EUROPE: OPEC experts say oil to remain dominant source of energy

European Union and OPEC (Organization of Petroleum Exporting Countries) experts met in Brussels Wednesday to discuss energy policies.

"While both parties welcomed an enhanced diversification of the energy mix, they also noted that, under all reputable scenarios, the world would continue to rely on oil as its dominant source of energy, to foster economic growth and social progress," said the European Commission in a statement.

They also noted that, according to most reputable international institutions, there are enough conventional and non-conventional oil resources to meet demand.

The one-day meeting was part of the formal EU-OPEC Energy Dialogue, which was established in December 2004, to exchange views on energy issues of common interest, including oil market developments, "Notable successes have already been achieved with the energy dialogue," noted the statement.

Wednesday's roundtable included sessions on: the energy outlook over time-horizons to 2030; the EU's energy, transport and climate policies; and OPEC's capacity-expansion objectives and market stabilization measures.

Both the EU and OPEC believe that cleaner fossil fuels technologies should be promoted.

A joint EU-OPEC study on investment needs in the refining sector and the role of the oil refining industry in oil markets is now in progress.

The parties concluded that continued dialogue and exchanges of views between the EU and OPEC constituted an important element in improving understanding among all parties and that this was in line with the mutual interests of supporting oil market stability and predictability, for the benefit of the world at large.

The event was co-chaired by Mr Heinz Hilbrecht, Director of the European Commission's Directorate for Conventional Energies, and Dr Hasan M. Qabazard, Director of OPEC Secretariat's Research Division.

The next event under the EU-OPEC Energy Dialogue will be the 4th Ministerial Meeting in Vienna on 21 June.

Islamic Republic News Agency

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UNITED KINGDOM: Government dilutes stake in British Energy to fund nuclear clean-up

The government said yesterday it was selling a £2.2bn stake in nuclear power generator British Energy as the company announced a sharp rise in profits and its first dividend since a state-backed rescue operation in 2002.

Under an accelerated sale process which began yesterday morning and closes this afternoon, 400m shares are being offered to institutional investors.

The sale will cut the government's 64% stake, acquired at the time of the 2002 bail-out, to 39% but the Department of Trade and Industry said it was committed to keeping a holding of at least 29.9%.

Trade and industry secretary Alistair Darling said the money raised from the sale of the stake would be used to help finance the clean-up of British Energy sites as existing nuclear plants are closed down.

British Energy is already looking at potential partners to develop its existing sites for new nuclear generation and said yesterday that it had been surprised at the extent of the interest which had been generated.

The decision to sell the British Energy stake comes as the government launches its public consultation on energy policy and was immediately criticised by Greenpeace UK. Ben Ayliffe, the organisation's senior climate and energy campaigner, said: "Before making any decision on whether to press ahead with new nuclear power stations the government is legally obliged to consult fully with the public. But if they intend to do this, why are they priming the energy market for nuclear before the consultation has even started?"

The chancellor, Gordon Brown, first announced that the government intended to reduce its holding in British Energy in March last year.

Yesterday the DTI defended the timing of the sale, arguing that it would reduce the reliance of the nuclear liabilities fund, which finances the clean-up programme, on British Energy's fortunes. A spokesman added: "[The sale] has no connection with the nuclear consultation about new build. It is about the company and its structure now."

British Energy, which produces up to a fifth of Britain's electricity needs from its eight nuclear and one coal-fired plant, said earnings before interest, tax, depreciation and amortisation had risen from £846m to £1.2bn in the year to the end of March.

Although output fell from 68.4 terrawatt hours to 58.4 terrawatt hours, because of higher unplanned cuts at three nuclear plants, the price at which British Energy sold its electricity was 38% higher than the previous year. Chief executive Bill Coley said he expected the company would have "a far better year ... in delivering output" in 2007/08.

The company said it was pressing ahead with plans to seek permission to extend the life of its Hinkley Point B and Hunterston B plants, the two nuclear plants closest to their planned closure dates.

In a separate development RWE said it was to go ahead with plans to build a £600m gas-fired power station at Staythorpe in Nottinghamshire.

Originally it had said it was planning to build a new plant at either Staythorpe or Pembroke in South Wales. However yesterday RWE said it was still considering building the South Wales plant, despite giving the go-ahead to the Nottinghamshire development. The company is also considering building two clean coal plants, which would cost more than £1bn each, but has yet to make a decision on nuclear power.

Andy Duff, chief executive of RWE npower said: "With a quarter of UK power plants due for closure over the next 10 years, it is vital that generators commit to the construction of large-scale plants to ensure the UK has a secure, affordable electricity supply into the future."

British Energy was privatised in 1996 but in September 2002, hit by sharp falls in the wholesale price of electricity, it was forced to ask the government for financial help or face the risk of going into administration. The government agreed to provide a £650m loan and took on many of the group's clean-up liabilities. As part of the rescue package, eventually approved by Brussels, the government effectively acquired ownership of 64% of British Energy's equity.

INDIA: Tata Power Q4 net profit down 33%

Tata Power Company (TPC) has posted a 33% fall in profit to Rs 92.73 crore in the quarter ended March while revenue decreased by 9% to Rs 1126.11 crore. “The company has debited a tax of Rs 181.74 crore from the revenue in this quarter that will be passed to consumers in 2007-08 only. This tax burden has reduced the revenue as well as the profit,” said Prasad Menon, managing director, Tata Power.

TPC is planning to raise Rs 640 crore through preferential allotment and another Rs 640 crore through issue of warrants to Tata Sons. The money will be used to finance the acquisition of 30% in Bumi Resources’ two coal mines and building other power plants. Tata Sons’ stake in the company will rise by 5% to 37% after the conversion of warrants.

The company has posted a 14% rise in profit to Rs 696.8 crore for the year ended March while revenue has increased by 4% to Rs 5059.31 crore. The company has reported a 5.9% growth in annual sales to 14,422 million units against 13,616 million units last year. TPC has recommended a dividend Rs 9.50 per share.

