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To: Richard Grenier who wrote (23462)	11/27/1998 5:57:00 PM
From: goldsnow	Respond to of 116752

Full story Old OPEC rivals beat oil market wardrums 12:31 p.m. Nov 27, 1998 Eastern By Richard Mably VIENNA, Austria (Reuters) - Guerrilla warfare in OPEC? That was the fear in oil industry circles Friday after the crumbling cartel left Vienna with nothing to show from two days of bad-tempered talks. Bitter rivalries between Organization of the Petroleum Exporting Countries members have been exposed again just as the group, and the oil industry in general, can least afford it. Abandoning plans even to extend existing output curbs, OPEC on Thursday left oil prices, already at 12-year lows, perilously exposed to even heavier losses. ''It looks like a disaster. Everyone is hunkering down and planning for the worst,'' said financier Robert Maguire of Morgan Stanley Dean Witter. ''There is bad blood in OPEC. Oil producers may be in for a lot more pain. This looks like guerrilla warfare,'' said old OPEC hand Mehdi Varzi of Dresdner Kleinwort Benson. Oil's slump this year has sent the petroleum industry worldwide running for cover in a spate of company cost-cutting and mergers. Now the battle lines have been drawn again between OPEC's three biggest producers -- Saudi Arabia, Venezuela and Iran -- together responsible for more than half the group's 27 million barrels daily of output. Venezuela and Iran fear that Saudi Arabia, easily the world's biggest producer, is keeping prices low to spoil the opening to foreign finances of their upstream industries. ''Iran fears that the Saudis want to keep oil prices low for some time,'' said one senior delegate after OPEC ended on Thursday with agreement only for another meeting in March. ''Unless the Saudi-Iranian differences are resolved they have serious implications for March and implications for Iran's opening up and Gulf politics in general,'' said Sharif Ghalib, a director at credit ratings agency Standard and Poor's Corp. For its part, Saudi Arabia sees its two rivals going back on the supply curbs agreed earlier this year, and stealing Saudi market share. Riyadh has become particularly concerned that Venezuela's fast-growing oil capacity, fueled by foreign company investment, was forcing it out of the giant United States market. But is Saudi Arabia, holder of the cheapest and largest oil reserves in the world, prepared to play the long game or will a common interest in higher prices quickly prevail again? ''What remains unclear is whether Saudi policy is guided by short-term tactical considerations or longer-term strategic goals,'' said the Petroleum Finance Company in a note to clients. Saudi reluctance for further supply cuts could merely signal the failure of Riyadh's summer tactics of limited and collective cuts to keep a floor under prices. ''On the other hand it may be the beginning of a new strategy of letting prices fall further to limit high-cost production in the medium term,'' said Petroleum Finance. With plenty of spare capacity and unrivaled reserves, Saudi Arabia certainly has the muscle to outflank its competitors. Whether it has the political will is another matter. Reliant on oil to fund state bureaucracy and welfare handouts, Saudi, like others in OPEC, would find it difficult to contemplate the social pressures that a lengthy period of low prices might bring. ''We would die in the process. We have to be responsible,'' said a senior Saudi source recently. Nevertheless, the uneasy truce forged earlier this year by OPEC with outside producers to manage world oil supplies is now under threat. And the further supply curbs which most in OPEC agree are necessary to lift prices look hard to achieve. ''We require a realignment of strategy and interests that at the moment in OPEC we've foregone,'' said a senior Gulf Arab OPEC official. ''This situation needs swift efforts behind the scenes.'' For that to happen before OPEC meets in March, tough issues must be resolved. Iran's firm stance in Vienna this week that the benchmark for OPEC's summer agreement to cut output was unfair is a bad omen. A simmering row over output quotas allocated in the wake of the 1990-1991 Gulf crisis also reemerged as a bone of contention for Iran, which wants Saudi Arabia to reverse some of the production gains it made then. And December Venezuelan elections mean Caracas may rethink its oil policy, torn now between capacity growth and short-term OPEC supply limits which it has failed to meet in full. Many oil analysts think oil prices, now at just $11 a barrel for North Sea Brent, will test single digits -- providing a further shock to OPEC economies. That might prove the producer group's best hope. ''OPEC tends to work best when cornered,'' said oil analyst Geoff Pyne of Warburg Dillon Read. ''OPEC is crisis management club rather than a market managing organization.'' Copyright 1998 Reuters Limited.

To: Richard Grenier who wrote (23462)	11/28/1998 1:12:00 PM
From: goldsnow	Respond to of 116752

Placer Dome targets SA gold mining industry David McKay Placer Dome is set to become the first North American gold producer to make a significant investment in the SA gold mining industry. Mining industry officials said Vancouver-based Placer was in an advanced stage of negotiations for a joint venture that would own the Western Areas mine on the West Rand. Placer's partner will be JCI Gold, at present Western Areas' biggest shareholder. Speculation on the deal continued to fuel the Western Areas share price yesterday. Western Areas' share price ended 70c higher at R26,50. This equates to a 43% gain in the last month as the counter advanced on its 12-month high of R32 a share achieved in April. JCI Gold also benefited from the investor expectation over the deal. Its stock gained 75c or 15% to end at R5,85 a share. This is a 30% increase in value on the JSE this month. Placer Dome's investment comes on the heels of predictions that the SA industry was dying a slow death owing to its high average costs and relative maturity of its reserves. JCI Gold declined to comment yesterday, but the group said previously it would consider any offers from an international partners, providing it made business sense. Placer Dome said last week it was interested in buying SA-based assets, but declined to give details on the timing of its approaches. Industry analysts said SA assets were relatively cheap for foreigners with strong currencies to buy and strongly tipped Placer Dome to finalise its offer shortly. Placer Dome was linked last year with Avmin, which may have been considering taking on a joint venture partner at the time to help it finance its Target gold mining project. Details of the transaction between Western Areas and Placer Dome are unknown, but it is thought a joint venture is being envisaged. Placer Dome, which is looking to lift its gold output this year 10% to 2,7-million ounces, has an exploration budget of $115m, or about R650m. Its cash reserves would therefore be useful to JCI Gold as Western Areas has future capital costs of about R2,5bn to complete its deep level South Deep gold mining project. For its part, Placer Dome is seeking to increase its new business portfolio. Its gold reserves, of about 33,2-million ounces, give it less upside potential than its North American competitors Barrick Gold and Newmont Mining, which have recoverable reserves of 59,7-million ounces and 53,5-million ounces of gold respectively. Analysts said Western Areas offered significant promise and could produce 1-million ounces a year when its capital projects were completed. bday.co.za