Oil and Gas Mining Companies News

Growth Rate of China's Industrial Profit Decreases

2009-01-04T08:50:00.001-08:00

From January to November, the total profit of China's industrial enterprises with annual sales of more than $724,600 reached $348.78 billion, an increase of 4.9 percent year over year but down 31.8 percentage points compared with the same period last year, the National Bureau of Statistics of China on December 26.

- State-owned and state-controlled firms: $115.72 billion, down 14.5%
- Collective-owned firms: $9.96 billion, up 29.5%
- Share-cooperative firms: $2.43 billion, up 19.2%
- Joint-stock firms: $195.17 billion, up 11.4%
- Foreign-funded firms: $92.38 billion, down 3.1%
- Private firms: $79.64 billion, up 36.6%

Taxes paid totaled $265.42 billion, up 20.7% year over year, and combined revenue totaled $6.37 trillion, up 24.1% year over year. By the end of November the total volume of net receivables totaled $652.26 billion, up 12.3%, and the total value of finished products reached $334.99 billion, up 25%.

Sectors

- Oil and natural gas: up 37.2%
- Coal: up 133.7%
- Iron and steel: down 13.7%
- Architectural materials: up 27.7%
- Chemicals: up 0.2%
- Smelting and pressing of nonferrous metals: down 34.1%
- Special-purpose machinery: up 9.4%
- Transportation equipment: up 15.7%
- Electronic communication equipment: up 1.1%
- Electric power: down 84.1%
- Chemical fibers: down 74.9%

The petroleum processing and coking industries lost $18.26 billion compared with a profit of $3.55 billion in the same period last year.

Cooking Gas Supply to Ease This Weekend

2009-01-04T08:45:00.000-08:00

The supply of cooking gas remains tight for small retailers even as the Energy department’s inspection has so far cleared some suppliers from allegations of hoarding.

In a phone interview, Liquefied Petroleum Gas Marketers Association (LPGMA) President Arnel U. Ty said there are still long queues for the commodity in suppliers’ depots.

He said the supply situation is expected to ease on Saturday with the arrival of liquefied petroleum gas (LPG) imports.

The Energy department has ordered during the holiday break an inspection of major and so-called independent LPG retailers to ensure steady supply in the market after small sellers complained of supply lack to meet the holiday demand.

The department has cleared, among others, Petron Corp.’s facility in Bataan province of hoarding after an inspection conducted on Jan. 2.

Col. Felipe Perez of the Presidential Task Force on the Security of Energy Facilities and Enforcement of Laws and Standards said they will also inspect other major suppliers Pilipinas Shell Petroleum Corp., which sells Shellane, and Total Philippines, Inc., which retails TotalGaz, but he did not indicate a specific date.

"We are looking at inspecting them this month, we can’t do it all at the same time since we lack manpower," Mr. Perez said in an interview at the weekend.

Mr. Ty earlier said the supply lack forced their members to operate only every other day and that this has affected 30% of their operations.

LPGMA members, who operate only in Luzon, control 30% of the market.

Liquigaz, which supplies LPGMA members, earlier said there is enough supply for its customers.

LPGMA members include Pinnacle Gas, Cat Gas, Omni Gas, Nation Gas and Island Gas.

LPG prices remain steady at P380 to P464 per 11-kilogram cyinder tank.

Rise in Oil Prices Helps Fuel Stock Gains

2009-01-04T08:44:00.002-08:00

U.S. stocks last week advanced the most since November after fewer Americans filed for jobless claims and oil's biggest weekly increase in two decades lifted energy stocks.

Marathon Oil and Baker Hughes led energy producers, climbing more than 15 percent as the price of crude oil reached $46.34 a barrel, the highest in a month. SanDisk staged the steepest rally among technology companies in the Standard & Poor's 500-stock index, adding 21 percent as investors speculated that it may be acquired. The S&P 500 gained 6.8 percent during the holiday-shortened week, to 931.80. The Dow Jones industrial average added 6.1 percent, to 9034.69. The Nasdaq composite index rose 6.7 percent to 1632.21.

"If we get some letup in risk aversion, we could easily see double-digit" percentage gains in U.S. stocks this year, said E. William Stone, chief investment strategist at PNC Wealth Management. "We only know two things: Typically, the market moves before the economy does, and valuations are reasonable."

More than $30 trillion was erased from global equity markets in 2008. The S&P 500 plunged 38 percent, the most since 1937, as the economy entered a recession and the biggest financial firms lost more than $1 trillion on subprime-related loans and securities.

Energy stocks increased the most among 10 S&P 500 industry groups, jumping 9.6 percent. Companies that rely on growing consumer spending rose 8.4 percent, the second-biggest gain. Industrial, financial and technology companies advanced more than 7 percent and every group added at least 3.8 percent.

Crude futures gained 23 percent last week, the most since August 1986, as the conflict in Gaza increased concern that Middle East supplies would be cut and Russia curbed natural-gas shipments to Ukraine. Oil fell 54 percent last year, the first annual drop since 2001.

The Labor Department said new jobless claims were depressed by the shortened Christmas workweek even as the total number of people collecting benefits reached a 26-year high. There were 492,000 new claims for the week ended Dec. 27, below the 575,000 average estimate of economists in a Bloomberg survey.

The Treasury will auction $32 billion of three-month bills and $22 billion of six-month bills on Monday. They yielded 0.11 percent and 0.32 percent, respectively, in when-issued trading. The Treasury will sell $16 billion of 10-year bonds on Thursday. They yielded 2.37 percent.

Oil Prices Begin the New Year by Slipping 4%

2009-01-04T08:44:00.001-08:00

Crude oil prices were lower and gold prices rose as trading resumed after the New Year holiday.

Crude oil prices fell in New York, extending their worst yearly drop, on concern that a global economic contraction would limit fuel demand.

Crude oil for February delivery dropped as much as $2.06, or 4.6 percent, to $42.54 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

Gold rose in Asia after an eighth straight annual gain as demand increased for the metal as a hedge against inflation and an alternative asset.

Gold advanced 5.8 percent in 2008 on demand for a store of value, as a financial crisis pushed major economies into recession and drove equity markets lower.

Bullion for immediate delivery gained $2.10 an ounce to $881.55 at 9 a.m. in Singapore, after earlier rising as much as 1 percent to $888.35. Gold for February delivery fell 0.2 percent to $882.40 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Among other precious metals for immediate delivery, silver fell 0.4 percent to $11.345 an ounce, platinum was little changed at $935 an ounce, and palladium rose 1.1 percent to $189 an ounce as of 8:54 a.m. in Singapore.

Oil fell 54 percent in 2008, the first annual decline since 2001 and the biggest drop since futures trading started in 1983. The February contract rose $5.57 to $44.60 a barrel on Dec. 31, the highest settlement since Dec. 12.

Fuel consumption in the United States was down 3.7 percent during the four weeks ended Dec. 26 from a year earlier, according to the Department of Energy. Oil rose 14 percent on Dec. 31 after a report showed American fuel stockpiles climbed less than expected and the conflict between Israel and Hamas raised concern that Middle East supplies may be disrupted.

“That rally on the 31st didn’t have too much behind it so we’re seeing crude come back to a level more reflective of the fundamentals,” said Toby Hassall, an analyst with Commodity Warrants Australia in Sydney. “We still don’t have a clear picture of when a global recovery is going to take place.”

Crude oil may rise next week as the Organization of the Petroleum Exporting Countries makes record production cuts to counter the deepest economic slump since World War II.

Iran Budget To Be Based on Oil Price of $37.5

2009-01-04T08:41:00.000-08:00

Iran's 2009-10 budget is expected to be based on an oil price of $37.5 per barrel, a "logical" level in view of last year's price fall, Oil Minister Gholamhossein Nozari was quoted as saying on Sunday.

An Iranian newspaper last month said the government and a parliament committee had an initial agreement to base the budget starting in March on an oil price of $45, lower than previously suggested.

"The price of oil in next year's budget has been envisaged at $37.5 (per barrel) which seems to be a logical price considering the drop in prices," Nozari was quoted as saying by the semi-official Mehr News Agency.

The Islamic Republic of Iran Broadcasting (IRIB) website carried a similar report, saying the government and parliament had agreed on this price for the budget, which has yet to be presented to the legislature.

Oil prices have plunged by some $100 per barrel since mid-July to around $46, pulled down by a slowing world economy.

Some 80 percent of the foreign exchange earnings of Iran, the world's fourth-largest oil producer, come from crude sales.

Economists say Iran's government, which has enjoyed windfall oil earnings in recent years, would likely have to cut spending in 2009 when President Mahmoud Ahmadinejad is expected to run for re-election, unless crude prices rebound to $80 or so.

The head of parliament's economic commission Gholam-Reza Mesbahi said the lower oil price was expected to cause a 33 percent drop in government revenue in the next budget, the Jahan-e Eghtesad business daily reported.

"In view of the drop in income from crude oil exports one of the necessities of the budget would be for it to be contractionary," Mesbahi was quoted as saying.

He said raising taxes would not be possible and that borrowing from the Iranian banking system would fuel inflation. Financial sanctions imposed on Iran over its disputed nuclear plans hindered borrowing from foreign banks, he said.

A government official said in October Iran was planning for an oil price of $55 to $60 in the next budget, but oil prices have continued to slide since then.

The oil price set for Iran's budget indicates government expectations but does not give a full picture.

Economists said last year's budget was officially based on a price of about $40 a barrel but, when withdrawals from an oil revenue reserve fund and other crude-related earnings were taken into account, the state needed $70 or more to balance its books.

The government has been seeking to reduce subsidies, a heavy drain on state coffers, including discussing utility bill hikes.

Rusian Oil and Gas Company, Gazprom Cut All Natural Gas Supplies to Ukraine

2009-01-02T09:54:00.000-08:00

Ukraine sought support Friday in European capitals a day after Russia cut off gas supplies and hardened its stance on prices.

Russia's Foreign Ministry issued a statement saying that it, too, was ready to explain its position in the dispute to Europe, asking for a special session of the European Commission to address the question.

But there were no face-to-face talks between Ukraine and Russia as of late afternoon Friday, a day after Russia's state-controlled energy giant Gazprom cut off gas to Ukraine, saying it had failed to pay an outstanding $2.1 billion bill.

For the moment, the two countries instead fought a public relations war.

A Ukrainian delegation headed by Energy Minister Yuriy Prodan, and including the deputy chief of gas company Naftogaz, Volodymyr Chuprun, visited Prague, the Czech Republic, and Bratislava, Slovakia, on its way to Brussels for meetings with officials.

"Our aim is to explain our position to our European partners on the situation which arose in the gas sphere," Bohdan Sokolovsky, energy adviser to Ukrainian President Viktor Yushchenko, told The Associated Press in a telephone interview from Bratislava. "We are informing them on how the negotiations are going, we are stating our negotiating position."

Sokolovsky said Ukraine was trying to reassure its neighbors that it would not interrupt gas supplies.

"We told them that Ukraine is fulfilling all of its transit obligations and they have no doubts about that," he said.

Russian Deputy Foreign Minister Alexander Grushko said Friday Russia was ready to go to Brussels as well to make its case to the European Union.

Many in the West viewed a 2006 Russian cutoff of gas to Ukraine as an effort to punish Ukraine's political leaders for their pro-Western policies.

That cutoff, which temporarily affected supplies to Europe, also led to accusations that Russia was an unreliable source of energy and led to calls for greater energy independence from Moscow.

This year, Russia has taken pains to paint the conflict as a purely commercial matter, and both countries have pledged they would keep gas flowing through Ukraine's pipeline system to the rest of Europe. As of late Friday afternoon there were no reports of interruptions in shipments beyond Ukraine.

Despite the apparent absence of talks, there seemed to be little sense of urgency. Experts say both Ukraine and Europe have significant stockpiles of gas.

Germany's E.ON Ruhrgas utility said it had seen no disruption to Russian gas deliveries as of Friday — although it said any effects would not be noticeable until the beginning next week because of the distance the gas travels.

In any case, "we have nearly 25 percent of our annual needs ... in reserves, so that even if gas volumes from Russia were to be reduced, we are well prepared," German Economy Ministry spokeswoman Beatrix Brodkorb said in Berlin.

Thomas Steg, a spokesman for Chancellor Angela Merkel, called on both sides to "negotiate quickly and constructively" on a new contract.

The cutoff came after Ukraine made a $1.5 billion overdue payment, but Russia demands another $600 million, including $450 million penalties for the late payment for gas shipped in November and December. The two sides also have not agreed on prices for 2009.

Gazprom also wants to charge Ukraine higher gas prices for 2009. Ukraine, meanwhile, says Russia should pay more to ship through its pipelines, which carry 80 percent of the gas Russia sells to European Union customers.

The dispute also reflects strained relations between the two former Soviet nations that developed after Ukraine's 2004 Orange Revolution, which brought a pro-Western government to power.

Ukraine has since sought to join NATO and supported Georgia during its brief war with Russia in August — moves that angered the Kremlin.

The recent decline in energy prices has hit Russia hard, and Gazprom faces a sharp drop in demand for energy.

Experts say efforts to resolve the dispute are also hampered by divisions within Ukraine's leadership. President Yushchenko and Prime Minister Yulia Tymoshenko are bitter political rivals.

At one point Gazprom said it would accept $250 per 1,000 cubic meters of gas, close to the $235 that Ukraine has offered.

But late Thursday Gazprom CEO Alexei Miller toughened his company's stance, resuming an early demand of $418 per thousand cubic meters, the price Russia will charge European customers over the next few months.

Those prices are expected to slide considerably later this year, as the gas market begins to reflect the fall in world oil prices. Last year, Ukraine paid $179.50 per 1,000 cubic meters of gas.

Russian To Supply Natural Gas Demand in Europe

2009-01-02T09:50:00.000-08:00

Russian natural gas was reaching Europe in full measure Friday, one day after Russia cut supplies to Ukraine in a contract dispute, the European Union said.

French Foreign Ministry spokesman Eric Chevallier said Friday Russia and Ukraine were honoring their promise to maintain natural gas supplies to their European customers, reported RIA Novosti, the Russian news agency.

Russia cut its natural gas supplies to Ukraine Thursday after talks on a 2009 contract broke down, but increased shipments to European countries.

The European Union urged both sides to continue discussions, RIA Novosti said.

"All existing commitments to supply and transit (natural gas) must be honored," the European Union, the Czech Republic and the European Commission said in a joint statement.

Recurring disputes between Moscow and Kiev have raised concerns among European countries about Russia's reliability as a supplier, the Russian news agency said. Ukraine transports about 80 percent of Russian gas, shipped to EU members.

Iran Sign Agreement To Import Natural Gas From Turkmenistan

2009-01-02T09:39:00.000-08:00

Tehran has agreed on a six-month pricing mechanism for natural gas imports from Turkmenistan to supply customers in northeastern Iran, officials said.

Iran holds some of the most abundant gas reserves in the world, but struggles under economic sanctions to keep up with a faltering infrastructure. Gas imports from Turkmenistan were disrupted during the 2008 winter when Ashgabat insisted on a higher price.

Resa Kasaizadeh, the head of the National Iranian Gas Export Co., said his country reached a deal on a fixed, six-month term for gas imports, the Gulf Daily News said Friday.

"It was agreed that Turkmenistan's gas would be imported to the country with a fixed price in the first six months of the year," he said.

Iran has lobbied to position itself as a regional energy hub from Central Asia to Europe amid pressure from Washington. The deal comes as Europe eyes a gas row between Ukraine and Russia.

Nigeria Crude Oil Production Will Decline 1.1.6 mln barrel

2009-01-02T09:33:00.000-08:00

Following the decision by the Organization of Petroleum Exporting Countries (OPEC) to cut production by an additional 2.2 million barrels per day, Nigeria will produce about 1.584 million barrels of crude oil per day by January 1, 2009, far below the 2.29 million barrels per day production estimated in the 2009 budget.

Lagos-base Business Day reported on Thursday that in November, following a 113,000 barrels -per day cut, Nigeria produced 1.903 million barrels per day, according to a figure given in the organization's Oil Market Report for December.

With another 319,000 barrels per day OPEC cut for Nigeria which takes effect January 1, the nation's crude oil export will dip to 1.584 million barrels per day.

Meanwhile, oil rose just a bit over 40 U.S. dollars on Monday, reinforcing the fact that the Nigerian economy will face turbulent times in 2009.

With the OPEC production cuts and falling prices, many of federal government's projections in the 2009 budget might not be met except prices rise again.

Nigeria has also based its 2009 budget on 45 U.S. dollars per barrel for its oil revenues as the international oil price has crashed to slightly more than 40 U.S. dollars per barrel this week.

According to local media reports, oil money accounts for more than 95 percent of Nigeria's export gains and over 80 percent of the federal government revenues, contributing to approximately 30 percent of the Africa's most populated country's total GDP.

Crude Oil Prices Drop in Asia

2009-01-02T09:25:00.001-08:00

Gold declined in Asia as crude oil’s rally stalled and the dollar strengthened, reducing demand for the precious metal as a hedge against inflation and an alternative asset. Platinum was little changed.

Oil fell as much as 5.2 percent, after gaining 14 percent Dec. 31, on concern that a global economic contraction will limit fuel demand. The dollar was at $1.3870 a euro from $1.4045 late yesterday in New York.

“The relationship between gold and oil has steadily strengthened as the commodity boom has progressed,” Standard Chartered Plc’s analysts Helen Henton and Dan Smith wrote in a report. “While both were affected by deleveraging and risk aversion, the oil market is far more exposed to the deterioration in global growth. As the markets have become more settled, the relationship has strengthened again.”

Bullion for immediate delivery traded down 0.5 percent to $874.90 an ounce at 12:09 p.m. in Singapore, after rising as much as 1 percent earlier. Gold for February delivery was 0.8 percent lower at $875.40 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Crude oil for February delivery dropped as much as $2.32 to $42.28 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It fell 4.3 percent to $42.70 a barrel at 12:41 p.m. Singapore time.

Silver Falls

Among other precious metals for immediate delivery, silver fell 1.8 percent to $11.185 an ounce, platinum was little changed at $935.50 an ounce, and palladium rose 1.2 percent to $189.25 an ounce as of 11:50 a.m. in Singapore.

Gold advanced 5.8 percent last year on demand for a store of value as the global financial crisis pushed major economies into recession and drove equity markets down.

“If one bought gold on January 1, 2008, instead of any other investment, they would still have everything they had come January 1, 2009,” Peter Grandich, managing member of Grandich Publications, said in a report. “How many people wish all they did was break even in 2008? Gold continues to offer not only that result, but gains of 20 percent or more in 2009.”

Crude Oil Advances on Gaza Attacks, Russia’s Gas-Shipment Cut

2009-01-02T09:25:00.000-08:00

Crude oil rose in New York for a second day as the conflict in Gaza raised concern that Middle East supplies would be cut and Russia curbed natural-gas shipments to Ukraine.

Israeli warplanes conducted fresh attacks against Hamas on the seventh day of a bombing campaign in the Gaza Strip, raising the prospect of violence in the Middle East, source of one-third of the world’s oil. Russia’s dispute with Ukraine over natural- gas prices deepened today and no new talks are scheduled. Oil futures have traded in a range of more than $5 a barrel today.

“A lot of the volatility we are seeing is a result of the wild geopolitical news,” said Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. “The news from Gaza and Ukraine scares some people and not others.”

Crude oil for February delivery rose $1.58, or 3.5 percent, to $46.18 a barrel at 11:43 a.m. on the New York Mercantile Exchange. Oil dropped 54 percent last year, the first annual decline since 2001 when crude slipped 26 percent, and the biggest loss since trading began in 1983.

OAO Gazprom boosted gas supplies to Europe through Belarus, avoiding Ukrainian pipelines. Talks between the two sides on the price of gas deliveries to Ukraine for 2009 and transit fees for Russian gas to Europe through the country broke down on Dec. 31, and Gazprom cut supplies of the fuel to Ukraine yesterday.

Stocks Rally

Agricultural futures also rose and equities rallied on speculation that government stimulus efforts will curtail the recession. The Dow Jones Industrial Average increased 49.78 points, 0.6 percent, to 8,826.17. The Standard & Poor’s 500 Index rose 0.4 percent to 906.87.

“Equities and commodities are tracking each other,” said Bill O’Grady, chief markets strategist at Confluence Investment Management in St. Louis. “The outsized moves we are seeing are in part due to very thin trading volume.”

Oil prices may be more volatile this week because many traders are taking time off for the New Year’s holiday.

Brent crude oil for February settlement climbed $1.16, or 2.5 percent, to $46.75 a barrel on London’s ICE Futures Europe exchange.

Crude Oil Extend Decline Record Trader Year-End

2009-01-02T09:22:00.000-08:00

Crude oil fell in New York as some traders viewed a rally of 14 percent at the end of last year as excessive amid slumping demand.

Manufacturing in the U.S., the biggest energy user, probably contracted in December at the fastest pace in almost 30 years, economists said before a report today. Fuel consumption there fell an annual 3.7 percent last month, according to the Department of Energy. Oil jumped 14 percent on Dec. 31 as U.S. fuel stockpiles rose less than expected, and as the conflict between Israel and Hamas raised concern that Middle East supplies would be disrupted.

“There was an over-reach to the upside,” said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland. “The extent of the move was more due to low liquidity, and it being the end of the year” than fundamentals.

Crude oil for February delivery fell as much as $3.55, or 8 percent, to $41.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $42.28 a barrel at 1:11 p.m. London time and is up 12 percent this week.

Oil fell 54 percent in 2008, the first annual decline since 2001 and the biggest drop since futures trading started in 1983. The February contract rose $5.57 to $44.60 a barrel on Dec. 31, the highest since Dec. 12.

Fundamentals

“That rally on the 31st didn’t have too much behind it so we’re seeing crude come back to a level more reflective of the fundamentals,” said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney. “We still don’t have a clear picture of when a global recovery is going to take place.”

An 8 percent drop in crude imports last year by South Korea reaffirmed the spread of plunging demand in Asia, the center for oil demand growth. The continent’s fourth-biggest economy imported 865.3 million barrels in 2008, down from 872.5 million the previous year, according to a government report today.

The U.S. Institute for Supply Management will probably say today its factory index fell to 35.4, the lowest level since 1980, from 36.2 the prior month, according to the median estimate of 57 economists surveyed by Bloomberg News. A reading of less than 50 signals contraction.

U.S. stocks last year plunged the most since the Great Depression as financial shares collapsed, energy and metal producers tumbled and the economy entered a recession.

Output Cuts

The Standard & Poor’s GSCI Index of 24 commodity futures lost 47 percent last year, the most since its introduction in 1971. The Reuters/Jefferies CRB Index of 19 raw materials dropped 40 percent, the biggest plunge since 1957.

Crude oil may rise next week as the Organization of Petroleum Exporting Countries makes record production cuts to counter the deepest economic slump since World War II.

Seven of 14 analysts surveyed by Bloomberg News, or 50 percent, said futures will gain through Jan. 9. Five respondents, or 36 percent, forecast oil will fall and two said there will be little change in prices. Last week, 46 percent of analysts said prices would drop.

Oil jumped earlier this week on turmoil in the Middle East and a natural gas dispute in Europe.

Israel yesterday killed a Hamas leader in its assault on the Gaza Strip and Foreign Minister Tzipi Livni said her nation would keep pressure on the militant Islamic group. An army spokesman, speaking anonymously in accordance with regulations, said warplanes hit Hamas leader Nizar Rayyan’s house in the Jabaliya refugee camp.

Gas Dispute

In Europe, the repeat of an energy standoff between Russia and Ukraine threatened fuel shipments. Russia prepared to resume talks with Ukraine in their dispute over the price of natural gas after cutting supplies to its western neighbor for the second time in three years.

The European Union urged Russia and Ukraine to “rapidly” resolve their dispute and said it counted on assurances gas supplies would continue uninterrupted.

Ukrainian President Viktor Yushchenko said in a statement the two sides are near a compromise, urging state utility NAK Naftogaz Ukrainy and OAO Gazprom, Russia’s gas exporter, to meet again in one or two days. Gazprom also proposed talks.

Brent crude oil for February settlement fell as much as $3.99, or 8.8 percent, to $41.60 a barrel on London’s ICE Futures Europe exchange. It was at $42.05 a barrel at 12:53 p.m. London time. The contract on Dec. 31 rose $5.44, or 14 percent, to settle at $45.59 a barrel.

Iraq to Open More Oil Fields to Bidding

2009-01-01T09:19:00.001-08:00

Iraq announced on Wednesday that it would begin a second round of bids to license international oil companies to develop 11 oil and gas fields or groups of fields.

Iraq's oil minister, Hussain al-Shahristani, said at a news conference that he hoped that these fields could be producing 2 to 2.5 million barrels of oil a day in three or four years. The goal, he said, is to produce 6 million barrels a day in four or five years, up from the current 2.4 million.

The oil and gas fields are distributed around the country and include some that lie near the border or are shared with neighboring countries like Iran and Kuwait.

The first round of bids, announced last summer, is scheduled to be concluded in the middle of 2009. It will be for the development of six major oil fields and two gas fields.

The same 35 foreign companies that qualified to take part in the first round are involved in this one, said Ahmed al-Shammar, a deputy minister, but it is possible that more companies could be added.

Shahristani said he hoped the contracts in the second round would be signed by the end of 2009. He also said the ministry was planning to announce more licensing auctions in the future.

The ministry has come under criticism for the slow pace of Iraq's oil production. Although the country sits on one of the largest proven oil reserves in the world, roughly 115 billion barrels, security and infrastructure problems have left them largely untapped.

Iraq is producing far below its capacity, Shahristani acknowledged at the news conference, but he said opening these fields for development was meant to address that.

"There are about 78 oil and gas fields in Iraq, but only 15 of them are under operation," he said.

Plunging oil prices around the world have hurt Iraq's revenues as well; Iraq's oil is being sold for around $38 a barrel, a ministry official said, down nearly 70 percent from its high for 2008.

One of the other main events of Wednesday was to be the start of the trial of Muntader al-Zaidi, the Iraqi reporter who was arrested for throwing his shoes at President George W. Bush during a news conference two and a half weeks ago.

But Abdulsattar al-Berikdar, a spokesman for the Supreme Judicial Council, said the trial had been postponed because Zaidi's lawyer had filed an appeal.

In a phone interview, Dheyaa Saadi, the lawyer, said the appeal's purpose was to reduce the charge against Zaidi so that the case could be taken outside the jurisdiction of the Central Criminal Court of Iraq, which specializes in terrorism and other serious cases. A higher court will rule on the appeal.

