OPEC: Organization of Petroleum Exporting Countries likely to reject output rise

Various Organization of Petroleum Exporting Countries officials have said there is no need to take steps to raise oil production rates at the group's summit in Vienna.

Officials from Qatar, Nigeria, and Libya have said Organization of Petroleum Exporting Countries doesn't need to raise production because the US economy is slowing and inventories are rising, Bloomberg News reported on Thursday.

"The world has sufficient supply, even oversupplied in some places," Qatar's Abdullah bin Hamad al-Attiyah said yesterday. "So to increase, I don't think this is on the agenda."

Saudi Arabia's oil minister, Ali al-Naimi, said oil market fundamentals are "very sound" and declined to comment further.

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The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world's oil, would consider an output cutback "if the world economy moves toward a recession," al-Attiyah said.

Oil has fallen from a record $100.09 a barrel on Jan. 3, but rose 69 cents yesterday to settle at $92.33 in New York.

Officials from Iran, the United Arab Emirates, Iraq, and Ecuador have also said that oil supplies are sufficient, rejecting US President George Bush's January 15 request for increased supply.

"There is no need to take any action," Shokri Ghanem, Libya's top oil official, said yesterday. "There should be caution" because of slowing economies, he said.

The economy is "not doing too well," Organization of Petroleum Exporting Countries president and Algerian Energy Minister Chakib Khelil said in Vienna yesterday. Oil market stockpiles "are at a good level," though demand will decline in the second quarter, he said.

Organization of Petroleum Exporting Countries will keep its output target unchanged at 29.67 million barrels a day when it meets in Vienna tomorrow, according to 29 of 32 analysts surveyed by Bloomberg News.

Source: PressTV
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AUSTRALIA: India can access Australian gas reserves

India’s global hunt for energy could take a new turn with Australia offering to supply gas on a sustained basis through long-term contracts. Australia has reserves to meet India’s growing energy needs, but the new Australian government wants to tap them only on the basis of assured supply avenues. Investments can be pumped in to tap gas reserves if off-take is assured, said Australian trade minister Simon Crean, who visited India recently.

In an exclusive interview with ET, he said India could get gas at cheaper price by getting into long-term contracts. Delay in finalising such contracts could lead to higher prices, he emphasised. “The problem is that while we have the reserves, those reserves are not going to be developed unless the demand commits to the long term. Committing to the long term also means coming to grips with seeing it in the context of market price, which is a harder thing for gas because of the length of time in it,” Mr Crean said.

Australia is a key source of coal supply for India’s thermal power plants and the two countries feel that the synergy can be taken forward to cover gas, too. The long-term tie-up talk for gas comes at a time when Australia has urged India to commit to non-proliferation before seeking uranium supplies. While the broad consensus is Australia’s natural resources provide synergy to India’s energy needs, ways have to be worked out for committed supplies over a long term.

“There are ways in which they (the synergies) develop that over the longer term. Those are the institutional problems that you have got in terms of gas being supplied for other purposes, the agriculture community with fertiliser and the like, and the domestic constraints on that price,” Mr Crean said.

He was confident that Australia could be key source of India’s energy security. “We have commissioned a study through ABARE (the Australian Bureau of Agricultural Resource Economics) which I presented to the Planning Commission deputy chairman Montek Singh Ahluwalia,” Mr Creansaid.

“The study tries to set out the framework and the opportunities for energy supply and energy security in future. Australia is more than willing to understand the importance not just of the provision of this as an export and a revenue earner, but also contributing to regional security through sustaining economic growth.” That is why I talk in terms of not just the bilateral relationship but the regional dimension of it and the way in which we can sensibly use trade in an integrated way,” he said.

Surce: India Economic Times
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ASIA: CNOOC Aims to Increase Output by 18 per 100 to Supply China

CNOOC Ltd., China's largest offshore oil producer, aims to increase crude oil and natural gas output by as much as 18 percent this year as economic growth spurs energy demand.

CNOOC targets production of between 195 million and 199 million barrels of oil equivalent this year, compared with last year's output of between 169 million and 171 million barrels, the Beijing-based company said in a statement today.

Economic growth that reached 11.4 percent last year has forced China's oil companies to scour the planet and drill deeper to meet the nation's energy needs. Planned capital spending may jump 44 percent this year to $5.24 billion as CNOOC brings 10 new projects on line and seeks new fields.

``2008 is a new exciting year with rapid growth in production,'' CNOOC Chairman Fu Chengyu said in the statement. ``The quality and quantity of our assets will be further optimized, bringing better return for the shareholders.''

CNOOC has jumped 65 percent in Hong Kong trading in the past year, ranking the stock fifth among the 59 members of the Bloomberg World Oil & Gas Index. The city's benchmark Hang Seng Index has gained 20 percent. CNOOC fell 0.2 percent to HK$11.06 before today's production report.

Panyu Delays
Production in 2007 was little changed from the previous year partly because of delays to the start-up of the Panyu oil field in the eastern part of the South China Sea.

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The company plans to spend $1.04 billion on oil and gas exploration in 2008, CNOOC said in the statement. The state- controlled explorer aims to replace the oil and gas reserves it depletes at a rate of 100 percent this year.

CNOOC set its 2008 budgets based on a projected benchmark New York oil price of $70 a barrel. Crude oil surged 57 percent last year to average $74.09 a barrel.

