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Quick jump to below stories:
Bush: U.S. on Verge of Energy Breakthrough
Norwegian Bourse Director wants oil bourse - priced in euros
Nigeria rebels vow more attacks
Venezuela Launches 12 New State Enterprises to Substitute Imports
China's Energy Efficiency Goal "Near-Impossible"
Mind the record trade gap
Big Oil fan after little man
INTERVIEW - Citigroup takes broad approach to win India deals
Venezuela cuts US airline flights
At least 66 dead in Nigeria's religious violence
Japan vows calm response over S. Korea isles row

[Someone needs to explain to W that batteries do not create energy, they only store it. It has to come from someplace else. This is really reminiscent of the clichéd jokes about the end of the Third Reich. "We will have a new secret weapon any minute now". -- MCR]

Bush: U.S. on Verge of Energy Breakthrough

Feb 20, 4:44 PM (ET)

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

MILWAUKEE (AP) - Saying the nation is on the verge of technological breakthroughs that would "startle" most Americans, President Bush on Monday outlined his energy proposals to help wean the country off foreign oil.

Less than half the crude oil used by refineries is produced in the United States, while 60 percent comes from foreign nations, Bush said during the first stop on a two-day trip to talk about energy.

Some of these foreign suppliers have "unstable" governments that have fundamental differences with America, he said.

"It creates a national security issue and we're held hostage for energy by foreign nations that may not like us," Bush said.

Bush is focusing on energy at a time when Americans are paying high power bills to heat their homes this winter and have only recently seen a decrease in gasoline prices.

One of Bush's proposals would expand research into smaller, longer-lasting batteries for electric-gas hybrid cars, including plug-ins. He highlighted that initiative with a visit Monday to the battery center at Milwaukee-based auto-parts supplier Johnson Controls Inc. (JCI)

During his trip, Bush is also focusing on a proposal to increase investment in development of clean electric power sources, and proposals to speed the development of biofuels such as "cellulosic" ethanol made from wood chips or sawgrass.

Energy conservation groups and environmentalists say they're pleased that the president, a former oil man in Texas, is stressing alternative sources of energy, but they contend his proposals don't go far enough. They say the administration must consider greater fuel-efficiency standards for cars, and some economists believe it's best to increase the gas tax to force consumers to change their driving habits.

During his visit to Johnson Controls' new hybrid battery laboratory, Bush checked out two Ford Escapes - one with a nickel-metal-hybrid battery, the kind that powers most hybrid-electric vehicles, and one with a lithium-ion battery, which Johnson Controls believes are the wave of the future. The lithium-ion battery was about half the size of the older-model battery. In 2004, Johnson Controls received a government contract to develop the lithium-ion batteries.

While Bush is highlighting his budget proposals to help wean America from foreign oil, the lab he visited is meeting a $28 million shortfall by cutting its staff by 32 people, including eight researchers.

"Our nation is on the threshold of new energy technology that I think will startle the American people," Bush said. "We're on the edge of some amazing breakthroughs - breakthroughs all aimed at enhancing our national security and our economic security and the quality of life of the folks who live here in the United States."

Later Monday, Bush was visiting the United Solar Ovonics Plant, which makes solar panels, in Auburn Hills, Mich., outside Detroit. The company also works on hydrogen fuel cells to power autos.

"Roof makers will one day be able to make a solar roof that protects you from the elements and at the same time, powers your house," Bush said. "The vision is this - that technology will become so efficient that you'll become a little power generator in your home, and if you don't use the energy you generate you'll be able to feed it back into the electricity grid."

Rep. Ed Markey, D-Mass., questioned Bush's energy policies Monday, saying the administration also supports subsidies for luxury SUVs.

"This single tax subsidy dwarfs anything being done for hybrid batteries," Markey said in a news release.

On Tuesday, Bush plans to visit the Energy Department's National Renewable Energy Laboratory in Golden, Colo., to talk about speeding the development of biofuels.

As a complement to Bush's travels, six Cabinet officials are crisscrossing the nation this week, appearing at more than two dozen energy events in more than a dozen states.