Though recent statistics report that there were fewer civilian deaths in Iraq in 2008 than in any other year since the 2003 invasion, violence continues to buffet the volatile provinces of Nineveh and Diyala.

Two bombs exploded Wednesday in Mosul, the capital of Nineveh, killing 4 and wounding 20, a local security official said. The target of the first was a police patrol, and the second exploded shortly afterward, as bystanders gathered.

A candidate for the coming provincial elections was killed by unidentified gunmen on a major street in Mosul, a police official said. One policeman died in a gunfight with the attackers as they escaped.

The candidate, Mowaffaq al-Hamdani, was a Sunni Arab. The elections in Nineveh are seen as crucial for the Sunnis. Many of them boycotted the last election, leaving a provincial council dominated by a Kurdish bloc.

A car bomb exploded near a public market in Sinjar, a town in Nineveh near the Syrian border, killing 3 and wounding 35. The Kurds maintain a tight control of Sinjar, which they view as belonging to Kurdistan, a situation that has raised tensions with Sunni Arabs who live in the volatile, poverty-stricken towns to the south.

In Diyala, a bomb, its target an army patrol, exploded near Khanaqin, another area that has been involved in a tense standoff between Kurds and Arabs. Two were killed in the attack, including an officer, and two others were wounded, a security official said.

Exxon Argues for Alaskan Oil Lease

2009-01-01T09:14:00.000-08:00

Exxon Mobile Corp. said it was ready to drill at Alaska's Point Thomson oil field contrary to the state's assertion the company would rather procrastinate.

The state has accused Exxon of holding back on drilling while it pursues other ventures and has tried to regain control the 106,000-acre field, the Anchorage Daily News reported Thursday.

Exxon is the dominant leaseholder of the oil field, the newspaper said.

The argument went to court Wednesday. Mark Ashburn, representing the state, told Judge Patrick McKay that a suit on the issue was moot, as the state had not yet given Exxon its final decision on a permit to start drilling.

Exxon said it was "ready, willing and able," to initiate its drilling in the field that could produce 10,000 barrels daily of condensate -- a light oil -- by 2014, the newspaper reported.

Ashburn called Exxon's assertion that it will drill soon "a public relations ploy."

The state contends the company is using the field as a natural warehouse and does not intend to begin drilling soon.

A decision on whether or not Exxon can continue with the suit could come within a week, Ashburn said.

China's LPG imports hit 6.89 mln tons in 2007

2008-03-16T21:20:00.001-07:00

China's imports of liquefied petroleum gas (LPG) surged 15.2% year-on-year to hit 6.98 million tons, valued at US$3.09 billion, according to sources.

The liquefied natural gas imports surged 320% to 2.91 million tons, accounting for 41.7% of the total imports, according to sources with the General Administration of Customs on Saturday.

Of the total LPG imports, 83.4% or 5.82 million tons were imported by the foreign-funded companies, up 37.5%. The main import sources were from Australia and the Middle East, with 3.38 million tons and 2.83 million tons respectively, accounting for 18.55% and 20.6% of the total.

Industry observers predicted China would continue to face the short supply of LPG in a short term, as the LPG importers would reduce their imports due to the limited profits.

China Huaneng the winner in race to buy Tuas Power

2008-03-16T21:20:00.000-07:00

China Huaneng Group will buy Singapore's Tuas Power Ltd for S$4.24 billion (US$3.1 billion) in China's second-biggest overseas acquisition this year.

The Beijing-based company has signed an agreement to buy Tuas Power from Temasek Holdings Pte, Huaneng, China's biggest power producer, said on its Website Friday.

The transaction is expected to be completed by March 24, Singapore's state investment company said in a separate statement.

The purchase "represents a major step for China Huaneng in its goal to diversify its assets across geographies and technologies," Vice President Huang Long said in the statement.

Tuas Power, the first of three utilities Temasek is selling, was set up in 1995 and has 2,670 megawatts of capacity built at a cost of S$2 billion.

Its power station at the western end of the city state comprises four blocks of natural-gas-fired combined cycle plants and two units of steam plants.

"The move is a natural extension of the Chinese power producer's core competencies," Donovan Huang, a Nomura Securities Ltd analyst, said by phone from Hong Kong. "Huaneng has sound management and has some gas-fired management experience."

For the year to March 2007, Tuas Power had revenue of S$2.27 billion, up 31 percent from a year earlier, its financial report showed.

Net income for the year to March 31 was S$177 million, 70 percent more than a year earlier. At December 31, Tuas Power's net debt stood at S$71 million.

Wong Kim Yin, Temasek's managing director for investments, said in the statement that China Huaneng's proposal, through its subsidiary SinoSing Power Ltd, was the "most attractive." It was the clear winner on price and commercial terms, according to the statement.

Kuwaiti firm buys shares in Sudanese oil Petrodar

2008-03-16T21:18:00.000-07:00

Kuwait’s Al-Kharafi Group on Sunday bought shares in Sudanese oil company Petrodar Company, taking some 3 percent stake of the capital.

According to KUNA, the official Kuwaiti news agency, Al-Kharafi has agreed to buy a 3 percent stake of Perodar at a value of 500 USD million from Thani, a Dubai based firm. The Kuwaiti group signed the contract with the Sudapet in Khartoum on Sunday.

Sudapet Director-General Saleh Jaafar told reporters that the company had agreed to buy Thani’s five-percent stake in Petrodar, noting that Al-Kharafi would acquire three percent while the Sudanese company would obtain two percent.

Al-Kharafi Group Deputy Director-General Marzouk al-Kharafi said his company had agreed with the Ministry of Energy to enter agricultural and animal investment in Sudan, which abounds in natural potential and resources in such fields.

Thani Group had bought the sold shares for USD two million. The Sudanese responsible said that the agreement with Al-Kharafi came due to its large experience in the oil field.

The deal would raise Sudapet’s stake to 10 percent in Petrodar, which operates the Dar Blend field. Dar’s exports were estimated at about 200,000 barrels per day in mid-2007. The Sudan produces around 500,000 bpd of crude oil.

Petrodar was set up to explore, develop and produce oil and gas from blocks 3 and 7 in the south east with a total area of about 72,000 square km (27,800 square mile).

Petrodar is a venture between China National Petroleum Company International (Nile) Ltd, Petronas Carigali Overseas Sdn Bhd, Sudapet Ltd, Gulf Oil Petroleum Ltd and Al Thani Corp. The Chinese Sinopec holds the majority 41 percent stake in Petrodar, the Malaysian Petronas, holds 40 percent, while Sudapet, Gulf oil and Al Thani jointly hold the remaining 19 percent.

Native Leader Serving Six Months for Opposing Mine

2008-03-16T21:17:00.000-07:00

Algonquin community leader Robert Lovelace had never been charged with an offence, but when a uranium company began prospecting for radioactive ore on unceded First Nations land without engaging in consultation, he decided to take action and organized a non-violent blockade.

On February 15, Judge Cunningham of Ontario's Superior Court sentenced Lovelace to six months in jail for contempt of court and fined him $50,000 for his involvement in the peaceful protest.

Chief Paula Sherman, elected leader of the Ardoch Algonquin First Nation, a small community about 110 kilometres southwest of Ottawa, where the controversial uranium prospecting is taking place, calls Robert Lovelace "a political prisoner."

"It seems like a very heavy sentence," said Jamie Kneen of Mining Watch Canada, a non-governmental watchdog. "If the court had issued a trespassing charge, there could have been an argument about who was really trespassing."

The territory in question involves mainly Crown land that is subject to ongoing land-claim negotiations between First Nations and the provincial and federal governments.

In September 2007, an Ontario provincial court issued Frontenac Ventures, the mining company, an interlocutory injunction ordering protestors from Ardoch and Sharbot Lake First Nations, along with their non-native allies, to vacate the Robertsville camp. The camp is the only feasible entry point to a 30,000-acre wilderness tract in Frontenac County, where the company has its prospecting license. Lovelace and other activists violated that order.

"The source of this conflict is the Ontario Mining Act, which allows companies to stake land and prospect without consultation with private land owners or other users, including First Nations," said Kneen. Lovelace and other activists argue their constitutional rights were violated by the lack of consultation.

People living on or near the exploration site discovered their land was being taken almost two years ago. There were no community meetings or information sessions about the uranium exploration. "It started on private land when a cottager saw trees being cut and started protesting the development," said Kneen. A few months later it became clear that some of the land being staked was disputed territory.

"Uranium mining has no record other than environmental destruction and negative health issues," said Doreen Davis, chief of the Shabot Lake First Nation. "Uranium can't be stored safely," said Davis, who will be sentenced on March 18 for participating in the blockade. She is under court order not to talk about the dispute with Frontenac.

"I do know that we have communities from Kingston to Ottawa on our side against uranium mining in this district," said Davis. "A huge group of settlers, that's what they call themselves, have been working with us, pounding the pavement and educating people about this. I think it is unique to have aboriginal and non-aboriginal people standing shoulder-to-shoulder like this."

The federal government has yet to get involved in this case and Ontario's provincial government has only been reluctantly and peripherally involved, according to Kneen.

Not much is known about the company at the centre of the dispute. "Frontenac is a private company, so they don't have to file any disclosure," said Kneen. "Aside from the president and their lawyer, no one knows who they are or where they get their money."

The company's website has only one page and a press release. Frontenac's president, George White, did not return calls. The website says the company "is committed to participating in any efforts of Ontario and the First Nations' to consult in good faith," but Ardoch Chief Paula Sherman isn't convinced.

"No consideration was given to the circumstances leading to our actions," said Sherman in a statement following Lovelace's sentencing. "The testimony given under oath by Robert Lovelace outlined Algonquin Law and the corresponding responsibilities of Algonquin people with respect to human activity in our territory," wrote Sherman, who was fined $15,000 during the court case for breaking the injunction that prohibited protests on land being explored by Frontenac.

Because the company obtained a court order against protestors rather than filing trespassing charges, the judge was not required to consider arguments regarding historical precedent or Algonquin legal codes when making the decision. "It's a way of avoiding the core issues," said Kneen.

After a decade of low prices, the spot price of uranium has increased drastically in recent years, from $43 per pound in 2006, to $75 today.

As oil prices rise, countries have re-started old nuclear reactors and countries like South Africa, India and China have ambitious nuclear-power plans on the horizon. UBS, a financial services company, predicts uranium will hit $110 per pound by 2010.

These developments don't sit well with Dr. Mark Winfield, a Canadian nuclear expert. "Existing [uranium] mines in northern Saskatchewan have caused severe contamination through heavy metals like arsenic, and long-lived radionuclides, along with conventional pollutants," said Winfield.

In 2004, Health Canada concluded that effluent from uranium mines meets the definition of a toxic substance under the Canadian Environmental Protection Act.

Canada is the world's largest supplier of uranium and Conservative Prime Minister Stephen Harper wants to increase exports in his bid to transform the country into an "energy superpower."

"The Intergovernmental Panel on Climate Change was very clear that nuclear [energy] can't compete economically," said Winfield. "The potential health and environmental impacts of uranium mining are not worth the risks."

Chevron Corporation Financial Analysts

2008-03-16T21:16:00.001-07:00

Chevron Corporation (NYSE:CVX) told financial analysts at a meeting in New York City today that major upstream capital projects in the U.S. Gulf of Mexico, offshore Nigeria and in Kazakhstan will produce additional crude oil and natural gas this year. In the downstream business, company executives said projects to increase refining scale and flexibility are under way in areas of market strength in the United States and Asia.

"We are focused on execution as a top priority for 2008 and 2009" Dave O’Reilly, Chevron’s chairman and CEO, said at the company’s annual analyst meeting. "This entails excelling at operational performance, executing our capital projects well and effectively managing costs"

O’Reilly’s presentation outlined the momentum Chevron has developed in key areas of its business plan:

* Significant upstream and downstream presence in the highest-growth regions of the world.
* Outstanding queue of upstream projects in all phases of engineering and construction.
* Successful exploration program that provides resources for oil and gas development projects.
* Improved refinery capabilities to process heavier, higher-sulfur crudes.

UPSTREAM – EXPLORATION AND PRODUCTION

George Kirkland, executive vice president for Global Upstream and Gas, said a track record of exploration success and project execution is expected to grow Chevron’s production capacity and boost proved reserves of crude oil and natural gas.

The company has approximately 40 major capital projects with a net Chevron investment of $1 billion or more each. Of those, important projects – including Blind Faith in the Gulf of Mexico, the Sour Gas Injection/Second Generation Plant in Kazakhstan and Agbami in Nigeria – are planned to increase production capacity in 2008. In 2009, Tombua Landana in Angola, Frade in Brazil and Tahiti in the Gulf of Mexico are expected to come online and further grow production capacity.

Kirkland also explained that the company’s exploration teams had another strong year in 2007. Each year from 2002 through 2007, Chevron’s exploration program has added an average of 1 billion barrels to its resource base. The 2007 success rate for exploration wells was 41 percent, comparable with Chevron’s average of 42 percent over the past six years. In addition, a recently released Wood MacKenzie report cited Chevron as the leader among its peers in exploration results from 2002 to 2006.

"Not only is our exploration success feeding our strong queue of major capital projects, it is also building the foundation for long-term reserves replacement as the discovered resources move to proved reserves" he said.

In regard to proved reserves, Kirkland said projects in Kazakhstan, Nigeria, Australia, Brazil, China, the United States and Angola will deliver strong reserves replacement for Chevron over the next three years.

"Our three-year business plan indicates we will have reserves of approximately 11.3 billion barrels of oil-equivalent at the end of 2010 – more proved reserves at the end of the decade than we have today" Kirkland explained.

ConocoPhillips Describes Business Strategies Intended to Deliver Growth and Enhance Shareholder Value

2008-03-16T21:16:00.000-07:00

ConocoPhillips, Houston Becky Johnson, 281-293-6743 (media) or Gary Russell, 212-207-1996 (investors) ConocoPhillips (NYSE:COP) held its annual analyst meeting today in New York. The company's Chairman and Chief Executive Officer Jim Mulva outlined how ConocoPhillips' strategic objectives and operating plans will enable the company to utilize its portfolio of high-quality assets in delivering growth and enhancing value for shareholders, while overcoming a variety of challenges inherent to the current business environment.

"We have a strong portfolio of opportunities, and development plans are under way so that we can fully capitalize on their potential," Mulva said. "We are benefiting from our talented work force and ongoing focus on capital discipline and project execution, financial optimization, operating excellence, and safety and environmental stewardship. As a result, we believe ConocoPhillips is well positioned to operate successfully in the business environment we foresee for 2008 and beyond - one that seems likely to be characterized by strong energy demand. Although we face intense competition for access to new resources and the prospect of legislation on climate change, we have taken steps to enable ConocoPhillips to operate effectively and deliver value as we manage the challenges ahead."

Mulva noted that ConocoPhillips' 2007 total shareholder return of 25.4 percent was above the peer group average, and that the company's three-, five- and 10-year returns led the peer group. He reaffirmed ConocoPhillips' intent to fund a capital program of $15.3 billion in 2008, to continue select asset sales that facilitate ongoing renewal of its portfolio, and to continue pursuing efficiency in executing its development projects, drilling programs and base operations.

In pointing out that efficiency, Mulva said, "In terms of cash contribution per barrel of oil equivalent, our performance leads our peers in both the E&P and R&M segments. This ability to generate cash enables us to enhance distributions to our shareholders, such as the recently announced 15 percent increase in our dividend, and it should enable us to complete the $10 billion in share repurchases authorized for 2008."

In its Exploration and Production (E&P) segment, the company outlined its strategic plans to advance an asset portfolio that is resource-rich, with more than 50 billion barrels of oil equivalent of existing resources, including 10.6 billion barrels of proved reserves at year-end 2007. ConocoPhillips has leading positions in both natural gas production and heavy-oil acreage in North America, a legacy asset position in the North Sea, and strong growth prospects in the Asia Pacific, Russia and Caspian, and Middle East regions. Major near- and long-term development projects are under way in all these regions. The company expects to sustain a long-term, average production growth rate of 2 percent and a five-year reserve replacement average of 100 percent or more. ConocoPhillips also anticipates new opportunities to emerge from its business development efforts and from a replenished exploration program that is increasing the company's exposure to high-potential prospects.

In Refining and Marketing (R&M), ConocoPhillips is committed to maintaining its segment-leading performance in U.S. refining, a strong refining position in Europe and an advantaged position in Asia. The company expects to sustain its leadership position by delivering safe, reliable and environmentally responsible operations, while holding base operating costs generally flat. ConocoPhillips also plans to capitalize on opportunities in the market by improving its clean products yields and enhancing the integration of its downstream, upstream and commercial businesses, while increasing operating margins through key investments in refining conversion capacity. In addition, the company is engaged with foreign partners in studying opportunities to expand its global portfolio.

Updates also were provided on the company's strategic partnership with LUKOIL, the upstream and downstream business ventures with EnCana Corporation, and the DCP Midstream and Chevron Phillips Chemical Company joint ventures.

In addition, Mulva addressed the important role technology would play in helping ConocoPhillips achieve its plans. "We have a rich history in technological development devoted to the recovery of conventional resources, and we believe that further research is the key to unlocking the value of our non-conventional resources and advancing the development of alternative energy sources."

The company expects to spend approximately $400 million on technology in 2008, primarily to progress such technologies as reservoir imaging, steam-assisted gravity drainage, coal gasification, carbon capture and sequestration, cellulosic ethanol conversion, and refining processes. This also includes more than $150 million for research efforts focused on the development of non-conventional oil and gas resources and the development of new energy sources, such as alternatives and renewables. Additionally, ConocoPhillips plans to build both a state-of-the-art global technology center and a best-in-class corporate learning center on land recently purchased in Colorado.

"Further, we are investing strongly in our people by enhancing our efforts to recruit, retain and develop a highly capable, demographically balanced and diverse work force," Mulva said. "We are making good progress, and our plans to develop both a technology center and a corporate learning center will help ensure our employees attain their maximum potential."

Discussing other issues, Mulva said that, "To ensure that our business remains sustainable over the long term, we must operate safely and with environmental care, while also helping address the key challenges facing society. For example, society clearly needs to achieve energy supply security, as well as address the challenge of climate change caused by carbon emissions. We believe these issues are interrelated and must be solved together. Therefore, ConocoPhillips supports enactment of a comprehensive U.S. energy policy, and a mandatory national framework to reduce carbon emissions. Also, we are working to conserve and recycle more of the water used in our operations, and are funding research into new techniques that could utilize the water produced in association with oil and natural gas for agricultural and industrial applications."

More information, including presentation materials and a recorded webcast of the meeting, is available at www.conocophillips.com/investor.

ConocoPhillips is an international, integrated energy company with interests around the world. For more information, go to www.conocophillips.com.

Oil, gas exploration gets costlier after govt clarifies ship rental tax

2008-03-16T21:13:00.001-07:00

The government’s clarification in the Budget 2008 that ships hired to support drilling activities would indeed attract a 12.5% service tax, will make oil and gas exploration more expensive, given the unwillingness of explorers to pay the tax, forcing shipowners to take a hit to their financials by doing so themselves.
Exploration firms were brought under the purview of service tax in Budget 2007, but they have thus far refused to pay up arguing that the levy did not cover hiring of ships, as these were not involved in mining and drilling operations.
“To promote oil exploration activities along the county’s coast, the government introduced a special tax regime for this industry in the new exploration licensing policy, wherein it (the sector) is exempted from all duties and levies. Why should the government impose a service tax on us now?” asked an official with Oil and Natural Gas Corp. Ltd (ONGC), India’s biggest oil explorer. The official did not wish to be identified. ONGC has hired at least 100 offshore support and supply ships, paying anywhere between $2,000 (Rs81,000) and $12,000 a day to shipowners. Hiring of oil drilling rigs is costlier with daily rentals in excess of $200,000.
Both oil firms and local shipowners lobbied vigorously in the run-up to the Budget to exempt ship rentals to the offshore oil industry from service tax.
However, Budget 2008 clarified that renting ships such as drilling rigs, offshore support and supply vessels, anchor handling tugs and other supply boats would come under the scope of service tax.
Exploration companies are still resisting the tax. State-owned ONGC said it could not absorb the extra costs unless the government provides for it in the firm’s annual budget. “Oil exploration firms told us that service tax is not payable by them when we asked them to reimburse the levy on ship rentals for payment to the government,” said an official with Garware Offshore Services Ltd.
Shipowners could be in trouble as a result. The indirect nature of the tax means shipowners have to collect it from explorers and pay it to the government.
Recently, the Indian National Shipowners Association (Insa), the umbrella body representing local shipowners, received a communication from the government’s service tax department asking shipowners to pay the tax or risk action.
“We are in a jam. On one hand, we cannot violate government tax laws. On the other, we cannot give up on our clients,” said an executive with TAG Sealogistics Ltd who did not wish to be identified.
Shipowners such as Shipping Corp. of India Ltd, Great Eastern Shipping Co. Ltd, Varun Shipping Co. Ltd, Garware Offshore, TAG, Great Offshore and Dolphin Offshore Enterprises (India) Ltd will have to take a substantial hit if they are to pay the service tax from their own pockets. “It is a sizeable amount and will be a big problem for shipowners,” an Insa official who did not wish to be identified said.
The oil explorers’ stance contradicts a commitment by at least some of them to reimburse the service tax if it is made mandatory. “In fact, some shipowners had incorporated a clause in their contracts with ONGC that the company would reimburse service tax if it became payable,” said an executive with Great Offshore, India’s biggest offshore service provider.
“So, we are pretty much covered both contractually as well as due to the indirect nature of the tax, which is paid to the government only after it is collected from the end users,” added this executive who did not wish to be identified.

Coastal likely to clinch new offshore support vessel orders

2008-03-16T21:13:00.000-07:00

SHIPBUILDER Coastal Contracts Bhd expects to secure a further RM400mil worth of new offshore support vessels (OSV) orders this year, said executive chairman Ng Chin Heng.

“Apart from the RM105mil sale announced in January and the RM51mil deal announced last week, we are targeting to bag at least an additional RM400mil worth of new OSV orders to add to our already sizeable order book.

“We hope to achieve this before the end of 2008 to close the financial year at a high,” he told StarBiz.

Ng said the Sabah-based company was in “advanced negotiations” with several potential OSV buyers and was confident of closing these deals soon.

Coastal’s order book to build vessels had surpassed the RM1bil mark, he added.

In January, it announced that its wholly-owned subsidiary Coastal Offshore (Labuan) Pte Ltd had secured the sale of two OSVs to an Indonesia buyer for about RM105mil while last week it said it had secured the sale of two units of OSVs to an Egyptian buyer for RM51mil.

Ng said Coastal hoped to maintain a strong double-digit growth in net profit this year, with the OSV segment spearheading the earnings expansion.

At the same time, the company was positive that demand for tugboats and barges – its traditional vessels which are chartered out – would remain significant in line with the rise of global seaborne trade, he said.

Coastal’s vessels are used by agriculture, mining and heavy industry companies to transport grains, coal, iron ores, scrap irons, crude oil, crude palm oil and various other commodities.

“We are also considering the option of retaining a number of OSVs from our current building programme for outright charter to support vessel service providers.

“Alternatively, we can opt to assume the role of a support vessel service provider ourselves to get the ball rolling in this lucrative sector and bolster our recurring income,” Ng said.

He said that despite looming inflationary pressures, shipbuilders were still anticipating growth in orders of OSVs this year.

This is because demand is expected to trend up in line with robust activities in the oil and gas sector, which would drive demand for offshore exploration platforms and rigs. That, in turn, would generate demand for OSVs.

As for competition, although there have been several new entrants into the OSV market on the domestic front recently, Coastal does not expect congestion overnight in the sector.

“There will definitely be a gestation period of a few years between the development and preparation of new shipbuilding facilities and the actual roll-out of finished products,” Ng said.

Additionally, Coastal had moved up the shipbuilding hierarchy by fabricating “sophisticated” OSVs – a segment where barriers to entry were high, he said.

“We believe the pie is large enough to absorb additional OSV supply. Vietnam's oil industry, for example, is booming and that country is expected to have some 900 exploration wells over the next 15 years.

“Meanwhile, Petronas has targeted to explore and develop 500 new wells over the next five years,” Ng said.

Against this backdrop, surely the OSV demand and supply imbalance would continue, he added.

Coastal reported a 102% jump in net profit to RM69.3mil for the financial year ended Dec 31, 2007 while sales grew 82% to RM290.4mil.

Troop surge won't stop Iraq oil fraud, insurgency: leading Democrat

2008-03-16T21:12:00.001-07:00

Senator Dianne Feinstein said Sunday that the US troop surge in Iraq could fall short of its goal, and raised concerns about a news report that said stolen oil cash was paying for the insurgency.

"The surge, where it has worked militarily, has not worked politically. What's left in Iraq is a government that is incompetent," Feinstein, a Democrat who serves on the Senate Appropriations committee, told CNN.

Feinstein also pointed to a report in the New York Times that alleged that stolen Iraqi oil profits were paying for deadly insurgent activities five years after the US-led invasion.

"The front page of the New York Times points out massive, massive oil fraud. We had a hearing in defense appropriations, which dealt with some of it. The estimate is nine billion dollars of oil revenues are missing," she said.

"Now, the Times contends it's going in to fuel the insurgency. If this is allowed to happen, it doesn't matter what the surge does, the insurgency will continue."

The newspaper citing American military officials as saying fraudulent activities, including hijackings of oil tankers, bribed drivers, forged papers and manipulated meters are responsible for siphoning off about one-third of Iraqi oil revenue toward the black market.

"Some of the earnings go to insurgents who are still killing more than 100 Iraqis a week," the newspaper said.

The Times quoted Captain Joe DaSilva, a platoon commander at the Baiji oil refinery in a Sunni Arab-dominated region of Iraq, as saying such kinds of fraud were "the money pit of the insurgency."

The United States boosted troop levels to Iraq last year, sending in tens of thousands of extra soldiers. Its force in Iraq, which currently numbers 162,000, is supposed to fall to 140,000 by July.

CORRECTED - Oil prices rising due to speculation-OPEC president

2008-03-16T21:12:00.000-07:00

Oil markets are rising due to speculation and the dollar's fall, not to a lack of petroleum production, OPEC President Chakib Khelil said on Sunday, the official Algerian news agency APS reported.

APS quoted Khelil, who is also Algerian Energy and Mines minister, as saying: "Prices are not going up because of a lack of output, but rather from the effect of speculation."