The oil explorer plans to more than double production at the Bohai Bay field to more than 27 million metric tons, or about 542,000 barrels a day, in five to six years as new fields come on stream, CNOOC Vice President Chen Bi said Oct. 12.

Production from Bohai Bay in northeastern China reached the equivalent of 269,126 barrels a day in 2006, 39 percent of CNOOC's total, Chen said. The field has net proven reserves equivalent to 1.1 billion barrels, which is 60 percent of CNOOC's total, he said.

CNOOC restored production at the Liuhua field in the South China Sea in June, more than a year after a typhoon shut it down, the oil explorer said in August. The field produces 23,000 barrels a day.

Talisman Energy Inc. bought a stake in Indonesia's Tangguh liquefied natural gas project from CNOOC Ltd. for $212.5 million, settling a lawsuit over a stake in the $6.9 billion project. Talisman, a Calgary-based company with a fifth of its reserves in the North Sea, bought a 3.06 percent interest in the BP Plc- led project, CNOOC said yesterday.

The Tangguh LNG project in West Papua province has the capacity to produce 7.6 million tons of the fuel a year, CNOOC said.

Source: Bloomberg |by Ying Lou
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ASIA: Sinopec Plans 16 Billion Yuan Central China Expansion

China Petroleum & Chemical Corp., supplier of two-thirds of the nation's auto fuels, plans to spend about 16 billion yuan ($2.2 billion) expanding plants in central China, a company official said.

Capacity at the Changling refinery in Hunan province will be doubled to 10 million metric tons a year by 2010 at a cost of about 10 billion yuan, the official said, asking not to be named because of company rules. Sinopec, as China's largest refiner is known, will spend 6 billion yuan upgrading its Baling plant, which turns output from Changling into chemicals.

Sinopec's plan comes as China strains to meet fuel demand in an economy that expanded 11.4 percent last year. The state yesterday ordered refiners to ensure supplies after snowstorms disrupted transportation. China may use 25 percent of global chemical output by 2015, Exxon Mobil Corp. said in May.

``The project shows the company's concern about rising fuel demand in central China, where there is a lack of large-scale oil refineries,'' said Qiu Xiaofeng, an oil analyst with China Merchants Securities Co.

Expansion work at the Changling refinery may start this year, the official said. Huang Wensheng, a spokesman for Beijing-based Sinopec, declined to comment.

Sinopec increased oil processing by 6.3 percent last year to 155.58 million tons, about 3.13 million barrels a day, the company said Jan. 21. The state-controlled oil refiner supplied almost two-thirds of China's refined oil products in 2006.

Yangtze River
Sinopec may enlarge five oil refineries along the Yangtze River, Company Secretary Chen Ge said in May. The Beijing-based oil and gas producer is studying a plan to expand plants at Anqing, Changling, Baling, Jingmen and Wuhan, Chen said May 29, without giving details on the budget or capacity.

Parent China Petrochemical Corp. said in August that it signed a cooperation agreement with the provincial government of Hunan to promote energy projects. China Petrochemical will expand refining capacity and its sales network for oil products and gas in the region, the company said, without giving details.

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Hunan, where gross domestic product grew 15 percent in 2006, is the 13th-biggest economy among China's 31 provinces and major urban areas.

China plans to increase annual oil-refining capacity by 25 percent to 355 million tons by 2010 to meet rising demand for gasoline, diesel and chemicals in the world's fastest-growing major economy.

Government Order
The government ordered the nation's two biggest oil companies to boost fuel supplies to ensure the delivery of food and major raw materials as the heaviest snowstorms in decades hit parts of the country, the National Development and Reform Commission said yesterday.

China National Petroleum Corp. and China Petrochemical are heeding the government call and increasing fuel supplies, the Xinhua News Agency reported, citing people it didn't name.

China National Petroleum issued notices to the company's refineries and sales units, instructing them to increase crude processing volumes, state-run Xinhua said. China Petrochemical activated its emergency reaction plan to increase fuel supplies, Xinhua said in a separate report.

By Winnie Zhu

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GEOPOLITIC: United States and Turkey go for energy cooperation deal

President George W. Bush has green-lighted a civilian nuclear cooperation deal with Turkey, saying that private-sector proliferation worries have been addressed, the White House said Wednesday. Bush on Tuesday sent the US Congress a July 2000 agreement, signed by then-US president Bill Clinton, that would clear the way for transfers of nuclear know-how to Turkey's planned civilian atomic sector, it said.

"In my judgment, entry into force of the Agreement will serve as a strong incentive for Turkey to continue its support for nonproliferation objectives and enact future sound nonproliferation policies and practices," Bush said in a letter to lawmakers dated Tuesday.

"It will also promote closer political and economic ties with a NATO ally, and provide the necessary legal framework for US industry to make nuclear exports to Turkey's planned civil nuclear sector," it said.

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Lawmakers could pass legislation blocking the accord.

The agreement "permits the transfer of technology, material, equipment (including reactors), and components for nuclear research and nuclear power production," a White House official said.

"It does not permit transfers of sensitive nuclear technology, restricted data, or sensitive nuclear facilities or major critical components of such facilities," the official said.

The pact has an initial term of 15 years and provides for automatic renewal, in five-year increments, unless either side terminates it, according to the official.