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[Now I have to wonder how the Neocons will make Norway into a part of the Axis of Evil. Will they plant weapons of mass destruction? Will they allege that Norway is developing nuclear weapons. Maybe it’s not Muslims but blonde-haired blue eyed people who are really evil. (I’d be in trouble). Maybe there’s some resurgence of a pagan Nordic religion that is aligning Thor with the Prophet Muhammad that is the new threat to world peace and the spread of democracy. The final assault on the dollar has clearly begun. -- MCR]

Norwegian Bourse Director wants oil bourse - priced in euros

By Laila Bakken and Petter Halvorsen
Published on Wednesday, February 22, 2006 by

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Bourse Director Sven Arild Andersen is fed up with Norwegian oil having to be traded in London and wants to have a commodities and energy bourse in Norway.

The Bourse Director believes that Norway already has the prerequisites for building up a Norwegian or Scandinavian energy bourse.

"This would in such case compete with the bourse in London. Why not have the ambition to outcompete the British petroleum bourse," says Sven Arild Andersen.

"Here, you could trade crude oil, natural gas contracts and establish derivatives for these products."

"In addition, we must set up a larger financial industry around this, as important in other large markets and employ many people. And which are important for the competencies that are needed beyond the extraction itself of oil and gas," says Andersen.

In Euros

Andersen in of the opinion that Norwegian oil must be traded in Euros, which can be advantageous for international customers.

"We have performed market studies and both Russia, which is a large oil exporter, as well as the countries of the Middle East have large parts of their economies in Euros. They would be able to view such a bourse as a contribution to balancing their economies in a better manner than at present, where their products are traded solely in dollars," says Andersen.

The Bourse Director holds out the Scandinavian power bourse, Nordpool, as an example of how a successful bourse is constructed. And he believes that this ought to be included in a Norwegian or Scandinavian energy bourse.

"We currently we have the leading power bourse in Europe. It is large, well-respected and efficient. Nordpool would be natural to consider as being important in the establishment of an oil and energy bourse," says Andersen.

The plans have been discussed for years, but have never gone past the stage of being just talk.

"We must get large Norwegian players onboard such as Statoil and Hydro, and even though the interest has been there, nobody has taken it further with great enthusiasm.

"There is now talk of a fish bourse in Norway and there certainly is no doubt as to whether we thus aren't in a position to build an energy bourse that would be much, much larger and for which we possess significant requisite competence to get up and running."

Translation from Norwegian (C) 2006 by Hugh Whinfrey, all rights waived in perpetuity.

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Nigeria rebels vow more attacks

By Jim Jelter, MarketWatch
Feb 19, 2006

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

SAN FRANCISCO (MarketWatch) -- Nigerian rebels vowed Sunday to step up attacks on foreign oil companies, just a day after they took nine oil workers hostage and forced the shutdown of one of the nation's biggest oil export terminals.

The move heightens concerns over Nigeria's ability to secure its oil supplies and is bound to put more upward pressure on spot oil prices, which closed Friday in New York at $59.88 a barrel.

Unrest in Nigeria also raises thorny issues for the Organization of Oil Exporting Countries, which gathers March 8 in Vienna to discuss production quotas. Several members of the cartel have been leaning toward output cutbacks to shore up sagging prices, a calculation made far more complicated by the supply disruptions in member nation Nigeria.

"Fresh targets will be hit shortly," a spokesman for the rebel group told Bloomberg News Sunday. "There is no shortage of things to destroy."

Shell shut its EA oil field off the Niger River delta on Saturday after militants attacked the facility, taking nine hostages from a Willbros. Co. pipe laying barge working there under contract for Shell. The hostages, which the rebels claim are safe, include three Americans, two Egyptians, a Thai, a Briton and a Filipino. See full story.

Shutting the EA field takes about 115,000 barrels a day out of production.

This latest round of violence also prompted Shell (RDS.A)to suspend tanker loadings at its 400,000 barrel-per-day Forcados oil terminal, one of Nigeria's main export facilities.

A man who identified himself as a commander of the rebel movement told the Associated Press that the group was prepared to fire rockets at oil tankers waiting offshore to load.

About 20% of Nigeria's oil production flows to the market through Forcados, most of it high quality crude destined for refineries in Western Europe and the United States.

According to Energy Department data, the U.S. imported 1.1 million barrels a day from Nigeria in 2005, or about 10% of the nation's total crude oil imports.

Nigeria, the world's eighth-largest oil exporter, was pumping about 2.4 million barrels of oil a day prior to the attacks. About a fourth of the nation's oil production flows from the Niger Delta region.

These latest assaults on the nation's oil industry are part of a campaign by the Movement for the Emancipation of the Niger Delta against foreign oil companies operating in the region. The actions were stepped up last week after military helicopters opened fire on villages in the troubled region.