This increase in price "is linked not to a lack of production but to the devaluation of the dollar, which has given speculators the opportunity to invest in oil."

Victoria Petroleum Announces Growler Oilfield Commences Production PEL104, Cooper Basin

2008-03-16T21:11:00.000-07:00

Victoria Petroleum as operator for the Growler Oilfield Development Project, advised that oil production has commenced from the Growler Oil Field. The start of production is significant as this is the first oil produced from PEL 104 located on the north western margin of the Cooper-Eromanga Basin. Both Growler wells were opened to natural flow on 12 March and were flowing at a combined rate of 100 BOPD. Artificial Lift production pumps will be installed over the next few days and once this work has been done the production rate is expected to reach 300 barrels of oil per day.

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Cairn plans more exploration in B'desh after gas find

2008-03-16T21:09:00.000-07:00

British oil and gas firm Cairn Energy Plc has discovered new gas in one offshore well but has failed to find any in two other offshore fields in the Bangladesh sea, government officials said on Sunday.

The firm completed exploratory drilling in the Hatiya structure in the Bay of Bengal, 60 kilometers south of the port city of Chittagong, an official said.

"The firm informed us today that they have encountered hydrocarbon/petroleum in the structure which is not commercially viable," said Muhammad Muqtadir Ali, a director of state-run Bangladesh Oil, Gas, and Mineral Corporation or Petrobangla.

But Cairn has discovered new gas in a well at the Sangu offshore field.

"The firm will be able to add at least 25 to 30 mmcfd of gas in its total production," another official said.

Earlier, the firm did not find any commercially viable gas in Magnama, another offshore field in the sea.

"Now the firm proposed to conduct a 3D seismic survey in both the fields either in late December this year or early next year," Muqtadir told Reuters, referring to Hatiya and Magnama.

After the 3D survey is completed, Cairn will conduct an appraisal for a final decision which will cost altogether about $90 million for each field, the official said.

Muqtadir said the firm had already spent about $200 million in offshore exploration work.

The firm started drilling after completion of 2D seismic surveys but failed to discover commercially viable gas there.

Petrobangla, based on seismic surveys, has estimated that there was a potential reserve of 3.5 trillion cubic feet of gas at Magnama and 1.8 TCF at the Hatiya structure.

The firm operates Bangladesh's only offshore gas field at Sangu in the Bay of Bengal, producing up to 80 million cubic feet of gas per day .

Cairn has been in Bangladesh for more than 10 years and, along with its joint venture partner, U.S. firm Halliburton Co., has invested nearly $790 million, officials said.

Bangladesh's proven and recoverable gas reserves of 13.54 tcf are expected to be exhausted by 2011, officials said.

Panda Energy to build natural gas fueled power plant in Sherman

2008-03-16T21:07:00.001-07:00

Sherman soon could be home to a highly efficient and clean 500-megawatt natural gas-fired electricity plant. Sherman Economic Development Corp. entered an agreement with Panda Energy Inc. Monday to build a $300 million, combined-cycle natural gas fired power plant.

Panda's is likely the largest building project in Grayson County history. In return for Panda's investment, SEDCO agreed Monday to give Panda 204 acres in its industrial park and $2 million in cash incentives. "We're just really excited about it," said SEDCO Board of Directors Chairman Joe Fallon. "They still have some financing and regulatory approvals to obtain, but it is really going to be great for the Sherman economy, mainly from the $300 million increase to the tax base ... From everything we're hearing and have looked at it's a very efficient, really clean-burning natural gas plant we're building."

Fallon said it is the largest building project they've found in Grayson County history.

SEDCO President John Boswell said the city of Sherman and Grayson County are still considering their economic development incentives for the plant. Such incentives from the county, Grayson County College and cities often come in the form of tax abatements. SEDCO acted quickly because it was important for Panda Energy Inc. to be able to go to the Electricity Reliability Council of Texas to begin discussions for building the plant, Boswell said. ERCOT controls the state's power grid. Panda also must gain permits to build and operate the plant from the Texas Commission on Environmental Quality.

Boswell said the SEDCO board approved giving Panda the land, which the company first will pay for and then SEDCO will reimburse; and $2 million based on the nearly $300 million investment. The incentives were based on investment and not the number or quality of jobs created. About 25 full time, permanent jobs should be created, Boswell said. The press release quotes Boswell as saying that building the plant will create 300-400 construction jobs and 32 jobs will be created indirectly supporting the plant.

The generating plant will be built in SEDCO's Northgate Park III industrial park, partially on 40 acres the board purchased in January for $400,000. Boswell said Panda will pay for the land and when the plant is built and the company receives a certificate of occupancy from the city, it will be reimbursed. The land, according to the land option contract between Panda and SEDCO, is valued at $3,600 per acre or $734,400. The park is west of U.S. Highway 75 and south of FM 1417. Part of the land is within Blalock Industrial Park.

A press release from Panda quotes Sherman Mayor Bill Magers as saying, "Panda representatives have been actively engaged with community leaders since the beginning of the site selection process. 'They've done a good job answering questions and building support for this project. Panda has also shown that they intend to be a good corporate citizen of our community.'"

Boswell said this is one of the best deals SEDCO has made, with incentives being less than 1 percent of the investment.

Panda officials said in a press release that the natural gas-fueled generating station would be able to supply the power needs of approximately 400,000 homes in North Texas and is expected to bring more than $248,000,000 into the area's economy over the next 10 years.

"The Panda Sherman generating station will utilize the latest in proven technology and will be one of the cleanest power plants in the nation," the press release states. "Air emissions at the facility will be controlled to among the very lowest of any power plant in Texas."

Combined cycle generating plants produce more energy than traditional plants do with a unit of fuel. The Northwest Power Planning Council explains that a combined-cycle gas turbine power plant consists of gas turbine generators equipped with heat recovery steam generators to capture heat from the gas turbine exhaust. This steam powers additional turbines that produce more electricity. Thus, what heat once was released back into the environment now is used to produce electricity.

This combined cycle produces power at about 50 percent of the chemical energy of the gas that powers it.

Combined cycle gas turbines emit nitrogen oxides, according to the NPPC and carbon monoxide. If fuels other than gas, such as fuel oil, were used, the plant might emit other chemicals, such as sulfur dioxide.

"In 2004, the company brought its development expertise to the biofuels industry originating several large-scale ethanol projects," Panda's press release states. "Newsweek Magazine subsequently recognized Panda, in 2005, as one of the ten most eco-friendly energy companies in America for developing the Hereford ethanol facility — the largest biomass-fueled ethanol refinery in the United States with one of the lowest carbon footprints of any similar-sized facility in the nation. In 2006, Panda Energy founded and transferred responsibility for its ethanol projects to Panda Ethanol, later establishing the company as a separate public entity."

Panda also owns combined-cycle natural gas fired generating plants in Paris, Odessa, Guadalupe, Oneta, Okla., Gila Bend, Ariz., El Dorado, Ark., Rosemary, N.C., and Brandywine, Md. The company owns a small hydroelectric plant in Bhoti Koshi, Nepal, and a coal-fired plant in Luannan, China. The Sherman plant would be one of its smaller natural gas plants. The company also owns natural gas and electricity distribution lines.

“Panda Energy is continuing its work to build out a fleet of new generating stations that will help meet the rising demand for clean, low-priced electric power,” said Robert Carter, chairman and chief executive officer of Panda Energy. “North Texas officials are clearly looking toward the needs of tomorrow, and we look forward to working with them to enhance the future reliability of the region’s power supply.”

Sherman Mayor Bill Magers said Panda representatives have been actively engaged with community leaders since the beginning of the site selection process. “They’ve done a good job answering questions and building support for this project. Panda has also shown that they intend to be a good corporate citizen of our community.”

“I can’t think of another company that has worked harder to bring something good to the city of Sherman than Panda Energy,” said John Boswell, president of the Sherman Economic Development Corporation. “This power plant will have a significant impact on the area’s economy for years to come. It will expand the tax base, enlarge payrolls and drive revenues for contractors, suppliers, engineering firms, hotels, restaurants, retailers and a host of other businesses. The plant will create an estimated 300-400 construction jobs, 25 direct jobs to run the facility and 32 indirect jobs to support it. This is good for the city of Sherman.”

The generating station will be located on a 200-acre site at the Progress Industrial Park. Construction will take approximately 24 months and is dependent upon financing, regulatory approvals and other conditions.

Panda Energy previously announced that it has filed for an air permit to build a 1,000-megawatt combined-cycle power plant in Temple, Texas.

Panda Energy was founded in 1982, has developed, financed, built and operated large-scale energy facilities both domestically and internationally. The company built the two largest gas-fueled, combined-cycle independent electric generation facilities in the United States totaling 4,500 megawatts of generating capacity. Altogether, the company has raised over $5.9 billion to develop and build more than 9,000 megawatts of generating capacity.

Newsweek Magazine, in 2005, recognized Panda as one of the 10 most ecofriendly energy companies in America for developing the Hereford ethanol facility — the largest biomass-fueled ethanol refinery in the United States with one of the lowest carbon footprints of any similar-sized facility in the nation. In 2006, Panda Energy founded and transferred responsibility for its ethanol projects to Panda Ethanol, later establishing the company as a separate public entity.

Rising oil prices spread beyond gas

2008-03-16T21:07:00.000-07:00

In import-based Hawaii, rising energy prices raise the price of everything else

It's easy to see the impact of record-high crude oil prices at the gas pump.

But what about other areas of the economy?

Anywhere you turn in Hawaii, it's hard to not notice the rising cost of everything from gasoline to groceries.

"You see it at the gas pump, and that's the wake-up call, but it also shows up in the processing costs for food and other manufactured items that are produced elsewhere, but that we then import," said Paul Brewbaker, chief economist for Bank of Hawaii.

Some increases are easily seen, such as fuel surcharges on airfares or shipping rates.

Other costs are less measurable, such as how meat prices are driven up due to higher feed prices as a result of ethanol demand, Brewbaker says.

"The inflation has been much higher than we thought in a particular commodity, petroleum, on which Hawaii is very much more dependent than the rest of the U.S. energy consumption complex," Brewbaker added. "That vulnerability weighs increasingly heavy on prospects for economic growth in the islands."

Texas pump prices hit record highs

2008-03-14T09:49:00.001-07:00

A continued rise in crude oil prices pushed pump prices in Texas to new record highs this week.

According to the AAA Texas, the current average price per gallon of self-serve unleaded gas in Texas rose to $3.16, an all-time high.

Fort Worth pushed past Dallas with the highest average in the state at $3.17 a gallon, up 9 cents from last week. Dallas' average also reached $3.17 a gallon, up 8 cents.

Elsewhere in the state, the average price in Houston hit $3.16 per gallon, up nearly 8 cents.

San Antonio had the state's lowest average at $3.12 a gallon, but that price was still up five cents over the previous week.

In Corpus Christi, the cost of gas increased nearly 6 cents -- to just under $3.14 per gallon.

"Every Texas region surveyed set new record highs this week, with Amarillo being the only exception," said AAA Texas spokeswoman Rose Rougeau.

The price in Amarillo reached $3.16, an increase of more than 5 cents compared with the previous week.

"Texarkana is the only area that posted a decrease," Rougeau said. "With record crude oil prices pushing retail gas prices upward, it is unlikely that area will continue to move downward."

The pump price was $3.13 a gallon in Texarkana, down more than 4 cents from the previous week.

Offshore oil boom business for isle shipyards

2008-03-14T09:48:00.002-07:00

The massive building squatting just off Harborside Drive is a 506-ton reminder of how the global quest for oil and natural gas is reviving island shipyards.

Building the structure, which will serve as living quarters for offshore workers, took 10 months and was the largest project to date for LoneStar Marine Shelters, 6800 Harborside Drive.

Last week, LoneStar Marine employees and about 150 energy industry representatives, including some from BP Energy and Fluor Corp., marked the completion of the 32-person sleeping quarters, control room and 69-foot-by-69-foot helideck with a tour and topping-out party.

Exmar Offshore, a subsidiary of an Antwerp, Belgium-based group of companies, contracted with LoneStar Marine to design and build the living quarters and a smaller workshop and storage building.

Marriage Made In Ingleside

The unit soon will be shipped by barge to the Kiewit Offshore Services yard in Ingleside, north of Corpus Christi, and be married to Exmar’s $300 million Opti-Ex deepwater semisubmersible production platform. Samsung Heavy Industries in South Korea is building Opti-Ex’s hull. Workers at Kiewit’s fabrication yard will complete the rig’s 6,400-ton deck.

The living unit includes a galley, gymnasium, sick bay, offices and rooms equipped with 15-inch plasma TVs and a lounge with a 42-inch screen TV. It’s all wired for Internet.

Monster Move

Perhaps as soon as the end of this month, the structure will be rolled onto a barge at the shipyard’s dock by a remote-controlled mover equipped with 280 independently operated wheels, LoneStar officials say.

The mover will lower the unit down onto a structure engineered to distribute its enormous weight across the barge, officials said.

Finally, workers will brace and weld the building to the support structure on the barge for the trip through the Gulf of Mexico to Ingleside.

Exmar’s Opti-Ex, which can operate in depths of 10,000 feet, is the only new production semisubmersible under construction that’s available for lease, officials say. The platform is expected to be delivered in the first quarter next year and will be available for lease to oil companies worldwide, Exmar officials say.

Opti-Ex is capable of supporting production of 60,000 barrels of oil and 50 million cubic feet of natural gas a day, Exmar officials say.

Record Demand

Record high oil prices — light, sweet crude for April delivery reached a new trading record of $110.20 Wednesday— is driving demand for buildings to accommodate offshore workers.

Strong energy prices bode well for the island yard, said Steve Vacker, vice president of LoneStar Marine Shelters.

“For our business, it means there’s more out there to invest in the search for oil,” Vacker said. “Companies are more likely to go out farther to drill in deeper water.”

Vacker declined to say what the Exmar contract was worth to LoneStar Marine.

The company arrived in Galveston in 2003, taking over a repair yard that had been idled by First Wave Marine/Newpark Shipbuilding a few years before when island shipyards were struggling.

LoneStar Marine, which previously had a landlocked Houston site, moved to the island specifically to take on bigger projects such as the one it just completed, officials said. Being near water allows it to put projects directly on barges, officials said.

LoneStar Marine, with more than 100 employees, owns 85,000 square feet of warehouse and office space on 28 acres just north of Harborside Drive.

Industry Energized

Booming energy and marine industries have created between 400 and 500 full-time jobs on the island in the past 12 months, said Jeff Sjostrom, president of the Galveston Economic Development Partnership.

Last month, Rolls-Royce Commercial Marine broke ground on a 50,000-square-foot facility on Pelican Island, where it will overhaul propulsion equipment used by the offshore and marine industries. Eventually, Rolls-Royce could employ about 100 people, officials have said.

Rolls-Royce is subleasing space from Gulf Copper Dry Dock and Rig Repair, which in 2005 revived a shipyard on 110 acres. Including contractors, Gulf Copper employs about 1,000 people.

Sjostrum said the partnership has taken notice of the energy-driven growth and has revived a task force to attract more offshore and maritime industry to the island. Jayson Levy, a former chairman of the partnership, is heading up the task force.

Sjostrum likens growth of offshore support services on the island to the residential development boom.

“It’s just amazing,” he said.

Crude oil price rising: Need to reduce consumption

2008-03-14T09:48:00.001-07:00

Crude oil prices have touched $110 per barrel in international market. India's public sector marketing companies have to face losses in this connection. It is noticeable that at present we have to import more than 75 per cent crude oil for our energy requirements. The coming years could see this requirement touching 90 per cent. The reason behind this is not lowering of prices of crude oil and continuous demand of energy in China, India and other developing countries.

In such countries the governments give subsidy on petro products, due to which its demand does not come down even when the price of crude oil goes up. The Organisation of Oil Exporting Countries (OPEC) has decided not to increase production of crude oil, even if its price keeps on rising. With the value of the dollar against the Euro falling and continuous concern over its supply has also led to unexpected hike of crude oil price.

Taxes are already high in India and the government has come out with ways to solve this problem by issuing oil bonds to meet losses. However, it is not necessary that a permanent solution may be arrived at this way. The government is the biggest consumer of oil in India. Other sectors come after it. First of all, it is necessary that the consumption of oil should be decreased. Efforts should also be made for saving oil. Use of private vehicles should be controlled and the traffic should be made easier and public transport should be made popular.

Buses and car pool system should be developed to carry employees/officials to and fro from office. Rationing system could also be followed. OPEC should also take steps to control oil prices in international market. In the present circumstances saving of oil should be enforced. Research for alternative fuel should be carried out.

Gasoline Prices Second-Lowest

2008-03-14T09:45:00.000-07:00

The good news for Missouri motorists: Gasoline prices here are the second-lowest in the nation.

The bad news: They're still high, and it's going to get worse once the summer travel season rolls around.

AAA Auto Club's online Fuel Gauge Report shows the average price of a gallon of regular unleaded was at $3.25 nationally on Wednesday. The Missouri average was $3.04. Only New Jersey, at $3.02, was lower.

But Mike Right of AAA's St. Louis office said the survey was taken before St. Louis-area stations saw a significant Wednesday spike of about 11 cents per gallon, to $3.10. AAA's survey around Missouri showed most towns had prices above $3 per gallon.

It's still a bargain by comparison. The average price in the state of Washington was $3.50. It was $3.59 in California. Even in states neighboring Missouri, prices were sharply higher, most markedly in Illinois, with an average price of $3.31. Kansas was at $3.17, Arkansas at $3.16, Iowa at $3.18.

''I guess that's some consolation anyway,'' Right said.

Ron Leone, director of the Missouri Petroleum Marketers & Convenience Store Association, said individual service station owners can do little to offset the price.

''Three main factors make up 90 to 95 percent of the cost: Crude oil, refining and state and federal taxes,'' Leone said. ''Right now you're seeing the cost of crude as the biggest reason prices are rising.''

The price of crude oil has escalated to around $109 per barrel. Right noted that a year ago, a barrel of crude oil was about $58. At this time last year, Missourians were paying $2.39 per gallon. As recently as a month ago, the average price in the state was $2.80, according to AAA's Web site.

Eric Wittenauer, energy futures analyst for Wachovia, said gasoline prices would be even higher if not for flat demand.

''That's reflective of the cyclical downturn in the economy, and consumers changing their driving patterns and behavior,'' Wittenauer said. ''Public rider transportation is at all-time highs. Prius outsold Ford Explorer last year. That's indicative of the shift in behavior from consumers.''

Right also believes that people are driving less, a trend that could continue through the summer travel season.

''Last year we noticed decreases in the vehicle miles per travel,'' he said. ''I think people are indeed trying to reduce their consumption.''

Still, both Right and Wittenauer expect gasoline prices to go even higher as the warmer weather arrives and demand increases as people go on trips. The highest-ever gasoline costs in Missouri were reached last May when prices spiked as high as $3.30 per gallon in Kansas City and St. Joseph.

Right expects that record to be topped, probably this May, but neither he nor Wittenauer expects to see $4 per gallon - at least not in Missouri.

''Inventories remain high in terms of gasoline stockpiles and demand numbers are weak,'' Wittenauer said. ''I do not look for prices to get to $4 per gallon (in Missouri), but certainly in other parts of the country.''

Diesel prices may get there, though, a huge burden for truckers and others. The average price for a gallon of diesel on Wednesday was at an all-time high of $3.71 in Missouri. A month ago, the price was $3.19 and a year ago, $2.60.

Wittenauer said diesel fuel supplies are tighter than those for gasoline and he expects prices to continue to rise.

Oil gives up around a dollar on profit-taking, US recession fears

2008-03-14T09:43:00.000-07:00

Oil fell by around a dollar as end of week profit-taking and concerns over the health of crude's recent rally knocked the top off yesterday's record price.

At 4.00 pm, New York's WTI crude for April delivery was down 87 cents at 109.46 usd per barrel, having yesterday traded to a new all-time high of 111.00 usd.

In London, Brent crude for April delivery was down 84 cents at 106.70 usd per barrel, having yesterday touched 107.88 usd, its highest ever price.

Crude prices have spiked to a series of record highs in recent sessions, as investors poured into oil in a bid to guard against historic dollar weakness. But with the US economy possibly already in recession, and economic fears heightened today by news Bear Stearns has had to seek emergency funding, crude's recent gains appear to be detached from market fundamentals.

A US recession should see demand growth slow, while rising crude inventories point to decent supplies heading into the second quarter, when crude usage is generally at its lowest.

"Oil prices are treading in dangerous territory as oil and gasoline are being played more as a hedge against the dollar and has little regard for supply and demand," said Alaron trader Phil Flynn in Chicago.

But while prices have eased today, few investors are confident of calling a top on the market, despite an unsupportive fundamental backdrop. The dollar has tanked to another record low against the euro, possibly encouraging more hedging activity in crude next week, while also making prices cheaper for overseas investors.

MF Global analyst Ed Meir said: "With the sinking dollar providing support, the path of least resistance seems to be higher still," though he warned that markets could be dangerously overbought, with the risk of a sharp decline in prices not to be ruled out.

OPEC, the producer's cartel responsible for some 40 pct of global oil supplies, today revised its monthly estimation for US economic growth down, but kept its oil demand figures largely unchanged at 87 mln bpd for 2008.

Last week, the group decided to hold production quotas steady, despite pressure from the US to increase output to help cool record prices.

While OPEC is not due to meet again until September, the cartel said it would, "continue to closely monitor ongoing market developments and as always stand ready to take the necessary measures in line with their commitment to market stability and ensuring adequate supplies."

OPEC has consistently blamed recent price gains on market speculation, geopolitical tensions, and the weakening dollar, rather than a lack of supplies in the market.

Some have explained the recent record highs seen in oil and other commodity markets, set against the backdrop of an economic slowdown, as indicative of a broader trend.

Goldman Sachs analysts have argued that booming demand from developing nations, increased resource nationalism, and decades of underinvestment in commodities has created an environment where prices can continue to rise despite a slowing economy.

"The most recent rise in commodity prices is simply the extension of the structural bull rally in commodities that is now in its ninth year, and the fact that the rally continues in the midst of an economic slowdown simply serves to highlight the fact that this bull rally is structural, not cyclical," analysts at Goldman's said, warning that prices will probably remain at higher levels until significant investment increases production capacity to a level capable of meeting future demand projections.

"Solving the politically driven supply constraints will be a very difficult and protracted process which will likely lead to explosive prices in the next couple of years, with oil prices potentially spiking toward 175 usd a barrel, particularly should growth in the G7 re-accelerate in 2009 and beyond."

Goldman Sachs was one of the first investment banks to predict oil prices at 100 usd a barrel. They recently increased their 2008 average price forecast to 105 usd a barrel.

Mining Oil and Gas Exploration New Investment in India

2008-03-14T09:41:00.000-07:00

Public sector oil companies would invest Rs 229,071.5 crore in oil and gas exploration, fuel retailing, refineries and petrochemicals, during the 11th Plan Period (2007-2012).

In a written reply in Lok Sabha, minister of state for petroleum and natural gas, Dinsha Patel, said Rs 150,932.49 crore would be spent on oil and gas exploration in India and abroad, Rs 62,582.10 crore on refining and marketing and Rs 15,321 crore on petrochemical business.

Oil and Natural Gas Corp (ONGC) will invest Rs 75,983.77 crore in domestic E&P while its subsidiary ONGC Videsh Ltd has budgeted Rs 45,332.87 crore in overseas oil and gas hunt. Oil India Ltd has earmarked Rs 13,439.02 crore and GAIL India Rs 10,326.83 crore, the minister said.

Indian Oil Corp has planned an investment of Rs 28,567.75 crore in refining and marketing in 2007-12, Bharat Petroleum Rs 11,344.80 crore and Hindustan Petroleum Rs 8,714 crore. IOC also plans to invest an additional Rs 11,844.10 crore in petrochemical plans while GAIL has projected Rs 1,618 crore.

To a separate question, Patel said IOC, BPCL and HPCL plan to set up 1,830 new petrol stations in 2008-09.

Of these, IOC would set up 930, HPCL 498 and BPCL 380. He said oil retailers are at present operating 306 auto LPG dispensing stations in the country. They would add another 158 next year.

"Auto LPG sale during April-January was 170,000 tons as against 108,000 tons during the corresponding period of last year, showing a growth rate of 57.4%," he said.

The government, he said, has not given approval for use of domestic LPG in vehicles. As per the auto-LPG Control Order, only imported or import-substituted auto LPG can be used in vehicles.

Stocks tumble as Bear Stearns liquidity crisis unnerves investors

2008-03-14T09:37:00.000-07:00

Financial stocks led the way down on stock markets late Friday morning after JPMorgan chase and the Federal Reserve Bank of New York moved to provide temporary funding for investment bank rival Bear Stearns.

The funding will be provided as necessary for up to 28 days. During that time, JPMorgan Chase will also help Bear Stearns find permanent financing.
Bear Stearns says its liquidity significantly deteriorated over the past day and the temporary funding will help it continue operating normally. Its stock fell 42 per cent.

"We're moving into the phase where the reality of trying to stay afloat while your business is crippled is going to start to bury companies," said Paul Thornton at Northern Securities.

"You're going to see the obvious sectors continue to be weak because of this kind of thing. It's the old cockroach theory which is not new at this point - if one company is going to go under you know more of them are coming."

The Bear Stearns news overshadowed tame inflation data from the U.S. that reassured investors that the U.S. Federal Reserve can put price pressure worries on the back burner and continue to cut interest rates aggressively to hopefully help the economy through an economic slowdown.

The TSX Venture Exchange declined 15.64 points to 1,665.03 while the Canadian dollar moved down 0.3 cent to 101.16 cents US.

On the economic front, Statistics Canada reported that Canada's labour productivity fell for the first time in more than a year in the fourth quarter as GDP growth slowed, while hours worked continued to increase steadily. Productivity lost 0.8 per cent, after posting a slight 0.1 increase in each of the previous two quarters.
New York's Dow Jones industrials tumbled 124.23 points to 12,021.51.

The U.S. Labour Department reported that consumer prices were unchanged last month, a much better performance than the 0.3 per cent gain that had been expected.
Core inflation, which excludes energy and food, was also well-behaved, with an unchanged reading in February following a 0.3 per cent jump in January.

This was particularly welcome news coming ahead of Tuesday's scheduled announcement by the Fed on interest rates.

