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Mar 04, 2003 (ODJ Select via COMTEX) -- Here is a summary of Dow Jones Newswires coverage of the general strike in Venezuela, including the status of oil operations, political developments, and reaction of the oil market. Full stories can be found by searching R/VE.

TOP NEWS

PdVSA Paraguana Refinery Can't Restart Cat Cracking Unit

Venezuela's state-owned oil monopoly Petroleos de Venezuela (E.PVZ), or PdVSA, over the weekend failed to restart one of its catalytic cracking units at the massive Paraguana refinery complex, a PdVSA spokesman said Monday. Due to acts of sabotage and troubles to establish a stable natural gas feed, one of the catalytic cracking units at the Amuay plant that should help achieve a production of around 140,000 barrels per day of gasoline couldn't be started up, the PdVSA spokesman said.

Venezuela Feb CPI Soars To 5.5%, Highest in 7 Yrs

Venezuelan consumer prices soared in February up to its highest level in seven years by 5.5%, up from 2.9% the previous month, the Central Bank said in its monthly report over the weekend. The price increase was significantly higher than February last year when inflation stood at 1.8%. Accumulated inflation for the year 2003 stands at 8.4%, the Bank reported. Price controls on certain products pushed prices higher while expectations of a new currency control regime of which details are to be announced this week were among the main reasons for the jump, the bank said.

Chavez: $30/Bbl Venezuelan Oil Basket Price 'Perfect'

Venezuela's President Hugo Chavez on Friday celebrated the current spike in world oil prices and said that the price of around $30 a barrel for the nation's oil basket of crude and refined products is "perfect." "The current price is really very good...I think $30 a barrel is a fair and just price," Chavez said, speaking at the state-run television network while visiting an electricity utility in Bolivar State. Venezuela's oil basket closed at $30.90 Friday and is trading some $5 below West Texas Intermediate, WTI, and almost $4 below Brent. World oil prices are hovering around $35 a barrel on fears a possible U.S.-led war in Iraq could cause a disruption of Mideast oil. Chavez didn't say what the Organization of Petroleum Exporting Countries should do at its meeting March 11 in Vienna. The possible intervention in Iraq is seen around that time and is hampering OPEC's ability to respond and ease world oil prices.

Venezuela May Adjust Avg Price Oil Basket 2003 - Report

The Venezuelan government may adjust the 2003 targeted average of $18 a barrel for its basket of crude oil and refined products, El Nacional reported Friday. A final decision to hike the average target price to $20 or $22 a barrel on which the nation's federal budget is based has to wait until the end of March, El Nacional reported, citing a government study. That is because of the possibility of a U.S.-led intervention in Iraq sometime in March, which could affect world oil markets seriously. Also, by then the recovery of the oil industry should be complete after a strike at the nation's oil behemoth Petroleos de Venezuela SA (E.PVZ).

Venezuela Crude Production At 1.58M B/D - Ex-PdVSA Staff

Crude production at Venezuela's state-owned oil monopoly Petroleos de Venezuela SA (E.PVZ) currently stands at 1.58 million barrels a day, former staff of PdVSA said in a daily report late Thursday. However, Venezuela's Oil Minister Rafael Ramirez told reporters in Washington Thursday crude oil production has risen to 2.08 million b/d from 150,000 b/d in early January when widespread worker protests and walkouts paralyzed the PdVSA. Production is likely to reach 2.7 million b/d by mid-March and 2.9 million b/d by the end of March, he said.

Venezuela Strike Damage Seen At $7.6 Bln - Report

The nationwide strike in Venezuela that lasted two months and crippled the vital oil industry has cost the nation $7.6 billion due to lost economic production and fiscal contribution, the local daily El Nacional reported Friday. Total loss of production in the economy caused by the strike is estimated at $6.2 billion of which $2.7 billion comes from the oil sector and $3.5 billion from the non-oil sector, El Nacional reported, citing a report of the Finance Ministry. Added to that is a loss of $1.4 billion in fiscal income for the state, El Nacional said. The Finance Ministry couldn't be reached for additional comment. The damage caused by the strike is seen as long-term and severe, the report said.