TPC is planning to generate an additional 100 MW from wind. The project will be completed in 2008. It is already generating almost 85 MW from wind. The company’s capex for the current fiscal will be Rs 2,670 crore, said Mr Menon.Tata Power shares fell by Rs 9.15 to Rs 590.85 on Wednesday ahead of the results. Britannia FY net dips 27%

Britannia has reported a drop of 27% in net profit to Rs 108 crore for the year ended March 2007 on sales of Rs 2,199 crore which grew 28%. Britannia attributed the drop to the inflation in all key commodities — wheat, oil and dairy products. In the last quarter, Britannia has reported net sales of Rs599 crore and net profit of Rs 40 crore, up 32% & 43% respectively over the corresponding quarter.

The board has recommended a dividend of Rs 15 per share of Rs10 each, same as the previous year. The Britannia stock fell by 3% to close at Rs 1557.65 on the BSE. For the first time this year, Britannia has consolidated its various businesses, the most significant being the dairy business.

AUSTRALIA: BHP's Kloppers Succeeds Goodyear as Chief Executive

BHP Billiton Ltd., the world's largest mining company, promoted Marius Kloppers to chief executive officer, giving him control over $17.5 billion of projects as costs rise and industry takeovers increase.

Kloppers, 44, who heads the division contributing more than half BHP's profit, succeeds Charles Goodyear on Oct. 1, the Melbourne-based company said in a statement today. He'd been named by analysts and investors as the most likely candidate.

South African-born Kloppers takes over a company that's delivered seven straight half-year record earnings due to soaring Chinese demand and commodity prices. Surging profits spurred more than $79 billion of takeover bids in the industry this year, including Alcoa Inc.'s hostile offer for Alcan Inc.

``Kloppers has been focused on building the revenue end of the company and he is very good at it,'' said Peter Chilton, who helps manage the equivalent of $1.4 billion at Constellation Capital Management, in Sydney. ``Growth and cost control will be very important.''

Shares of BHP have risen 23 percent this year, more than double the 10 percent gain on the benchmark Australian index. The stock rose as much as 75 cents, or 2.4 percent, to A$31.82, and traded at A$31.66 at 12:21 p.m. Sydney time.

Internal Candidates
Kloppers is group president of BHP's non-ferrous materials, which includes the aluminum, base metals and stainless steel materials units. The three units accounted for 57 percent of BHP's earnings before interest and tax. He beat out at least one other internal candidate, Chris Lynch, who runs the company's carbon steel business, for the job.

``We are in a time of considerable change in our industry with the emergence of new markets and sources of supply,'' Don Argus, chairman of BHP, said in the statement to the Australian Stock Exchange. ``Marius has an excellent strategic mind and delivers on his commitments.''

Kloppers also held positions of chief marketing officer and chief commercial officer in BHP. He drove iron ore price talks and contract negotiations with copper smelters, Constellation's Chilton said. He was also involved in BHP's 2005 acquisition of WMC Resources Ltd., then the world's fifth-largest nickel producer, for A$9.2 billion ($7.6 billion).

Since then, BHP hasn't made another major acquisition, while rivals Xstrata Plc and Cia. Vale do Rio Doce spent $34.4 billion between them buying Falconbridge Ltd. and Inco Ltd. respectively last year.

Takeover Focus
``Other companies have been aggressive in the marketplace in trying to build their overall positions,'' said Tim Barker, who helps manage $54 billion of assets at BT Financial Group, in Sydney. ``That's an area BHP needs to focus on.''

BHP could be a possible bidder for Alcan, Canada's largest aluminum producer, and has started ``early stage'' talks, the Globe and Mail said May 23, citing unidentified people. BHP and Alcan denied to comment. Alcan rejected a $27.7 billion bid from rival Alcoa Inc. and has been in talks with other suitors.

Shares of Rio Tinto Group, the world's third-largest mining company, rose to a record on May 9 on speculation of an approach from BHP. Rio denied the speculation.

``Whilst (Kloppers) may push it, I think the logic and reasoning behind any acquisition or purchase will have to meet stringent criteria,'' said John Colnan, senior resources analyst at Shaw Stockbroking Ltd., in Sydney. ``I can't see any change there.''

BHP's pipeline of projects range from iron ore mines in Australia to U.S. oil and gas fields. Goodyear in March said prices of copper, nickel and other metals will remain high for several decades as demand from China and India climbs.

The company may post record profit of $13.9 billion for the year ending June 2007, up from $10.45 billion the previous year, according to the average of 18 estimates compiled by Bloomberg.

Cost Challenges
BHP is struggling with rising costs at its projects as it competes for labor, equipment and materials. It has announced higher costs for its Alumar alumina refinery in Brazil, the Atlantis South oil project in the Gulf of Mexico, and its Ravensthorpe nickel project in Australia.

``The biggest challenge is going to be cost control and the blow out in costs in pretty much every area they are in,'' said Michael McCormick, who helps mange A$380 million at Leyland Private Asset Management, in Sydney. ``They are in a good position as far as demand is coming through from China on iron and copper.''

BHP, the world's largest producer of coal for the steel industry and third-biggest iron ore exporter, mines those products and more in Australia and controls Chile's Escondida copper mine, the world's largest. It also produces oil and gas.

Rivals Anglo American Plc and Rio Tinto Group, the world's second-and third-largest mining companies, also changed top executives this year. Cynthia Carroll becomes Anglo's new chief executive from March, replacing Tony Trahar. Rio's Leigh Clifford was replaced by Tom Albanese, 50, this month.

by Tan Hwee Ann and Jesse Riseborough
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eNergy Stocks: Oil and gas stocks caught their stride midday Wednesday

Oil and gas stocks caught their stride midday Wednesday, making solid gains as rising crude-oil prices helped the sector shake off early pressures from a China-inspired pullback in the broad market.