Investors are hoping for a cut of at least three quarters of a point.
"The report provides some tentative evidence that the weakening in economic activity is contributing to containing inflationary pressures emanating from rising energy and non-energy commodity prices," said RBC assistant chief economist Paul Ferley.
"This will allow policy to remain focused on limiting the extent of any slowing in growth from the ongoing housing market meltdown and credit tightening."

The TSX financial sector dropped 2.5 per cent on the Bear Stearns news as Royal Bank (TSX:RY) gave back $1.28 to $46.07 and Bank of Montreal (TSX:BMO) stepped back $1.18 to C$40.27.

Oil prices were off after running ahead to yet another record high close. The April crude contract on the New York Mercantile Exchange lost 58 cents to US$109.75 a barrel. The TSX energy sector fell 1.2 per cent with Suncor Energy (TSX:SU) down $2.84 to C$104.22 and Canadian Natural Resources (TSX:CNQ) retreated $2.72 to $104.34.

Gold prices were up, rising above US$1,000 an ounce for a second day. The April bullion contract moved up $12 to US$1,005.80 an ounce. The gold sector was up 2.3 per cent with Barrick Gold Corp. (TSX:ABX) ahead $1.76 to $53.95.

Major fertilizer supplier Agrium Inc. (TSX:AGU) has extended the deadline for UAP Holding Corp. (NASDAQ:UAPH) shareholders to tender shares to its US$2.45-billion bid until April 30.

The offer was set to expire Friday at midnight, but has been extended because all of the completion conditions have not yet been satisfied. Agrium shares declined 57 cents to $70.37.

Shares in giant-screen movie company Imax Corp. (TSX:IMX) were down 19 cents to $6.41 after its fourth-quarter loss widened to US$10.1 million from a year-ago $9.2 million as the company booked a $4-million writedown on its film-related inventories.
WestJet Airlines Ltd. (TSX:WJA) shares moved up 27 cents to $18.33 after it said Thursday it has received regulatory approval to buy back up to 2.5 million of its shares from the Toronto Stock Exchange.

Major European indexes also turned lower as France's CAC 40 gave back 52.22 points to 4,577.97, Germany's DAX down 70.37 points at 6,430.19 and the London-based FTSE 100 down 55 points at 5,637.4.

Tokyo's benchmark Nikkei 225 stock index fell 1.5 per cent, to 12,241.60, dropping to its lowest close since August 2005.

Hong Kong's Hang Seng Index extended its losses as well, dropping 0.3 per cent to 22,237.11 after plunging nearly five per cent in the previous session.

Oil Price on Market and Trading

2008-03-14T09:36:00.000-07:00

Spot gold jumped to a record high above $1,000 an ounce on Friday as a tumbling dollar and an escalating financial crisis triggered a surge in investment demand looking for safety in hard assets.

Crude oil came within a whisker of all-time peaks, while industrial metals and soft commodities were also strong.

Spot gold rose to a session high of $1007.10 a troy ounce. It was up at $1002.30/1003.00 by 1521 GMT from $991.00/991.80 on Thursday.

The latest spurt of buying came after shares in U.S. investment bank Bear Stearns plunged by 50 percent on news that the bank's liquidity position had deteriorated significantly over the last 24 hours.

Fears that this could be the beginning of another tranche of bad news in the financial sector pushed the dollar to record lows against the euro.
"As long as credit problems persist, primarily in the United States, but elsewhere as well, then we will see this tendency for people to move towards real assets," said Stephen Cohen, managing director at Troika Dialog UK.

Gold is used as a hedge against financial market turbulence. It has risen by more than 50 percent since the credit crisis exploded last August.
"Financial sector firms have been hit hard ... Some are trading below book value," said James Fenkner, a fund manager at Red Star. "It gives you a sense of the negative sentiment."

Worries about rising inflationary pressure this year have also given the precious metal a boost.

LAGS AND LAPSES

A falling dollar makes commodities denominated in the U.S. currency cheaper for holders based outside the United States. This is one of the reasons cited for crude oil's climb to an all-time high of $111 a barrel on Thursday.
Crude has gained despite the growing chances of recession in the United States, the world's largest consumer of oil, and the likelihood of lower demand.
But fund managers believe a major reason behind oil's climb over the last few years has been the realisation that shortages over coming years will be a major feature of the market.

"Many major commodity producers whether it be oil companies considering exploration projects or mining companies considering new mines, have in many cases been slow to assume higher prices are here to stay," Cohen said.
"They have not rushed into new project to increase capacity. There are signs this is changing, but there is a big lag between an investment decision and provision of extra capacity."

Copper rose to $8,545 a tonne, less than $300 from the record high of $8,820 seen last week.

The metal used widely in the power and construction industries was also boosted by falling stocks of the metal in London Metal Exchange warehouses, down by more than 35 percent since the beginning of this year.

"The seeming paradox of rising commodity prices in the midst of an economic slowdown has been a source of concern for many," Goldman Sachs said in a note.

"The fact that the rally continues in the midst of an economic slowdown simply serves to highlight the fact that this bull rally is structural, not cyclical."

Cocoa futures in London rose to a new 5-1/2-year high of 1,567 pounds, reinforced by a dock workers strike in the Ivory coast, the world's top cocoa producer.
London robusta coffee and white sugar futures were firm below their recent 12-1/2-year and 15-month peaks respectively.

Berry Petroleum says it's being investigated for 2,500-barrel spill

2008-03-14T09:35:00.000-07:00

Berry Petroleum said on Thursday that it is one of two companies being investigated by the state for sizable recent spills from oil and gas operations into a gulch feeding into Parachute Creek.

Berry joins Marathon Oil Co. in stepping forward to say they experienced spills from reserve pits in the Garden Gulch area near Parachute. However, like Marathon, Berry says its spill involved only water.

Berry said the spill totaled 2,500 barrels and that a nearby spring contributed to it. But the company said trace amounts of drilling additives were found below the pit.

Last week, the Colorado Oil and Gas Conservation Commission announced it was investigating what it called four major spills by two companies in the Garden Gulch area from November through February. It has refused to identify the companies because the investigation is ongoing.

Marathon later announced it learned Jan. 31 that 30,000 barrels, or 1.2 million gallons, of water had leaked from one of its reserve pits.

The commission’s statement last week said one of the spills consisted of 30,000 barrels of drilling mud.

Deb Frazier, spokeswoman for the Colorado Department of Natural Resources, has said drilling mud can contain a variety of things, and the state is still working to determine the contents of the four spills it announced. She would not confirm that the Marathon spill was the same 30,000-barrel spill referred to in the oil and gas commission statement.

Last week’s statement indicated that the company responsible for the 30,000-barrel spill was not involved in the others. Marathon has said it was responsible for only one of the Garden Gulch spills.

The state has said a second company didn’t report two of its three spills immediately, in violation of commission requirements.

Berry’s statement Thursday referred to only one spill, consisting of 2,500 barrels. It said that during drilling, it saw fluid flowing away from a well pad, and an investigation showed two possible sources — a spring or the reserve pit. The reserve pit ultimately was determined to be contributing to the flow.

“While no drilling muds were placed into the pit or released into the environment, trace amounts of other drilling additives were identified downgradient from the pit. These concentrations were below drinking water standards,” Berry said in its statement.

Berry spokesman Todd Crabtree said Berry has met with oil and gas commissioners and will fully cooperate in the matter.

“We recognize the need to promptly report all releases from well sites,” he added.

He said he didn’t know what the commission is referring to in its mention of releases that weren’t reported immediately, and Berry isn’t acknowledging any failure to make immediate reports.

He said he didn’t know the timing of the report for its spill, but that there’s no indication it wasn’t immediate. Crabtree also said he didn’t know whether the company was involved in multiple spills in the area.

Edge Petroleum Swings to 4th-Qtr Loss, Hurt by Volatile Commodity Prices and Higher Costs

2008-03-14T09:34:00.000-07:00

Independent energy company Edge Petroleum Corp. said Thursday it swung to a fourth-quarter loss, hurt by the commodity price volatility and higher costs.

The company posted a loss of $6.4 million, or 22 cents per share, compared with a year-ago profit of $2.9 million, or 16 cents per share.

Revenue jumped 44 percent to $35.9 million, from $24.9 million in the year-ago quarter. Sales were boosted by increased production, the company said. Production rose to 5.8 billions of cubic feet equivalent, from 4 billions of cubic feet equivalent a year earlier.

Analysts were expecting a profit of 7 cents per share on revenue of $43.6 million, according to a poll by Thomson Financial.

"The volatility in commodity prices, particularly for oil, continues to have a major impact on our reported earnings as a result of mark-to-market accounting which we follow," Executive Vice President and Chief Financial Officer Michael G. Long said in a statement.

When a company marks to market, they adjust the value of assets on their books to reflect current market conditions.

The company said it was also weighed down on costs from increased staff, higher rent, and professional service fees.

For the full year, the company posted a loss of $1 million, or 4 cents per share, compared with a loss of $41.3 million, or $2.38 per share, in 2006.

Revenue rose 24 percent to $160.9 million.

Edge said it's continuing its review of strategic alternatives, noting it's "working quickly" toward a potential merger or sale.

Central Petroleum Provides 140308 Exploration Update

2008-03-14T09:33:00.000-07:00

Central Petroleum provided a 140308 exploration update, reporting access roads have been constructed to both the Blamore and Simpson well locations with the road building crew reaching Simpson this morning; underdale water well drillers have been mobilised and are expected to be on site by the coming 17 March with first water by the following 21 March. The water is necessary to complete the access road for the drilling rig; and an onsite-while-drilling inspection of Hunt Rig #2 has been completed by the Company's GM Drilling, Operations and Production, Randy Frazier and it has been deemed fit for purpose with the final detailed drilling contract to be executed shortly.

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Pilgrim Petroleum Announces Update in Operations for Q1 2008

2008-03-14T09:32:00.001-07:00

Pilgrim Petroleum Corporation announces increased production of an average of approximately 10% over the last month, after rework of two additional re-activated wells. In addition it has begun the process of interviewing qualified geology and engineer firms for its additional reserve evaluation estimates; the additional work is for the new properties unaccounted from the last reserve report. Pilgrim continues to complete the design for extensive 9 wells on the Archer County area for July 2008.

Pilgrim Petroleum Corporation Vice President of Operations Jerry Schilling said, "Pilgrim's Reactivation Program has shown significant progress since its implementation; operations will continue to bring back more inactive wells into production and optimize our existent oil & gas production through reduced production cost, improved production rates and increased ultimate recovery."

About Pilgrim Petroleum Corporation

Headquartered in Dallas, Texas, Pilgrim Petroleum Corporation is a publicly traded company (PGPM). The company is acquiring oil and gas leases, producing properties, mineral rights and surface interest's primary on marginal fields. Once acquired, the company intends to develop each property to maximize the income from each by refurbishing and improving the existing production.

Forward-Looking Statements: The statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including but not limited to, the effect of economic conditions, the impact of competition, the results of financing efforts, changes in consumers' preferences and trends. The words "estimate," "possible," and "seeking" and similar expressions identify forward-looking statements, which speak only to the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, because of new information, future events, or otherwise. Future events and actual results may differ materially from those set forth herein, contemplated by, or underlying the forward looking statements.

2008 Pilgrim Petroleum Corporation. The information herein is subject to change without notice. Pilgrim Petroleum Corporation shall not be liable for technical or editorial errors or omissions contained herein.

Anadarko Petroleum appoints senior vice president

2008-03-14T09:32:00.000-07:00

Independent exploration and production firm Anadarko Petroleum has named Robert Gwin as the senior vice president of the organization.

Mr Gwin has more than 20 years of experience in corporate finance and executive management. He joined Anadarko in January 2006 as vice president for finance and treasurer.

In his new position, he will join the company's executive management committee and will assume oversight of the company's human resources functions.

In addition, he will continue to serve as the president and CEO of Western Gas Holdings, which is the general partner of Western Gas Partners.

Parallel Petroleum VP John S. Rutherford Sells 30,000 Shares

2008-03-14T09:31:00.000-07:00

A vice president of oil and natural gas producer Parallel Petroleum Corp. sold 30,000 shares of common stock, according to a Securities and Exchange Commission filing Wednesday.

In a Form 4 filed with the SEC, John S. Rutherford reported selling the shares on Tuesday for $17.50 apiece.

Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

Parallel Petroleum is based in Midland, Texas.

Crude Oil Drops From Record on Speculation Demand May Decline

2008-03-14T09:29:00.001-07:00

Crude oil dropped from a record on concern that prices have risen too high, too fast at a time of rising inventories and expectations energy demand may weaken in the U.S.

Oil futures fell today, following a report this week that showed U.S. crude inventories rose more than analysts forecast. Prices had gained 26 percent since Feb. 6, sparked by declines in the dollar's value against the euro and the yen.

``The market is overbought and it is not related to the real fundamentals anymore,'' said Andy Sommer, an analyst with HSH Nordbank in Hamburg. ``The weak dollar has been driving the market in the last couple of weeks.''

Crude oil for April delivery fell as much as 94 cents, or 0.9 percent, to $109.39 a barrel in electronic trading on the New York Mercantile Exchange. It was at $109.66 at 12:55 p.m. London time.

Futures yesterday settled at a record $110.33 a barrel after reaching $111, the highest since trading began in 1983. The dollar yesterday fell below 100 yen for the first time since 1995 and dropped to an all-time low against the euro. The tumbling dollar draws investors to oil as commodities become cheaper for buyers using other currencies.

New York crude's relative strength index, a measure of how rapidly prices have advanced or dropped during the past 14 days, was at 72.9 today. Readings above 70 indicate a price may be poised to fall, and readings below 30 indicate it may be poised to rise.

Brent crude for April settlement fell as much as 90 cents, or 0.8 percent, to $106.64 a barrel on London's ICE Futures Europe exchange. It was at $107.7 at 12:56 a.m. London time. Brent yesterday closed at an all-time high of $107.54 a barrel after reaching an intraday record of $107.88.

Brent Expiry

The April Brent contract expires today. The more-active May contract was down 41 cents at $106.00 a barrel.

U.S. crude oil stockpiles climbed 6.18 million barrels last week to 311.6 million barrels, a U.S. government report showed this week, versus an average analyst forecast of 1.68 million barrels. Rising inventories has increased speculation that demand for fuel is falling in the U.S. as the economy slows.

``The dollar dominates everything right now,'' said Andrey Kryuchenkov, an analyst at Sucden (U.K.) Ltd. in London. ``When we had very bearish stocks from the Energy Information Department, within one hour the price had come back again.''

The dollar dropped as low as $1.5651 per euro earlier today, the weakest since the European currency's debut in 1999. It was last at $1.5579 per euro.

``Slowing U.S. growth will dampen demand for energy from the world's largest oil consumer,'' said Sucden's Kryuchenkov. ``This will put some pressure on oil prices.''

Gasoline Demand

U.S. gasoline demand increased by about 0.7 percent, or 60,000 barrels a day, last week, according to data from the Department of Energy. Demand remained below levels recorded at the same time last year.

Sixteen of 37 analysts surveyed by Bloomberg News, or 43 percent, said prices will drop next week. Thirteen of the respondents said oil will rise and eight forecast little change. Last week, 45 percent said oil would decline.

OPEC cut its production forecast for countries that are not members of the organization, citing lower output from Western Europe, North America and Mexico.

Non-OPEC production will run at a rate of 50.37 million barrels a day this year, the Organization of Petroleum Exporting Countries said today in a monthly report, cutting its previous projection by 160,000 barrels a day. OPEC left its world demand forecast little changed.

Investors are buying oil to ``hedge against inflation and the declining value of the U.S. dollar,'' OPEC said. ``While financial markets dynamics lifted prices to record level, fundamentals indicate a market which is currently well balanced and expected to soften over the comings months.''

Gold glisters, oil hovers at record high on weak dollar

2008-03-14T09:29:00.000-07:00

Global commodities markets were bubbling on Friday after gold briefly peaked at over 1,000 dollars an ounce, oil hit new highs and the dollar tumbled.

Hong Kong gold prices edged close to the symbolic 1,000 US dollars an ounce mark that was breached for the first time Thursday on the London Bullion Market.

The plunging dollar and the precious metal's traditional role as a safe haven amid fears of rising inflation have caused gold prices to surge about 17 percent so far this year.

Investors are funnelling cash into commodities generally as they seek a refuge from volatile world stock markets and growing fears of a US-led economic slowdown, traders said.

On Friday Hong Kong gold prices were markedly higher at 997.20-997.70 US dollars an ounce in afternoon trading, up from Thursday's close of 987.10-987.60 dollars.

Oil simmered down on Friday after hitting a record 111.00 dollars per barrel the previous day, but analysts said prices remained on the boil due to the ailing greenback.

New York's main oil futures contract, light sweet crude for delivery in April, was at 109.78 dollars per barrel in Asian trade, down 55 cents from its all-time closing high of 110.33 dollars in New York.

In earlier frenzied US trading, the contract had struck 111.00 dollars for the first time.

"We are seeing only a marginal movement," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney, noting that prices remained high.

The dollar fell below the key 100-yen level Friday for the second day in a row, flirting with fresh 12-year lows amid mounting fears of a US recession.

The dollar dropped to as low as 99.83 yen in Asian trade, approaching Thursday's trough of 99.78, which was the weakest since November 1995.

It recovered slightly to stand at 100.15 in late Tokyo trade, down from 100.60 in New York on Thursday.

"Resistance to a falling dollar has evaporated as the market is unable to see a drastic improvement" in the subprime crisis, said Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.

The euro firmed to 1.5640 dollars in Tokyo from 1.5624 in New York, close to its all-time high of 1.5645.

Many analysts now expect the US Federal Reserve to cut its key lending rate by as much as three-quarters of a point next week. Investors generally prefer the currencies of countries that have higher interest rates as they can reap better yields.

In Washington, US Treasury Secretary Henry Paulson insisted Thursday that a strong dollar "is in our nation's interest" and said he would like to see the currency strengthen.

Paulson acknowledged the US economy was suffering but said: "Our economy, like any other, has got its ups and downs but the long-term fundamentals are strong and I believe it's going to be reflected in the currency market."

In Asian markets on Friday, Hong Kong's Hang Seng Index ended the morning session down 0.67 percent after an early rebound faded, while Japanese shares closed down 1.54 percent at the lowest level for two years and seven months.

Oil prices slip from record levels

2008-03-14T09:28:00.000-07:00

Oil prices retreated Friday after jumping as high as a record $111 a barrel in the previous session as investors fled the declining dollar in search of a haven in commodities.

Analysts said the decline reflected the volatility that has characterized crude futures trading in recent weeks.

"When there are no immediate supply side concerns that justify surging to new record everyday, some pullback is inevitable," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "This is just part of the volatility of trading."

Light, sweet crude for April delivery on the New York Mercantile Exchange dropped 29 cents to $110.04 a barrel in electronic trading by midday in Europe.

In London, Brent crude futures lost $1.34 to $106.20 a barrel on the ICE Futures exchange.

Shum said the expiration of options on the April Nymex crude contract on Friday added to the volatility of trading.

The contract surged Thursday to an all-time trading high of $111 before settling at a record close of $110.33 a barrel, up 41 cents from the previous session.

Crude has risen to records in 12 of the last 13 trading sessions. Analysts blame oil's ascent on the weak dollar, which dropped to yet another low against the euro Thursday.

Crude futures and other commodities offer a hedge against a falling dollar; as well, oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak.

Interest rate cuts further weaken the dollar and have helped drive oil's rise, and another reduction in U.S. benchmark lending rates is expected at the Federal Reserve's regularly scheduled monetary policy meeting next Tuesday.

"The dollar traders will be watching the release later (Friday) of the U.S. inflation number for February as an indicator of the Fed decision next Tuesday," said Olivier Jakob, of Petromatrix in Switzerland. "What central banks decide next Tuesday should be more relevant to oil prices than any recent OPEC meetings."

Analysts said the U.S. Commerce Department's report Thursday that retail sales fell in February raised new worries that the economy is headed for a recession that would curtail demand for oil. But analysts expect any oil price weakness to be short-lived.

"In the near term, despite the fact that oil pricing is pulling farther from market fundamentals, this bull run could continue because of the expectation of further (Fed) interest rate cuts and continued weakening of the U.S. dollar," Shum said.

In other Nymex trading, heating oil futures dropped 0.39 cent to $3.1209 a gallon while gasoline prices fell 1.23 cents to $2.6705 a gallon.

Natural gas futures fell 1.6 cents to $10.214 per 1,000 cubic feet.

Why OPEC Won't Boost Oil Supplies

2008-03-14T09:26:00.001-07:00

Pity Dick Cheney, when Air Force Two lifts off on Sunday for the Middle East. Reviving the Israeli-Palestinian peace talks looks to be the simpler part of his mission, compared with the task that awaits him in the Saudi capital of Riyadh — persuading the 13-country OPEC cartel to help bring down the soaring price of oil by boosting output. As cynics might say, good luck with that.

The stakes could hardly be higher: With a U.S. recession looming and the dollar at its lowest-ever value against major currencies, oil prices reached a new record high on Thursday, crashing through the $111 a barrel mark. That's a climb of about 30% in just six months, and this week it sent the prices at U.S. gas pumps soaring to a record national average of $3.27 a gallon.

President Bush last week urged Saudi Arabia — the world's leading oil producer — to help ease the crisis by pumping more oil onto the world market. He made a similar appeal in person when he visited King Abdullah in January. And now comes a new attempt by Cheney, as part of his 10-day trip to the region to discuss a number of crises. But oil analysts believe Cheney is unlikely to be any more successful than Bush has been.

Washington argues that a deep economic downturn in the United States — which consumes a quarter of the world's energy — could drive down global demand for oil, and wind up hurting oil-rich countries. But OPEC's 13 oil ministers — whose countries account for about 40% of the world's oil supply — have heard that argument from U.S. officials before, and have rejected it at three meetings in the past six months, most recently in Vienna on March 5. There, U.S. foes Venezuela and Iran took a lead in arguing against raising oil output.

The Saudis might find it politically difficult to change their position without consulting fellow OPEC members — who would surely reject the idea — says Greg Priddy, energy analyst for the Eurasia Group in Washington. "It would be a real loss of face if all of a sudden they would reverse course unilaterally," he says. Cheney's visit to Riyadh might be too late, says Priddy, adding about U.S. officials: "If they were going to ask [for increased oil production] they should have asked a month ago."

The Bush Administration could be working on the assumption that the Saudis and other allies could quietly increase production unilaterally, and relieve pressure on prices. After all, OPEC output quotas are hardly effectively policed. But analysts believe that assumption may be false. Priddy believes Americans might be unfairly pinning the blame on oil-rich countries. "They want to find someone to blame and Gulf countries aren't popular to begin with," he says. But producers are contending with rising production costs, while extracting oil has become more difficult as land-based wells with plentiful reserves have been depleted in many places, leaving expensive, complicated deep-sea drilling as the best hope for tapping massive new reserves.

The even larger problem facing Washington, however, is that as pricey as oil is these days, there's no shortage of customers elsewhere in the world. (There are also plenty of investors pouring billions into oil futures as a hedge against the falling dollar — and so driving up oil prices even more.) The major reason for the current high prices is that OPEC's production has been seriously stretched by the huge increase in demands from booming China and India, as well as from oil-rich countries in the Middle East itself, says Lawrence Eagles, chief economist of the Paris-based International Energy Agency, the watchdog for oil-consuming countries like the United States and those in the European Union. "Most OPEC members are working close to flat-out," he says. "There is little spare capacity outside of the United Arab Emirates and Saudi Arabia, and some of that is relatively poor quality crude." And right now, global demand continues to rise.

OPEC members are also haunted by the organization's misstep in 1998, when they voted to boost production quotas shortly before the Asian economic crisis hit. That sent oil crashing to $10 a barrel. Such prices may now seem like ancient history, but as Cheney flies out to the Middle East, he'll be visiting a region where ancient history can seem very fresh indeed.

Norway's DNO revises oil deal with Iraq's Kurdish authorities

2008-03-14T09:26:00.000-07:00

Norwegian oil company DNO International said Friday it had revised an agreement with Kurdish authorities on splitting oil production in two licensing areas in northern Iraq.

DNO, the first foreign firm permitted to prospect for oil in Iraq after Saddam Hussein's fall, initially held 55 percent of the production licenses in Erbil and Dohok in Iraq's autonomous Kurdish region.

After revising the contract, the Dohok bloc was split in two parts, with DNO maintaining a 55 percent share of the Tawke oil field but only 40 percent of the remaining Dohok area.

DNO said its Erbil share had also been slimmed down to 40 percent.

"The new terms ... are now in line with recently enacted legislation and we are pleased with the overall terms of the contracts," DNO managing director Helge Eide said in a statement.

The new deal opens the way for DNO, which had previously been forced to sell all oil produced in the licensing areas locally, to export the black gold at a higher price.

The Norwegian company also said it was "encouraged" by initial test production in its Erbil bloc with some 9,000 barrels of oil and 11 million standard cubic feet (more than 311,600 cubic metres) of natural gas per day.

"It is the opinion of DNO that the terms of the ... contracts provide a solid basis for creating substantial values to our shareholders, the region and all of Iraq," the company said.

Its upbeat comments may however be premature in light of an ongoing conflict between the government in Baghdad and authorities in the Kurdish region of the country.

Iraqi Oil Minister Hussein Chahristani said for instance last week that "no oil contracts signed by any regions in Iraq will be recognised by the government of Iraq."

"Companies will not be allowed to work on Iraqi territory unless their contract is approved by the central government in Baghdad," he added.

In November the minister announced he had cancelled around 15 oil contracts signed by the authorities in Iraqi Kurdistan.

Following DNO's announcement on Friday it saw its stock price soar more than 15 percent on the Oslo stock exchange to 7.0 kroner (1.36 dollars, 0.88 euros) a share.

Oil Drops From Record in New York on Concern Demand May Decline

2008-03-13T19:05:00.000-07:00

Crude oil dropped from a record in New York on concern that the rally in energy prices may reduce demand at a time of increasing supplies.

Oil futures climbed to a record $111 a barrel yesterday after the dollar fell below 100 yen for the first time since 1995 and dropped to an all-time low against the euro. U.S. crude stockpiles rose more than analysts forecast last week, while gasoline supplies jumped to the highest since 1993.

``Certainly it looks shaky, but it's been looking like that the past few days and kept rising,'' said Rowan Menzies, head of research for Commodity Warrants Australia Ltd. in Sydney. ``What could derail it is a slowdown'' in demand.