The deal stalled shortly after being signed in July 2000 because US agencies received "information implicating Turkish private entities in certain activities directly relating to nuclear proliferation," the White House said.

"The pertinent issues have been sufficiently resolved," it said.

Source: Agence France Presse
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EUROPEAN UNION: Bulgarian leader urges European Union to allow reactors' reopening

Bulgaria's President Georgy Parvanov urged the European Commission Sunday to order a new peer review to reexamine safety at two shut reactors at its Kozloduy nuclear plant and allow for their reopening.

"There is not a single survey proving the reactors are unsafe to operate," Parvanov said at a press conference marking the first year into his second mandate.

"But we signed a treaty for their closure with the European Union and we have been a member of the bloc for one year now. Our only chance to achieve the reopening of the two blocs is to make the European Union reexamine their safety by demanding a new peer review," he added.

Bulgaria agreed to close down two 440-megawatt reactors at its single nuclear power plant at Kozloduy in late 2006, to secure accession to the European Union which considered them unsafe to operate.

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This left Sofia, which joined the 27-member bloc last year, with only two 1,000-megawatt facilities in operation, as Bulgaria had already shut down the plant's two oldest reactors in 2002.

"If the European Commission decides that it does not have the capacity to conduct such a peer review and assigns the International Atomic Energy Agency (to do it), we will agree. We will accept the result of the review," Parvanov said.

His call for reopening the two reactors was aired earlier this month by the country's energy minister Petar Dimitrov.

The International Atomic Energy Agency already conducted safety checks on the reactors on the eve of their closure and said it did not have any objections to their state of operation.

But Brussels insisted the blocs should be closed after its own experts concluded that Soviet-built reactors of their type could not be modernised at a reasonable price.

The reactors' closure ended Bulgaria's role as a major electricity exporter in the Balkans, drastically reducing its exports from eight billion kilowatt-hours in 2006 to 300 million kilowatt-hours in 2007.

To compensate for the lost capacity, the government signed on January 18 a four-billion-euro (5.86-billion-dollar) contract with the Russian company Atomstroiexport and its subcontractors Areva and Siemens to build a new nuclear plant at Belene on the Danube.

The first of the two 1,000-megawatt blocs at Belene is expected to start operating in 2013 and the second a year later.

Source: Agence France Presse
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AFRICA: Egypt to launch tender for nuclear reactor in February

Egypt said on Saturday it would launch a tender for offers in February to build its first nuclear reactor, the official MENA news agency reported.

"The nuclear energy agency will in February launch an international tender for offers to build Egypt's first nuclear reactor worth 1.5 to 1.8 billion dollars," MENA said.

"The type of reactor and its constructor will be chosen according to international safety standards and reputation as well as costs," MENA said. "The offer is open to all countries."

On January 10, Egypt said the first nuclear reactor will be built at Dabaa on the Mediterranean coast, west of the port of Alexandria.

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Last October, President Hosni Mubarak announced the beginning of a national plan for setting up nuclear plants for peaceful uses.

France has offered to share its nuclear expertise with Egypt, which initiated a nuclear energy programme in the 1970s but abandoned it in 1986 after the Chernobyl disaster in the Ukraine.

Source: Agence France Presse
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GEOPOLITIC: World free of nukes

Since the beginning of the Atomic Age, policymakers and scholars have attempted to come up with formulas to constrain the nuclear genie. In mid-January, in an effort to move this ambition forward, former senior decision-makers -- Secretaries of State Henry Kissinger and George Shultz, Defense Secretary William Perry and Senate Armed Services Committee Chairman Samuel Nunn -- released "Toward a Nuclear-Free World," a report published in the Wall Street Journal designed to advance nuclear abolition.

The timing would seem propitious. In December 2007, in voting down a new nuclear weapon (the reliable replacement warhead), Congress mandated that President Bush and his successor rationalize the U.S. nuclear arsenal by the end of 2009 to justify future appropriations. As a result, a disarmament proposal advanced by such statesmen and endorsed by dozens of prominent experts should be taken seriously. Unfortunately, it cannot.

At first blush the Shultz et al. proposal appears to be promising for nuclear-arms controllers, who could object to extension of the 1991 Strategic Arms Reduction Treaty, deeper nuclear reductions beyond those promoted by the Bush administration or increasing the warning time for the initiation of nuclear use. Likewise the call for cooperative ballistic missile defense, increased security at nuclear materials sites, strengthening non-proliferation verification and implementation of the treaty banning nuclear weapons testing. If constraining nuclear development or use marks the objective, the answer is no one.

However, if the aim truly is the elimination of nuclear arms -- the authors declared an objective to eradicate the "threat to the world" -- the proposal falls far short. A review of what could be done versus what the authors say should be done supports this conclusion.

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-- Set a timeline for the elimination of nuclear arsenals, not an "agreement to undertake further substantial reductions." The authors' call for extension of the monitoring provisions of the 1991 Strategic Arms Reduction Treaty coupled to undefined reductions below the 1,700 to 2,200 nuclear warheads allowed under the 1992 Strategic Offensive Reductions Treaty with Russia may be admirable, but it does not amount a "nuclear-free world." Absent weapons elimination benchmarks -- including disposal of non-deployed warheads -- the authors' plan amounts to maintenance of diminished but still substantial weapons caches.