The militants, believed to be part of a coalition of Niger Delta rebel groups, have taken to violence and sabotage to call attention to the region's chronic poverty and oil industry pollution problems that they claim are not being addressed.

Exxon Mobil Corp. (XOM) while not directly affected by the latest violence in the Niger Delta, are also a major operators in Nigeria.

Chevron pumps about 117,000 barrels of oil a day there and has been the target of violent protests there in the past. Exxon Mobil's output in Nigeria totals about 650,000 barrels a day.

Jim Jelter is Industrials Editor for MarketWatch in San Francisco.

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Venezuela Launches 12 New State Enterprises to Substitute Imports

Thursday, Feb 02, 2006
By: Gregory Wilpert –

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

The inauguration of the new state-owned company Coniba (National Company of Basic Industries)
Credit: VTV

Caracas, Venezuela, February 2, 2006—Venezuela’s President Chavez presented a board of directors on Monday, for a new state-owned holding company that will direct 12 new industrial enterprises that are to substitute numerous products Venezuela currently imports. The industries will cover everything from paper, aluminum lamination, textiles, and steel pipes and parts production. The new company will be called Coniba, which stands for National Company of Basic Industries.

Coniba will be funded with a $3.5 billion investment from the country’s National Development Fund FUNDEN, which was created with money from a portion of the Central Bank’s foreign currency reserves. According to Venezuela’s Minister of Basic Industries and Mines, Victor Alvarez, the new company will create 20,000 direct and indirect jobs.

The creation of Coniba, “forms part of the sowing of the oil and of the policy of endogenous development,” of the Chavez government, said Alvarez during the company’s inauguration.

Endogenous development is the term the Chavez government has used to describe the project of developing the country’s economy “from within,” that is, without relying primarily on outside investors. The plan to “sow the oil,” an expression borrowed from Venezuela’s oil boom years in the 1970’s, is a plan to use the country’s oil wealth for investment in and diversification of the country’s economy.

The 12 new companies that will belong to Coniba will be constructed as Social Production Enterprises (EPS), by which the government means that they will not be exploitative and oriented exclusively towards making profits. Rather, according to Alvarez, “work [in these enterprises] will lose its alienated character and will become an element of conscience.” Also, “Its products will be sold at solidarity prices. They will be completely oriented towards endogenous development.”

President Chavez, who also spoke during the inauguration, said that Social Production Enterprises, such as those of Coniba, would work towards eliminating hierarchies and inequalities within the workplace, in contrast to capitalism, where one discriminates on the basis of the type of work one does. “We are all equal … there should not be hierarchical privileges at work,” said Chavez.

The main objective, though, of the new enterprises is to produce industrial products that are currently being imported, for which Venezuela has the raw materials. As such, they will support the country’s energy, construction, infrastructure, rail, and textile industries, explained Alvarez.

Venezuela currently imports approximately 70% of the products it consumes, largely because Venezuela’s large oil revenues have made it relatively easy to purchase imports and expensive to manufacture products within Venezuela. The Chavez government has repeatedly stated that it is committed to diversifying the country’s economy. While non-traditional exports, such as agricultural products, have increased in the past two years, increasing oil revenues have left the ratio between non-traditional exports and oil exports more or less the same.

In one of the first concrete moves to reduce Venezuela’s reliance on imports, Minister Alvarez announced yesterday that the country would reduce its exports of aluminum to zero by the year 2012, so that the domestically produced aluminum could be used for products manufactured in Venezuela.

According to the Associated Press, “The objective is that we will not export even a gram of aluminum or a kilogram of wood,” Alvarez said, adding, “In 2012, 2013, we should be processing 100 percent of our raw materials, our basic products in this country.” “Our goal is for Venezuela, in the next six years, to declare itself an industrialized country.”

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China's Energy Efficiency Goal "Near-Impossible"

By Erik Dahl
09 Feb 2006 at 09:22 AM EST

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

BEIJING (Interfax-China) -- China's goal to reduce energy intensity (energy consumption per unit of GDP) by 20% before 2010 is "near-impossible" using the government's official statistics, a new report from the World Bank states.

"To meet the 20% reduction in only five years could require pretty tough policies that might hurt growth," Louis Kuijs, senior economist for the World Bank in China, told Interfax.