After tipping lower in opening trades, the Amex Oil Index (XOI: 1,370.63, +22.20, +1.6% ) was firmly in the green, up 0.9% at 1,361 points. The move recaptured all of the index's losses on Tuesday. The Amex Natural Gas Index (XNG : 0.00, 0.00, 0.0% ) was also ahead 0.9% and the Philadelphia Oil Index ($OSX : 252.22, +5.24, +2.1% ) was up 1.5%, with all of its 15 component companies showing gains.

Energy stocks extend gains
Crude oil for July delivery was up 31 cents at $63.46 a barrel on the New York Mercantile Exchange, carving back a piece of the steep $2.05 loss Tuesday that sent the contract to a three-month low.

That upward drift in oil was enough to mute damage in the sector from an early sell-off in the broader market triggered by Chinese officials' decision to triple taxes on trades on the Shanghai stock exchange in an effort to cool down one of the world's hottest stock markets.

The Dow Jones Industrial Average (.DJI :13,629.59, +108.25, +0.8% ) was also narrowly back into positive territory as investors gradually shrugged off a 6.5% drop in the Shanghai Composite index. A major tumble on the Shanghai exchange in February triggered the biggest global stock market correction seen so far this year.

Meanwhile, investors in U.S. energy stocks were shifting their attention to this week's fuel supply reports, delayed for release until Thursday to accommodate the Memorial Day holiday on Monday. Traders are predicting the Energy Information Administration will report a rise in U.S. crude inventories of about 1 million barrels. Gasoline stocks are expected to rise by 750,000 to 1.5 million barrels. See Futures Movers.

Exxon Mobil Corp. (XOM :83.74, +1.12, +1.4% ) was up 63 cents at $83.25 a share, wiping out the morning's losses. The world's biggest publicly traded oil company is hosting its annual shareholders meeting Wednesday in Dallas. More corporate intrigue at BP Plc (BP :67.32, +0.07, +0.1% ) , where the head of its refining and marketing operations, John Manzoni, is stepping down following a series of mishaps and scathing reports on the company's poor safety record.

Manzoni will be moving to the CEO job at Canadian oil company Talisman Energy (CA:TLM: news, chart, profile) by late summer. He will be replaced at BP by Iain Conn on June 1. Conn is a BP executive with responsibility for safety and operations. See full story.
BP shares traded in New York were last down 6 cents at $67.19.

Oil stocks close lower, pressured by crude
Oil stocks wrapped up the first day of a shortened work week with a loss Tuesday, as crude oil prices fell 3% to a 3-month low on easing fears of supply disruptions from Nigerian oil fields.

Downward pressure built through the first half of the session, leaving the Amex Oil Index
(XOI :1,368.91, +20.48, +1.5% ) 0.8% lower to close at 1,348 points. Occidental Petroleum Co. (OXY : 55.01, +0.94, +1.7% ) and Royal Dutch Shell Plc (RDSA : 73.79, +0.01, +0.0% ) led percentage decliners in the oil group, down 1.6% to $54.07 a share and $73.78, respectively.

Exxon Mobil Corp. (XOM : 83.66, +1.04, +1.3% ) , part of the Dow Jones Industrial Average (.DJI : 13,612.03, +90.69, +0.7% ) , shed nearly 1.1% to $82.62 a share. The company is holding its annual shareholders meeting in Dallas on Wednesday. Spain's Repsol S.A. (REP : 36.11, -0.03, -0.1% ) was the Amex Oil Index's sole gainer, up 0.4% at $36.14.

The Philadelphia Oil Service Index ($OSX : 251.98, +5.00, +2.0% ) fell 0.6% to 247 points, backing off Friday's gains. BJ Services Co. (BJS : 29.60, +0.40, +1.4% ) led decliners on a 3% drop to $29.20. Crude for July delivery tumbled $2.05 to $63.15 a barrel, a 3.1% retreat from Friday's close while July gasoline futures fell 4.4% to $2.30 a gallon as several key U.S. refineries resumed operations following repair outages. See Futures Movers.

The main pressure on crude came from suspension of a two-day strike by Nigerian oil workers after the government met their demands for higher pay and agreed to keep a state-owned majority stake in oil refineries it plans to sell. Earlier, oil prices shot higher on concerns a lengthy strike could severely curtail crude supplies flowing from Nigeria, which feed primarily European and North American refineries. See full story.

British oil giant BP Plc. (BP : 67.29, +0.04, +0.1% ) announced Tuesday it plans to return to Libya, reflecting improved relations between Britain and the Libyan government. BP also said it had signed a gas exploration deal with Libya worth at least $900 million. See full story.

BP's return to Libya would end a 33-year absence from the OPEC-member nation. Several U.S. oil companies have already resumed operations there after the government of Moammar Gadhafi agreed in 2004 to abandon its quest for nuclear and chemical weapons. BP shares traded in the U.S. finished the session with a 52-cent loss at $67.25.

The Amex Natural Gas Index (XNG :516.38, +6.69, +1.3% ) advanced 0.5% to 509.7 points, recovering quickly from a lower opening with good help from Western Refining Inc. (WNR : 48.98, +2.63, +5.7% ) . Western added 8.5% to $46.35. Western and Giant Industries Inc. (GI :77.00, -0.09, -0.1% ) said a federal court in New Mexico denied the Federal Trade Commission's request for a preliminary injunction against the companies' proposed $1.4 billion merger. El Paso, Texas-based Western said it believes the commission will appeal the ruling and seek an injunction to block the deal. Unless a court ruling halts the transaction, Western and Giant said they expect to close the deal Thursday afternoon. Western agreed last November to buy Giant for $77 a share. Giant Industries shares rose 1.2% to $77.09. Pogo Producing Co. (PPP :53.96, +0.66, +1.2% ) also gave a boost the gas index, up 2.4% to $53.30 a share on news it sold its Canadian subsidiary Northrock Resources to Abu Dhabi National Energy Co. for $2 billion. See full story.