-- Separate nuclear warheads from delivery systems. To reduce the risk of nuclear war prior to abolition, the authors advocate increased warning and decision time for nuclear initiation. They speak abstractly about mutually agreed upon "physical barriers in the command-and-control sequence" to prevent premature nuclear launch. Only warhead separation from missiles meets the objective. Certainly, if Pakistan can separate its bombs from delivery vehicles to allow time for prudent decisions, so can the United States, Russia and others.

-- Eliminate long-range ballistic missiles except those used for commercial and scientific research. Such an approach nullifies the authors' promotion of ballistic missile defense. A precedent for negotiated missile elimination includes the 1987 Reagan-Gorbachev Intermediate Force Reduction Treaty. Elimination also finds precedent in the unilateral withdrawal and destruction of obsolete delivery systems from arsenals.

-- Eliminate all high enriched uranium and separated plutonium rather than enhance security at sites holding such material. The authors call for countries to apply the highest standards of security to nuclear materials. But only removal and disposal will prevent access by terrorists or nuclear ambitious nations.

-- Ratify the comprehensive test ban treaty. The U.S. Senate failed to do so during the Clinton administration. The authors propose a "process" to get the treaty implemented but fail to call upon the most prominent hold out to adopt the agreement it gave birth to.

-- Go beyond the Additional Protocol to verify that countries are not using civil nuclear programs for military purposes. The protocol allows International Atomic Energy Agency inspection of all suspect nuclear sites. Many countries have yet to adopt it, but the protocol itself is imperfect. Placing all atomic plants under IAEA co-management would do a better job to prevent nuclear breakouts.

-- Provide teeth to deal with nuclear violators. The authors fail to furnish a strategy to combat atomic cheats. Given the gravity of an attempted nuclear breakout, the international community must have "in place" a dedicated military capacity to stop any nuclear fudging.

Shultz and his colleagues conclude, "Progress (toward a nuclear-free world) must be facilitated by a clear statement of our ultimate goal."

Unfortunately the goal is muddled by the authors' own formulation. If nuclear disarmament is the objective, we can do far better.

(Bennett Ramberg, Ph.D., J.D., served in the Bureau of Politico-Military Affairs in the George H.W. Bush administration. The author of three books and editor of three others on international security, he has written for such prestigious journals as Foreign Affairs and the Bulletin of the Atomic Scientists. Ramberg's Op-Eds have appeared in all major newspapers in the United States and many around the world.)

Source: United Press International|by Bennett Ramberg
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AFRICA: Areva ready to bid for two reactors in South Africa

A consortium led by French nuclear giant Areva is preparing to bid for two third-generation atomic reactors to be built in South Africa, a spokesman for the group said Tuesday. Areva, construction and communication conglomerate Bouygues and electricity giant EDF have teamed up with South African engineering firm Aveng for the project, with a formal offer to be made to Pretoria at the end of January.

South Africa wants to build new nuclear reactors to meet growing demand for electricity and has also asked US-Japonese Westinghouse to made a bid.

Areva is building two second-generation nuclear reactions near the Koeberg power station near Cape Town.

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President Nicolas Sarkozy is scheduled to pay a visit to South Africa on February 26 and 27.

Areva signed an eight-billion-euro (12-billion-dollar) deal in November to deliver two reactors to China and agreements to develop civilian nuclear power were inked with the United Arab Emirates, Algeria and Libya.

Source: United Press International
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AFRICA: Umaru Yar'Adua eyes emerging Nigeria

Nigerian President Umaru Yar'Adua is hoping to transform his energy-rich country into a leading world player on the energy market and beyond during the next decade by improving the country's oil and gas production as well as its infrastructure.

In a recent meeting with officials from General Electric -- led by GE Vice Chairman John Rice -- Yar'Adua said his administration recognized the need to focus on developing infrastructure with the help of multinational companies if it hoped to improve oil and gas production in years to come.

"We urgently need this partnership in our effort to develop Nigeria and transform it to be among 20 top nations in the world by 2020," he said earlier this month while expressing his hope Africa's No. 1 oil producer would one day be considered among the world's leading developing nations and one of its largest economies.

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Reaching such goals won't be easy, however, considering the country's current state and the continuing unrest in the resource-rich Niger Delta, where armed militant groups have been blamed for a 20-percent decrease in oil production alone over the last few years to 2 million barrels per day.

Yar'Adua's efforts to negotiate a viable peace settlement with the militants have produced mixed-to-poor results in recent months with a tenuous cease-fire declared by one militant group going unrecognized by another.

A recent increase in violence in the delta forced Royal Dutch Shell to shut down operations. Its terminal had already been shut down once before because of violence and reopened in October 2007 after more than a year of halted production. Since its reopening, the facility, which can produce some 450,000 bpd, had been operating at a fraction of its capacity.

Militant groups like the Movement for the Emancipation of the Niger Delta have in recent weeks made good on promises to increase attacks on petroleum installations, raising fears that already-hampered production would be stymied further.

The attacks came amid efforts by Yar'Adua to negotiate a peace settlement with the militants. For months, it appeared Yar'Adua's efforts would pay off as MEND said it would honor a cease-fire brokered while the president attempted to make good on promises to improve the lives of the residents of the impoverished delta.