The World Bank also has concerns about the policies suggested by the National Development and Reform Commission (NDRC) including the classification of industries into ones that should be encouraged, discouraged or banned, said Kuijs.

Adjusting energy prices is a more appropriate and market-friendly method, Kuijs said.

"China has been adjusting energy prices for a long time, and indications are that helped improve the energy intensity. There is still a lot of scope for raising energy prices," said Kuijs.

Higher prices are also likely to eliminate the occasional shortages of gasoline that have hit the country in recent months, according to the report.

From 2001 to 2004, energy intensity has skyrocketed, with growth in energy use exceeding GDP growth, according to official data, which some experts have questioned.

Some have suggested that the official data is not correct, and the situation has not actually been deteriorating.

Policies in the 1990s aimed at closing small mines may have resulted in them being taken off the books instead of being closed. They therefore may have disappeared from the statistics, leading to a rapid apparent decline in energy intensity. If the "closed" mines are included in the data, the decline has been smooth and the recent spike is eliminated.

"Even with the better numbers, the 20% reduction in only five years is still an ambitions target," said Kuijs.

According to these estimates, elasticity has been 0.5 over the last five years, which means that every 10% increase in GDP required a 5% increase in energy use.

Assuming 7.5% growth, enough to reach China's target of doubling GDP between 2000 and 2010, energy elasticity would have to be 0.34, with every 10% increase in GDP requiring a 3.4% increase in energy use.

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Mind the record trade gap

Appetite for imports, even with strong export growth, may pose long-term risk to economy; heading for a $1 trillion deficit?

By Chris Isidore, CNNMoney senior writer
February 10, 2006: 2:32 PM EST

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

NEW YORK (CNN/Money) - The nation's trade deficit soared 18 percent to nearly three-quarters of a trillion dollars last year -- the ninth record in the last 10 years -- fueling a growing debate over the risks to the U.S. economy, and American workers, posed by imported goods.

The December report from the Commerce Department brought the full-year trade gap up to $725.8 billion from the previous record of $617.6 billion set in 2004, as U.S. consumers' appetite for oil, imported cars and cheaper consumer goods produced overseas showed no signs of flagging.

That gap works out to an average of $2,448 per U.S. resident, up from $2,103 per capita in 2004.

"It's not just China, it's not just oil," said Jay Bryson, an international economist with Wachovia. "We spend more than we produce, end of story."

The report showed U.S. imports outstripped exports by $65.7 billion in December, the third largest monthly gap on record. That was up from the revised $64.7 billion in November and bigger than the forecast of $64.8 billion from economists surveyed by

So far the growing trade gap hasn't caused an economic crisis, partly because foreign investors have continued to buy U.S. assets such as government debt, essentially financing the growing trade gap.

"Sooner or later, foreigners will stop financing the deficit. But at this point they show no signs of slowing down," said Bryson. "If there were trade barriers that caused Americans to buy significantly less imports, production here would go up a little, but the thing that would take the brunt of the reduction is that our spending would go down as prices went up. We would have less of everything."

But University of Maryland Professor Peter Morici argued in a note Friday that the trade gap is hurting American workers more than they are being helped by lower prices.

"Were the trade deficit cut in half, GDP would increase by nearly $300 billion, or about $2,000 for every working American," he said. "Workers' wages would not be lagging inflation, and ordinary working Americans would more easily find jobs paying good wages and offering decent benefits."

Morici also argued that the growing trade gap poses a long-term threat to U.S. competitiveness, companies and workers.

"By shifting employment away from trade-competing industries, the trade deficit reduces U.S. investments in new methods and products, and skilled labor," he said.

Larger trade gaps still lay ahead
If the trade gap grows at the same pace in 2006 and 2007, it will top $1 trillion annually by the end of next year. And an 18 percent growth rate is not out of the realm of possibility; the gap has seen an average 19 percent growth rate since 2002 and nearly 25 percent annual growth rate over the last decade.

As recently as 1995 the trade gap was under the $100 billion mark, but it has set new records nine times in the last 10 years.

The rise in the gap came even as the nation's exports were strong in December. The report showed both a monthly and annual record. Exports grew by $2.3 billion to $111.5 billion in the month, bringing the value of exports for the year to $1.3 trillion, a 10 percent gain.

But imports grew even more, rising $3.3 billion to $177.2 billion for the month. For the year imports grew about 13 percent to just under $2 trillion.