CHINA: Sinopec Discovery May Hold 200 Million Tons of Oil

China Petroleum & Chemical Corp., the nation's largest refiner, made an oil discovery in western China that may be a third of the size of PetroChina Co.'s Jidong Nanpu, the country's biggest find in 50 years.

Block 12 at Tahe in Xinjiang holds geological reserves of as much as 200 million tons (1.47 billion barrels) of oil equivalent, the parent of Sinopec, as the Beijing-based company is known, said today. Tahe may add 15 percent to Sinopec's reserves and 5 percent to its net asset value, said Gordon Kwan, head of oil and gas research at CLSA Ltd. in Hong Kong.


The Tahe field is the third major oil and gas discovery China has announced this year as the world's fastest-growing major economy intensifies its search for energy supplies. Sinopec's spending on exploration will account for 45 percent of total 2007 expenditure as it drills in areas including the oil- and gas-rich province of Xinjiang.

``We expect Sinopec's crude reserves to grow 10 percent by 2010, which will mainly come from the Tarim Basin, where the Tahe field lies,'' Qiu Xiaofeng, oil analyst with China Merchants Securities Co., said today from Shenzhen in the southern province of Guangdong.

Sinopec's Shanghai-traded stock rose as much as 5.3 percent to 13.76 yuan and traded at 13.52 yuan at 2 p.m. China's benchmark CSI 300 Index was 5.7 percent lower after the government tripled the tax on securities transactions to cool a rally in domestic share markets. Sinopec's Hong Kong shares fell as much as 3.6 percent to HK$7.79 and last traded at HK$7.83.

Appraisal Drilling
Should 30 percent of Tahe's deposits turn out to be recoverable, the field's proven reserves may reach 500 million barrels, one-third of PetroChina's Jidong Nanpu discovery, Kwan at CLSA wrote in e-mailed comments today.

Before these volumes can be booked, more appraisal drilling will be required and they must be certified by third-party international audits to meet U.S. Securities and Exchange Commission standards, according to Kwan. This may happen by April next year at the earliest.

China wants new domestic oil fields to help curb a growing reliance on purchases of foreign crude, which climbed to 43 percent of total demand last year, Sinopec deputy planning director Qin Weizhong said May 24. The nation shipped in a record 3.6 million barrels of oil a day last month and 3.3 million barrels a day in March, customs figures show.

Sinopec parent China Petrochemical Corp. announced the Tahe discovery in its in-house newsletter today.

Longgang Field
PetroChina the nation's biggest oil company, will spend 40 billion yuan ($5.2 billion) by 2012 to develop the nation's biggest oil discovery in half a century, Chief Financial Officer Wang Guoliang said May 16.

PetroChina's Jidong Nanpu field in Bohai Bay off the northeast coast has geological reserves of 1.02 billion tons of oil equivalent, including ``proved reserves of original oil in place'' of 405 million tons and ``probable'' reserves of 298 million tons, PetroChina said May 3, using industry measures.

PetroChina plans to produce 4 billion cubic meters of natural gas from its Longgang discovery in Sichuan province by 2010, the China Securities Journal reported May 28, without saying where it got the information.

The Longgang field has reserves of at least 500 billion cubic meters, said the newspaper, which is affiliated to the official Xinhua news agency. The reserve exceeds estimates at Sinopec's Puguang gas field, it said.

PetroChina will announce details of Longgang's reserves by the end of this year, Chairman Jiang Jiemin said March 19.

Sinopec's Puguang gas field in Sichuan, announced last August, may have proven reserves of 356 billion cubic meters of gas by the end of last year, Sinopec said May 9.

Sinopec set up a subsidiary to bolster oil and gas exploration as the company seeks ``big and middle-sized'' oil and gas fields, Sinopec Group said yesterday.

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by By Wang Ying and Winnie Zhu

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EMIRATES: LNG from Qatar, Algeria to power Ratnagiri plant

Dabhol power plant seems to have been given a fresh lease of life. In what could ease gas supplies for Dabhol power, Petronet LNG (PLL) has tied up with companies in Qatar and Algeria to import 1.5MT of liquified natural gas (LNG), that will be used to run the power plant.

Ratnagiri Gas and Power Private, which is the new name for Dabhol Power, will get LNG at a cost of $4.93 per million British thermal units (MmBtu). Petronet will supply the LNG from its terminal in Dahej through a pipeline which is scheduled to be completed by June, Petronet managing director P Dasgupta told ET.

Initially, PLL will supply 1.5MT of LNG which will be increased to 2.1MT, when the power plant runs at its full capacity of 2,100MW.

The price of $4.93 per MmBtu will remain till September 2009. Meanwhile, the proposed LNG terminal will be completed near Dabhol plant and GAIL would tie up for the long-term LNG later on. GAIL has approached LNG suppliers in Australia, Malaysia, Indonesia, Abu Dhabi, Oman, Qatar, Egypt and Algeria for tying up supply from 2009. No commitment has so far been received, said a source.

Maharashtra is getting almost 700MW from Dabhol unit II, at Rs 5.01 per unit, since the project is being run on naphtha, which is costlier than gas. If the price remains same, then MahaDiscom, the distribution arm of Maharashtra State Electricity Board, is not likely to buy the power during the monsoon when the demand falls.

In the previous monsoon, MahaDiscom had stopped buying power from Dabhol that resulted in the shutdown of the plant.

Recently MahaDiscom, the sole customer of RGPPL, signed a power purchase agreement with RGPPL. Under the agreement, power will be supplied to MahaDiscom at a fixed cost of 98.50 paise and a variable cost of Rs 1.96, taking the total cost per unit to Rs 3.02, inclusive of VAT and interest component, said Ratnagiri Gas MD Chandan Roy.