Despite generating more than $300 billion worth of crude from the southern delta states over the last three decades, poverty and high unemployment persist. Environmental degradation due to oil and gas extraction, and a lack of basic resources such as fresh water and electricity, have angered some of the region's youth and incited them to take up arms.

Yar'Adua said that in 2008 the delta's security would be chief among his concerns, adding the government would allot one-third of the country's $20 billion budget for the military and development projects in the region. Those promises, however, haven't dissuaded one militant leader, Ateke Tom, and his Niger Delta Vigilante Movement from waging numerous attacks in recent weeks.

Tom said recent attacks were in retaliation for the "unprovoked destruction and invasion" of homes at his base in Rivers state by Nigeria's Joint Task Force.

Analysts say the recent round of violence won't last much longer, as Tom and his militant group recently accepted a cease-fire.

"The recent spate of violence is unlikely to last for more than another several weeks into early February at the most, since already political pressure has led Tom to declare an unverified unilateral cease-fire," said Eurasia Group Africa analyst Sebastian Spio-Garbrah.

Despite the violence hampering production, analysts are predicting an improved security situation for the delta in months ahead and have forecast that Nigeria would exceed its production goals for 2008, set by the Organization of Petroleum Exporting Countries, as new offshore facilities are expected to come online.

Those predictions, it appears, have in part fueled Yar'Adua's hope that Nigeria is poised for a turnaround, which some say is far from near.

"It would take a tremendous effort to do that," said Mark Schroeder, a Sub-Saharan Africa analyst for Stratfor Strategic Forecasting Inc. "They would first have to demonstrate that they could stabilize their own sector, curtail militant violence and expand out.

"That's not something that's going to happen overnight."

Source: United Press International | by Carmen Gentile
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OIL WORLD: State-controlled energy firms versus Private energy firms

State-controlled energy companies OAO Gazprom and Petroleo Brasileiro SA are winning the battle for investors as their governments squeeze Exxon Mobil Corp., BP Plc, and Royal Dutch Shell Plc for access to oil and gas.

Russia's Gazprom forced BP and Shell last year to cede control of gas deposits that can supply Asia for more than five years, while Brazil pulled 41 exploration licenses from an auction after Petrobras found an 8-billion barrel oil field in November.

Governments are demanding more of the industry's record revenue because crude prices have tripled since 2002, and drilling contracts give host nations a bigger share of output when commodity prices rise. The loss of oil in Russia, Kazakhstan and Venezuela is felt more keenly because production from older fields in the North Sea, Gulf of Mexico and Alaska is declining as easy- to-tap reserves age.

``You're starting to get a cap on just what these guys can earn,'' said James Halloran, who helps manage $35 billion at National City Private Client Group in Cleveland. ``Production is starting to peak. I'm concerned about what these guys are going to have in terms of reserves going forward.''

Petrobras shares gained 46 percent in the past six months, while Gazprom, the world's largest gas producer, advanced 12 percent. Exxon Mobil lost 4.9 percent, and Shell dropped 8.6 percent. London-based BP fell 6.5 percent.

Twelve of 13 Wall Street analysts tracked by Bloomberg tell investors to buy Gazprom and 15 of 15 recommend Petrobras, the biggest oil company in Brazil. For Exxon Mobil, 10 of 21 endorse the stock, while for Chevron Corp., the second-largest U.S. oil producer after Exxon, it's eight of 21. Shell's A shares in London have a ``buy'' rating from 20 of 37 analysts.

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Dumping Exxon
Lord Abbett & Co., Hermes Investment Management and Caisse de Depot et Placement du Quebec each dumped at least 2 million shares of ExxonMobil in the latter half of last year as crude prices rose toward $100 a barrel, data compiled by Bloomberg show.

ExxonMobil and Chevron may record the smallest annual per share net income growth since 2002 when they report results this week, according to the average estimate of analysts compiled by Bloomberg. Irving, Texas-based ExxonMobil will probably post a 4.4 percent increase in quarterly profit to $10.7 billion, while San Ramon, California-based Chevron may report a 24 percent gain to $4.66 billion.

``We're making a shift away from the vertically integrated companies,'' said Daniel Genter, who helps manage $2.8 billion at RNC Genter Capital Management, a Los Angeles firm that sold more than 60,000 Chevron shares last year. ``As we go forward, the benefits of higher oil prices will go more toward the national oil companies and away from the major oil companies.''

Organization of Petroleum Exporting Countries's Meeting
OPEC, along with Russia, Kazakhstan, Azerbaijan, Turkmenistan and Brazil, sit on 1.06 trillion barrels of oil, or 88 percent of global reserves, estimates from London-based BP show.

In many contracts with host nations, the price of crude determines how much output foreign oil companies are allowed. BP's production from Azerbaijan, for example, was lower when oil was $60 a barrel than when it was $40, the company said in 2006.

Such agreements are encouraging the Organization of Petroleum Exporting Countries to bolster prices by lowering output. Last week ministers from Qatar, the United Arab Emirates and Iraq said the group doesn't need to raise production at their Feb. 1 meeting in Vienna.

Crude ended last week at $90.71 a barrel after reaching a record $100.09 in New York trading on Jan. 3. It fell 0.2 percent to $90.57 a barrel at 1:05 p.m. New York time.