Crude oil for April delivery fell 56 cents, or 0.5 percent, to $109.77 a barrel at 8:47 a.m. Singapore time in after-hours trading on the New York Mercantile Exchange. Yesterday, futures rose 41 cents, or 0.4 percent, to settle at a record $110.33 a barrel. They earlier touched $111, the highest since trading began in 1983.

Brent crude for April settlement rose $1.27, or 1.2 percent, to $107.54 a barrel on London's ICE Futures Europe exchange, a record close. Futures reached an intraday record of $107.88 a barrel yesterday.

Stockpiles of crude and oil products in the developed economies of the Organization of Economic Cooperation and Development, or OECD, rose by 32.6 million barrels in January, reaching 2.62 billion barrels, the International Energy Agency said on March 11.

`Financial Bubble'

Those inventories alone could satisfy OECD demand for 52.9 days, compared with a five-year average of 51.8 days.

``We are waiting for the fundamentals of the physical market to pop this financial bubble; the only question is when it will occur,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Gasoline supplies are at a 15-year high, which can't be ignored forever.''

Gasoline inventories in the U.S. rose 1.69 million barrels to 236 million barrels last week, the highest since 1993, the Energy Department said March 12 in its weekly report.

Crude oil stockpiles climbed 6.18 million barrels to 311.6 million barrels in the week ended March 7, the Energy Department said. A 1.68 million-barrel gain was forecast, according to the median of responses in a Bloomberg News survey.

Inventories of crude in the U.S. in the week ended March 7 were 1.9 percent above the five-year average for the period, the department said. Gasoline stockpiles were 11 percent above the five-year average.

Reduced Oil Use

U.S. crude-oil use typically falls at this time of year when refiners schedule repairs and upgrades as U.S. heating- fuel demand slows and before warmer weather spurs an increase in gasoline consumption. Refineries operated at 85 percent of capacity last week, down 0.9 percentage point from the week ended Feb. 29.

Refiners in Asia also schedule maintenance in the second quarter.

The tumbling dollar has drawn investors to the crude market as commodities become cheaper for buyers with other currencies.

``It's been financially driven,'' Commodity Warrants' Menzies said. ``When you think it's going to drop, the dollar weakens and takes it back up again.''

The U.S. currency headed for the fifth straight week of declines against the euro and the fourth week of losses versus the yen before an industry report today that may show U.S. consumer confidence fell this month to the lowest in 16 years, giving the Federal Reserve more reason to cut interest rates further to avert a recession.

The dollar traded at $1.5612 per euro at 8:19 a.m. in Singapore, after touching $1.5645 per euro yesterday, the weakest since the European currency's debut in 1999. The dollar traded at 100.68 yen, after touching 99.77 yen, the lowest level since October 1995.

Traders expect the U.S. Federal Reserve to lower its benchmark rate by 0.75 percentage point to 2.25 percent, based on futures prices. The Federal Open Market Committee's next regular meeting is March 18.

South Korea oil spill devastates marine life: official report

2008-03-13T19:03:00.001-07:00

South Korea's worst oil spill has devastated marine life, halving the number of sea plants and mollusks found off the western coast, a government report said Thursday.

The oil leak also threatened the underwater food chain, endangering fish and sea birds, the Environment Ministry report said.

Surveys following the spill last December showed mollusk populations had plunged to 56 creatures of five species per square metre from 133 creatures of eight species as mussels were found to have been considerably contaminated by remnants of crude oil.

The density of seaweeds per square metre fell 43 percent from February 2007 and phyllospadix iwatensis, a seagrass, also declined 47 percent.

"Because seagrasses and seaweeds make up the lowest part of the ocean food chain, there are risks of second-hand contamination of fish and birds that are at the top of the food pyramid," the report said.

The surveys, the first since the oil spill, were carried out in order to set up plans to restore damaged beaches and sea farms.

Hong Kong-registered supertanker Hebei Spirit spilled 10,900 tons of crude after it was rammed by a Samsung Heavy Industries barge in rough seas off Taean county on December 7.

Scores of marine farms and kilometres (miles) of beaches were devastated and three people in Taean, about 110 kilometres (70 miles) southwest of Seoul, killed themselves in frustration over delays in compensation.

Five people -- the skippers of the barge and of the two tugs, and the tanker's captain and chief officer -- are on trial on charges of negligence and violating anti-pollution laws.

Samsung Heavy Industries and Hebei Shipping, a Hong Kong corporation which owns the tanker, have also been charged with violating anti-pollution laws.

Local residents called for comprehensive restoration measures, claiming most sea creatures were wiped out following the spill.

"Oysters, crabs or octopuses have already gone. Even sea slugs or abalones are hard to find in the sea," Kang Tae-Chang, 47, was quoted as saying by Yonhap news agency.

Lim Hyo-Sang, 60, said he was worried further damage might occur as spring arrives and temperatures rise, causing heavy tar balls that have sunk to surface again.

Angry residents have protested against previous delays by local officials in distributing compensation from the central government.

Samsung Heavy Industries said last month it was donating some 107 million dollars to help victims, which they rejected as inadequate.

South Korea has reported to the International Oil Pollution Compensation Funds that the spill destroyed the livelihoods of 40,000 households and polluted 300 kilometres of shoreline, 101 islands, 15 beaches and 35,000 hectares (86,000 acres) of fish farms.

Gas, oil prices continue setting record highs

2008-03-13T19:03:00.000-07:00

Gasoline and oil prices extended their record-setting streaks Wednesday, with gas at the pump reaching a new high of nearly $3.25 and crude surpassing $110 for the first time.

The gains came as a weakening dollar led investors to shrug off an Energy Department report that crude oil and gasoline supplies jumped last week.

The national average price of a gallon of regular gas rose by 1.9 cents overnight to $3.246 a gallon, a record, according to AAA and the Oil Price Information Service. Pump prices are following crude's recent surge, and could rise as high as $3.75 a gallon this spring, analysts say.

Meanwhile, light, sweet crude for April delivery rose $1.17 to settle at a record $109.92 a barrel on the New York Mercantile Exchange after earlier rising to a new trading record of $110.20.

The dollar weakened throughout the day Wednesday, setting a number of new lows against the euro and attracting new buyers to the oil market. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak. Many analysts believe the dollar's decline is the reason crude futures have surged to records in 12 of the past 13 sessions, despite the fact that crude supplies have risen 10.2% since early January.

"It's almost like people are worried they're going to miss the ... train," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos., of investors' dollar driven enthusiasm for oil futures.

For consumers also facing rising food prices and a drop in housing values, the dollar-fed oil rally simply means more pain at the pump. Analysts see little reason for the dollar to stop falling, or for oil and gas prices to stop rising, any time soon. And with gas prices certain to rise as the summer driving season approaches, consumers will be even more cash-strapped.

In part, the dollar is falling in anticipation of another interest rate cut by the Federal Reserve next week. Lower rates tend to weaken the dollar.

The importance of dollar weakness to crude prices is reflected in the fact that oil's latest record came the same day the Energy Department's Energy Information Administration said crude supplies jumped by 6.2 million barrels last week, more than three times the 1.6 million barrel forecast of analysts surveyed by Dow Jones Newswires. The EIA also reported that gasoline supplies rose by 1.7 million barrels last week, well above the expected 300,000 barrel increase, and distillate supplies dropped by 1.2 million barrels, less than the expected 2 million barrel decline.

It was the eighth increase in crude supplies in nine weeks, putting oil inventories back on a growth track after a one-week decline. Meanwhile, forecasters including the Energy Department, the International Energy Agency and OPEC have consistently reduced their demand growth predictions for this year.

Wednesday's EIA report offered more evidence demand is falling: Gasoline consumption fell 0.7% last week compared to the same week last year. Normally, gas consumption grows about 1.5% year-over-year, just to keep pace with population growth.

"Product demand remains quite weak," said Tim Evans, an analyst at Citigroup Inc., in a research note. "This was another set of consistently bearish data."

Yet negative supply and demand fundamentals don't seem to matter to oil investors as long as the dollar keeps falling.

In other Nymex trading Wednesday, April gasoline futures rose 0.25 cent to settle at $2.7286 a gallon on the Nymex, and April heating oil futures rose 2.87 cents to settle at a record $3.0244 a gallon.

April natural gas futures rose 1.1 cents to settle at $10.011 per 1,000 cubic feet.

In London, April Brent crude futures rose $1.02 to settle at $106.27 a barrel on the ICE Futures exchange.

(AP)

NY oil prices close at record high above 110 dlrs

2008-03-13T19:02:00.000-07:00

Oil prices quoted in New York closed at a record high above 110 dollars per barrel Thursday amid fevered price speculation on world crude markets.

New York's main oil futures contract, light sweet crude for delivery in April, closed at an all-time high of 110.33 dollars per barrel following another day of volatile price action which saw prices strike a record intraday high of 111.00 dollars.

The frenzied trading saw the April contract close up 41 cents compared with Wednesday's closing level.

Traders said a weakening dollar has also stoked a surge in crude oil prices as purchasers with stronger currencies have bought up increased oil supplies.

Supply constraints and booming oil demand from growing economies such as China and India have also bolstered prices to all-time peaks.

Some market analysts said accelerating prices and mounting speculation had created a price bubble that could burst soon, especially as the northern hemisphere winter draws to a close.

"And at some point, oil will disconnect as rising supply and slowing demand start to fall. Oil is in a bubble," said Phil Flynn, a market analyst at Alaron Trading.

Oil prices have also rocketed higher despite increased concerns about a potential US recession which some economists say could spark a shortfall in demand from the world's biggest oil importer.

Gas, oil rise to records as dollar falls

2008-03-13T19:01:00.000-07:00

Gas and oil prices jumped again to new highs Thursday as the dollar weakened, although crude's advance was limited by fresh evidence of a U.S. economic slowdown.

At the pump, gas prices surged 2.1 cents overnight to a record national average of $3.267 a gallon, according to AAA and the Oil Price Information Service. Gas prices are likely to rise much higher this spring; estimates range from about $3.50 a gallon in the Energy Department's latest forecast to $3.75 or even $4 a gallon according to some analysts.

Diesel fuel, used to transport the vast majority of the nation's consumer goods, also hit a new record. Diesel prices rose another 3.3 cents overnight to a record average of $3.909 a gallon.

Gas and diesel are following crude, which has risen to records in 12 of the last 13 trading sessions. Analysts blame oil's ascent on weakness in the dollar, which dropped to yet another new low against the euro Thursday. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak. Interest rate cuts further weaken the dollar, and have helped fuel oil's rise, especially with another reduction expected next Tuesday at the Federal Reserve's regularly scheduled monetary policy meeting.

Light sweet crude for April delivery rose 41 cents to settle at a record $110.33 a barrel on the New York Mercantile Exchange Thursday after earlier surging to a new trading record of $111.

"This cocktail's been whipped up by the Federal Reserve," said James Cordier, founder of OptionSellers.com, a Tampa, Fla., trading firm.

Analysts said the Commerce Department's report that retail sales fell in February raised new worries that the economy is headed for recession, and might curtail demand for oil. Those concerns limited oil's gains, but analysts expect any oil price weakness to be short-lived, and for oil to maintain its upward track.

For consumers, that means pain at the pump — and in the form of higher prices for food and consumer goods, primarily related to rising fuel costs — will continue into the foreseeable future.

"There's really no end in sight to this," Cordier said.

Other energy futures were mixed Thursday. April gasoline futures fell 4.58 cents to settle at $2.6828 a gallon, while April heating oil futures rose 10.04 cents to settle at a record $3.1248 a gallon after earlier rising to a trading record of $3.1275 a gallon.

April natural gas futures rose 21.9 cents to settle at $10.23 per 1,000 cubic feet. The Energy Department reported that gas inventories fell by 86 billion cubic feet last week, slightly higher than the 83 billion cubic foot withdrawal analysts surveyed by Dow Jones Newswires were expecting.

In London, April Brent crude rose $1.27 to settle at $107.54 a barrel on the ICE Futures exchange.

Dollar's fall against euro, yen fuels fears of vicious cycle

2008-03-13T19:00:00.000-07:00

The plummeting dollar broke through an important benchmark against the Japanese yen Thursday and hit another low against the euro, continuing an unnerving plunge that shows little sign of easing.

For the first time since 1995, the dollar traded for less than 100 yen while a euro now costs $1.56. The past six years, the dollar has lost 45% of its value against the European currency.

The weaker dollar makes U.S. exports less expensive for foreign buyers, but it boosts inflation and especially the price of oil. The greenback's malaise is now so bad that currency specialists are considering central bank intervention to halt the rout.

"The Europeans are already verbally intervening in the market. But they can't do this by themselves. They need the U.S. on board," says Stephen Jen, Morgan Stanley's global currency head.

European Central Bank chief Jean-Claude Trichet this week told a French magazine he was "concerned by excessive exchange-rate movements." President Bush late Wednesday caused a brief flurry when he said in an interview with the PBS program Nightly Business Report that he "absolutely" favors a stronger dollar. The comment seemed to go beyond long-standing policy backing an unspecified "strong" dollar.

But White House spokesman Tony Fratto said the president, who is scheduled to speak on the economy Friday before the Economic Club of New York, "did not change his position." The dollar is likely to come under additional pressure next week, with the Federal Reserve widely expected to cut interest rates at its Tuesday meeting.

The dollar's drop inflates world oil prices, which are quoted in dollars. When the dollar weakens, oil producers raise prices to keep revenue stable. Higher oil prices ignite inflation fears, causing foreign central banks to raise interest rates. That draws investment away from the USA, further depressing the dollar. "The danger is a vicious cycle between the dollar and oil prices," Jen said.

If the U.S. does intervene, the Federal Reserve Bank of New York would sell foreign currency reserves and buy dollars. Such action was more common in the 1990s than today. But Marc Chandler, currency head at Brown Bros. Harriman, said intervention at this point would likely fail. With the yield on two-year German notes roughly twice that of comparable U.S. securities, investor demand for the European currency will remain robust whatever the Fed does.

Chandler also said intervention won't be needed. The dollar has rebounded from its lows against the British pound and Canadian dollar, reached late last year, and likely will do the same against the euro and yen. "The dollar is in the process of turning," he said.

Sales, dollar plunge; oil soars

2008-03-13T18:59:00.000-07:00

ECONOMIC GRIEF: Crude oil and gasoline prices hit all-time highs Thursday. The dollar fell to a new low against the euro. Consumers slowed shopping, triggering a 0.6 percent drop in retail sales last month.

OPTIMISTIC: Government officials predicted an economic rebound once the impact of the Federal Reserve's credit cuts and the economic aid plan begin to be felt.

DISSENTING: Private analysts worried the economy's slump is showing no signs of abating.

Oil hits record 111 dlrs as price rally accelerates

2008-03-13T18:58:00.001-07:00

Oil prices hit a record 111.00 dollars per barrel Thursday amid an accelerating price rally which traders say has been fueled by a sharp fall in the value of the US dollar and supply concerns.

Saudi Foreign Minister Prince Saud al-Faisal said speculators were largely responsible for the price peaks as some analysts cautioned that the market could be in a price bubble.

New York's main oil futures contract, light sweet crude for delivery in April, closed at an all-time high of 110.33 dollars per barrel, marking a gain of 41 cents from Wednesday's closing level.

In earlier frenzied trading, however, the contract had struck a record 111.00 dollars.

In London, Brent North Sea crude for April delivery settled up 1.27 dollars at 107.54 dollars after striking an all-time intraday high of 107.88 dollars.

Prince Faisal played down some analysts suggestions that supply worries had boosted prices.

"The current turbulence on the oil market is due in large part to speculation and has nothing to do with market fundamentals, which are stable," the prince told the Organization of the Islamic Conference summit in Dakar.

Saudi Arabia is a key member of the Organization of the Petroleum Exporting Countries (OPEC) and the world's biggest oil producer.

"Most of the explanation of high prices is summarized in a weak dollar, limited spare production capacity and speculation in the futures market," James Williams, a market analyst at WTRG Economics, said in a briefing note.

Other analysts agreed that the plummeting dollar had stoked oil prices higher.

"Oil is being use as a hedge against the dollar, no more and no less. And at some point, oil will disconnect as rising supply and slowing demand start to fall. Oil is in a bubble," said Phil Flynn, a market analyst at Alaron Trading.

The dollar's decline has enabled speculators armed with stronger currencies to snap up additional oil purchases as oil is priced in dollars. Some market participants believe oil could also be a good investment as the dollar falls.

The beleagured US currency plunged to another all-time low against the euro, which struck a record high 1.5625 dollars in earlier trading before retreating slightly.

Some economists say the dramatic spike in world oil prices is fueling inflationary pressures in the United States, the world's biggest oil importer, which is already battling other economic problems including a deep housing slump.

If the US economic slowdown worsens into a recession, analysts say oil demand could suffer and that prices could retreat.

Other analysts said the looming end of the northern hemisphere winter could also see a turnaround in the recent price gains.

The International Energy Agency, which seeks to coordinate energy policy among the world's leading industrialised nations, was to hold a meeting of oil industry experts on Monday to review the latest price spikes.

Canadian pleads guilty in oil pipeline bomb plot

2008-03-13T18:58:00.000-07:00

A Canadian man charged with plotting to blow up the Trans-Alaskan oil pipeline on New Year's Day 2000 pleaded guilty to a terrorism charge on Thursday.

Alfred Reumayr, 58, of British Columbia, pleaded guilty to aiding and abetting terrorism transcending national boundaries, at the U.S. District Court in Santa Fe, New Mexico.

Reumayr was arrested in August 1999 in a joint operation by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and the Royal Canadian Mounted Police.

They accused him of soliciting the help of a U.S. citizen to bomb the Trans-Alaska Pipeline System.

Prosecutors said Reumayr acquired explosives and sought to plant 14 time bombs at three points along the pipeline in an attempt to disrupt energy supplies over the Millennium.

"Today's guilty plea is the final resolution to a 10-year-long joint ... investigation ... which if successful would have had an enormous negative economic and environmental impact on the United States and Canada," said William Newell, the ATF agent in charge in Phoenix.

"Make no mistake about it, this was a very serious threat that was thwarted by the tremendous investigative work and dedication of ATF and RCMP law enforcement personnel," he added.

Prosecutors said Reumayr planned to buy energy securities at low prices before the attack, and hoped to profit by selling them at a higher price amid market turmoil afterward.

The Trans-Alaska Pipeline System runs north south almost 800 miles (1,300-km) from the Arctic Ocean at Prudhoe Bay to the Gulf of Alaska at Valdez.

A successful attack would have caused oil shortages in California and other Western states, driving up oil and gas prices, ATF said.

The prosecution's case against Reumayr included letters and e-mails to a New Mexico man with whom he had served time in jail on mail fraud charges, who became an informant in the case.

Oil Mining Exploration Company, ConocoPhillips Lowers Production Outlook

2008-03-12T09:39:00.003-07:00

Oil major ConocoPhillips on Wednesday lowered its long-term production growth rate to 2 percent from a previous forecast of 3 percent, saying the company's goal was value not volume.

The third-largest U.S. oil company also said it expects its reserve-replacement rate to exceed 100 percent over the next five years.

Reserve replacements represent the ratio of reserves found over production for a given period. Analysts typically say a company's reserve replacements should average more than 100 percent over a three- to five-year period to indicate growth.

Proved reserves are a key asset of oil companies.

"We expect we're going to more than replace our reserves over the next five years, and we'll do that not from what we hope to do, or what we might get from exploration success," ConocoPhillips Chairman Jim Mulva said at a presentation to Wall Street analysts in New York. "This comes from defined projects and resources that we're going to bring and book."

In February, ConocoPhillips said it lost the equivalent of more than a billion barrels of oil when its Venezuelan operations were expropriated last year, leaving the company to replace less than a third of its 2007 output with new reserves. Excluding the assets seized by the Venezuelan government in an ongoing dispute, the company said it replaced 159 percent of production.

The Houston-based company said it expects to sustain a long-term, average production growth rate of 2 percent. At a similar meeting in New York a year ago, it predicted a growth rate of 3 percent.

John Lowe, ConocoPhillips' executive vice president of exploration and production, said the company could grow production more than 2 percent, but it wants to maintain a balance on matters such as dividend payments versus capital spending.

"We are not going to chase volume to the detriment of value," Lowe said. "So our focus is on value creation -- however best we can do that."

ConocoPhillips shares were down $1.09, or 1.4 percent, to $78.41 in midday trading. They've traded in a range of $64.97 to $90.84 in the past year.

The company reaffirmed its intent to fund a capital program of $15.3 billion in 2008, up from about $13 billion in 2007. Lowe said the company plans to emphasize projects with "material resource potential" in North America, the Arctic and the deepwater Gulf of Mexico, among other regions.

ConocoPhillips plans to spend $10 billion on share repurchases this year, up from $7 billion in 2007.

In January, ConocoPhillips reported 2007 earnings of $11.9 billion, down from $15.5 billion the year before. However, excluding a $4.5 billion charge in the second quarter to write off its Venezuelan assets, the company's earnings amounted to $16.4 billion -- its best-ever result.

Earlier this month, a Lehman Brothers analyst downgraded shares of ConocoPhillips, saying the stock was close to a fair price. Analyst Paul Cheng cut his rating to "Equal Weight" from "Overweight" and noted ConocoPhillips was struggling to improve its natural gas and oil upstream production and processing operations. He also predicted the company would have to cut its growth forecasts.

Oil Mining Exploration Company, ConocoPhillips Lowers Production Outlook

2008-03-12T09:39:00.001-07:00

Total Mining and Oil Exploration, acquires 40 pct stake in new deep offshore concession in Nigeria

2008-03-12T09:39:00.000-07:00

Total said it has agreed to acquire a 40 pct stake in the deep offshore OPL 257, a new exploration concession in Nigeria.

Total said the Nigerian government has approved the agreement, of which financial terms were not disclosed.

The French oil group will act as technical advisor in the development, alongside the operator Conoil Producing Limited, which will have a 50 pct stake.

Another Nigerian company will hold the remaining 10 pct of the licence.

In the initial exploration period that runs to 2011, the partners are to study 400 square kilometres of 3D seismic and drill two exploration wells.

In a second exploration period, which will be for a duration of five years, the development will cover a further 100 square kilometres of 3D seismic and the drilling of five exploration and/or appraisal wells.

No wells have been drilled so far in the concession, Total said.

Eldorado Exploration to Drill 3 Oil Prospects in Nebraska

2008-03-12T09:38:00.000-07:00

Eldorado Exploration announced that the Company has agreed to drill 3 new prospects in Nebraska. The prospects range in size from a potential of 10 up to 40 wells with reserves from 100,000 to 250,000 BBLs per well. Drilling is expected to commence as early as May, 2008.

Also, Eldorado Exploration, Inc. remains ready to drill 2 Illinois wells in a shallow pinnacle reef system. Warmer weather is required to gain the county permit to move a drilling rig on county roads between January 15 and April 15. Drilling is expected to start in April and take from 7 to 10 days per well.

Eldorado Exploration, Inc. uses a technological process called PASSIVE INDUCED POLARIZATION (PIP) which greatly enhances the odds of finding commercial quantities of Oil and Gas. The process helps eliminate geological prospects that will be dry holes. Strong signals indicate commercial potential of discovering oil and / or gas. No signal or weak readings indicate low probability for a successful find. The cost of evaluating prospects is a small fraction of 3-D Seismic and takes much less time. 'PIP' technology takes days instead of months or years for 3-D Seismic.

Husky to expand exploration off the Newfoundland coast

2008-03-12T09:36:00.001-07:00

Husky Energy Inc., the Canadian oil company controlled by Hong Kong billionaire Li Ka-shing, said it will expand exploration off Canada's east coast.

Plans include drilling to boost output from the White Rose field, Calgary-based Husky said yesterday. Satellite fields located off of the east coast of Newfoundland will start production in late 2009 or early 2010, Husky said.

Husky also said it has taken a 35 per cent stake from Norway's StatoilHydro ASA in the Mizzen exploration parcel in the Flemish Pass off Newfoundland's coast. No terms were disclosed.

Tullow Profit Falls 68 Percent on Exploration Costs (updated)

2008-03-12T09:36:00.000-07:00

Tullow Oil Plc, the U.K. explorer with the most drilling licenses in Africa, said earnings plunged 68 percent last year because of costs at wells that failed to find commercially viable reserves.

Profit from continuing operations fell to 50.9 million pounds ($103 million), or 6.96 pence a share, from 157.4 million pounds, or 23.67 pence, a year earlier, London-based Tullow said today in an e-mailed statement. Sales gained 10 percent to 639.2 million pounds.

``Earnings came in below our forecasts,'' Phil Corbett, a London-based analyst at ABN Amro Holding NV, wrote today in a report. Corbett reiterated his ``buy'' recommendation on the stock, citing ``a clarification of the near-term upside potential in both Ghana and Uganda, the company's key exploration assets.''

ABN estimated Tullow would earn 9.8 pence a share in 2007.

The company wrote off 64.2 million pounds in exploration costs, compared with 32.5 million pounds a year earlier, it said in the statement. Most of that was related to unsuccessful drilling in countries such as the U.K., Namibia and Cote d'Ivoire.

Tullow will focus on projects in Ghana and Uganda to help raise output to as much as 250,000 barrels of oil equivalent a day as early as 2010. Production advanced 13 percent to 73,100 barrels a day last year.

Spending Plan

The producer plans to invest 440 million pounds in projects this year, up from 370 million pounds last year, Chief Financial Officer Tom Hickey said today by telephone. Tullow will allocate more than 50 percent of that to developments in Ghana and Uganda.

``The level of cash-flow generation per barrel will remain stable'' during the exploration phase of projects, Hickey said. Cash flow last year rose 6 percent to a record 473.8 million pounds, the company said.

``Tullow was in the best position to add value'' last year, Chief Executive Officer Aidan Heavey said today in a telephone interview. ``The operating profit is down, but that has to be expected in the period when we are trying to step-change the business up to a new level.''

The board proposed a final 4-pence-a-share dividend, raising the total payout for 2007 to 6 pence, from 5.5 pence a year earlier. The dividend will be paid to shareholders as of April 18, Tullow said.

Dividend Increase

With ``cash available to the business, we've never been in better shape,'' Hickey said. ``Despite profit being down, we've actually increased our dividends.''

Tullow rose as much as 22.5 pence, or 3.6 percent, to 652.5 pence in London trading, the highest in two months. The stock was at 638 pence at 2:13 p.m. local time.

The explorer last year discovered the Jubilee field in Ghana with 1.3 billion barrels of potential oil and gas resources. Today, it said two offshore Ghana prospects, Teak and Tweneboa, may each hold 500 million barrels.

