuine excess production capacity.

Jum'ah told the Davos forum that Saudi Arabia would "continue to have 1.5 to 2 million barrels per day in extra capacity" that it could put on the market "to temper prices."

OPEC has not yet decided whether to take further action to curb prices when it holds its next scheduled meeting on March 11, with the cartel's president saying "all options are open."

www.gulf-news.com | | 25-01-2003

Jakarta seeks partner for LNG plant Jakarta - Indonesia's state oil firm Pertamina said yesterday it needed to find a partner soon to build another liquefied natural gas (LNG) plant in East Kalimantan or it would risk losing market share. "We have to start building a new plant this year to fill market (requirements) in 2005.

Therefore, we are seeking a partner," Pertamina downstream director Muchsin Bahar told reporters. "We need around $600 million to build one LNG plant. If we do not build now we will lose market (share) in 2005," he added.

Pertamina announced its plan for the new plant last September, saying its capacity would be around 3 million tonnes. Pertamina has eight LNG plants in the East Kalimantan city of Bontang and four in Arun in northwestern Aceh province with a combined total annual capacity of around 26 million tonnes.

Gazprom sees rise in gas prices Brussels - Russian gas giant Gazprom said yesterday it foresaw gas prices in western Europe increasing in the next few months as a result of continued rises in the world crude oil market.

"Everything leads us to believe that prices will increase," Gazprom's Chief Executive Alexei Miller told reporters after a meeting with a senior official of the EU's transport department, pointing to high oil prices to which gas prices are linked. Miller was in Brussels to discuss possible European investment in a Baltic pipeline project to export Russian gas to the EU.

BPCL profit soars threefold Mumbai - Bharat Petroleum Corp. said third-quarter net income surged threefold per cent after India's third-biggest oil refiner benefited from selling diesel and gasoline at higher prices. Profit in the three months ended September increased to Rs2.33 billion ($49 million) from Rs719 million in the year- ago period.

Bharat Petroleum and other Indian refiners raised fuel rates twice in the quarter to reflect an increase in international crude oil prices. Refiners revise prices twice a month to keep them in line with international crude oil rates. Bharat Petroleum was paid past dues by the government for subsidising cooking fuel, boosting profit. India's oil refiners were forced to sell kerosene and cooking gas at below world prices to the country's poor until March 31. 

IBP three-month profit dives Mumbai - IBP Co, an Indian fuel retailer, said its profit in the three months ended December 31 fell 98 per cent to Rs13.2 million ($275,000). Sales rose 0.7 per cent to Rs21.53 billion. The shares fell Rs15.75, or 6.4 per cent, to Rs232.1 on the Mumbai Stock Exchange.

Kochi Refineries profit rises 65pc Mumbai - Kochi Refineries Ltd, a refinery based in south India, said its profit in the three months ended December 31 rose 65 per cent to Rs269.5 million ($5.6 million). Sales rose 32.7 per cent to Rs21.17 billion. Kochi Refineries shares rose 0.55 paisa, or 1.1 per cent, to Rs49 at 1:02 p.m. India time on the Mumbai Stock Exchange.

ENI begins production at Bhit field Milan - ENI SpA started production at the $236 million Bhit gas field in Pakistan as Europe's fourth- biggest oil company expands in the Asian country following two acquisitions. The field has proven and probable reserves equivalent to 172 million barrels of oil while output is expected to rise to as much as 40,000 barrels a day, ENI said in an e-mailed statement.

ENI, which operates the field, has a 40 per cent stake in it while Royal Dutch/Shell Group holds 28 per cent. Rome-based ENI entered Pakistan through its purchase of two UK rivals, British Borneo Oil & Gas Plc in 2000 and Lasmo Plc a year later. The state-controlled company expects production in the country - including two other gas fields already in production and two being developed - to exceed 50,000 barrels of oil equivalent in 2004, up from 10,000 last year.

PGS sells Atlantis unit for $105m Oslo - Norwegian oilfield services group Petroleum Geo-Services said yesterday it had agreed a long-delayed deal to sell its Atlantis oil unit to Chinese oil trader Sinochem for up to $105 million. Shares in the heavily indebted PGS, hit by weak global demand which has cut into oil drilling, climbed 8.5 per cent to 2.8 Norwegian crowns ($0.404) at 0907 GMT over a flat Oslo benchmark index on relief the deal was finally agreed.

Failure to close the Atlantis sale last year as planned had been a major reason behind the July 2002 collapse of merger talks with U.S. competitor Veritas DGC Inc. PGS said it expected the deal with oil trader China National Chemicals Import & Export Corporation (Sinochem), which had once been estimated to be worth about $200 million, to be finalised by February 20.

Venezuelan exports surge 62pc Caracas - Venezuelan oil exports jumped 62 per cent in the week yesterday to 688,000 bpd, or 25 per cent of capacity, as the government struggled to break a strike in the world's fifth largest exporter, shipping data showed yesterday. The recovery in exports adds weight to reports of rising flows at the wellhead in the Opec member, where a bitter political conflict is being played out in the oil industry, a key supplier to the U.S.