And the trade gap is almost certain to grow further. Because imports now outpace exports by such a large amount, exports would have to grow 57 percent faster just to keep the trade gap unchanged.

"It's very easy to get the trade gap to narrow, have a recession in the United States to cut spending here," said Bryson. "But I don't think anyone wants that to happen."

The trade gap with China was by far the largest with any trading partner, soaring 24 percent to $201.6 billion, or more than a quarter of the overall gap.

The U.S.-Japan trade imbalance was the nation's second largest at $75.6 billion, although the European Union would be No. 2 if counted as a single trading partner, with its exports here outstripping its U.S. imports by $109.3 billion. The U.S. gap with Canada was $66.5 billion, just behind Japan.

By comparison, the U.S. had a positive trade balance with only six countries identified in the report, with the Netherlands having the largest U.S. trade gap of its own at $11.8 billion for the year.

Oil and petroleum products accounted for a $229.2 billion gap during the year, up 40 percent for the year. Much of the increase was caused by the average price of a barrel of imported oil rising about 36 percent during the year to $46.78. Oil accounted for about 31 percent of the overall deficit, up from 26 percent of the smaller 2004 trade deficit.

But even without any oil imports, the trade gap would have about a half-trillion dollars in 2005, large enough to have been a record as recently as 2003. And oil was not the only product that produced a trade gap.

Imported consumer goods topped the value of those exports by $291.5 billion, even more than the gap caused by oil. But the gap between imports and exports of those goods grew at a far more modest 8 percent. The trade deficit for autos and auto parts edged up 2 percent to $142.2 billion for the full year.

There were some areas where the United States is a net exporter. Service sector exports grew 10 percent to $378.6 billion, outstripping services purchased from foreign providers by $56 billion. The exports of civilian aircraft, engines and parts outstripped imports of those goods by $34.6 billion in the year. Both those positive trade gaps grew compared to 2004.

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[Rep. Joe Barton, the powerful Texas Republican who is chairman of the House Energy and Commerce Committee, launched a bizarre investigation last week into possible antitrust violations by a major oil company.

You will be surprised to learn that Barton, one of the top recipients in Congress of campaign donations from the energy industry, is not probing whether ExxonMobil or Chevron or any of the other oil giants engaged in price gouging when gasoline and heating oil costs skyrocketed the past few years. -MCR]

Big Oil fan after little man

NY Daily News
23 February 2006

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Rep. Joe Barton, the powerful Texas Republican who is chairman of the House Energy and Commerce Committee, launched a bizarre investigation last week into possible antitrust violations by a major oil company.

You will be surprised to learn that Barton, one of the top recipients in Congress of campaign donations from the energy industry, is not probing whether ExxonMobil or Chevron or any of the other oil giants engaged in price gouging when gasoline and heating oil costs skyrocketed the past few years.

No, the good congressman has set his sights on the only oil company that actually dared to lower its prices last year - at least for the poorest Americans.

In a Feb. 15 letter to Citgo, the Houston-based company owned by the Venezuelan government, Barton demanded that company officials produce by tomorrow all records, minutes, logs, e-mails and even desk calendars related to Citgo's novel program of supplying discounted heating oil to low-income communities in the United States.

The Citgo program, which kicked off late last year in Massachusetts and the South Bronx, provides oil at discounts as high as 60% off market price.

Since its inception the program has expanded to low-income communities in Delaware, Pennsylvania, Vermont, Maine and Rhode Island. Local politicians, desperate for ways to reduce energy costs for their constituents, have welcomed it with open arms.

Here in New York, Harlem Congressman Charles Rangel will soon announce an expansion of the Citgo program into upper Manhattan.

All of this unexpected corporate philanthropy has made Barton and other House Republicans furious. Citgo's oil-for-the-poor program, after all, was the brainchild of Hugo Chavez, the fiery populist president of Venezuela who has become one of the most strident opponents of the Bush administration.

"The bellicose Venezuelan decided to meddle in American energy policy, and we think it might prove instructive to know how," Larry Neal, deputy staff director for Barton's committee, said yesterday.

Barton's letter lists a bunch of questions he wants Citgo to answer, including "how and why were the particular beneficiaries of this program selected" and whether the program "runs afoul of any U.S. laws, including but not limited to, antitrust laws."

Rep. Ed Markey, a Massachusetts Democrat, is flabbergasted by Barton's investigation.

"The Republicans are on another planet when it comes to energy policy," Markey said.