Last month, RGPPL had assured 1,400MW electricity to MahaDiscom from June 2007. But sources say that schedule could be difficult as there have been problems in laying pipelines.

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The Blog of The DAY, from My Blog Directory

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Yes Yes Yes ... is a great support.
Today I got the news about Our Blog, your Energy Data Warehouse ...

So, the last
2, May .. we got the Blog of The Day, from FUELMYBLOG.COM

today we are The Blog of The DAY from

... for me is really interesting this kind of support, because we born one year ago and is growing step by step, to share the news, the stats, graphs, reports, interviews, about the energy affairs between students and everybody interesting in this kind of info.

2 AWARDS in JUST ONE month. A great responsability to US, so, we going to continuing making changes to be better for our visitors. Thank you to our visitor,
Thanks a lot

atte. Manuel T. Laveaga
BajaeNergy Group

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ASIA: BP control over Siberian gas field slipping away

by Richard Wray

BP faces being cut out of a huge Russian gas field as the country's licence regulator meets at the end of the week to discuss withdrawing its right to develop the Kovykta site in Siberia.

News of the meeting came as a court in Siberia yesterday threw out an appeal by BP's Russian joint venture, TNK-BP, against moves to take back the licence.

The spat over the £10bn field, which has reserves estimated to be large enough to supply the whole world for a year, has caused concern among oil analysts who see it as a further indication of the Russian government's desire to claw back assets owned by western companies.

Russia's environmental agency, RosPrirodNadzor (RPN), maintains that TNK-BP failed to hit its production targets. It was expected to produce an annual 9bn cubic metres of gas, but the regulator maintains that last year only 33.9m cubic metres was extracted.

The company blames the low production levels on a lack of government investment in local transport infrastructure, pointing out that even if more gas was produced it could not be delivered to customers outside the Irkutsk region.

It wants to build a pipeline to transport the gas to China, but Russia's state gas monopoly Gazprom has blocked the move. In fact the fight over Kovykta is seen by many analysts as a ruse to force BP to hand over control of the field to Gazprom. The deputy director of RPN, Oleg Mitvol, who has been vociferous about TNK-BP's failures, has shown no interest in TNK-BP's protestations about its failed Chinese pipeline saying the company should have been sure it had agreement for its plans.

"When the company [TNK-BP] signed its licence agreement, it had no guarantee from Gazprom. In the west, in any civilised country, you wouldn't sign an agreement without a 100% guarantee," he said earlier this year. RPN yesterday completed its inspection of TNK-BP's work at Kovykta and submitted its report to the Federal Subsoil Use Agency, Rosnedra, due to meet to discuss the issue on Friday.

"Our checks showed again that Kovykta is not complying with production terms," said Mr Mitvol yesterday. "We filed the documents to Rosnedra and it is now up to the agency to decide on the terms and timing of licence withdrawal."

TNK-BP is expected to continue to fight to keep its involvement in the field. A spokeswoman for the company said that the business that actually operates the field - Rusia Petroleum - will now lodge its separate appeal.

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MIDDLE EAST: Iran, India and Pakistan serious about gas pipeline

Iran, Pakistan and India are striving to sign an agreement to export natural gas from Iran to the two states.

The final date set by three sides for achieving a result on the so-called 'Peace' pipeline agreement is July 30 and all the sides will make their best efforts to prevent any delay.
Oil Minister Seyed Kazem Vaziri Hamaneh evaluated the views of all sides of the 'Peace' pipeline agreement as positive. He added US sanctions did not have any effect on the trend of the agreement describing such 'pressures' as 'nonsense'.

He clarified that as there is interest among the three sides to reach an agreement, the plan was going ahead for final signing. Although India and Pakistan, the former in particular, are under US pressures to suspend talks, the states are seriously pursuing talks and trying their best to achieve a mutual understanding on the cost of gas transfer from Iran. It seems that the two states will make their best efforts to reach common ground on the cost of gas transfer, despite differences.

Pakistan President Parviz Musharraf has stressed repeatedly that the gas pipeline would be constructed at any cost and Islamabad would not tolerate any pressure against the project.

On the other side, Indian state minister on oil and natural gas recently called the project technically executable and clarified that the three states would sign a general agreement by the end of June to construct the gas pipeline to transfer Iranian gas to India via Pakistan. According to the agreements, the new round of expert talks will be held in Tehran next Tuesday and Wednesday on the details of the agreement.

After the end of expert talks, officials of the three states including Pakistan deputy minister of oil and natural resources and advisor of Pakistan prime minister, India's deputy minister of oil and natural gas and special representative of Iran's oil minister on the 'Peace Pipeline' will continue talks.

It seems that for finalizing the agreement on peace pipeline, to achieve the accepted results until the June 30, next week talks are of particular importance.

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IRAQ - IRAN : The Persian Goverment wants to develop shared oilfields with Iraq

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Iran wants to develop previously untapped oil fields shared with neighboring Iraq, a move that will benefit the two countries which fought a war in the 1980s, an Iranian oil official said on Saturday.

“We hope to start working together. Both countries stand to gain. We would strengthen investment and make the best use of our shared fields,” Gholamhossein Nozari, managing director of National Iranian Oil Company (NIOC), told reporters.

“There is a general agreement between us (on the fields),” Nozari said, adding that the two countries had already held two rounds of discussion on developing the fields.

“We want to use ‘green’ fields,” he said, referring to previously untapped fields.

“We have many joint fields like Naftshahr, Paidar-e Gharb, Azar, Azadegan and so many others,” he said.

Iraq has already invited Iranian firms to bid for contracts to build at least four oil refineries in the country, Iraq’s Oil Ministry said this month. Iraq needs to attract investment from foreign firms to develop fields and boost output, Reuters reported.

Iran has finalized technical issues with China’s Sinopec on developing its Yadavaran oil field but legal and economic details are still being negotiated, Nozari said.

