OPEC may open up spigots to allay strike, war concerns

Houston Chronicle News Services ^ | January 8, 2003 | uncredited

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LONDON -- Hoping to ease fears of a possible oil shortage, OPEC representatives plan an emergency meeting this weekend to discuss boosting the cartel's crude production by up to 2 million barrels a day, or 8.7 percent, an OPEC official said Tuesday.

Oil prices, which are about 45 percent higher than they were a year ago, have surged in recent weeks on concerns about deepening turmoil in Venezuela and a possible war against Iraq, two key members of the Organization of the Petroleum Exporting Countries.

A hike in production would represent an abrupt reversal in OPEC policy. OPEC's 11 members decided less than a month ago to slash output by up to 1.7 million barrels a day in the hope of preventing a price decline when seasonal demand dips this spring.

But oil industry analysts and traders pointed out that any additional oil exported by OPEC would not reach the United States soon. As a result, they said they expected the price of oil in the United States to remain above $30 a barrel. Those high prices, in turn, have pushed up retail prices of gasoline, heating oil and jet fuel.

Ministers of each member country except Algeria have agreed to meet Sunday at the group's headquarters in Vienna, Austria, the official said.

Since OPEC's Dec. 12 decision to cut production, worrisome signs of a potential shortage have begun to appear.

Oil shipments from Venezuela, normally OPEC's third-largest producer, have dwindled by 80 percent because of a month-old strike aimed at forcing the country's president, Hugo Chavez, from office. A U.S.-led attack on Iraq would halt exports from that country, which has the world's second-biggest crude reserves after Saudi Arabia.

OPEC officials have said the group cannot pump enough additional crude to make up for a simultaneous loss of exports from Venezuela and Iraq, which together have historically exported roughly 4 million barrels a day. OPEC's remaining members have spare production capacity of 3.3 million barrels a day, according to the Paris-based International Energy Agency, the West's energy watchdog.

Saudi Arabia, OPEC's most influential member, has proposed that the group raise output by 1.5 million barrels a day.

Crude prices slipped after news of OPEC's discussions. In New York, the price of light, sweet crude for February delivery tumbled $1.02 to $31.08 a barrel. February contracts of North Sea Brent crude fell 87 cents a barrel to $29.33 in London.

February heating oil futures shed 3.91 cents to close at 84.88 cents a gallon, while February gasoline lost 4.02 cents to settle at 84.18 cents a gallon.

Natural gas for February delivery gained 19.2 cents to settle at $5.127 per thousand cubic feet.

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Bush: U.S. oil reserves locked up tight - Chavez: claims role of "oil commander"

Smoke billows behind an oil refinery in El Palito, appoximately 150 miles West of Caracas, January 7, 2003. Workers trying to restart Venezuela's 130,000 barrel per day El Palito refinery, shut by a 37-day strike by foes of Venezuelan President Hugo Chavez, have damaged a seal in one of the vacum units. 'The products have to be drained from the vacum unit of the plant and they have to be burned', Pedro Jimenez, the plant's logistics manager said. REUTERS/Str

An oil leak near western Maracaibo, Venezuela, is seen Tuesday, Jan. 7, 2003. According to members of the opposition in a news conference Monday, new workers who were trying to resume oil production had an accident, resulting in the leakage. (AP Photo/Ana Maria Otero)

Venezuela to Split State's Oil Monopoly - Replacement workers damaging equipment *** CARACAS, Venezuela - President Hugo Chavez, battling a strike that has paralyzed the world's fifth-biggest oil exporter, will restructure the state oil company to tighten government control and eliminate dissent, the energy minister said.

In a nationally televised speech, Energy Minister Rafael Ramirez said the Caracas headquarters of Petroleos de Venezuela S.A. would be mostly dismantled. The company's administration would be moved to two centers of operation in eastern and western Venezuela.

Ramirez didn't say how many of the 7,000 workers at the headquarters will lose their jobs, but most are currently on strike. The government says it will fire strikers - some 35,000 are off the job - and already has dismissed high-ranking executives.

Ramirez, who told reporters last week of the plan to split the company, said a new board "with a more strategic vision" will soon be appointed. The company will focus more on production of crude, gas and refining, he said.

Chavez long has said he wanted to restructure the company, which he has called a "state within a state" run by privileged executives. Chavez wants to increase government revenues from the company.

"We need a PDVSA much more efficient ... and not as an oil enclave, but a company at the service of the nation," Ramirez said. Bureaucracy in Caracas increases operating costs by $1 billion a year, he added. ***

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Chavez opponents rip up tax forms [Full Text] CARACAS, Venezuela -- Tens of thousands of Venezuelans marched on the federal tax agency Tuesday and many ripped up their tax forms, vowing to further deprive President Hugo Chavez of revenue as part of their strike that has already dried up oil income. In a speech he ordered broadcast on all radio and TV stations, Chavez warned that tax evasion carries up to seven years in prison.

Protesters cheered and blew whistles as they tore up blank tax forms at the doors of the tax agency. They called for individuals and businesses to stop paying income and value-added taxes. The march was the first opposition protest in the capital since clashes between Chavez foes and followers and security forces left two people dead and 78 injured last week.

Venezuela's largest labor confederation, the biggest business chamber and opposition political parties began the strike Dec. 2 to pressure Chavez into resigning or accepting an early vote on his rule. The president has refused to do either. The strike has crippled Venezuela's oil industry, which provides half of government income and 80 percent of export revenue. [End]

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