``We've been testing'' these deposits in Ghana, ``trying to see if that actually increases over the course of 2008 exploration,'' Hickey said. ``We are now getting ready to drill.''

The company said it won't reduce its forecast for resource potential in Uganda after last month deciding to suspend the Ngassa-1 exploration well and re-drill from another site. Tullow expects the new well to reach the Ngassa target, Hickey said.

Butiaba Reserves

New prospects in Uganda's Butiaba onshore region in the Lake Albert Rift Basin also have reserve potential ``in excess of a billion barrels,'' the company said.

Seismic studies at Butiaba ``revealed high density of prospects. We're also finding oil seeps in that area,'' Angus McCoss, an exploration director at Tullow, said today by telephone. ``We plan to drill all these prospects at the rate of about one per month.''

The first well at Uganda's Taitai deposit will be spudded in April, McCoss said.

Tullow is ``evaluating long-term financing options with the support of our bank syndicate,'' it said. The company plans to invest 325 million pounds in African projects this year.

High oil, gas revenues boost Petrobank

2008-03-12T09:33:00.000-07:00

Petrobank Energy and Resources Ltd.'s fourth-quarter profit leaped ahead to $40.1 million from year-earlier $2.6 million on higher oil and natural gas revenue rises.

Revenue for the Calgary based-company amounted to $122.5 million for the three months ended Dec. 31, up from $25.7 million a year earlier.

The earnings translated into 45 cents per share, up from four cents in the previous year.

Full year profit was $81.4 million, or 99 cents per share, up from $23.1 million, or 33 cents per share, as production rose 94 per cent to 10,243 barrels of oil equivalent per day from 5,269 boepd in 2006.

Revenue rose to $250.4 million from $99.2 million a year earlier.

Fourth quarter production was increased 17,829 boepd , up 217 per cent from 5,632 boepd in 2006.

"In 2007 we positioned ourselves to be a key player in the Bakken formation in southeast Saskatchewan, launched a significant exploration campaign in Colombia, continued to expand our strategy to commercialize the `Thai' process and obtained additional opportunities to apply our technology," Petrobank said.

Petrobank Energy and Resources Ltd. is a Calgary-based oil and natural gas exploration and production company with operations in Western Canada and Colombia.

Costs at the Pump Reach Record as Oil Prices Soar

2008-03-12T09:32:00.001-07:00

Prices at the gas pump rose to a record high Tuesday as oil prices climbed, putting further strain on American consumers already confronted with slumping home values and overall concerns about a lackluster economy.

Average regular gasoline prices touched an all-time high of $3.227 per gallon, up 27 cents in a month, travel group AAA said in its daily survey of more than 85,000 self-serve filling stations. That surpasses the previous record of $3.2265 set last May.

AAA said it expected pump prices to rise further in the coming months, surpassing $4 a gallon in some areas by summer when road travel typically peaks, the Associated Press reported.

Prices have already passed the $4 mark at some stations. On Tuesday, the average price of a gallon of gas in California stood at $3.581.

Also Tuesday, light sweet crude for April delivery climbed to a new record of $109.72 on the New York Mercantile Exchange. The price then fell after the International Energy Agency cut its forecasts for crude consumption this year and the U.S. Federal Reserve and other central banks announced a liquidity injection of $200 billion to loosen up financial markets.

The Fed action boosted stocks and helped the dollar rally.

"Oil is definitely reacting to the reversal of the dollar, on coordinated central bank liquidity action," Tom Bentz, analyst at BNP Paribas Commodity Futures Inc., told Reuters.

According to the Wall Street Journal, the IEA said the Organization of Petroleum Exporting Countries' decision last week to maintain its existing production rate -- rather than increase output -- and to not hold a new meeting until September helped create speculation in global oil markets.

"While the latest output decision does not totally ignore price, the decision not to meet until September increases concern that there is no room for stronger demand or delays in non-OPEC production. That by itself provides fertile ground for speculation," the IEA said, according to the Journal. "The market is concerned that producers are more inclined to react to price declines than price rises."

Amid the recent economic slowdown, energy costs appear to top consumer anxieties about the economy.

"I've got to say, if they ever go up to $3.50, that would be the point where I'd feel angry," Alex Magby, a Morrisville, Pa., resident who was gassing up near his New Jersey restaurant job told the AP. "I'd feel cheated at that point."

A poll conducted by the Pew Center for People and the Press in early February found that when Americans were asked what worries them most among several economic issues, 35 percent said rising gasoline prices, followed by 28 percent who named health care costs.

The survey also found that 58 percent said their incomes are falling behind the rising cost of living, a jump from 44 percent who expressed this view in September.

The White House said soaring oil prices are "not going to be solved overnight" and that "it would be wrong" of President Bush to promise otherwise. On Air Force One, Press Secretary Dana Perino said the record-high oil prices are something "we're all going to have to work through," according to news agencies.

Arctic Oil & Gas Expects to Benefit From Increased U.S. Interest in Development of American-Owned "ANWR"

2008-03-12T09:32:00.000-07:00

Arctic Oil & Gas Corp. (Other OTC:AOAG.PK - News), a petroleum exploration company, expects heightened interests in drilling for oil and gas in the U.S.-owned Arctic National Wildlife Refuge, or ANWR, will benefit the Company's own prospects of expediting development and drilling. The bi-partisan "American Made Energy Act" (HR 5437) was proposed in the House of Representatives by Reps. Nunes (R-CA) and Ross (D-AR).

Arctic's legal and political activities to initiate support for its development and drilling in the nearby "Arctic Commons" will be benefitted by the push in Congress for drilling in the ANWR, which probably contains significantly smaller reserves than the "Arctic Commons." The Company has already been in contact with the offices of the President, the Secretary of the Interior, and the Secretary of Energy, and expects that all those who support HR 5437 will also be supportive of Arctic's proposal, which will provide great benefits to the United States, through helping to lessen dependency on foreign oil and to provide dramatic royalty payments to the U.S. government, based on the Arctic formula.

Meanwhile, oil prices surged to over $109 on Monday, a new inflation-adjusted record and their fifth new high in the last six sessions on an upbeat report on wholesale inventories. Energy investors shrugged off a relative stabilization of the dollar and a cooling in tensions between Venezuela and its neighbors Colombia and Ecuador.

Peter Sterling, Arctic CEO, stated, "We are thrilled by the introduction of the 'American Made Energy Act,' HR 5437, which we firmly believe at Arctic will help us garner stronger political support for our drilling and producing the 'Arctic Commons.' We expect Representatives Nunes and Ross to be strong potential allies and look for the same positive support from all supporters of this energy bill."

Mr. Sterling further stated, "This energy bill potentially does a great deal of our work for us. At the same time, we believe that we are going to be even better environmentally prepared than they will be to drill in ANWR, so that we feel that these gentlemen have prepared a model that will help us speed up our own timetable."

Report: Oil Inventories Rose Last Week

2008-03-12T09:29:00.001-07:00

Crude-oil inventories rose last week after an unexpected drop in the prior week, according to government data published Wednesday.

For the week ended March 7, crude-oil inventories rose by 6.2 million barrels, or 2 percent, to 311.6 million barrels, the Energy Department's Energy Information Administration said in its weekly report. While the stockpiles were 2.8 percent below year-ago levels, analysts had expected a gain of only 1.6 million barrels, according to a survey by Dow Jones Newswires.

Gasoline inventories rose by 1.7 million barrels, or 0.7 percent, to 236 million barrels, which were 11.2 percent above year-ago levels. Analysts expected stockpiles of the motor fuel to rise by only 300,000 barrels last week.

Demand for gasoline over the four weeks ended March 7 was 0.4 percent higher than a year earlier, averaging nearly 9.1 million barrels a day.

At the same time, U.S. refineries ran at 85 percent of total capacity on average, a drop of 0.9 percentage point. Analysts expected a gain of 0.1 percentage point.

Inventories of distillate fuel, which includes diesel and heating oil, fell by 1.2 million barrels to 116.4 million barrels for the week ended March 7. Analysts expected distillate stocks to drop by 2 million barrels.

At the pump, gas prices set a record high for a second straight day, rising nearly 2 cents overnight to a national average of about $3.25 a gallon Wednesday. The year-ago average was $2.54 a gallon, according to AAA and the Oil Price Information Service.

In morning trading, light, sweet crude for April delivery fell $1.40 to $107.35 a barrel on the New York Mercantile Exchange.

Oil up despite big increase in supply

2008-03-12T09:29:00.000-07:00

Crude prices rise on weak dollar even as crude and gasoline inventories much higher than forecasts.

Oil prices rebounded Wednesday after initially plummeting when a government report said supplies of crude and gasoline had risen much more than expected.

U.S. light crude for April delivery rose 60 cents to $109.35 a barrel. Oil had traded as low as at $107.09 after the report's release.

In its weekly inventory report, the U.S. Energy Information Administration, a government agency that measures oil and gas supplies, said crude stocks rose by 6.2 million barrels last week. Analysts were looking for a rise of 1.6 million barrels, according to a Dow Jones poll.

Gasoline supplies rose by 1.7 million barrels, significantly more than the 300,000 barrel rise that analysts had forecast. The government said gasoline stockpiles are well above average for this time of year.

"The big number is the build in gasoline," said Stephen Schork, publisher of the industry newsletter the Schork Report. "We usually see a 2 million barrel draw at this time, not a surplus."

Since September, gasoline stockpiles have increased from a 16 million barrel deficit to a 22 million barrel surplus, which Schork believes is due primarily to the continually low demand for gasoline.

Rising prices in spite of supply and demand. Typically, an increase in supply and low demand would result in much lower crude prices. But crude and gas prices continue to rise.

"This is all driven by speculation," said Schork, who believes that investors have poured money into the commodity to make some interest in a slumping economy. "That's why we've seen a jump from 20,000 to 90,000 contracts this month."

About an hour after the government report's release, oil rebounded to around the level of Tuesday's settle as investors continued to pour money into commodities.

"This market is not about supply and demand, it's about the dollar," said Alaron senior analyst Phil Flynn. "The dollar is weaker and investors are buying anything they can get their hands on."

Still, oil's rebound is somewhat surprising given continued low demand for gasoline. Gas demand held steady last week, still averaging 9.1 million barrels per day over the past month. Demand is 0.4% higher than the same period last year.

Gas demand much lower. The EIA revised its U.S. oil and gasoline demand forecasts downward Tuesday, citing a slow economy and high oil prices. The government agency now expects oil demand in the United States to grow just 40,000 barrels a day, or 0.2%, in 2008, down from 0.5% or 100,000 barrels a day from its previous forecast.

Since 2001, oil demand has grown an average of 0.9% annually or 175,000 barrels a day. In 2007, oil demand was statistically flat, growing only 10,000 barrels a day.

Gasoline demand has grown an average of 1% annually over the past six years, but this year's demand for gas is expected to increase only 0.3% from last year, down from last year's annual growth of 0.4%.

But vapid demand hasn't caused gas prices to come down at all. The average price of regular gasoline rose overnight to $3.246 a gallon, according to motorist group AAA, setting a record high.

"Motorists who rely on their automobiles... are understandably upset," said AAA President & Chief Executive Robert L. Darbelne in a statement.

"Every extra dollar needed to fill up the car is a dollar not available for groceries, housing, education, vacations, paying off debt, and other key aspects of American families' lives," added Darbelne, who called on Washington to develop a long-term energy solution, as high fuel prices have dragged down consumer spending in an already struggling U.S. economy.

Though gasoline is selling at its highest price in history, gas prices are still below their peak when adjusted for inflation, according to the EIA. The record on that basis was $3.405 and set in March 1981.

The government report also showed distillates, used to make heating oil and diesel fuel, fell by 1.2 million barrels, which was slightly less than the 2 million barrel drop analysts had expected.

And refinery usage was a bit lower than the previous week, operating at 85% capacity last week, falling slightly short of estimates. Refineries tend to lower their capacity in March, as they retool to produce summer fuels.

After oil prices settled above $100 a barrel for the first time on Feb. 26, they have set record intraday highs in 10 of the past 11 trading sessions, nearing $110 a barrel Tuesday. Oil has not traded below $100 a barrel since March 5.

Oil prices have risen more than five-fold since 2002 and about 10% already in 2008. Most analysts blame rising demand and tight supply. That has also attracted floods of investment money, and exaggerated the effects of supply disruptions.

Oil steadies after record run

2008-03-12T09:27:00.000-07:00

Oil prices steadied Wednesday a day after briefly rising to a record of almost $110 a barrel, supported by weakening of the U.S. dollar.

Traders were awaiting the release of data later Wednesday on U.S. petroleum inventories. Analysts surveyed by Dow Jones Newswires were expecting an increase.

Light, sweet crude for April delivery on the New York Mercantile Exchange edged up 6 cents to $108.81 a barrel in electronic trading by midday in Europe.

On Tuesday, crude futures settled at a record finish of $108.75 a barrel, up 85 cents on the day after rising to a new trading high of $109.72 a barrel during the day.

The euro and other major currencies crept higher Wednesday against the dollar despite the U.S. Federal Reserve's plan to pump $200 billion into the financial markets to help ease the strain from the credit crisis.

The 15-nation euro bought $1.5455 at midday in European trading, up from $1.5319 in New York late Tuesday. The British pound rose to $2.0194 from $2.0029, while the dollar dropped to 102.73 Japanese yen from 104.17 yen.

The relief plan is seen as likely to remove pressure on the Fed to cut interest rates before its next meeting, and "could have had a cooling effect on crude prices" in the short term, Vienna's JBC Energy said in its daily report. Still others warned that it could have the opposite result down the road.

"The end result of what the Fed did yesterday would be still to eventually increase liquidity, and that would still have the effect of weakening the U.S. dollar," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

"That's going to support crude oil pricing," he said.

The dollar's weakness has fueled much of oil's recent run-up, as investment funds seek a hedge in hard assets. Speculation that rising prices for oil and other commodities will offset the falling dollar has been the main drivers of oil's rally from $87 a barrel in January.

Shum noted that the surge in investors' demand for commodities as a hedge against inflation has created a self-fulfilling cycle that causes prices to keep rising.

"As oil prices go higher and the inflation pressure continues to build, that further attracts investors to buy into oil and other commodities to get better returns," he said.

Oil's growing strength has also come amid warnings that there were no signs of relief from high oil prices on the immediate horizon.

Two prominent forecasters warned Tuesday that brisk demand in China and other emerging markets is likely to offset any downturn in demand in the U.S.

The Paris-based International Energy Agency on Tuesday said high crude prices continue to chip away at oil consumption in the U.S. and other industrialized nations, but warned of continuing strong demand in China and other emerging markets.

The energy watchdog agency for the world's most industrialized nations slightly cut its projection for world oil demand, which it now sees at 87.5 million barrels a day for this year, up 2 percent from 2007.

Separately, the U.S. Energy Information Administration said Tuesday it expects a slowing economy and record high oil prices to hold U.S. oil demand growth to just 40,000 barrels a day in 2008, bringing daily consumption to 20.74 million barrels.

The U.S. petroleum inventory report is expected to show that U.S. crude oil stockpiles grew 1.6 million barrels, gasoline stocks grew 300,000 barrels and stocks of distillates, which include diesel fuel and heating oil, fell 2 million barrels.

In other Nymex trading, heating oil futures were up by more than a cent at $3.0079 a gallon while gasoline prices lost 0.69 of a cent to trade at $2.7192 a gallon. Natural gas futures lost 1.6 cents to $9.984 per 1,000 cubic feet.

In London, Brent crude futures fell 13 cents to US$105.12 a barrel on the ICE Futures exchange

OPEC oil surges to more than 100 dollars a barrel

2008-03-12T09:26:00.001-07:00

The price of oil produced by OPEC countries has topped the 100-dollar-per-barrel mark for the first time, the cartel said on Wednesday.

OPEC's daily basket price, which is always published with a 24-hour delay and serves as the reference price for the Organisation of Petroleum Exporting Countries, rose to 100.57 dollars on Tuesday from 99.48 dollars the previous day, the cartel said in a statement.

The basket comprises 13 different crudes from all countries in the organisation, which produces about 40 percent of global oil supplies.

The OPEC price is tied to benchmark prices for light sweet crude oil, the highest quality crude, which are set on the main oil exchanges in London and New York.

In Asian trade on Wednesday, the New York benchmark price was close to its record of nearly 110 dollars, underpinned by the US dollar's dive to a new low against the euro and supply concerns.

London's benchmark crude for April delivery was just below 105 dollars, close to its record of 105.82 set on Tuesday.

OPEC is dominated by Saudi Arabia, the world's biggest oil producer, but also includes Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, the United Arab Emirates and Venezuela.

OPEC members each have a production quota that, in theory, limits their output to a level that is negotiated each time ministers from the organisation meet.

OPEC says the system is designed to stabilise the oil market by preventing wild fluctuations in prices, which makes investment in the industry easier and guarantees a reliable flow of petrodollars for exporters.

Critics charge that the group manipulates the market and is chasing crude prices to their record highs deliberately by restricting supplies when the market is sending a signal it needs more.

OPEC is under intense pressure from the United States to increase its production, but has declined to do so at its meetings, including one in Vienna last week.

Record oil revenues have sparked an investment boom in exporting countries, enabling huge domestic development programmes and encouraging national companies to go in search of foreign assets.

Oil prices fall as inventories jump

2008-03-12T09:26:00.000-07:00

Oil prices fell Wednesday after the Energy Department said crude oil and gasoline supplies jumped much more than expected last week. Inventories of distillates, which include heating oil and diesel, fell less than forecast.

The Energy Information Administration report injected a dose of bearish sentiment into a market that has set new records in 11 of the past 12 sessions. Crude oil supplies jumped by 6.2 million barrels last week, more than three times the 1.6 million barrel increase analysts surveyed by Dow Jones Newswires were expecting.

It was the eight increase in crude supplies in nine weeks, putting oil inventories back on a growth track after a one-week decline.

Gasoline supplies, meanwhile, rose by 1.7 million barrels last week, well above the expected 300,000 barrel increase, and distillate supplies dropped by 1.2 million barrels, less than the expected 2 million barrel decline.

Light, sweet crude for April delivery fell $1.47 to $107.28 a barrel on the New York Mercantile Exchange.

At the pump, however, gas prices continued their charge into record territory Wednesday, following crude's recent climb. The national average price of a gallon of gas rose 1.9 cents overnight to $3.246 a gallon, a new record, according to AAA and the Oil Price Information Service.

Gas prices are following crude's surge, and could rise as high as $3.75 a gallon this spring, analysts say.

Oil prices edge up ahead of data

2008-03-12T09:25:00.000-07:00

Oil prices edged up Wednesday but were still below the intraday peak of almost $110 a barrel set a day earlier, supported by further weakening in the U.S. dollar.

Traders were awaiting the release of data later Wednesday on U.S. petroleum inventories. Analysts surveyed by Dow Jones Newswires were expecting an increase.

Light, sweet crude for April delivery on the New York Mercantile Exchange rose 19 cents to $108.94 a barrel in electronic trading by afternoon in Europe.

On Tuesday, crude futures settled at a record finish of $108.75 a barrel, up 85 cents on the day after rising to a new trading high of $109.72 a barrel during the day.

The euro and other major currencies rose Wednesday against the dollar despite the U.S. Federal Reserve's plan to pump $200 billion into financial markets to help ease the strain from the credit crisis.

The 15-nation euro rose to $1.55 for the first time, up from $1.5319 in New York late Tuesday.

The relief plan is seen as likely to remove pressure on the Fed to cut interest rates before its next meeting. and in the short term "could have had a cooling effect on crude prices," noted Vienna's JBC Energy in its daily report. Still others warned that it could have the opposite result down the road.

"The end result of what the Fed did yesterday would be still to eventually increase liquidity, and that would still have the effect of weakening the U.S. dollar," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

"That's going to support crude oil pricing," he said.

The dollar's weakness has fueled much of oil's recent run-up, as investment funds seek a hedge in hard assets. Speculation that rising prices for oil and other commodities will offset the falling dollar has been the main drivers of oil's rally from $87 a barrel in January.

Shum noted that the surge in investors' demand for commodities as a hedge against inflation has created a self-fulfilling cycle that causes prices to keep rising.

"As oil prices go higher and the inflation pressure continues to build, that further attracts investors to buy into oil and other commodities to get better returns," he said.

Oil's growing strength has also come amid warnings that there were no signs of relief from high oil prices on the immediate horizon.

Two prominent forecasters warned Tuesday that brisk demand in China and other emerging markets is likely to offset any downturn in demand in the U.S.

The Paris-based International Energy Agency on Tuesday said high crude prices continue to chip away at oil consumption in the U.S. and other industrialized nations, but warned of continuing strong demand in China and other emerging markets.

The energy watchdog agency for the world's most industrialized nations slightly cut its projection for world oil demand, which it now sees at 87.5 million barrels a day for this year, up 2 percent from 2007.

Separately, the U.S. Energy Information Administration said Tuesday it expects a slowing economy and record high oil prices to hold U.S. oil demand growth to just 40,000 barrels a day in 2008, bringing daily consumption to 20.74 million barrels.

The U.S. petroleum stockpiles report is expected to show that U.S. crude oil stockpiles grew 1.6 million barrels, gasoline stockpiles grew 300,000 barrels, and stocks of distillates, which include diesel fuel and heating oil, fell 2 million barrels.

In other Nymex trading, heating oil and gasoline futures were essentially steady at $2.9913 and $2.7024 a gallon, respectively. Natural gas futures lost 4.1 cents to $9.959 per 1,000 cubic feet.

In London, Brent crude futures were unchanged at $105.25 a barrel on the ICE Futures exchange.

Paying at the Pump, in a Big Way

2008-03-11T07:43:00.003-07:00

Ricardo Caraballo was having a familiar American experience at the filling station the other day, groaning as the pump clicked up, up, up. By the time he finished it read $505, and his tank was only half full.

A few years ago, “$500 would have kept me rolling for two weeks,” he said. “Now, I’ll be lucky to make it three days.”

Mr. Caraballo is a trucker, and instead of gasoline he was buying 143 gallons of diesel. While the price of gasoline may be on the verge of setting another record, diesel is already there.

According to AAA, the motor club, the average nationwide diesel price has set records on 18 of the past 19 days, including Monday, when it hit $3.83 a gallon.

In the nation’s tool and die plants, in the driver’s seats of farm tractors and in the cabs of the long-haul semis that ply America’s highways, people are feeling the pain.

“It’s killing us,” said Chad Beachler, co-owner of Beachler Trucking, which operates nine trucks in Loudonville, Ohio. “Every day, I come in here and wonder if I have enough money to buy fuel.”

Both diesel and gasoline prices had lagged behind the big increase in the price of oil, as slack wintertime demand helped to suppress increases at the pump. But now both fuels are rising rapidly. Gasoline was selling for a nationwide average of nearly $3.23 a gallon on Monday, a half-penny shy of the record set last May. Oil closed up sharply on Monday to hit a record, $107.90 a barrel, in trading on the New York Mercantile Exchange.

Four states — New York, California, Pennsylvania and Vermont — reported average diesel prices above $4 a gallon on Monday. “That really is unprecedented,” said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service, which compiles data for AAA.

Stunned by the high prices, businesses are trying to cut fuel consumption any way they can. Farmers are buying more fuel-efficient equipment. Truckers are putting off maintenance and packing lunches. Transport companies of all types are cutting what little fat remains in an industry that subsists on lean margins even when fuel is cheap.

“In this industry, if you’re making 4 percent profits, you’re held in high esteem,” said Jim O’Neal, chairman of the Truckload Carriers Association. “Now we’re looking at the dreaded stagflation: a soft economy and increasing prices on everything, especially fuel.”

Some causes of the run-up are seasonal, said Ron Planting, an economist at the American Petroleum Institute. For instance, home heating oil and diesel are close cousins, and when heating-oil demand goes up in the winter, the prices of both fuels often rise.

But other reasons are relatively new. The rising popularity of diesel vehicles in Europe increases demand for the fuel and decreases demand for gasoline, allowing European refiners to export their surplus to the United States, which helps stabilize gasoline prices here, Mr. Planting said. Diesel use is on the rise in fast-growing countries like India and China, Mr. Kloza said. And even in the United States, demand for diesel and heating oil grew 1.5 percent in 2007, compared with 0.4 percent for gasoline, Mr. Planting said.

Diesel is mostly burned by businesses to power machinery or haul freight, Mr. Planting said. Since few of the functions dependent on diesel are discretionary, companies must pay the higher prices to remain in business.

“In the U.S., gasoline is having its little run,” Mr. Kloza said. “But diesel is much more of a global market. All the signs say that the world’s appetite for diesel is only going up.”

Rising fuel costs come at a difficult time for America’s transport companies, already hit by slumps in new home construction and consumer spending. Truck tonnage fell 1.5 percent in 2007, to just under 11 billion tons, said Bob Costello, chief economist of the American Trucking Association. Rising diesel costs will almost certainly lead to higher consumer prices and more bankruptcies, he said.

“We’re already seeing more trucking companies fail, and it’s only going to get worse,” Mr. Costello said.

When Tony Jarachovic bought his white Kenworth semi in 1998, diesel cost 88 cents a gallon. Today the truck’s odometer reads 1.1 million miles. It needs new front tires, which together cost $900, and a major overhaul, which will cost $8,500.

Spending $1,500 a week on fuel has depleted his maintenance budget, however. Now he avoids driving from his home base in Lodi, Ohio, into Pennsylvania because the hills strain his motor. Mr. Jarachovic used to buy Krispy Kreme doughnuts at truck stops, and treat his family to dinner at Applebee’s every Sunday. Now his wife cooks extra spaghetti so he can eat leftovers on the road.

“I have no expenses left to cut,” Mr. Jarachovic said.

Trucking companies are looking for efficiencies, as well. O & S Trucking of Springfield, Mo., recently installed electronic devices in each of its 350 trucks to kill the engines automatically after they idle for two minutes, said Jim Frieze, the equipment director. And all the company’s trucks have devices that limit roadway speeds; Mr. Frieze has dialed those down from 70 miles an hour to 65 to conserve fuel. He audits every truck’s computer every week, searching for wasteful habits.

“If a driver’s gear shifts take him over 8,000 r.p.m., he’s just blowing fuel out the stack,” Mr. Frieze said. “I take him aside and counsel him to shift faster.”