`Big Volumes'
Kazakhstan this month scrapped parts of a 10-year-old agreement over the Kashagan discovery because foreign companies are behind schedule and over budget on developing it. The country gave its national oil company a larger stake in the 13 billion- barrel project instead. The new deal may cost Exxon Mobil, Shell, Total SA of France and Italy's Eni SpA, the venture's biggest shareholders, 9.5 million barrels a year each in lost production after 2020, said Colin Smith, an analyst at Dresdner Kleinwort in London

In Brazil, the government's approach changed after the Tupi oil discovery, one of the largest of the past two decades. Officials who pulled the licenses from planned auctions said they needed to ``rethink'' how the blocks were sold.

``The indications point to big volumes,'' Petrobras Chief Executive Officer Jose Sergio Gabrielli said Jan. 23 in a Bloomberg Television interview from Davos, Switzerland. ``We have a very large, new exploratory frontier in the coast of Brazil.''

To get Shell to sell Gazprom a majority stake in the $22 billion Sakhalin-2 venture last year, Russia threatened to block the project because of environmental concerns. Gazprom, based in Moscow, is also taking control of BP's Kovykta Siberian gas deposit after the government threatened to revoke the contract for failing to meet the schedule.

Pumping Less
``We're going to find that most oil companies produce a little bit less each year,'' said Charlie Maxwell, senior energy analyst at Weeden & Co. in Greenwich, Connecticut, in a Bloomberg Television interview Jan. 23.

In the first nine months of 2007, production at Exxon and Chevron declined by about 2 percent from a year earlier, while output at Shell, based in The Hague, fell 4 percent. Most state- run producers had increases during the period, with Russia's OAO Rosneft reporting a 29 percent gain.

Shell CEO Jeroen van der Veer said state oil companies will have to grant access to their reserves as fields become harder to develop.

``We have to offer things that other companies cannot offer, such as our technology or our experience,'' Van der Veer said in an interview Jan. 23 in Davos.

Source: Bloomberg | by Fred Pals and Eduard Gismatullin
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MIDDLE EAST: Managing Director of Iran's Gas Transfer Company Mostafa Kashkouli said here Monday that Iran-Europe gas pipeline project was put on ten

Managing Director of Iran's Gas Transfer Company Mostafa Kashkouli said here Monday that Iran-Europe gas pipeline project was put on tender recently and bidders have offered envelops containing their financial offers.

Kashkouli told IRNA that under the project, nationwide gas network would be established in western part of the country and Iranian gas will be exported to Europe via Turkey.

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He said under the project, 17 inch pipelines will be laid dow on an area of 1,800 kms at a cost of dlrs five billion and 17 gas pressure stations will be set up on the Build, Operate and Own (BOO) scheme.

He added that the pipelines will have the capacity to transfer 110 million cubic meters of gas.

The official said a technical-commercial committee at National Iranian Gas Company is busy studying the offers and qualified applicants will soon be chosen.

Source: Islamic Republic News Agency
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FRANCE: Despite interest in re-embracing nuclear energy, disposal problem remains

Thousands of canisters of highly radioactive waste from the world's most nuclear-energized nation lie silent and deadly beneath this jutting tip of Normandy. Above ground, cows graze and Atlantic waves crash into heather-covered hills.

The spent fuel, vitrified into blocks of black glass that will remain dangerous for thousands of years, is in "interim storage." Like nearly all the world's nuclear waste, it is still waiting for the long-term disposal solution that has eluded scientists and governments in the six decades since the atomic era began.

Industry officials hope renewed worldwide interest in nuclear energy will break a long, awkward silence surrounding nuclear waste. They want to revive momentum for scientific and political breakthroughs on waste that stalled after the accidents at Three Mile Island in 1979 and Chernobyl in 1986, which raised worldwide fears about radioactivity's risks to human and planetary health.

So far, though, recent talk of a nuclear renaissance has focused on the "front end," or reactor construction. Engineers are designing the next generation of reactors to be safer than today's – and they're being billed as a solution to global warming. Nuclear reactors do not emit carbon dioxide, blamed for heating the planet.

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Waste, however, "is the main problem with this so-called nuclear rebirth," said Mycle Schneider, an independent expert who co-authored a recent study for the European Parliament casting doubt on a global nuclear resurgence.

Workers at this waste treatment and storage site on France's Cherbourg peninsula, run by industry giant Areva, don't see a problem.

Though much of the technology here dates from the 1970s and 1980s, they point to a strong safety record and the 26,000 environmental tests conducted every year as evidence that the public has nothing to fear from their activity.

The tests routinely find crabs, cows and humans living nearby to be healthy. One longtime plant employee gestured toward her pregnant abdomen as proof that there's nothing to worry about. Plant officials say strict security measures rule out terrorism risks.

Greenpeace questions state-run Areva's safety figures, and accuses the government of playing down accidents and soil and water contamination.

The splitting of uranium atoms in a reactor creates the exceptional heat that drives turbines to provide electricity. The process also creates radioactive isotopes such as cesium-137 and strontium-90, which take about 30 years to lose half their radioactivity. Higher-level leftovers includes plutonium-239, with a half-life of 24,000 years.

Direct exposure to such highly radioactive material, even for a short period, can be fatal. Indirect exposure, through seepage into groundwater, can lead to life-threatening illness for those living nearby and environmental damage.