Oil exports stood at 688,000 bpd, up from 424,000 bpd in the previous week, according to information from ship agents and port authorities. Venezuela exported 2.7 million bpd before the strike and exports have averaged 519,000 bpd over the past four weeks.       · Opec can do no more to ease prices · Soaring Asia prices draw supplies from Europe · U.S. cash crudes mixed · Oil Briefs - January 25, 2003 · Asia crude premiums rise  

www.khilafah.com uploaded 24 Jan 2003

LONDON-BAGHDAD-MOSCOW: One of the most popular themes on the placards of anti-war demonstrators across the US and Europe is that the looming confrontation is primarily about oil.

US and British ministers dismiss such a charge as the stuff of conspiracy theorists, and instead argue that the Iraqi president, Saddam Hussein, has to be dealt with for one reason: the threat posed by weapons of mass destruction. And, yet, western powers have been fighting over Iraq's "black gold" for decades. Travelling through the country, it is immediately obvious why this is such a great prize in energy terms.

Around Mosul in the north, flares from oil wells can be seen at regular intervals in the otherwise empty grasslands; even in the centre of the country, in Baghdad, the skyline is lit by the al-Dohra oil refinery; and further south, in the desert scrubland round Basra, there is a huge concentration of wells.

Iraq has the second biggest known oil reserves in the world, after Saudi Arabia. But its facilities have been starved of investment over the last few decades, partly because of war and partly because of sanctions. The vast al-Dohra facility is a symbol of all that is wrong. In an advanced state of decay, rusting pipes link a series of large, sand-coloured storage tanks, almost every one of which is crudely patched with sheets of steel.

At present Iraq exports around 1.5m barrels a day but energy experts say this could be increased to 6m barrels within five years after reinvestment. The US needs access to new energy reserves. American industry and motorists are guzzling gasoline at a rate that easily outstrips the rest of the world while domestic reserves are running out at a time when demand is set to leap.

The US energy department frightened politicians with a study in 2001 known as the Cheney report after the former head of Halliburton oil services group, now US vice-president, who wrote it. He predicted that imported oil would need to rise from 10.4 million barrels a day at present to 16.7 million barrels a day by 2020.

The report spelled out the US dependence on a stable energy market and the need for a foreign policy that would protect America's energy supply." In a global energy marketplace, US energy and economic security are directly linked not only to our domestic and international energy supplies, but to those of our trading partners as well," it said. "A significant disruption in world oil supplies could adversely affect our economy and/or ability to promote foreign and economic policy objectives, regardless of the level of US dependence on oil imports."

George Bush, like Mr Cheney, is a former oil man, as are many of his close staff, so they need no lessons on how the energy world works. As politicians, they also know that their voters' commitment to cheap and available petrol for their car is seen as an inalienable right not far short of bearing arms.

Traditionally, America looked to Saudi Arabia and Venezuela for its crude supplies. But since the September 11 terrorist attacks, carried out in the main by Saudi nationals, the former important Middle East ally has been deemed unreliable while political turmoil in Venezuela has virtually halted exports to the US.

Washington has been wooing Russia and African nations to secure future supplies but there is nothing like the ultra-cheap-to-produce reserves in Iraq sitting just below the desert sands.

Professor Peter Odell, professor emeritus of international energy studies at Erasmus University in Rotterdam and a visiting professor at the London School of Economics, rejected the view that oil was the main driving force behind the current Iraq frenzy. "Its not all about oil. There are other factors such as US fears about weapons of mass destruction, revenge for earlier failures and the fact they believe Iraq has not behaved properly towards the US for 20 years," he said. "My own view is that an attack will lead to destruction of Iraqi oilfields as happened in Kuwait and there could be severe oil market problems in the short term. Longer-term, Russia and France have pre-emptive rights for deals done or money owned by Iraq but clearly the US will get in on the act [on redeveloping Iraqi oil fields]."

Paul Slater, who owned and ran a tanker fleet hired out to Shell and is a leading figure in the independent tanker owners association, is less certain. "I think oil is a major issue which cannot be left out of the equation although whether it is the major driver I don't know."

It is not just wild-eyed western peaceniks that believe oil is at the centre - or close to the centre - of the pending conflict. It is quite a commonly held view even in the conservative business world but few are willing to express such things publicly.

Fadel Gheit, a former Mobil chemical engineer and now an investment specialist with New York brokerage firm Fahnestock & Co, told 50 of the largest pension funds and financial investors in America before Christmas that the expected war was "all about oil" and that the global fight against terrorism was just "camouflage" to mask the real purpose.

Later he told the Guardian newspaper in London: "The Americans have nothing against the people of Iraq but our way of life is dependent on 20m barrels a day and half of it has to be imported. We are like a patient on oil dialysis. It's a matter of life and death. The smart people [in Washington] all know this but it's not generally advertised on the kind of shows that most people watch: MTV and soap operas."

Mr Gheit said a strike against Iraq has become vital in the eyes of Washington because politicians and security chiefs fear that Saudi Arabia, the traditional provider of US oil, is a political "powder keg" that is going to explode from within. "Of the 22m people in Saudi Arabia, half are under the age of 25 and half of them have no jobs.