SPECIAL REPORTS

Burning Across World Economy Energy Prices Hamper Growth

Almost 30 years after an energy crisis was blamed for the lights on the U.S. national Christmas tree staying off, rampaging oil and gas prices are once again eating into consumption and growth across the global economy. The 77% leap in energy prices over the past year hasn't yet sparked the alarm seen in 1973, when customers experienced electricity blackouts even before the Organization of Petroleum Exporting Countries imposed an oil embargo that pushed prices to levels previously thought impossible. But the rally in the price of oil, natural gas and a host of energy products has raised a slew of concerns about the longer-term repercussions for global growth. Some economists believe a sustained period of higher prices could tip the U.S. and other major economies back into recession.

OIL MARKET REACTION

Crude oil futures rallied Tuesday, staging a sharp recovery after three straight sessions of declines on hopes that a war with Iraq could be averted. Between Thursday and Monday, prices fell sharply as Iraq's increased cooperation with U.N. weapons inspectors and Turkey's rejection of access to U.S. troops sparked speculation that a U.S.-led attack on Iraq could be staved off or at least delayed by several weeks. But prices turned around Tuesday as the U.S. stepped up military preparations for a possible war and indicated it would seek the United Nations Security Council approval of a resolution on military action next week, analysts said. "The market had false perceptions of peace yesterday," an analyst said. "People were thinking that somehow Saddam Hussein's destroying the missiles and the lack of the Turkey vote would end the war." At the New York Mercantile Exchange, the nearby April crude oil futures rose $1.01 to end at $36.89 a barrel after rising as high as $37.18 intraday. At 2108 GMT, the April contract is 2 cents higher at $36.91 in overnight trade.

-By Beth Heinsohn, Dow Jones Newswires; 201-938-4435; beth.heinsohn@dowjones.com

www.vheadline.com Posted: Tuesday, March 04, 2003 By: Robert Rudnicki

Venezuela's inflation rate rose to 7.1% in February, a seven year high caused by increased demand a reduced supply brought about by price controls enforced by the government six weeks ago as a result of severe pressure on the nation's international reserves.

Last month's figure was the highest since June 1996, when a similar figure was reported.

February's 7.1% saw the 12 month trailing inflation rate rise to near 39%, the highest level since 1997.

The rise in inflation rates had been forecast by many analysts, who cautioned that imposing price controls would significantly reduce supply of goods and therefore force prices higher.

Central Bank of Venezuela (BCV) director Armando Leon said "price controls have had less impact than the authorities expected ... they have caused a drop in the supply of goods."

www.forbes.com Reuters, 03.03.03, 11:18 AM ET By Alistair Scrutton

CARACAS, Venezuela (Reuters) - Every day Venezuelan businessman Rafael Pedraza scours an official Web site to see if President Hugo Chavez's government will allow his firm to buy dollars, now as scarce a commodity as the whiskey he wants to import. "We're on edge," said Pedraza, an executive in Venezuela for Diageo, a whiskey importer that needs dollars to buy new inventories. UK-based Diageo, the world's largest spirits company, must also import basic supplies like bottle tops and labels for its rum exports to keep business going. While oil output is recovering after a two-month opposition strike, that other life blood of business, foreign exchange, has dried up since leftist Chavez introduced exchange controls in February to stop dollars hemorrhaging out of the world's No. 5 oil producer. The strike, which slashed vital oil output and choked off government revenues, was called to try to force the populist president to resign and hold early elections. He stayed put but decreed emergency currency and price curbs to shore up an oil-relient economy already reeling into recession. Diageo is hoping against the odds. Chavez, railing against the "dolce vita," has labeled whiskey a luxury that may not be on a list of goods the government will allow to be imported. By Wednesday, a new mechanism for buying dollars will kick in. A state-run currency board, run by an ex-military officer with close ties to Chavez, is expected to publish on its Web site those products that can be imported after six weeks of a total ban on dollar purchases. Priority, Chavez has said, will go to goods such as basic foods and supplies for utility firms. The president promised that not one dollar would go to "coup mongers" - a phrase used to describe strikers and political opponents. Thousands of business executives like Pedraza are also on tenterhooks as their inventories slowly fall. "As I understand it, nobody has yet got a single dollar," said Francisco Mendoza, head of the exporters association and who owns a fruit export firm. He expects non-oil exports to nearly halve this year as access to finance dries up. It is a shortage with political overtones. Investors worry that Chavez will use the controls to further squeeze companies - largely his foes - in what opponents say is another step down the road towards imposing Cuban-style Communism. "Businessmen are devastated. Aside from red tape problems, most executives I've talked to say they fear that the controls will become a political tool," said a European diplomat. "Over 60 percent of raw materials are imported and companies desperately need dollars," Mendoza said, complaining that his firm could not buy imported seeds and fertilizers.