For now, the best scientific solution for getting rid of the most lethal waste is to shove it deep underground.

Another option is recycling. Countries such as France, Russia and Japan reprocess much nuclear waste into new fuel.

That dramatically reduces the volume: Forty years' worth of France's highly radioactive waste is stored under just three floor surfaces, each about the size of a basketball court, at Beaumont-Hague. Recycling, though, produces plutonium that could be used in nuclear weapons, so the United States bans it, fearing proliferation.

Not all waste can be reprocessed. The deadliest bits, such as fuel-rod casings, other reactor parts and concentrated fuel residue containing plutonium and highly enriched uranium, must be sealed and stored away.

That's what lurks 10 feet underground at this Normandy plant: More than 7,000 cylindrical steel canisters, each about the height of a parking meter, stacked and sealed upright in holes beneath the slick floor. Some contain compacted radioactive metal, the others hold spent fuel that has been vitrified into glass.

Current research in industry-leader France, which relies on nuclear energy for more than 70 percent of its electricity, is focusing on new chemical processes that would shrink nuclear waste and cool it faster. It will be at least 2040, though, before these might be put to use, scientists estimate.

Nuclear scientists' dream is a wasteless reactor, and some sketches for the next crop of reactors, the Generation IV, include those that recycle 100 percent of their refuse.

Source: Associated Press|By ANGELA CHARLTON
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UNITED KINGDOM: Former British Petroleum chief Browne won't have to sit for grilling

The former chief executive of British oil giant British Petroleum won't have to give an extensive, in person deposition in civil litigation stemming from the deadly 2005 explosion at the company's Texas City refinery, the Texas Supreme Court ruled today.

While the decision could allow plaintiffs' lawyers to grill John Browne for just one hour by telephone, Brent Coon, a Beaumont attorney who has led blast-related litigation for several years, doubted it will happen because the company can appeal again.

"I'm just pessimistic that the Supreme Court would allow us to get to him," Coon said today. British Petroleum spokesman Neil Chapman said the company was reviewing the decision and informing Browne about it.

"We thank the court for considering the issue," Chapman said without elaboration on whether British Petroleum would oppose a limited deposition.

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The court's ruling didn't address the issue of whether a chief executive should be forced to give sworn testimony when such details can be gleaned from lower-ranking executives.

British Petroleum had claimed Browne and chief executives in general shouldn't be bogged down with potentially harassing depositions unless they have actual and pertinent knowledge that plaintiffs can't get from other sources. Exxon Mobil and several oil and chemical industry trade groups filed briefs supporting that stance.

Today's ruling instead focused on an October 2006 order by state District Judge Susan Criss in Galveston, who presides over blast-related litigation, that Browne submit to a multi-hour, in-person deposition.

That decision quashed the limits of a previous agreement between British Petroleum and the plaintiffs that Browne testify for one hour by phone if a deposition by John Manzoni, then BP's head of refining, provided new evidence that Browne had such unique knowledge of the blast that he needed to be questioned directly.

The plaintiffs have long argued that Browne had unique knowledge of budget cuts that diminished staffing and put off upgrades and maintenance that paved the way for the blast, which killed 15 people and injured many more. British Petroleum acknowledges such budget cuts, but disputes a link between them and the blast.

Today's ruling compels Criss to erase her October 2006 order on a longer deposition and enforce the previous agreement that allows for a limited one.

The Supreme Court ruled that Criss lacked sufficient justification to toss aside that previous agreement in part because the plaintiffs didn't formally ask for sanctions.

But the opinion also challenged whether the plaintiffs actually gleaned new evidence of unique blast knowledge on Browne's part from their deposition of Manzoni, which Coon interpreted to mean an effort to take limited testimony of the ex-CEO could be futile.

"It would give British Petroleum the argument that the Supreme Court said the facts in the record don't support going forward even with a one-hour deposition," Coon said.

Still, he said he'll try. Criss likely will hold a hearing on the issue next month.

Browne resigned abruptly in May last year upon admitting that he lied to a British court about the circumstances under which he had met a former companion. Three months later, he joined energy and power private equity firm Riverstone Holdings as a managing director and managing partner of Riverstone Europe.

Source: Houston Chronicle | By KRISTEN HAYS
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EUROASIA: Russia and Serbia strike major energy deal

Russian and Serbian officials today signed a multibillion-dollar energy deal that would make Serbia a key hub for Russian energy supplies and strengthen Moscow's dominance of the European energy market.

The agreement includes building a branch of a prospective major natural gas pipeline and a huge gas storage facility in Serbia. A separate agreement also lays the groundwork for Russia's state gas monopoly, OAO Gazprom, to acquire a controlling stake in Serbia's state oil company NIS.

"The agreements signed would make Serbia a key hub in the prospective network of Russian energy supplies to southern Europe," Russian President Vladimir Putin said after the signing. "This network will be long-lasting, reliable, highly efficient, and what is very important, help boost energy supplies to Serbia and the entire European continent."

The agreements, which Serbian officials have estimated as worth at least $2.2 billion, would include building a branch of the prospective South Stream natural gas pipeline in Serbia. South Stream would run under the Black Sea from Russia to Bulgaria, from where it would branch off. The section through Serbia would carry at least 10 billion cubic meters a year, Gazprom CEO Alexei Miller told reporters after the signing.

