Bloomberg
Television Interview Transcript, September 2003

JOINING US FOR AN OUTLOOK ON THE MARKETS IS MAYRA VALLADARES, OIL ANALYST AND PRESIDENT OF M.R.V. ASSOCIATES.

THE FIRST THING THAT COMES TO MIND IS THEY'RE COMING OFF OF LATE MEETINGS THAT THEY'RE TRYING TO PLACATE THE VENEZUELANS ON IRAQ. DO YOU THINK THAT THIS WAS A REACTION?

OPEC HAS BEEN VERY WORRIED THE PRICE HAS BEEN MOVING BELOW THEIR BAND. THAT'S QUITE PROBABLY ANOTHER REASON FOR THE CUT.

THEY HAVE MADE STATEMENTS TO LEAD EVERYONE TO BELIEVE THAT THIS IS REALLY JUST NOT GOING TO BE ONE OF THOSE MEETINGS WITH THEY'RE -- WHERE THEY'RE GOING TO CHANGE.

FOR OUR VIEWERS WHO MAY NOT BE FAMILIAR WITH THE DISPUTE GOING ON, CAN YOU TAKE US THROUGH THEIR OPPOSITION TO IRAQ HAVING A SEAT?

THERE'S STILL OBVIOUSLY A LOT OF UNCERTAINTY IN IRAQ IN TERMS OF WHAT ITS ROLE IS, WHAT GOVERNMENT WILL BE RECOGNIZED. SO VENEZUELA HAS BEEN VERY OPPOSED TO IRAQ HAVING AN OFFICIAL SEAT IN OPEC. THOUGH IT'S OBVIOUSLY INEVITABLE THAT IRAQ WILL HAVE A SEAT.

AND OPEC WOULD LIKE TO HAVE THEM ON. THEY WOULD HATE TO LOSE IRAQ, THE COUNTRY WITH THE SECOND BIGGEST KNOWN OIL RESERVES. TELL US ALITTLE ABOUT WHAT YOU THINK THIS MOVE COULD MEAN. WE'VE ALREADY SEEN A 3.5% POP-UP ALREADY THIS MORNING. WHERE ARE YOU LOOK AT PRICES TO GO?

CLEARLY THAT'S A KNEE-NERK REACTION. THE MARKET HAD BEEN APRIL ANTICIPATING THERE WOULD BE NO CUT, THERE HAS BEEN A SURPRISE CUT OF 900,000 BARRELS. SO YOU HAVE A POP-UP IN THE PRICE. I THINK THE PRICE WILL CONTINUE TO GO DOWN AFTER THE MARKET SETTLE AS A BIT. BECAUSE YOU STILL DON'T HAVE HIGH DEMAND FOR OIL. YOU STILL HAVE WEAK GLOBAL ECONOMIES. I THINK THAT PRICE WILL STILL CONTINUE TO BE UNDER PRESSURE. OF COURSE, THE FACTOR HERE THAT COULD AFFECT AS WELL, IS THAT RUSSIA CONTINUES TO EXPORT OIL. ITS PRODUCTION IS ON THE INCREASE.

SURE. THE EXPORT IS ON THE INCREASE. SO YOU HAVE A LOT OF PRODUCTION AND EXPORT FROM NONOPEC COUNTRIES THAT WOULD DIRECTLY INFLUENCE THE PRICE OF OIL. YOU STILL DON'T HAVE THAT PICKUP IN DEMAND THAT'S NEEDED.

NONETHELESS, YOU HAVE STILL GOT NIGERIA, VENEZUELA, THE SITUATION WITH CHAVEZ, THE WORRIES ABOUT IRAQ. WILL THESE CONTINUE TO KEEP A BID IN OIL PRICE? WILL TRADERS HAVE TO BE SCARED SHORTING THE MARKETED?

OF COURSE. THEY'RE ALWAYS GOING TO BE WANTING TO KNOW WHAT HAPPENS WITH VENEZUELA. SURPRISINGLY, DESPITE ALL THE PROBLEMS, THEY'VE COME BACK ONLINE RELATIVELY QUICKLY. NOT FULLY.

THEY HAVEN'T BEEN OFF THE MARKET AS MUCH AS SOME HAD ANTICIPATED. NIGERIA FOR THE MOMENT HAS BEEN OK. BUT, SURE, NIGERIA, VENEZUELA, AND RUSSIA ARE ALWAYS THE KEY COUNTRY THAT YOU HAVE TO BE LOOKING AT IN ADDITION TO THE USUAL OPEC COUNTRIES THAT WE LOOK AT.

THE OTHER THING THAT WAS ANNOUNCED TODAY -- AND AGAIN, I'M JUST READING OFF THE BLOOMBERG TERMINAL, IS THAT IRAQ IS SAYING IT IS PLANNING ON DOUBLING ITS CURRENT PRODUCTION BY 2005.

I THINK THAT'S A LITTLE OPTIMISTIC. ONE HAS TO REMEMBER THAT WHAT THEY SAY THEY'D LIKE TO DO STILL REMAINS TO BE SEEN. YOU STILL HAVE AN INCREDIBLE AMOUNT OF POLITICAL INSTABILITY THERE. YOU STILL HAVE THE RISK OF TERRORIST ATTACKS ON PIPELINES, ETC. NOW, IF YOU DO GET FOREIGN AID FROM THE U.S. AND OTHER COUNTRIES IN TERMS OF REBUILDING THE INFRASTRUCTURE THERE, YOU WILL SEE SOME IMPROVEMENTS IN THE SECTOR. BUT I THINK TO EXPECT SIGNIFICANTLY INCREASED PRODUCTION TO START RIGHT NOW IS A LITTLE BIT TOO OPTIMISTIC.

THANK YOU FOR BEING WITH US. THIS MORNING. MAYRA VALLADARES TALKING TO US ON BLOOMBERG