He also told reporters energy major Shell was still in talks about the possibility of taking a stake in Yadavaran.

Sinopec group, state-owned parent of Sinopec Corp, agreed in October 2004 to take the lead in developing Yadavaran and to buy 10 million tons of liquefied natural gas (LNG) a year for 25 years.

Shell has said it helped prepare a development plan for Yadavaran and had an option to participate in the project.

“The technical study has been finalized (for Yadavaran). We have some legal and economic issues that are pending. I have invited the COO (chief operating officer) of Sinopec to come and finalize these issues,” Nozari said. He did not give a date. Asked about Shell’s interest in taking a stake, Nozari added, “They are discussing this together with us.”

The Yadavaran field is expected to produce 300,000 barrels per day of crude.

“We had $17 billion in contracts last year and that shows we are attracting investors,” said Nozari, speaking on the sidelines of a conference in Tehran.

He added that other deals worth $36 billion were being discussed with foreign firms but did not list them all.

Alongside the talks on Yadavaran, he cited negotiations with China National Offshore Oil Corp. (CNOOC) to develop Iran’s North Pars gas field as one of the deals under discussion.

Nozari said the country welcomed technical, financial, and political cooperation with the energy customers, Petroenergy Information Network (PIN) said.

He added cooperation would beef up security in the world’s energy market.

He made the remarks at the RAVAND 2nd Annual Conference that started here Saturday to discuss Iran’s role in economic cooperation and security.

The NIOC chief pointed to Iran’s rich oil and gas reserves and added the country would welcome international companies’ participation in domestic projects.

“According to the prediction, the world’s demand for energy will increase by 1.6 percent by 2030 and will hit 17 billion barrels of crude oil,” he added.

The official said NIOC is third in the world rankings in terms of hydrocarbon reserves, output, refining capacity, and sales.

The two-day RAVANAD Annual Conference’s topics include “opportunities and threats between Iran and United Nations Security Council”, “Iran’s role in regional security and cooperation”, “trend of world oil market and geopolitical change”, energy as foreign policy’s tool”, “oil projects in the Persian Gulf and Caspian Sea regions”, “regional states’ participation in joint ventures”, “cooperation among gas producing countries”, “feasibility of establishment of OPEC-style gas body and its impact on energy security”, “challenges facing financial sector and direct attraction of foreign capitals and Iran’s experience”, “industrial growth in Iran and need in foreign markets”, “tariff and tax policies”, “private sector’s cooperation”, “emergence of environmental challenges”, and “trade opportunities”.

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TEXAS: ENRON and Kenneth Lay

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Kenneth Lay and Jeffrey Skilling, the former chief executives of Enron, have been found guilty by a Houston jury. Full story to follow shortly.

Skilling has been convicted on 18 charges including conspiracy, securities fraud and making false statements. He was found not guilty on insider trading charges.

Lay has been found guilty on six charges, including wire fraud

The widow of Enron Corp. founder Kenneth Lay is asking a judge to let her keep nearly $13 million in assets -- particularly the family condominium -- that the federal government is trying seize.
In a court filing last week, attorneys for Linda Lay asked U.S. District Judge Ewing Werlein Jr. to throw out the government's civil action, which was filed after Kenneth Lay's criminal convictions related to Enron's downfall were vacated following his death last year.

Federal authorities claim $12.7 million in assets they are trying to seize were "proceeds of the fraud proven in the criminal case against Lay."

If the entire complaint can't be thrown out, Linda Lay's attorneys asked that at least claims to the couple's home be dismissed.

"The facts alleged ... neither indicate nor suggest any intention on the part of Kenneth Lay to purchase the condominium for purposes of concealing, or disguising, or in any way facilitating an alleged money-laundering transaction," her attorneys, David Jones and Samuel Buffone, wrote in their 28-page motion.

Justice Department spokeswoman Jaclyn Lesch declined to comment on the motion Wednesday.

Linda Lay contends she, not her husband, is the owner of the assets the government is trying to seize. In his will, Kenneth Lay left all of his assets to his wife.

Prosecutors are looking to take three things: $2.5 million of the value of the couple's condominium in one of Houston's most exclusive high-rises; $10.2 million from a partnership named for both the Lays; and nearly $23,000 in a bank account.

Kenneth Lay had been convicted in May 2006 of 10 counts of fraud, conspiracy and lying to banks in two separate cases.

But in October, U.S. District Judge Sim Lake said Lay's death of heart disease on July 5 vacated his convictions because Lay couldn't challenge them.

Lake's ruling stopped the government's efforts through the criminal courts to seek millions more in ill-gotten gains prosecutors allege Lay pocketed by participating in Enron's fraud.

Jones and Buffone also argued that prosecutors can't use facts alleged in Lay's indictment to help their forfeiture case because his convictions were thrown out.

Earlier this month, Linda Lay filed a motion asking for a jury trial in the case. Enron, once the nation's seventh-largest company, entered bankruptcy proceedings in December 2001 after accounting tricks could no longer hide billions in debt or make failing ventures appear profitable.

Enron's collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.

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RUSSIA: Lukoil to gain sway with Gazprom venture

by Catherine Belton

The creation of a joint venture between Lukoil and Gazprom Neft, the oil arm of state gas monopoly Gazprom, is set to help privately-owned Lukoil win access to large oil projects at a time when it risked being sidelined.

Lukoil signed off on the creation of the joint venture with Gazprom Neft on Friday that will see them co-operate on new projects at home and abroad.

The deal will give Gaz-prom Neft a 51 per cent stake and Lukoil 49 per cent, while ConocoPhillips, which currently holds a 20 per cent stake in Lukoil, will be excluded from the venture.

The agreement comes as the state increases its sway over the energy sector, limiting Lukoil’s room for growth, and as both Lukoil and Gazprom Neft face increasing competition from state-controlled Rosneft.