The 550-mile, $15 billion project undercuts the prospective U.S.- and EU-backed Nabucco pipeline designed to ease Europe's reliance on Russia by carrying gas from the Middle East and Caspian countries other than Russia via Turkey.

Serbia's President, Boris Tadic, said the deal would bolster Serbia's standing by making it a key transit country for energy supplies to Europe.

"This agreement has a huge strategic importance for Serbia," Tadic said. "It will strengthen Serbia's strategic positions in southeastern Europe, since it will serve as a transit point for gas supplies to the EU's southern flank."

Belgrade has turned increasingly away from the West and toward Russia, which has supported Serbia in the debate over independence for the province of Kosovo.

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Tadic and Serbian Prime Minister Vojislav Kostunica both thanked Moscow for its support on Kosovo at the start of his talks with Putin.

"Serbia very deeply respects the position of Russia on Kosovo," Tadic said at the start today's talks with Putin. "We will defend our interests in Kosovo, operating on the basis of international law and we will never do otherwise."

Putin reaffirmed Moscow's strong opposition to Kosovo's independence.

"Russia is categorically against a unilateral declaration of independence for Kosovo," he said, adding that it could "seriously damage the system of international law and have negative consequences for the Balkans and affect stability in other regions."

Moscow last year threatened a veto in the U.N. Security Council to block a Western-backed plan for internationally supervised statehood for Kosovo.

Russia has used the rift to strengthen business and diplomatic ties to Serbia — with which Moscow has historic cultural and linguistic ties.

Serbia endorsed the energy deal days after Putin won Bulgaria's support last week for the South Stream project.

The terms of the deal for Gazprom to acquire a 51 percent stake in Serbia's state oil company NIS weren't announced, but Serbian Energy Minister Aleksandar Popovic has confirmed reports that Russia offered $600 million — just one-fifth of the company's estimated market value — and an additional $730 million in modernizing the run-down company. He said Tuesday that Serbia would try to better the price in further negotiations.

Source: Associated Press
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UNITED STATES: Enron successor seeks $9.15 million for payment snafu

What's left of Enron is asking a federal judge to extract $9.15 million from the human resources firm that botched the first wave of lawsuit settlement payments to former Enron employees.

Enron Creditors Recovery Corp., the successor to Enron, this week asked U.S. District Judge Melinda Harmon to force Illinois-based Hewitt Associates to pay for its mistake and facilitate payment of the remaining settlement money.

The lawsuit, filed on behalf of employees who were in Enron retirement plans when the energy company collapsed in 2001, resulted in a settlement totaling more than $218 million. Hewitt was hired to send out the first $89 million in 2006. But $22 million went to the wrong people because of a miscalculation.

According to Enron's filing this week, and a lawsuit filed last fall by the retirement plan, Enron Corp. Savings Plan, 7,700 people were overpaid and 12,600 were underpaid.

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The court documents say the $9.15 million is the amount that can't be recovered by adjusting the second payments that will go out to employees when the matter is cleared up.

"In the end Hewitt's stance reduces to the contention that although it admits it wrecked the car, it should not have to pay to fix it," Enron says in its filing.

"We're asking they pay the $9 million for their inexplicable mistake," said Harlan Loeb, Enron spokesman. He said it's "ludicrous" for Hewitt to say Enron should make up for the error. "Hewitt's own counsel admitted responsibility for the misallocation in court."

In July, Hewitt lawyer Bill Boies said his client acknowledged responsibility for the mistake. He said Hewitt will fix it. But Boies balked at Hewitt being labeled the fund administrator, saying Enron itself is the administrator with ultimate responsibility for distributions and for Hewitt's work.

Hewitt spokeswoman Maurissa Kanter said in an email Thursday that Hewitt has been trying "to reach an agreement that would allow for the immediate funding of the shortfall to these participants."

Enron's motion "significantly throws into doubt the ability of these parties to achieve a resolution," she said.

"It is important to note that Enron, as the plan sponsor, has the obligation to fund any shortfall to its participants," Kanter wrote.

Hewitt has not replied formally to the fall lawsuit or to Enron's request this week for $9.15 million.

The second set of payments to employees totals around $129 million but is held up in discussions about how to address the errors in the first payments. A different company will handle the second payments, said Enron's Chicago-based lawyer, Peter Rush.

Rush said it will be up to Judge Harmon whether to follow Enron's suggestion that Hewitt put up the $9.15 million to allow the distribution to go forth.

Enron is suggesting the money be a loan, followed by an effort to recover overpayments that went to people who are not due more money in the second series of payments.

Enron proposes that anything retrieved go back to Hewitt.

Employees who were overpaid the first time around but are still due more will receive smaller second payments to adjust for the miscalculations.

The retirement settlement with employees is distinct from a class action lawsuit on behalf of Enron shareholders. That lawsuit is coming close to payouts of its final settlement of $7.2 billion.

Lynn Sarko, a Seattle-based lawyer for the ex-employees, compared the error in the payment amounts to "a medical malpractice case that ends in corrective surgery and then that's botched."

The Enron court papers indicted that the U.S. Labor Department also has pushed for Hewitt to cover the shortfall. A department spokeswoman could not confirm the government's role in the matter.

Source: Houston Chronicle| By MARY FLOOD
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