Long-haul truckers often sleep in their cabs at night, running their engines for heat or air-conditioning and burning a gallon of diesel every hour, said David Owen, president of the National Association of Small Trucking Companies. Many businesses are installing auxiliary power units, known in the industry as A.P.U.’s, in their trucks, which do the same work for a quarter of the fuel.

But it takes money to save money. The units cost $6,000 to $9,000, Mr. Owen said.

“We might have to lay off some drivers,” said Louise Harbert, office manager at Harvest Transport in Vancouver, Wash. “There’s no way we can afford A.P.U.’s right now.”

Wal-Mart is working with truck manufacturers to create hybrid diesel-electric truck engines and improve the aerodynamics of its trucks, according to a company statement. United Parcel Service has a fleet of 1,400 alternative-fuel vehicles, and will add hundreds more this year, partly to reduce diesel costs, said Heather Robinson, a spokeswoman. U.P.S. is selling software that helps other companies improve the efficiency of delivery routes.

“The days of drivers running five miles off-route to get their favorite pizza are over,” Ms. Robinson said.

Other industries are cutting diesel waste as well. Every month, the Union Pacific railroad rewards engineers who have helped it save the most fuel by giving them $100 gasoline cards for their personal vehicles, according to a company statement.

The Anacostia and Pacific Company, which owns five regional railroads, recently installed devices that shut locomotives after 20 minutes of idling, and it is considering other devices to keep fuel lines from freezing in cold weather. Together, the cost would be $50,000 per engine.

“It’s not cheap,” said Bruce Lieberman, the chief financial officer. “But I am recoiling in horror at how much we spend on fuel.”

Tugboat captains sailing to Puerto Rico from Jacksonville, Fla., for Crowley Maritime Corporation once made the trip in 13 days. To save fuel, the company ordered them to slow down, adding a day to the voyage, said Rob Grune, Crowley’s vice president for Caribbean services.

Because boats move goods more efficiently than trains or trucks, barge shipping is one of the few diesel-burning industries that benefits from the high cost of fuel. Annual transportation revenue at American Commercial Lines, a tug-and-barge company in Jeffersonville, Ind., grew by $60 million in 2007, almost entirely from companies switching from trucks or rail to save money on fuel surcharges, said Michael P. Ryan, the company’s president and chief executive.

The nation’s farmers are also among those looking to save fuel. Bill Christison, 71, never had much of an erosion problem on his 2,000-acre farm near Chillicothe, Mo., so he never needed a no-till planter, which plants seeds without plowing up the soil. But plowing burns lots of fuel; last year Mr. Christison spent $17,207 on diesel. So this winter he paid $100,000 for his first no-till planter.

“I’m being as stingy with fuel as I can be,” Mr. Christison said. “But we just can’t get along without diesel.”

Addax Petroleum announces successful oil appraisal offshore Nigeria

2008-03-11T07:43:00.002-07:00

Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC) announced today the successful appraisal of and addition to the Kita Marine discovery. The recently completed KTM-6 well encountered an aggregate gross oil column of 173 feet over four zones. The Kita Marine discoveries lie in the northern part of the prolific OML123 block offshore Nigeria in an area which has not previously had production.

Commenting, Jean Claude Gandur, President and Chief Executive Officer of Addax Petroleum said: "I am very pleased to report an encouraging start to 2008 with these promising appraisal well results from OML123. The expansion the Kita Marine area opens up the very real possibility to initiate development and production for the first time in the northern part of OML123. Our track record of production and reserves growth in Nigeria and on OML123 in particular has been reliable and first rate. I believe that Kita Marine, along with the considerable remaining potential on OML123, will continue to underpin our strong and consistent operational performance."

The KTM-6 appraisal well was drilled two kilometres to the southwest of the successful KTM-2ST1 exploration well. Both wells penetrated separate but adjacent fault blocks. The KTM-6 well encountered an aggregate gross oil column of 173 feet including individual gross oil columns of 94 feet and 52 feet at depths of between 5,350 and 6,300 feet subsea. Flow tests were not performed but pressure and fluid sample data indicate medium gravity oil to be present, consistent with the approximately 30 degrees API Antan blend produced from OML123. The KTM-2ST1 well was drilled in late 2005 and encountered an aggregate gross oil column of 100 feet over three main zones and flow tested at 1,000 bbl/day of 28 degrees API oil.

The Kita Marine area lies in a water depth of approximately 10 metres and is approximately 10 kilometres northeast of the North Oron / Oron West producing facility. OML123 is Addax Petroleum's largest license area, currently producing approximately 60,000 bbl/day.

Lundin Petroleum Falls After Abandoning Well in Sudan (Update1)

2008-03-11T07:43:00.001-07:00

Lundin Petroleum AB, Sweden's largest oil explorer, fell to a two-week low in Stockholm trading after saying it will abandon a Sudanese well that failed to find oil.

Lundin dropped 2.5 kronor, or 3.2 percent, to 75.5 kronor. That's the lowest since Feb. 21 and values the Stockholm-based company at 23.8 billion kronor ($3.89 billion). The stock earlier lost as much as 5.1 percent.

The explorer started drilling at Sudan's Nyal prospect in February. It estimated at the time the deposit's recoverable resources at about 176 million barrels of oil. The Nyal-1 well is the first of four to be drilled this year at Block 5B, Lundin said today in a statement. The next two wells will be drilled in a swamp, while Nyal-1 was drilled on dry land.

``No oil shows were recorded,'' the company said in the statement. It encountered ``minor gas shows.'' All the samples and data from the drilling will be ``analyzed and studied in further detail,'' Lundin said.

Oil rises $2.75 to $107.90 a barrel

2008-03-11T07:41:00.000-07:00

Gasoline prices were poised Monday to set a record at the pump, having surged to within half a cent of their record high of $3.227 a gallon. Oil prices, meanwhile, surged above $108 to an inflation-adjusted record and their fifth new high in the last six sessions on an upbeat report on wholesale inventories.

Wall Street sank on the news. Investors, also worried about troubling signs for the financial sector, sent the Dow Jones industrial average down more than 150 points, bringing its three-day loss to nearly 515, while broader indexes showed steeper percentage losses.

The national average price of a gallon of gas rose 0.7 cent overnight to $3.222 a gallon, 69 cents higher than one year ago, according to AAA and the Oil Price Information Service. Last May, prices peaked at $3.227 as surging demand and a string of refinery shutdowns raised concerns about supplies.

That record is likely to be left in the dust soon as gas prices accelerate toward levels that could approach $4 a gallon, though most analysts believe prices will peak below that psychologically significant mark.

In its last forecast, released last month, the Energy Department said prices are likely to peak around $3.40 a gallon this spring; a new forecast is due today.

Retail gas prices are following crude oil, which has jumped 25 percent in a month.

On Monday, crude prices surged to yet another record after the Commerce Department said wholesale sales jumped by 2.7 percent in January, their biggest increase in four years, according to Dow Jones Newswires.

The strong sales report suggested to oil traders that the struggling economy may be doing better than thought.

Light, sweet crude for April delivery rose $2.75 to settle at a record $107.90 on the New York Mercantile Exchange after earlier setting a trading record of $108.21.

Prices are heading to $120 "in the short term," Matthew Simmons, chairman of Simmons & Co., a Houston investment bank, was quoted as saying by Bloomberg News. "I'm one of the few people who's not surprised to see crude at $107. I still think it's a bargain."

Goldman Sachs Group Inc.'s forecast for 2009 U.S. crude-oil prices was raised to $105 from $90 a barrel, in a report dated March 6, Bloomberg also reported. The Goldman oil-equity analysts in London said that the increase was warranted because non-OPEC production is approaching a plateau while Asian economies spur consumption.

Many analysts believe speculative investing attracted by the weak dollar is the primary reason oil has risen so far so fast in recent months. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.

"We've got a Fed meeting on the 18th that could see a sizable rate cut," said Brad Samples, an analyst with Summit Energy Services Inc., in Louisville, Ky. "So, it's not over."

Indeed, while the dollar rose against the euro on Monday, many investors believe the greenback is likely to keep falling as the Fed continues to cut rates. Many analysts believe the rise in crude prices is not supported by the market's underlying fundamentals, noting that supplies are generally rising while demand is falling.

"By gobbling up everything in sight, [investors] are pushing food and fuel prices to ruinously high levels," Peter Beutel, president of the energy risk management firm Cameron Hanover, said in a research note.

Other energy futures also rose Monday. April heating oil futures rose 2.64 cents to settle at $2.9734 a gallon while April gasoline futures rose 2.06 cents to settle at $2.7149 a gallon.

Crude Oil Futures Rise to a Record for a Fifth Day in New York

2008-03-11T07:40:00.000-07:00

Oil futures advanced to a record for a fifth day, rising above $109 a barrel in New York, as the sinking dollar drew investors to commodities.

The euro gained to $1.5489 against the dollar, the highest since the single currency's introduction in 1999, after European Central Bank council member Axel Weber said he doesn't see any leeway to lower borrowing costs. Oil has advanced 13 percent this year as the tumbling dollar makes assets priced in the U.S. currency an appealing currency hedge.

``The weaker dollar has attracted a lot of investors into oil,'' said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. ``At the same time, emerging market demand is strong.''

Crude oil for April delivery rose as much as $1.82, or 1.7 percent, to $109.72 in electronic trading on the New York Mercantile Exchange. The contract traded at $109.51 a barrel at 12:23 p.m. London time.

Brent crude for April settlement also rose to a fifth consecutive high, gaining as much as $1.66, or 1.6 percent, to $105.82 a barrel on London's ICE Futures Europe exchange.

Hedge-fund managers and other large speculators raised their bets that prices will rise last week. Bets on rising prices outnumbered so-called short positions by 99,539 contracts on the New York Mercantile Exchange, according to Commodity Futures Trading Commission data on March 7. That's the highest level since November.

Hedge Funds

Investments in commodity hedge funds rose to $104 billion at the end of 2007 from $73 billion in the first seven months of last year, according to data from Singapore-based research company Eurekahedge. Oil, industrial metals and wheat prices have rallied this year, while the S&P 500 and Dow Jones Industrial Average have dropped.

Oil rallied even as the International Energy Agency cut its forecast for 2008 global oil demand for a second month because high prices and weaker economic growth have ``weighed down'' demand growth in industrialized nations.

The agency, an adviser to 27 industrialized nations, reduced its forecast for 2008 demand by 80,000 barrels a day to 87.54 million barrels a day, leaving annual demand growth at 2 percent, the IEA said today in a monthly report.

New York crude's relative strength index, a measure of how rapidly prices have advanced or dropped during a specified period, rose above 70 for the first time since October. Readings above 70 indicate a price may be poised to fall, and readings below 30 indicate it may be poised to rise.

The 14-day relative strength index was at 71.18 as of 11:26 a.m. London time.

``As prices break highs on a daily basis with increasing volumes, these markets look overbought, but these are not normal trading conditions,'' said Rob Laughlin, senior broker at MF Global Ltd. in London. ``It will end in tears, but not yet.''

Fuel Prices Siphoning Money From U.S. Economy

2008-03-11T07:39:00.000-07:00

Crude oil prices continued a record-breaking climb today that pushed it past $109 a barrel, while the price of regular unleaded gasoline at the pump came within half a cent of its all-time high.

A White House announcement that Vice President Cheney would probably ask Saudi Arabia to boost oil output during a trip to the Middle East next week did nothing to blunt a run-up in prices that yesterday added $3 to the cost of a barrel.

As the rising cost of crude oil trickles down to the gasoline pump, fuel prices are siphoning cash away from other consumer spending, making it harder to revive the flagging U.S. economy and putting pressure on the Bush administration. It also siphoned more money out of the country: The Commerce Department reported today that the U.S. trade deficit jumped in January to $58.2 billion, compared to $57.9 billion in December, as a record, $27.1 billion monthly bill for imported crude helped offset an increase in U.S. exports.

According to the auto club AAA, the price of gasoline climbed to $3.222 a gallon yesterday, just shy of the $3.227 record set May 24.

"We're hurting in this thing, and it doesn't look like there's any end of it," said Ralph Bombardiere, executive director of the New York State Association of Service Stations and Repair Shops. "It looks like it's heading to $4" a gallon.

Bombardiere, who said members of his group of small service stations were having trouble raising pump prices fast enough to keep up with rising wholesale costs, added: "As the price goes up, it becomes a concern for us. We're the last line. We're the guys you face."

An opinion poll conducted in early February by the Pew Research Center for the People and the Press showed that 35 percent of Americans named the rising price of gasoline as the economic issue that worried them most. In the same poll, 60 percent of those surveyed said it was "difficult" for their families to afford gasoline. Since the poll was completed, retail gasoline prices have risen 24.7 cents a gallon.

The prices of other petroleum products are also soaring. Diesel fuel, usually cheaper than gasoline, is now more expensive. The Energy Department's Energy Information Administration said the average U.S. price of diesel was $3.819 a gallon in the week ending yesterday, up 53.9 cents in just four weeks. Heating-oil prices are also at all-time highs, up more than a dollar a gallon over the past year.

Cheney is scheduled to meet Saudi King Abdullah during a trip that starts Sunday. Discussions are expected to deal with oil and the security situation in Iraq.

Saudi Arabia is the world's biggest oil exporter and has more excess production capacity than any other member of the Organization of the Petroleum Exporting Countries. However, despite President Bush's entreaties, Saudi officials have asserted that oil markets have adequate supplies.

"I'm sure that energy issues will come up there," said White House spokeswoman Dana Perino. "Certainly the position of the United States and the president is that we believe that more supplies should be out there on the market. And the president does want OPEC to take into consideration that its biggest customer, the United States, that our economy is weakened, and part of the reason is because of higher oil prices; we think that more supply would help."

Democrats seized on the price increases to hammer Bush for his threat to veto an energy tax bill that would eliminate a tax break for the five biggest oil companies and extend tax breaks for solar and wind projects.

"How many records does the price of oil have to set and surpass before President Bush stands up for hardworking American families and stops taxpayer giveaways to Big Oil?" House Speaker Nancy Pelosi (D-Calif.) asked in a statement.

Analysts blamed the relentless increase in petroleum prices on an influx of investors fleeing sinking and unsteady financial markets and those searching for hedges against inflation. Unlike most other days recently, however, prices of other commodities -- including gold, copper and platinum -- fell while oil prices rose again.

While there are signs that U.S. gasoline consumption has flattened or declined slightly in the past few weeks, traders and investors still expect world demand for oil to remain strong. China's crude oil imports grew 18 percent last month, according to Bloomberg News.

Last week, Goldman Sachs raised its forecast for 2009 U.S. crude prices to $105 a barrel from $90 a barrel. Lehman Brothers has also raised its first-quarter forecast for crude prices, and today the Energy Information Administration is expected to increase its short-term oil price forecast. Its last forecast, issued only a month ago, had predicted oil prices of just $88 a barrel for March.

Gasoline prices are rising as crude costs grow. Tancred Lidderdale, an analyst with the EIA, said gasoline prices rise about 2.4 cents a gallon for every $1-per-barrel increase in crude oil.

Lidderdale said an additional factor in rising gasoline prices was the annual switch of refineries to make summer-grade gasoline, a more expensive form designed to minimize the evaporation of fuel in the summer heat.

Trade deficit grows in January as imports, crude-oil prices hit record highs

2008-03-11T07:36:00.000-07:00

The United States' trade deficit grew larger in January as imports — including crude-oil prices — zoomed to all-time highs.

The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, showed that the country's trade gap increased to $58.2 billion. That was up from a trade shortfall of $57.9 billion in December and was the highest since November.

Imports of goods and services climbed to a record high of $206.4 billion in January. The United States' voracious appetite for imported crude oil, where prices skyrocketed to the loftiest on record, figured into the increasing demand for overall imports.

The trade gap widened even as exports of U.S.-made goods and services totaled a record high of $148.2 billion in January. The declining value of the U.S. dollar, relative to other currencies such as the euro, is helping to make U.S.-made goods cheaper and thus more attractive to foreign buyers.

Economists were expecting the trade deficit in January to be a bit larger — growing to around $59 billion.

Still, rising energy prices are aggravating the nation's trade situation.

The average price of imported crude oil soared to a record $84.09 a barrel in January. That pushed the country's imported crude-oil bill to an all-time high of $27.1 billion in January.

The country's trade deficit with oil producing nations, including Saudi Arabia, Venezuela and Nigeria, grew to $15.5 billion in January, from $12.6 billion in December.

Meanwhile, the United States' politically sensitive trade deficit with China widened to $20.3 billion in January, up from $18.8 billion in the previous month.

The Bush administration says free-trade policies that also make it easier for U.S. companies to do business in other countries is the best way to deal with the country's trade deficits. Democrats, however, blame the president's trade policies for the trade gap and the loss of millions of U.S. factory jobs as U.S. companies moved production to low-wage countries such as China.

Trade tensions with China over the last few years have intensified on a number of fronts. Beijing's currency policies have strained relationships. So have the recalls of Chinese-made goods — from toys with lead paint to defective tired and tainted toothpaste — which have raised questions about the safety of Chinese goods flowing into the United States.

Critics contend that China is engaging in what they believe are unfair trade practices such as keeping the value of its currency artificially low against the dollar. That makes Chinese-made goods less expensive to buyers in the United States and makes U.S.-made goods more expensive in China. The administration has been prodding China to do more to let its currency rise in value.

The United States' trade deficit with Japan decreased slightly to $6.592 billion in January, from $6.593 billion in December. The trade deficit with Canada, however, increased to $5.9 billion, up from $4.7 billion.

Barrick, Suncor May Rise on Oil, Gold; Royal May Gain on Fed

2008-03-11T07:35:00.001-07:00

Barrick Gold Corp. and Suncor Energy Inc. may advance, based on bids on the Toronto Stock Exchange, as record crude-oil and rising bullion prices improved energy and raw- materials producers' earnings prospects.

Royal Bank of Canada may lead financial shares higher on speculation that a new $200 billion lending facility from the U.S. Federal Reserve will help ease a slump in credit market liquidity.

The Standard & Poor's/TSX Composite Index fell 276.63, or 2.1 percent, to 13,005.09 yesterday in Toronto, dropping for a sixth time in seven days.

Oil futures advanced to a record for a fifth day, rising above $109 a barrel in New York, as the sinking U.S. dollar drew investors to commodities. Gold led precious metals higher in London on revived demand for a hedge against inflation. Copper, soybeans and wheat prices advanced. Natural gas prices fell.

Barrick Gold, the world's biggest bullion producer, may climb C$1 to C$50, bids already submitted in Toronto indicated. Teck Cominco Ltd., Canada's largest publicly traded miner of industrial metals such as copper and zinc, may gain C$1.34 to C$41.45, bids showed.

Potash Corp. of Saskatchewan Inc. may rise C$3.38 to C$146.25, based on bids. The largest maker of crop nutrients had its share- price target increased to $211 (C$209.27) from $175 by UBS AG's Brian MacArthur. An increase in its estimates for potash prices prompted UBS to revise its earnings forecasts for Potash, the Toronto-based analyst said in a note. UBS left its ``buy'' rating unchanged.

Suncor Energy, the second-largest oil-sands miner in the world, may rise C$2.02 to C$105.50, bids showed.

The Fed plans to lend up to $200 billion of Treasury securities in exchange for debt including private mortgage-backed securities that have slumped in value as homeowners defaulted on their payments.

Royal Bank, Canada's biggest lender, may climb C$1.10 to C$46.50, bids suggested. Rival Toronto-Dominion Bank may climb C$1.19 to C$62.75, according to bids.

U.S. stock-index futures advanced on the Fed plans. S&P 500 futures expiring in March added 27.70 to 1,303.30 at 8:48 a.m. in New York. Dow Jones Industrial Average futures gained 221 to 12,000. Nasdaq-100 Index futures rose 30.25to 1,707.

Gas Prices Set New Record As Oil Soars

2008-03-11T07:35:00.000-07:00

The cost of filling up your gas tank has hit a new record. Average prices at the pump are at a new high of almost $3.23 a gallon.

According to AAA and the Oil Price Information Service, the average national price of a gallon of gas rose half a cent overnight to $3.2272. That is slightly higher than the previous record of $3.2265 a gallon, set last May.

Gas prices are following crude oil futures into record territory. Oil prices are surging as the falling dollar attracts investors who see crude futures as a hedge against inflation and the weak dollar.

Light, sweet crude for April delivery briefly climbed to a new record price of $109.72 a barrel on the New York Mercantile Exchange Tuesday morning.

Gas prices rise to new national record

2008-03-11T07:34:00.000-07:00

Crude Oil Hits Record, Pump Prices Keep Rising

2008-03-11T07:32:00.001-07:00

Crude oil prices shattered another record yesterday, hitting $108 a barrel while the price of regular unleaded gasoline at the pump came within half a cent of its all-time high.

A White House announcement that Vice President Cheney would probably ask Saudi Arabia to boost oil output during a trip to the Middle East next week did nothing to blunt the rise in oil prices yesterday. Much of the nearly $3-a-barrel increase came after the announcement.

As the rising cost of crude oil trickles down to the gasoline pump, fuel prices are siphoning cash away from other consumer spending, making it harder to revive the flagging U.S. economy and putting pressure on the Bush administration.

According to the auto club AAA, the price of gasoline climbed to $3.222 a gallon yesterday, just shy of the $3.227 record set May 24.

"We're hurting in this thing, and it doesn't look like there's any end of it," said Ralph Bombardiere, executive director of the New York State Association of Service Stations and Repair Shops. "It looks like it's heading to $4" a gallon.

Bombardiere, who said members of his group of small service stations were having trouble raising pump prices fast enough to keep up with rising wholesale costs, added: "As the price goes up, it becomes a concern for us. We're the last line. We're the guys you face."

An opinion poll conducted in early February by the Pew Research Center for the People and the Press showed that 35 percent of Americans named the rising price of gasoline as the economic issue that worried them most. In the same poll, 60 percent of those surveyed said it was "difficult" for their families to afford gasoline. Since the poll was completed, retail gasoline prices have risen 24.7 cents a gallon.

The prices of other petroleum products are also soaring. Diesel fuel, usually cheaper than gasoline, is now more expensive. The Energy Department's Energy Information Administration said the average U.S. price of diesel was $3.819 a gallon in the week ended yesterday, up 53.9 cents in just four weeks. Heating-oil prices are also at all-time highs, up more than a dollar a gallon over the past year.

Cheney is scheduled to meet Saudi King Abdullah during a trip that starts Sunday. Discussions are expected to deal with oil and the security situation in Iraq.

Saudi Arabia is the world's biggest oil exporter and has more excess production capacity than any other member of the Organization of the Petroleum Exporting Countries. However, despite President Bush's entreaties, Saudi officials have asserted that oil markets have adequate supplies.

"I'm sure that energy issues will come up there," said White House spokesman Dana Perino. "Certainly the position of the United States and the president is that we believe that more supplies should be out there on the market. And the president does want OPEC to take into consideration that its biggest customer, the United States, that our economy is weakened, and part of the reason is because of higher oil prices; we think that more supply would help."

Democrats seized on the price increases to hammer President Bush for his threat to veto an energy tax bill that would eliminate a tax break for the five biggest oil companies and extend tax breaks for solar and wind projects.

"How many records does the price of oil have to set and surpass before President Bush stands up for hardworking American families and stops taxpayer giveaways to Big Oil?" House Speaker Nancy Pelosi (D-Calif.) asked in a statement.

Analysts blamed the relentless increase in petroleum prices on an influx of investors fleeing sinking and unsteady financial markets and those searching for hedges against inflation. Unlike most other days recently, however, prices of other commodities -- including gold, copper and platinum -- fell while oil prices rose again.

While there are signs that U.S. gasoline consumption has flattened or declined slightly in the past few weeks, traders and investors still expect world demand for oil to remain strong. China's crude oil imports grew 18 percent last month, according to Bloomberg News.

Last week, Goldman Sachs raised its forecast for 2009 U.S. crude prices to $105 a barrel from $90 a barrel. Lehman Brothers has also raised its first-quarter forecast for crude prices, and today the Energy Information Administration is expected to increase its short-term oil price forecast. Its last forecast, issued only a month ago, had predicted oil prices of just $88 a barrel for March.

Gasoline prices are rising as crude costs grow. Tancred Lidderdale, an analyst with the EIA, said gasoline prices rise about 2.4 cents a gallon for every $1-per-barrel increase in crude oil.

Lidderdale said an additional factor in rising gasoline prices was the annual switch of refineries to make summer-grade gasoline, a more expensive form designed to minimize the evaporation of fuel in the summer heat.

Oil hits a new high point

2008-03-11T07:32:00.000-07:00

Crude surges to an all-time trading high of $109.20, propelling expectations of oil hitting psychologically significant $110 mark.

Oil prices surged to an all-time trading high on Tuesday as investors sought refuge from the anemic dollar.

Light sweet crude for April delivery surged to $109.20 a barrel before falling back somewhat to trade at $108.84 a barrel by early afternoon in European trading on the New York Mercantile Exchange.

But even that later level was 61 cents higher than the previous record high set Monday, reflecting oil's seemingly inexorable march toward the psychologically significant $110 a barrel mark.

On Monday, crude futures rose $2.75 to settle at a record $107.90 a barrel.

The dollar slipped as crude climbed, with the euro notching another record high against the U.S. currency. It was up by more than a cent in morning trading compared to late Monday in New York, fetching $1.5495.

Speculation that rising prices for oil and other commodities will offset the falling dollar has driven oil's rally from $87 a barrel in January.

The dollar has fallen to three-year lows against the yen and the head of the European Central Bank expressed concern Monday about the "disorderly movements" of exchange rates.

"This surge to new records is driven by the speculative and large funds moving money into commodities. It's primarily a U.S. dollar and inflation play by financial investors," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Oil's growing strength came amid warnings that there were no signs of relief on the immediate horizon.

The International Energy Agency said Tuesday that current high oil prices will likely be underpinned by brisk demand in China and other emerging markets.

$100-a-barrel crude prices continue to chip away at oil consumption in the United States and other developed countries, the Paris-based agency said in its monthly report.

As it has in recent months, the IEA revised down 2008 crude consumption in the U.S., Europe and other developed markets, forecasting a drop of 190,000 barrels a day to 49.3 million barrels a day.

In past years, falling demand in rich countries delivered some relief from high oil prices.

But today, most of the oil demand growth is coming from China, India and other fast-growing emerging markets, where consumers are largely protected from the effects of high oil prices because of fuel subsidies that reduce incentives for conservation.