Rosneft this month overtook Lukoil as Russia’s number one oil producer after it snapped up the remains of Mikhail Khodorkovsky’s Yukos oil empire in a series of bankruptcy auctions the state-run firm dominated.

Valery Nesterov, energy analyst at Troika Dialog, said that, without teaming up with Gazprom Neft, Lukoil risked being further outstripped by Rosneft. New laws on developing strategic new fields will limit access to companies that are majority Russian-owned, he said.

Even though the company is totally controlled by its Russian management, which holds 28 per cent of Lukoil’s shares, the combined amount held by foreign investors in the company could exceed 50 per cent, Mr Nesterov said.

“It also faces the strengthening growth of Rosneft and ahead is a battle for the major new oilfields that remain undistributed in Timan Pechora,” Mr Nesterov added, referring to the oil-rich province in northern Russia that is up for grabs.

Gazprom Neft, Rosneft’s state-run rival, has also been left by the wayside by Rosneft’s recent surge. Gazprom did not take part in any of the Yukos auction, mainly, bankers say, because it feared the legal risks of doing so. Yukos’s main shareholder GML has threatened a “lifetime of litigation” for any participant in the break-up of Yukos, which has been smashed by more than $33bn in back taxes. In teaming up with Lukoil, Gazprom Neft could also win vital expertise in helping boost its oil venture, analysts said. Since Gazprom created the oil arm in 2005 via its $13bn acquisition of Roman Abramovich’s Sibneft, the oil venture has been flagging.

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TEXAS: BP Must Face Trial Over Claims It Violated Blast Accords

by Laurel Brubaker Calkins and Margaret Cronin Fisk

BP Plc must face trial in November on claims it reneged on settlements with three victims of the deadly explosion at its largest refinery, a Texas judge said.

Judge Susan Criss in Galveston, Texas, today refused to end a lawsuit in which Alisa Dean, 33, Tracy Donaie, 33, and Henry Rivera, 39, are seeking about $42 million in joint future medical costs, plus $5 million each for mental anguish. They claim BP didn't pay their bills promptly as promised.

The ruling forces the company toward a Nov. 26 trial on claims once considered settled with the workers, three of the most seriously injured survivors of a March 2005 explosion at BP's Texas City, Texas, refinery.

``The facts are not unique, but everything else about this case certainly is,'' the judge said today in denying BP's request to decide the case in its favor. Criss presides over more than 3,000 lawsuits related to the explosion, which killed 15 and injured hundreds.

Under settlements reached soon after the accident, London- based BP, Europe's second-largest oil company, agreed to pay all the workers' past and future medical expenses promptly.

The company has so far avoided trial by settling roughly 1,350 blast-related claims, including all those involving worker deaths, from a $1.6 billion fund set aside for that purpose. BP has admitted responsibility for the explosion, which occurred when an octane-boosting unit overflowed as it was being restarted. Gasoline vapors spilled into an inadequate vent system and ignited in a blast felt five miles away.

Overdue Bills Paid
In October 2006, BP paid nearly $1 million in overdue medical bills for the three workers, saying the delay was caused by an administrative mistake.

The workers want to force BP to make lump-sum payments to cover their future medical expenses rather than pay their bills through reimburse-as-you-go medical trusts established by their settlements.

BP's lawyers urged Criss today to dismiss the case or risk a rush of other blast victims trying to renegotiate their settlements.

``They weren't stiffed on their bills,'' BP lawyer Ronnie Krist told Criss. ``They were paid late.'' If the victims are allowed to reopen their settlements, ``everybody's going to come back for a second helping,'' he said.

``The delay in paying the medical bills was unfortunate, but no one's medical care was affected,'' company spokesman Neil Chapman said in an interview.

Workers' Lawyers
The workers' lawyers said they don't want to reopen the settlements. Instead, they want BP to pay the workers immediately for their future medical expenses because the victims don't trust BP to honor their agreements.

``BP's lawyers are right. When a settlement is signed, that should be the end of the deal,'' David Perry, the victims' lawyer, told Criss. ``These injured people should not have to come back to court to make the defendant do what it promised to do. We're here because BP didn't keep its commitments.''

Dean, Donaie and Rivera were contract workers attending a meeting in a trailer about 120 feet from the operating unit that exploded. The trailer was demolished.

BP's Krist stressed that BP has fully funded the renewable trusts established to cover the workers' medical needs for the rest of their lives.

``Not one dime is owed,'' he told the judge. ``The future payments are not in jeopardy.''

Alton Todd, another BP lawyer, told Criss reopening the settlement might give the victims ``double recovery'' for their losses.

What Workers Want

``They want the money now, but they want the medical trusts too,'' Todd said. ``They can't have both.''

The workers' lawyers replied that they don't want bigger settlements from BP, just timely payment of what BP has already agreed to pay.

``It took us a year, a lawsuit and hospital liens to get timely performance'' of the original settlement terms, said Gerry Birnberg, another lawyer for the workers. ``BP victimized these people on March 23, 2005. Then BP victimized them again by depriving them of the peace of mind that their medical bills would be taken care of.''

The case is Dean v. BP Products North America, 06-CV-0387, in the 212th Judicial District Court, Galveston County, Texas (Galveston).

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IRAN -TAJIKISTAN : Sangtoudeh 2, good start for Iran-Tajikistan energy cooperation

Tajik Minister of Energy and Industry Sherali Gulov said that implementation of Sangtoudeh 2 power plant project in Tajikistan in cooperation with Iran would be a good start for bilateral cooperation in energy sector.

Gulov was speaking in a meeting with Governor General of the northeastern province of Razavi Khorassan Mohammad-Javad

Pointing to agreements reached between Iran and Tajikistan during recent visit by Tajik President Imomali Rakhmon to Tehran, the minister said the two countries enjoy great potentials to bolster economic cooperation in various economic fields including industries and energy.