Instead of doing something about skyrocketing oil prices, Markey said, the Republicans are probing "a charitable donation of heating oil to relieve the suffering of a few thousand American families."

Barton, however, is not as nutty as he sounds.

He is well aware that Citgo's limited discount program will have no influence on American energy policy. But it has created a huge public embarrassment for Barton's friends in the major oil companies, all of which recently announced record-shattering profits for 2005.

ExxonMobil, for example, reported $36 billion in earnings last year. That's the largest profit ever recorded by any company in the history of modern commerce. It works out to an average of $98 million in profit for every day of last year.

Oil profits have gotten so obscene that a lot of Americans are getting fed up, and pressure is mounting on Congress to do something.

That's where Barton comes in. He's the closest thing on Capitol Hill to a mouthpiece for Big Oil.

During the last election cycle, he was second only to fellow Texan Tom DeLay in the amount of oil industry contributions. During two decades in the House, Barton has raked in nearly $2 million in campaign donations from oil and electric companies.

He is such a rabid defender of the energy industry that when a group of scientists issued a damning study last year about the growing danger of global warming, Barton immediately launched one of his shotgun investigations. He fired off letters to each of the scientists and demanded that they list all the sources of their funding and provide him with their research data and notes.

Now Barton is after Citgo, the oil company that dared to do the unthinkable - lower oil prices for poor Americans.

Earth to Barton, call home.

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[Were you thinking that big US-based banks might be hurt by a collapse of the US economy? Think again. What's happening in India with banks like Citigroup is happening all over the world from Iran, to Hong Kong, yes, even to Venezuela. Is it a coincidence that - as in this story - the two banking groups involved in the Dubai/UAE port scandal are Citigroup and Deutschebank? We think not. These are also the two banks most often covered on the FTW website and in Crossing the Rubicon: The Decline of the American Empire at the End of the Age of Oil.

Until you understand how the money works, you understand very, very little. - MCR]

INTERVIEW - Citigroup takes broad approach to win India deals

Fri Feb 24, 2006 10:33 AM IST

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

By Tony Munroe and M.C. Govardhana Rangan

HONG KONG/MUMBAI (Reuters) - With India's soaring markets luring the world's investment banks in an increasingly ferocious battle for business, top global financial firm Citigroup figures it's best to serve a broad client base.

The U.S.-based giant, which unlike some Wall Street foes has taken a go-it-alone approach in India, last year began an aggressive expansion of its investment banking business in the country, snapping up bankers and analysts and snaring a veteran from a rival to head its equity capital markets unit.

India has become the third-biggest market for investment banks in non-Japan Asia, behind China and South Korea, with fees last year more than doubling to $381 million.

Besides traditional investment banking activities such as bond issues and IPOs, Citigroup is looking to commodities, distressed assets and venture lending as growth areas in booming India, said Sanjay Nayar, who heads Citigroup's corporate and investment banking business in the Indian subcontinent.

"We have significantly deepened our corporate and investment banking coverage and the next step is the emerging client base, which is largely entrepreneurial," Nayar told Reuters.

Last year, Citigroup was second behind DSP Merrill Lynch in investment banking revenue in India, generating fees estimated at nearly $38 million for market share of almost 10 percent, according to data firm Dealogic.

Its courtship of small and mid-sized customers is evident in the comparatively high number of transactions it closed -- 70, compared with 44 for Merrill Lynch's Indian venture. Only local player ICICI closed more deals, 78, among the top 10 investment banking fee generators.
"We're beginning to look and feel like a local house, when that is what our clients need, while we are already a well-established international house in India," said Nayar, who is Citigroup's chief country officer in India.


Serving clients across product segments means Citigroup must battle for business against local and global foes, including the Indian joint ventures of Wall Street titans.

Merrill Lynch last year agreed to pay $500 million for control of its local joint venture. Rival Morgan Stanley operates two ventures with JM Financial Ltd. and Goldman Sachs shares brokerage and investment banking ventures with Kotak Mahindra Bank Ltd.

And competition is intensifying.

Credit Suisse is ramping up its Indian business and relaunching its brokerage arm which had been dormant since 2001. Macquarie Bank is starting up in India, while Barclays has bulked up its operations in the country and Lehman Brothers is also keen to tap the market.

Fees on India deals have been notoriously cut-throat in the past two years as banks chase market share, but Nayar said they have bottomed out in the past three months.