NO MORE MCDONALD'S? "Those with products not on the list need not bother apply," said Edgar Hernandez, the currency board head who took part in a failed 1992 coup led by Chavez. The government is expected to sell about $600 million a month, about half the actual demand for the greenback before the new controls. U.S. icons like McDonald's may also be hit. Hernandez has singled out against fast-food companies, saying they will not be in the priority category for dollar import authorizations. He added that other luxuries like "some very tasty foreign" cheeses may also be kept off the list. Firms must supply hefty paperwork, from tax returns to financial balances, to get dollars. It will take at least 10 days to get dollars once the mechanism starts. This red tape worries businessmen who say that it will open up the system to corrupt state officials. Some European executives sat down recently in a plush Caracas boardroom to talk over the new controls. "It was a very bleak atmosphere, universally depressing really," said one person who attended the meeting. Firms can go to a parallel market -- something the government has condemned although as yet it is not illegal. "The trouble is that is it at least 30 percent more expensive and it's risky," said Mendoza. Newspapers, some of the most vocal opponents of Chavez, are waiting anxiously. They suffered shortages of imported paper and print in the mid-1990s during previous currency controls. But the government has denied it will persecute newspapers. "It's still early to know whether it will be used as a political tool. But since the controls we haven't imported any paper or printing equipment. said Maria Rosa Rullo, spokeswoman for El Universal, one of Venezuela's biggest daily newspapers. "The situation will get critical in two weeks," she added. (Additional reporting by Patrick Markey)

www.vheadline.com Posted: Friday, February 28, 2003 By: Robert Rudnicki

The two-month-long opposition national work stoppage has cost Venezuela around $7.6 billion according to Finance (Hacienda) Ministry estimates. According to the Ministry, the strike has forced businesses to close down, reduced wages, increased unemployment, lifted prices and caused shortages.

"The damages caused are severe and long term, they will permanently affect the whole population," Finance Minister Tobias Nobrega said.

The Minister estimates that the total loss of production caused by the strike amounts to $6.2 billion, while loss of fiscal income for the government adds another $1.4 billion.

Of the loss of production, $2.7 billion is from the petroleum sector and $3.5 billion from the non-petroleum sectors.

www.forbes.com Reuters, 02.26.03, 6:33 PM ET

CARACAS, Venezuela, Feb 26 (Reuters) - Venezuela's Planning Minister Felipe Perez said on Wednesday the government could end currency curbs and float the bolivar currency in four to six months if state oil firm PDVSA recovers production lost during a two-month opposition strike. "We believe in about four or six months we could have the problem resolved at PDVSA and the transition needed to guarantee the return of a floating system," Perez said. Venezuela's government imposed strict foreign exchange controls and price curbs in early February to shore up its strike-hit economy. Opposition leaders and dissident oil workers began the shutdown in December to pressure President Hugo Chavez to accept elections. The Venezuelan bolivar slipped about 24 percent against the dollar from the start of the year until the government closed the currency markets on Jan. 21, ending free flotation of the local currency. The new currency regime set a fixed exchange rate of 1,596/1,600 bolivars to the dollar. But the government has struggled to fine tune the new mechanisms and only a few banks have so far signed deals with the currency control board CADIVI. Perez said that the government was also studying a tax on currency transactions, but he did not provide more details. Chavez, an outspoken former paratrooper who brands his opponents terrorists trying to topple him, has said he will use the controls to deny opposition businesses access to dollars. Economists and opposition business leaders fear the currency curbs will create a thriving black market, hike inflation and severely restrict transactions in a nation which imports more than 60 percent of its goods. Venezuela's economy, already reeling from a sharp recession, could contract as much as 13.7 percent in 2003 as the lingering effects of the strike take a toll on the oil and non-oil sectors, according to a recent Reuters poll of analysts and economists. The government says output now stands at about 2 million barrels per day (bpd) compared with 3.1 million bpd that the world's No. 5 oil exporter produced before the strike. Estimates from rebel oil workers put production at about 1.5 million bpd. Oil exports, which account for half of state revenues, are at 1.5 million bpd compared with around 2.7 million bpd in November, the government says. But some analysts believe it will be difficult for the government to bring oil production above 2.2 million bpd this year.