Tajikistan's rivers have capacity to generate 527 billion kilowatts electricity power annually, he said and expressed his country's readiness to give implementation of other projects in energy sector to Iran.

The Tajik minister noted that building joint factories for exploitation of mines and production of aluminum products and construction materials in Tajikistan would be beneficial for both states.

Mohammadizadeh, for his part, stressed on historical, cultural and linguistic commonalties between Iran and Tajikistan and said future cooperation between Khorassan Razavi province and Tajikistan would be constructive for the sides.

He expressed Iran's readiness to sell 2,000 autos to Tajikistan, establish a center to repair and provide after-sale services for Iranian cars, auto spare parts and construct a factory to produce plastic utensils in Dushanbe.

Governor general of Khorassan Razavi arrived in Dushanbe Thursday evening at the head of an economic delegation to sign a memorandum of understanding for bolstering economic cooperation.

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INTERVIEW: The Caspian Pipeline by Marc Franco from the Delegation of the European Commission to Russia

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Interview by Interfax

Head of the Delegation of the European Commission to Russia Marc Franco spoke with Interfax after the Russia-EU summit in Samara

The question arises “as to whether the pre-Caspian pipeline will make the Transcaspian pipeline redundant”

Mr. Franco, could you comment on the results of the Russia-EU summit in Samara? Where, do you think, are Russia and the European Union in their relations now?

I would characterize the Samara summit as useful because we came together on some important conclusions and we worked together. Both sides stressed that there is important potential for further development and both sides stressed that the task of the politicians, and, of course, the diplomats, the technicians, and the officials is to make sure that this potential for further development is realized. We identified a number of outstanding issues and unfortunately we were unable to solve these issues because they are of a technical nature and rather complex. The Summit concluded that work at the technical level, be it on exports of meat from Poland or other issues, needs to be tackled at the technical level. Therefore officials on both sides have received an impulse to step up their work and to make sure that technical problems don’t drive us apart.

What can you say about statements by some Russian analysts that the old Europe is dancing to the tune of newly admitted EU member-states?

I don’t think this is a very fair representation of the situation. There are outstanding problems with the newer Member States. But there are also some outstanding problems with the older Member States, I am thinking of such issues as export duties. I think that unfortunately we have a wide range of technical and sometimes political issues that affect a very wide selection of members of the European Union.

The Russian President’s Special Representative for Relations with the EU Sergei Yastrzhembsky recently said that since Moscow and Brussels had failed to begin talks on a new framework treaty, the existing agreement on partnership and cooperation would be prolonged until December 2008? What do you think about that?

The end of this year is the time by when the existing agreement has to be extended in order to ensure legal continuity in the relationship. It was clear already some time ago that the new agreement would not be ready by December this year. Even if we had started these negotiations in November last year, it is unlikely that before 2008 or even say 2009 we would have a new ratified agreement because there is a minimum three year gap between the moment you start negotiating and the moment the agreement comes into force. But this has been known from the beginning and is not dramatic.

What are the prospects for solving the problem of Polish meat?

There is an ongoing consultation process at the technical level and the summit basically gave an additional impetus to this consultation process and from both sides the negotiators, the technicians have been asked by the Presidents to speed up the process. President Putin made a statement to this effect on May 21.

How would you comment on a Caspian gas pipeline deal agreed by the Presidents of Russia, Kazakhstan and Turkmenistan? Do you agree with the U.S. Energy Secretary that this project will not diversify gas supply routes to the EU?

I think there are two aspects to the issue. First of all there is the aspect of overall supply of gas. In terms of overall gas supply to the European Union this is good news because there is room for capacity of supply from some Asian countries. So this is a positive step. Secondly, if we are talking in terms of diversification of supply routes, this raises the question as to whether the pre-Caspian pipeline will make the Transcaspian pipeline redundant. As far as I have read some comments in the press this is not the case because Turkmenistan has indicated that there is enough gas to supply two pipelines, so one does not seem to exclude the other.

As I just said it is a mixed signal. On the one hand, in terms of regular supplies it is a positive signal, on the other hand, it is a mixed signal in terms of potential pipelines.

How would you comment the Marches of Dissent and rallies in front of your Moscow office during the Samara summit?

As President Barroso and Chancellor Merkel said and stressed during the summit, freedom of expression, the freedom to demonstrate, is a very fundamental principle of democracy, and therefore we have shared with President Putin our apprehensions about obstacles placed in the way of political demonstrations. As far as the demonstration in Samara is concerned, one gets the impression that this issue has been taken seriously. Unfortunately, some of the leaders of the opposition who wanted to be present in Samara were prevented from going and this, of course, is regrettable.

As far as the demonstration outside the Delegation is concerned, we absolutely accept this demonstration as an expression of the opinion of the demonstrators. We will listen to what they have to say. On May 21 we received a petition. The Deputy Head of Delegation met them and listened to their arguments. We will certainly transmit the arguments expressed by the demonstrators to our Headquarters and to the embassies of the relevant countries.

Is the European Commission ready to assist in the release of Russian citizen Mark Siryk, who was arrested in Tallinn?

The issue is outside the competence of the European Commission, and would therefore need to be addressed to the Estonian authorities. The European Commission cannot comment on ongoing legal cases.

The Russian Foreign Minister Sergei Lavrov has said that the deployment of U.S. anti-missile defense components in Europe is a boundary that puts an end to the principle of solidarity in the EU. Can this be regarded as double standards, considering Brussels’ support of the Estonian authorities during a conflict with Russia over the removal of a monument to the Soviet Soldier-Liberator?

I'm not sure that it is a case of double standards. It's worth underlining that European security and defense policy is a work in progress. At this stage I would say there is no monolithic European security and defense policy. The common European security and defense policy is something that we are constructing. On some issues we have a common policy, on some others it is still very much the responsibility of the national governments, but this is how we function, and this is something we have to accept.

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