"A lot of banks are now entering the Indian market and are competing on fees," he said.

The crowded market is exemplified by the follow-on equity sale by Union Bank of India that is currently in the market. Worth just $110 million, the offering is handled by five banks, including Citigroup.

"We are very clear as to what level we will do the business because we think we bring a lot more value to our clients. Just executing a deal is one thing, but the follow-through to that is equally critical," he said.

Citigroup is off to a vigorous start in 2006, underwriting deals worth over $1 billion, headlined by the $400 million convertible bond by drug maker Ranbaxy Laboratories.

The Ranbaxy deal, also sponsored by Deutsche Bank, Morgan Stanley and UBS, was the latest in a spate of convertible issues in India and was said in the market to have been just a break-even transaction for its underwriters. Banks are willing to do such deals in the hope of more lucrative future business from big and active clients such as Ranbaxy.

"We allocate capital to our highest growth opportunities," Nayar said.

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[Do not expect anything but deteriorating relations with Venezuela for the foreseeable future. As tensions escalate over Peak Oil and the Iran crisis, and as the global economy deteriorates, these developments will be remembered as the start of The Great Unraveling that is certain to get much worse very quickly. The attempt to blow up Saudi Arabia's El Abqaiq refinery (which processes 2/3 of all Saudi exports), Portgate, and even the Danish cartoons which have inflamed the Muslim world are all connected. We'll be telling you why in a new subscriber-only story coming out soon. - MCR]

Venezuela cuts US airline flights

Venezuela is cutting flights by US airlines as relations between the two countries continue to deteriorate.

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

From 1 March, flights by Delta and Continental Airlines will be cut by up to 70%, and American Airlines flights will also be affected, officials say.

They accuse the US - which imposed a similar ban on Venezuela 10 years ago - of failing to give Venezuelan carriers equal access to American soil.

Relations between the two countries have long been strained.

They have hit new lows in recent weeks after a tit-for-tat expulsion row over allegations of spying, and a fierce exchange of words between US Secretary of State Condoleezza Rice and Venezuelan President Hugo Chavez.

Safety issue

Continental Airlines has been running a daily service from Venezuela to Houston, and weekly flights to New York. Delta Airlines currently flies daily to Atlanta, and American Airlines to Puerto Rico and Miami.

Venezuela's National Aviation Institute said in a statement: "We have exhausted all avenues with the US aeronautical authority.

"We have been forced to reduce the frequency of flights of US airline companies from the US."

The institute accused the US aviation authorities of failing "to give Venezuelan airlines the rights they deserve under bilateral agreements".

The US Federal Aviation Administration restricted Venezuelan carriers into the US in 1996 ruling that their airline safety procedures needed to be tightened.

Venezuelan officials say their safety standards have improved since then.

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[And thus we see how the battles to control Nigerian oil will be framed, along the oh so convenient lines of Dick Cheney's war that will not end in our lifetimes, the war that will go around the world. Poor vs. rich. Muslim vs. Christian. Black vs. white. All to hide the real motive and the real objectives: oil and gas. - MCR]

At least 66 dead in Nigeria's religious violence

Wednesday, February 22, 2006

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

ONITSHA, Nigeria (Reuters) -- Revenge attacks against Muslims killed at least 20 people in the southeastern Nigerian city of Onitsha on Wednesday after days of anti-Christian violence killed dozens in the mainly Muslim north.

The slaughter raised the death toll from five days of religious riots fueled by political tensions in Africa's most populous country to at least 66, and possibly many more.

"There are thousands of boys with cutlasses and sticks on the rampage. I've counted at least 20 bodies here by the Onitsha bridge. They are Hausas. Some of them are burnt and some have their stomachs cut open," said Reuters photographer George Esiri.

The Hausa are the main ethnic group in the north, while Onitsha is located in the ethnic Ibo heartland. Rioting started in Onitsha on Tuesday after news of the northern riots emerged.Nigeria's 140 million people are split roughly equally between Muslims in the north and Christians in the south, although sizeable religious and ethnic minorities live in both regions. Religious violence is often stoked by political leaders seeking to bolster their own power bases. Fighting in one part of the country usually sparks reprisal killings elsewhere.

A doctor at the Onitsha general hospital said more than 50 newly injured people had been brought in on Wednesday, while the Red Cross said 325 people were injured and 2,000 displaced on Tuesday. Many were hiding in barracks and police stations.