Many want to see the end of the ruling royal family and whether it takes five months or five years, their days are numbered. If Saudi Arabia fell into the hands of Muslim fundamentalists and the exports were stopped, there is not enough spare oil anywhere else to make up the shortfall."

But Dr Charles Tripp, head of politics at the School of Oriental and African Studies, argues that the idea that oilfields need to be physically seized in order to be controlled is outdated. "Oil is a part of this," said Dr Tripp. "But it is as much to do with asserting American power."

Oil was key factor in the first Gulf war, along with protecting the sovereignty of a United Nations member. This time round "oil" is a word that politicians and officials in both Washington and London are almost afraid to speak, fearful of how it will play in the Arab world.

An independent working group part-sponsored by the Council on Foreign Relations has just handed over a report to Mr Bush entitled Guilding Principles for US Post-Conflict Policy in Iraq. It argues: "Iraqis have the capability to manage the future direction of their oil industry. A heavy American hand will only convince them, and the rest of the world, that the operation against Iraq was undertaken for imperialist, rather than disarmament reasons. It is in America's interest to discourage such misconceptions."

The international oil companies are already circling. The US and British accuse the Russians and the French, especially the French, of playing dangerous games with Iraq, keeping in with Baghdad in the hope of securing favourable oil contracts.

The French foreign ministry is infuriated by the suggestion. One French diplomat challenged journalists to look at what was really happening and insisted that they would find it was US companies that were making the running to secure a share of Iraqi oil.

Senior oil executives generally want to avoid talking publicly about the issue but privately they say its "rubbish" that they need Iraq so much that they would support a war. Mark Moody-Stuart, a director of Shell and its former chairman went further, telling the Guardian that a military strike would unhinge the Middle East and was therefore a "recipe for disaster."

So what do the people at the centre of the impending war think? "Our oil is the main reason America wants to attack Iraq," said Ali al-Rawi, head of the economics department at Baghdad University. "They want to control our oil and control price and production levels. They know the future oil resources for the world will continue to come from this area for many years."

Source:  The Guardian News Service

www.smartmoney.com January 24, 2003

NEW YORK -- Crude-oil and petroleum-products futures rallied Friday on fears that Saddam Hussein might destroy Iraqi oil fields in the event of a U.S.-led attack.

At the New York Mercantile Exchange, crude set for March delivery jumped $1.03 to settle at $33.28 a barrel. February heating oil rose 3.49 cents to 95.02 cents a gallon. February gasoline was up 2.44 cents to 92.25 cents a gallon.

At London's International Petroleum Exchange, March Brent rose 77 cents to close at $30.49 a barrel. February gasoil climbed $6.25 to $262 a metric ton.

A senior U.S. military official said the U.S. has learned through intelligence sources that Iraq will try to damage or destroy its oil fields if it is attacked.

The U.S. has developed plans to seize control of the oil fields as soon as fighting begins, and before Iraq can blow them up, the official said.

Reports that the Iraqi leader may be planning to blow up oil fields in his country have been floating around for weeks. But the likelihood that Iraq may have already wired some of the fields heightened worries about the future of Iraqi oil supplies, analysts said.

"It's a pretty critical concept," said Bernard Deverin, principal of American Commodities Trading, based in Westport, Conn. "If this in fact does come to pass, it could easily take a million or so barrels off the market."

Iraq is the fourth-largest producer among the members of the Organization of Petroleum Exporting Countries. Iraq's crude output, recovering from a slump last year, jumped to 2.5 million barrels a day in January, according to Petrologistics, a Geneva-based tanker tracker.

The disclosure that Iraq may have plans to damage its oil fields comes as the administration of President Bush steps up preparation for a possible attack despite growing international opposition to war.

U.S. officials have threatened Iraq with military action if it doesn't destroy its weapons of mass destruction.

Iraq says it has no such weapons, and United Nations inspectors working in Iraq have yet to turn up evidence that the Iraqi regime is in possession of banned arms. While inspectors have questioned Iraq's claims of innocence, they have also called for more time to carry out their work.

President Bush and his senior aides said earlier this week that time is running out for Mr. Hussein, suggesting that war has become increasingly likely.

Concern about Iraqi oil supplies comes at a time when Venezuela, another major OPEC producer, remains largely off the market. A strike that began in early December has severely disrupted Venezuela's oil industry.

In recent days, the government of President Hugo Chavez has managed to restore some oil operations. Nevertheless, oil prices are likely to remain high as long as the threat of a U.S. attack on Iraq remains, analysts said.

Separately, the Nymex February natural gas futures contract gained 6.6 cents to $5.524 per million British thermal units.

METALS: February gold on the Comex division of Nymex rose $3.70 to $368.40, while March silver was up 10 cents to $4.885 an ounce.

GRAINS: March oats lost four cents to $2.0425 a bushel at the Chicago Board of Trade. March wheat rose 6.75 cents to $3.185 a bushel.

(END) Dow Jones Newswires

01-24-03 1615ET