There was no official death toll from Tuesday's fighting in Onitsha but a security source said at least a dozen people, possibly many more, were killed.

Political chaos
In northeastern Bauchi, at least 18 people died and 3,000 were left homeless during two days of fighting triggered by rumors of a desecration of the Koran.

That following weekend, riots over cartoons of the Prophet Mohammed killed at least 21 people and possibly more than 50 in Maiduguri, another northeastern city.

In Katsina, in the far north, at least seven people were killed during weekend protests over a constitutional review -- controversial because many see it as an attempt to keep President Olusegun Obasanjo in power for longer.

Observers, both religious and secular, say that although the triggers were different in the three northern cities, the underlying reason for the unrest is uncertainty over the political future and particularly Obasanjo's plans.

"The political atmosphere in the nation is already very bad and with high poverty there are a lot of unemployed youths. That is why this kind of crisis starts easily," said Adamu Abubakar, a Red Cross official in Bauchi.

The violence in Katsina and Maiduguri broke out days before the two cities were due to stage public hearings on constitutional reform.

The hearings are ostensibly to consider many changes to the charter, but most Nigerians think the real goal is to push for an amendment to the section on presidential tenure, to allow Obasanjo to seek a third term in 2007 elections.

There is strong opposition to a third term in the north because many there believe the presidency should go to one of them in 2007, after eight years of Obasanjo, a Christian southerner.

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[Oil, gas, and mineral rights in the region are going to be defined by such things as which nation owns which island. Because as islands are added to territorial waters, everything in between them and the sovereign owner becomes territorial waters, along with what little gas and oil may be there. -- MCR]

Japan vows calm response over S. Korea isles row

By Takanori Isshiki

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

MATSUE, Japan (Reuters) - Japan vowed on Wednesday to make cool-headed efforts to resolve a simmering territorial dispute with South Korea over two rocky islets midway between the Asian neighbours.

In a move likely to anger Seoul, a local government in western Japan was set to hold a ceremony to mark its "Takeshima Day" later on Wednesday.

The tiny islands, located about the same distance from the mainland of Japan and South Korea, are known as Tokto in Korean and Takeshima in Japan.

"Our position on the ownership of Takeshima has been consistent," Japan's top government spokesman, Shinzo Abe, told reporters.

"We should not stir up the feelings of the people of both countries and we will continue our efforts to resolve the matter calmly."

The bilateral relationship deteriorated markedly a year ago after the prefectural assembly of Shimane in western Japan adopted a local law designating February 22 as "Takeshima Day", sparking South Korean protests.

In Matsue, the capital of Shimane prefecture, hundreds of Japanese took part in a ceremony on Wednesday to mark the day.

Several South Koreans tried to get to where the event was being held, but they were pushed back by plainclothes police officers. There were no reports of violence or injuries. About 250 police were mobilised to ensure there were no violent incidents.


Resentment of Japan's often brutal 1910-1945 colonisation of the Korean peninsula runs deep in South Korea, and many there see Tokyo's claims to the two islands as at an attempt to justify its wartime past.

South Koreans were also angered by Japan's approval last year of a history textbook by nationalist scholars that critics say whitewashes the wartime past and by Prime Minister Junichiro Koizumi's annual visits to the Yasukuni war shrine in Tokyo, where convicted war criminals are honoured along with Japanese war dead.

The South Korean Foreign Ministry issued a statement expressing "deep regret" over the ceremonial event.

"The government will respond sternly to any attempt to infringe on the territorial rights of Tokto, which is sovereign territory of ours," the statement said.

In Seoul, about 20 South Korean protesters gathered near the Japanese embassy demanding Japan relinquish its claim to the islands. They also demanded Koizumi apologize for his visits to Yasukuni. The protesters burned a Japanese flag and a picture of Koizumi. Scores of riot police were on hand to prevent the protesters from making their way to the embassy and to make sure the fires did not get out of hand.

"Tokto is our land", read one sign written in Korean.

South Korean officials said on Monday that a South Korean fisherman, his wife and a crew member had taken up residence on the disputed islets. South Korea maintains a small garrison of police on the islands, which have almost no flat surfaces or fresh water. The country's Maritime Ministry refurbished a building for fishermen on the island where the trio will be living. It has living quarters, a kitchen and a generator.

(Additional reporting by Teruaki Ueno in Tokyo and Jon Herskovitz in Seoul)

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