Many analysts believe speculative investing attracted by the weak dollar is the primary reason oil has risen so far so fast in recent months. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling. And expectations are growing that the U.S. Federal Reserve will cut interest rates at its policy planners' next meeting March 18.

"Lower interest rates would mean increasing liquidity, which means a further weakening of the U.S. dollar and rising U.S. inflation," Shum said. "What that means for investors is that they therefore move their money into commodities as a hedge against inflation."

The price jumps came despite forecasts of builds in U.S. oil stocks.

U.S. Energy Information Administration releases its short-term energy outlook later Tuesday and weekly oil and product inventory data on Wednesday. These indicators, along with the Commerce Department's retail sales data release on Thursday, are traditionally used as cues for oil prices, though their impact has been muted lately.

A Dow Jones Newswires survey of analysts found an average forecast of a 1.7 million barrel increase in oil inventories for the week ending March 7, a 100,000 barrel increase in gasoline stocks and a 2 million barrel draw in distillate inventories.

Many analysts believe the rise in crude prices is not supported by the market's underlying fundamentals, noting that supplies are generally rising while demand is falling.

"Crude oil futures' relentless advance is a price bubble and certainly, a sharp pullback cannot be ruled out," Shum said.

"What may at some point trigger investors to exit oil is perhaps a build up of poor economic data out of the U.S.," he added. "That may be enough of a trigger to refocus attentions on the U.S. and slow oil demand growth there."

April heating oil futures rose 2.11 cents to $2.9945 a gallon (3.8 liters) while April gasoline futures were basically steady at $2.7220 a gallon.

April natural gas futures added over 5 cents to $10.075 per 1,000 cubic feet after settling at $10.024 on Monday, the first time a natural gas contract has closed above $10 since January 2006.

Natural gas was following oil higher, but also rising in anticipation of cooler temperatures across the U.S. Midwest and Northeast, analysts said.

In London, Brent futures followed the lead of benchmark crude, rising 87 cents to trade at $105.03 a barrel.

Oil Is Little Changed Near a Record as Investors Buy Futures

2008-03-10T21:22:00.000-07:00

Crude oil was little changed after rising above a record $108 a barrel in New York yesterday as investors bought commodities because of higher returns than those of financial markets.

Commodities have outperformed stocks as oil, industrial metals and wheat prices rallied this year, while the S&P 500 and Dow Jones Industrial Average dropped. More pension funds and other money managers plan to boost commodities investments in the next three years, Barclays Plc said yesterday.

``There's increased uncertainty in equity markets, debt markets and of course property markets,'' said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``The oil market has the best long-term value of any commodity because of very strong ongoing demand, so the funds are switching from other asset classes.''

Crude oil for April delivery was trading at $107.82 a barrel, down 8 cents, in after-hours electronic trading on the New York Mercantile Exchange at 11:17 a.m. in Singapore. Yesterday, the contract rose $2.75, or 2.6 percent, to close at a record $107.90 after surging to $108.21, the highest since trading began in 1983.

Brent crude for April settlement traded unchanged at $104.16 a barrel on London's ICE Futures Europe exchange. Yesterday, it climbed $1.78, or 1.7 percent, to close at an all- time high of $104.16 after reaching $104.42, an intraday record.

Investments in commodity hedge funds rose to $104 billion at the end of 2007 from $73 billion in the first seven months of last year, according to data from Singapore-based research company Eurekahedge.

Barclays Survey

Thirty-four percent of about 260 investors surveyed at a conference in Barcelona last week said that more than 10 percent of their portfolios would consist of commodities in the next three years, Kevin Norrish, director of commodity research at Barclays, told reporters in London yesterday. That's up from 22 percent of those surveyed a year earlier and 19 percent in 2006, he said.

``Since the credit crisis started, there has not been a better asset class than commodities,'' Norrish said. Investments in the commodity market totaled $178 billion last year, he said.

The worst U.S. housing market in more than a quarter of a century, fueled by $188 billion in losses by Wall Street banks, and a decelerating economy have contributed to a plunging dollar and pushed investors to buy oil, which has held its value better than the dollar.

The dollar traded at $1.5354 per euro at 11:11 a.m. Singapore time. The U.S. currency touched $1.5459 late last week, the weakest level since the euro's debut in 1999.

Fund Buying

``The weak dollar is driving the movement of money into commodities,'' said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. ``Money always looks for better returns.''

Hedge-fund managers and other large speculators increased net-long positions, or bets on higher prices, in the week ended March 4, the Commodity Futures Trading Commission said.

``There's a heck of a lot of interest in the oil market at the moment,'' Australia and New Zealand Banking's Pervan said. ``It's quite evident when you look at the open interest on futures.''

Open interest is the total number of futures contracts that have not been closed, liquidated or delivered.

U.S. crude-oil inventories rose 1.63 million barrels last week, according to the median of 10 responses in a Bloomberg News survey. Stockpiles increased in seven of the previous eight weeks, Energy Department figures showed.

U.S. gasoline stockpiles are at their highest level since 1994. Inventories probably climbed 250,000 barrels from 234.3 million barrels the week before, according to the survey.

``Because the pricing is increasingly diverging from the fundamentals, there is a strong risk that the price bubble may burst sooner for oil than for other commodities,'' said Purvin & Gertz's Shum. ``At some point, there will be a trigger and it may be due to a buildup of bad economic news out of the U.S., where investors will exit oil.''

Gusher for Marathon Oil boss - $13.1 million

2008-03-10T21:21:00.000-07:00

Marathon Oil chief executive Clarence P. Cazalot Jr. saw his total compensation rise 53% to $13.1 million in 2007, a year in which the company's profit fell but its share price climbed, according to an analysis of a proxy statement filed Monday.

Cazalot's pay package rose from the $8.5 million he got in 2006, according to Marathon's filing with the Securities and Exchange Commission.

One of the big differences was that Cazalot, 57, received $6.26 million in incentive-plan and other bonuses for 2007, compared with a $3.2 million bonus the year before.

The remainder of Cazalot's 2007 package was a $1.3 million salary, up from $1.2 million in 2006; stock options valued at $5.2 million when they were granted May 30; and $326,983 for a variety of perks that include use of a company airplane, club memberships and contributions to deferred compensation plans.

The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.

The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC.

Big Oil's big four

Marathon Oil Corp. (MRO, Fortune 500) is the fourth-largest U.S. integrated oil company, meaning it's involved in exploration and production as well as refining and marketing. The nation's top three are Exxon Mobil Corp. (XOM, Fortune 500), Chevron Corp. (CVX, Fortune 500) and ConocoPhillips (COP, Fortune 500), respectively.

Cazalot, Marathon's CEO since 2002, was by far the Houston-based company's highest-paid official among five company executives listed in the report.

In its proxy, Marathon said it based part of Cazalot's compensation on certain company metrics, including its annual stock performance against peers in the Amex Oil Index. The company said its stock price rose 26 percent in 2007, ranking it fourth among 13 companies in the index.

That was down from 52 percent growth in 2006.

For all of 2007, Marathon's earnings fell 24% to $3.96 billion from $5.23 billion a year earlier. Full-year revenue dipped to $65.21 billion from $65.45 billion in fiscal year 2006.

Marathon's profits were hurt in the second half of 2007 by sharply lower margins at its refineries, project delays and higher costs. The refining margin pressure was driven mostly by high crude prices - a factor that crimped earnings at several oil producers with refining operations.

Still, the company said in its proxy, "Marathon had a very good performance in 2007."

Marathon shares gained 45 cents to $51.91 Monday. They've traded in a 52-week range of $43.24 to $67.04.

Oil Bubbling Up On Dive In Dollar

2008-03-10T21:20:00.000-07:00

As the dollar falls and stocks swoon, investors are pumping up prices for oil, along with other commodities, as they seek safe havens. With OPEC holding the line on production, it looks like there’s no end in sight for the uptrend in black gold.

On Monday, light sweet crude for April delivery rose $2.75 to settle at a record $107.90 on the New York Mercantile Exchange after earlier hitting a new intraday record of $108.21.

“I don’t see a bottom right now,” said Georges Yared, an analyst at Yared Investment Research. “Not until the stock market calms down.”

Yared says he wouldn’t be surprised if the Federal Reserve pre-emptively cut rates before its March 18 meeting to stem the bloodletting. “The Fed wants to stay in front of this instead of being reactive as they have been in the past,” Yared said.

In the meantime, pension funds and hedge funds are betting on higher commodities prices.

But surging commodities have a downside too: inflationary concerns may keep the Fed from slashing key rates by as much as investors would like.

Exchange-traded funds that focus on oil stocks rose strongly Monday.

The United States Oil Fund (amex: USO - news - people ) rose 2.3%, or $1.90, to $85.63, while Barclay’s BK (nyse: OIL - news - people ) gained 1.7%, or $1.07, to $63.42. Macroshares Oil Up Tradeable (amex: UCR - news - people ) jumped 2.6%, or 80 cents, to $31.05; Powershares DB Oil Fund (amex: DBO - news - people ) shot up 1.6%, or 61 cents, to $39.28; and Powershares DB Energy Fund (amex: DBE - news - people ) inched upward 1.3%, or 52 cents, to $40.13.

The iShares Dow Jones Transportation Average (nyse: IYT - news - people ), an ETF that tracks the performance of the transporation index, fell 1.8%, or $1.47, to $79.08, as investors pulled out on concern over higher oil prices.

Oil above 107 dollars in Asian trade but off record levels

2008-03-10T21:19:00.001-07:00

Oil eased from record levels in Asian trade Tuesday but underlying momentum remained strong because of the weak greenback and supply concerns, dealers said.

In morning trade, New York's main contract, light sweet crude for April delivery fell 19 cents to 107.71 dollars a barrel from its record finish of 107.90 dollars in US trading hours Monday.

The contract had surged to a new trading high of 108.21 dollars in New York Monday as investors bet on oil prices to continue marching north on expectations the greenback would remain weak.

London's Brent North Sea crude for April delivery dropped 11 cents to 104.05 dollars a barrel. The contract hit a trading high of 104.42 dollars Monday and closed at a new record 104.16 dollars.

OPEC's decision last week to keep its daily production levels unchanged despite pressure from the United States, the world's biggest energy user, was also lending support to the market, dealers said.

Investors are also rushing into the commodities markets, including oil, which they regard as safe havens, they said.

"There's increased nervousness about other asset classes so I think we are seeing by default, funds flowing into commodities (including oil)," said Mark Pervan, a senior commodity strategist with Australia's ANZ bank in Melbourne.

"It is really seen as a safe haven at the moment so there is a lot of momentum which can continue to push prices higher," he said.

Meanwhile, US President George W. Bush's administration has signaled that Vice President Dick Cheney personally would urge OPEC kingpin Saudi Arabia to convince the cartel to boost output.

The US economy is seen as the worst hit if oil prices continue to skyrocket because of its heavy dependence on imported oil and the weak greenback exacerbates the situation, dealers said.

"The US market is really feeling the pinch," said Pervan. "One is slowing growth and they bear the full brunt of high prices in terms of US dollars."

The weak US currency, which fell to a new low of 1.5464 against the euro last week, encourages demand for dollar-priced commodities like oil because it makes them cheaper for buyers using other currencies.

NRMA to track Sydney petrol prices

2008-03-10T21:19:00.000-07:00

The NRMA has launched a new online service that will track petrol prices across Sydney.

It comes as the price of crude oil has reached a new record, climbing to $108 US a barrel.

NRMA president Alan Evans says he hopes the online service will ensure customers pay lower prices over Easter.

"I hope it'll make this whole system more open and honest and transparent, and put pressure on the oil companies to make sure they don't jack prices up leading to Easter and the holiday period when we've traditionally seen price increases in petrol," he said.

"This will keep the pressure up so motorists can get a better deal at the pump."

Congress misses chance to cut oil dependence

2008-03-10T21:18:00.000-07:00

As Rome burned, Nero fiddled away. As the price of oil continues to rise, Congress fiddles away.

The wilderness of the north slope of Alaska is known to contain large quantities of petroleum, as are offshore sites to our east, south and west. They likely would not satisfy our entire need, but they certainly would increase the world supply and put downward pressure on the price of oil and its derivatives. These new sources, along with the Canadian output, would make us less dependent on oil from the volatile and monopolistic Middle East supply.

Yet our Congress continues to play politics by predicting environmental gloom as those cruel and greedy oil companies pillage the environment. Incidentally, Congress reaps as much profit from gasoline as the oil companies (6 percent) with no investment at risk.

I believe that all three of the top candidates for president have spoken out against drilling in these sites. I think most Americans would agree that we ought to pursue these resources while we simultaneously pursue market-driven conservation technologies.

Congress, stop fiddling around.

Rising diesel costs may sideline even more truckers

2008-03-10T21:15:00.001-07:00

Harold E. Funderburk has noticed more and more big rigs parked on the side of the road with "for sale" signs in their windows.

"They are just giving it up, selling their stuff and going to work for some big (trucking) company," the Raleigh, N.C. trucker said.

The high price of regular gasoline usually gets all the attention, but the price of diesel has been steadily climbing. This week, diesel nationally hit a record $3.68 a gallon.

If prices keep climbing, Funderburk said, he will park his semi, too.

"I'm going to make one more trip," Funderburk, 58, said this week. "When I get back, I'll make my decision."

The average tractor-trailer gets just 5 to 6 miles per gallon, and, at current prices, it can cost more than $700 to fill the empty tanks on most long-haul trucks. That's too much for many truckers to keep hauling goods.

Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association in Grain Valley, Mo., estimates as much as 10 percent of the association's 161,293 members have parked their trucks.

"Right now they are likely spending $70,000 to $100,000 a year just for fuel," Spencer said. "We are talking about losing half of their net income for the year. They simply cannot survive."

The ramifications go far beyond the trucking industry. With most of this country's goods transported by truck, fewer drivers could lead to strained supplies while higher fuel costs can be passed along to consumers who are already paying more for food and other goods.

The high fuel cost is a relatively new problem for trucking companies. Until a few years ago, diesel fuel - a byproduct of petroleum - was generally less expensive than regular gas. But government mandates to make diesel fuel cleaner and higher oil prices have steadily pushed up the price of diesel. The higher costs coupled with a slowing economy have been hard on the entire trucking industry, but especially so on small companies and independent drivers.

And it doesn't look as if there is going to be price relief any time soon, said Tom Crosby, an American Automobile Association spokesman.

Crosby said that the nation's already-strained oil supply has been worsened by a temporary refinery shutdown in Texas and minor glitches at other production sites

The weak economy isn't helping truckers, either.

With the downturn in the housing market, there are fewer construction supplies to ship. And consumers are starting to put the brakes on spending, which means less cargo to move across the country.

Fewer shipments have led to longer waits for a load to drive back home. Layovers also add to their travel costs since drivers, who commonly sleep in their cabs, have to run their truck engines throughout the night to keep warm.

Tom V. Lancaster, an independent trucker from Cumberland, Md., said he usually tries to haul close to home in case he has to wait for a load. But on a recent weekday, he was at a truck stop in Dunn, N.C., near Interstate 40 and I-95, preparing for an overnight stay.

He used the down time to do some light maintenance on his truck - one way he saves money - while he waited to hear whether he'd get another load. He had to get one that would cover the $315 in gas he figured it would cost to spend the night and make the drive.

Some truckers have invested in auxiliary power units to use at night to heat their trucks. But Lancaster hasn't been able to afford one; they range in price from $1,500 to $7,000.

With fewer jobs, some small companies are finding it hard to keep their drivers busy.

Kerry Ramsey, owner of K&M Ramsey Trucking in Fayetteville, N.C., parked one of his five trucks when a driver left. He doesn't plan to replace him until business picks up.

"I've got five families depending on me for income," Ramsey said. "You try to save as much as you can because the trucking expenses have gone plumb crazy."

Oil Price and Market, China’s Rate of Inflation Is Highest in 11 Years

2008-03-10T21:15:00.000-07:00

Consumer prices in China surged to a 8.7 percent annual rate in February from a 7.1 percent rate in January, the fastest pace of increase in more than 11 years, China’s National Bureau of Statistics announced on Tuesday morning.

Food prices were the biggest contributor, up 23.3 percent from February of last year. Snowstorms in China damaged harvests and interfered with food deliveries to cities, while rising global commodity prices made imports more expensive.

“The current price hikes and increasing inflationary pressures are the biggest concern of the people,” Prime Minister Wen Jiabao said in a speech last Wednesday.

The Chinese government imposed complex price controls in January on a range of farm products, like cooking oil and grain. In a speech on Sunday, President Hu Jintao of China urged local governments to maintain stable prices for vegetables and other perishables, which suffered particular losses during the storms.

But some economists saw the consumer price index’s acceleration in February as a sign of a broader problem in China that could be harder to fix.

The Chinese government has been issuing vast sums of Chinese currency each week so as to buy up dollars from the country’s trade surplus and investment inflows, while Chinese banks have been lending aggressively, creating a surge in circulating money.

“While we believe the snowstorm contributed to the high February reading, we believe that rapid money supply growth has been the main driver of high and rising inflation,” said Yu Song and Hong Liang, two Goldman Sachs economists, in a research note.

China announced separately on Monday that producer prices were up 6.6 percent in February from a year earlier, compared with 6.1 percent in January.

Montello Suspends Drilling Operations After Encountering Hydrocarbons in Morgan Highpoint # 3 Test Well

2008-03-10T10:16:00.002-07:00

Montello Resources Ltd. (TSX VENTURE:MEO) announces that the participating interests in the Morgan Highpoint # 3 and # 4 Test Wells are as follows: Montello, as Operator, is paying 15% of all costs associated with both the Morgan Highpoint # 3 and # 4 Test Wells to earn a 35% interest in the associated production spacing units. Austin Developments Corp. (TSX VENTURE:AUL) is paying 20% of the costs to earn a 30% interest, Blackrock Petroleum Corp. (OTCBB:BRPC) is paying 60% of the costs to earn a 30% interest and Park Place Energy Corp. (OTCBB:PRPL) is paying 5% of the costs to earn a 5% interest.

The Morgan Highpoint # 3 Test Well, located in Morgan County, Tennessee is strategically located approximately one mile west of the John Bowen # 1 & # 2 Wells and one mile north-west of the Howard White # 1 Well. From a geological standpoint this is significant as the Howard White # 1 Well, that was drilled in 2002, resulted in a Blowout flowing over 500 barrels / hour of light crude oil (12,000 barrels of oil per day for two days) before being capped. Environmental and legal issues relating to the Blowout have to date precluded the re-drilling of the Howard White # 1 Well.

After encountering hydrocarbons below the intermediate casing in the Morgan Highpoint #3 Test Well, as a precautionary measure, Montello has secured the well and suspended operations. The drilling rig has been released and moved to the Morgan Highpoint # 4 Test Well location. Montello is now mobilizing additional safety and under balanced equipment to be placed on the Morgan Highpoint # 3 Test Well after which drilling operations will recommence.

Montello and the joint venture partners are encouraged to have encountered hydrocarbons in the Morgan Highpoint # 3 Test Well. Although we cannot definitively state that we have a commercial well, we are pleased with the results that have been encountered in the Morgan Highpoint # 3 Test Well to date. It is anticipated that the Morgan Highpoint # 4 Test Well will spud this week once all regulatory approvals are in place.

SAGA Oil ASA: Fourth Quarter 2007 Report

2008-03-10T10:16:00.001-07:00

Stavanger, 10 March 2008: During the fourth quarter of 2007 SAGA Oil reached an important milestone starting commercial production of oil from its Russian operation. In addition focus has been on continuing the drilling program and on well completion to build up production. SAGA Oil also entered into agreements regarding sale of oil and going into 2008 the company is well positioned to grow its Russian operations both in terms of production as well as financially.

During the fourth quarter two exploration wells were drilled on the Petrovsky field, confirming that the preliminary 6.4 million BOE extractable recourses are in place. To further accelerate SAGA Oil's growth, the company in February entered into agreement to purchase the 637 square kilometre Kudryashovsky license in the Russian Orenburg region. The license has preliminary extractable reserves of 60.8 million BOE, confirmed by the Russian state. Combined with the positive development seen during the fourth quarter it provides valuable experience and establishes SAGA Oil as a player in the emerging Russian oil and gas market.

"We are pleased with the development seen during the fourth quarter and the basis it has formed for future growth. However, the start of 2008 has not been according to plan, but these problems have been solved and we expect production to pick up significantly during March and the spring. Through the acquisition of new acreage we also form a solid basis for future growth both in reserves and production" says President & CEO Malvin Høydal.

The company had revenues of NOK 2.00 million (NOK 2.68million) in the fourth quarter and a negative operating result of NOK 18.1 million (NOK 6.6 million) in the period. The results reflect the generally higher activity and cost level preparing for production start-up. SAGA Oil expects revenues to increase going forward.

During the first two months of 2008 external factors have slowed down SAGA Oil's oil production. Extreme weather conditions with strong winds and temperatures below -35 Celsius led to work on the wells slowing down and overall causing delays. However, these temporary problems have now been solved and the company expects further positive development over the coming months. The company produced 12,150 barrels of oil in January and 4,311 barrels of oil in February and expects to increase the production significantly during the coming months. SAGA Oil has set a production target of 3,500 barrels a day by the end of 2008.

Exall Announces Exceptional Flow Test on Oil Discovery

2008-03-10T10:15:00.002-07:00

Exall Energy Corporation (TSX:EE)("Exall" or the "Company") is pleased to announce preliminary production testing results from the previously announced Marten Mountain horizontal oil discovery (see Press release dated February 21, 2008):

- Extended test rate of 1,585 barrels of 40 degrees API sweet oil and 575 MCF of gas per day at 850 kPa flowing pressure (1,680 BOEPD)

- Average test rate once well was choked to 21.7 mm was 1,135 barrels and 475 MCF of gas per day (1,214 BOEPD)

- Equipping the well and road access construction is proceeding on schedule

- Second horizontal well and nearby vertical well planned for Q3

The well, located at 102/14-1-75-6W5, was rig released on February 23, 2008. On completion, the well flowed at an initial stabilized rate of 1,585 barrels of 40 degrees API sweet oil per day with associated solution gas of 575 MCFPD (1,680 BOEPD). The well flow rate was then restricted through a 21.7 mm choke due to a lack of adequate tankage and trucking from the site to handle the large volume of oil. The average flow rate during the 48 hour test period was 1,135 BOPD and 475 MCFPD. The produced oil had an average water cut of less than 1%.

The allowable production rate of the well, as prescribed by ERCB Regulations, is expected to be 285 BOPD (net 170 BOPD to Exall BPO and 190 BOPD APO). Exall expects that the well will be capable of long term production at this restricted rate. Exall is equipping the well for production into temporary facilities until break-up and evaluating permanent tie-in options. The Company is also pursuing water injection options which allow the well to produce at capacity under Good Production Practice.

Exall plans to drill a second horizontal well from the same surface location and a nearby vertical well as soon as surface access permits, which will likely be in the third quarter of 2008. Exall is the operator and holds a 59.338% working interest BPO and 66% APO in the well and a 66% WI in 6,080 acres of P&NG rights in lands surrounding the well. Exall is currently producing approximately 200 BOEPD and this discovery will have a significant impact on Exall's oil reserves, production, and cash flow.

Exall Energy Corporation is a Canadian junior energy company formed in November, 2006 and engaged in the exploration and development of oil and natural gas in Alberta, BC, Texas and the UK North Sea.

Please visit Exall Energy's website at: www.exall.com.

TXCO Resources expands Texas holdings for nearly $20M

2008-03-10T10:15:00.001-07:00

TXCO Resources Inc. bought additional acreage and oil and gas reserves in East Texas for $19.6 million.

San Antonio-based TXCO (NASDAQ: TXCO) bought the oil and gas leases in the Fort Trinidad Field through a series of several private transactions. The company now controls 36,498 gross acres with joint venture partners, or the equivalent of a net 20,526 acres.

Before this latest transaction, TXCO controlled 18,000 gross acres, or 8,000 net acres.

The new holdings also include 8.1 billion cubic feet equivalent of proved reserves at year end, bought at an average cost of $2.06 per thousand cubic foot equivalent.

TXCO first entered the Fort Trinidad Field as part of its 2007 buy-out of Output Exploration LLC. The field encompasses parts of Houston, Madison and Leon counties in East Texas. TXCO is targeting the field's Glen Rose shoals. Its first Glen Rose shoal well has already begun producing while a second well is currently drilling. TXCO expects to have a second rig working in this area by mid-April.

"Fort Trinidad is a good fit with our core, Maverick Basin area because it it prospective from similar formations that we know well, the Glen Rose, Buda, Austin Chalk and Eagleford/Woodbine formations," TXCO Chairman and CEO James E. Sigmon says.

TXCO is an independent oil and gas company with operations in the Maverick Basin, the onshore Gulf Coast region and the Marfa Basin in Texas and the Midcontinent region of western Oklahoma.

TransGlobe Energy Slides To Loss In Q4 - Update

2008-03-10T10:12:00.001-07:00

TransGlobe Energy Corp. (TGA, TGA.TO), an oil and natural gas producer, announced financial results for the fourth quarter, reporting a swing to loss, despite increased revenues.

The Calgary, Canada-based TransGlobe Energy's net loss for the fourth quarter was US$ 719 thousand or US$ 0.01 per share, compared to net income of US$ 4.73 million or US$ 0.08 per share in the prior-year quarter. The company posted comprehensive net income of US$ 3.28 million, compared to US$ 4.67 million in the corresponding quarter of 2006.

Net loss for the fourth quarter resulted from hedged prices being lower than market prices at the end of the reporting period. This is a non-cash event and losses, without hedging, totaled US$ 7.1 million or US$ 0.10 per share.

Quarterly revenues were US$ 22.66 million, up from US$ 17.72 million in the year-ago quarter. Net operating income for the quarter surged to US$ 18.71 million from US$ 11.42 million in the comparable quarter of the prior year.

Oil and gas revenues for the quarter were US$ 47.70 million, compared to US$ 27.03 million in the year-ago quarter. Oil and gas revenues, net of royalties, climbed to US$ 29.34 million from US$ 17.65 million in the same quarter of 2006.

The company posted expenses of US$ 18.09 million, higher than US$ 10.43 million in the same quarter of 2006.

For the full year 2007, the company's net income plunged 51% to US$ 12.80 million or US$ 0.21 per share from US$ 26.20 million or US$ 0.43 per share in the prior year. Comprehensive income for the quarter was US$ 21.36 million, down from US$ 25.77 million in the earlier year.

Revenues for the full year were US$ 80.12 million, compared to US$ 70.30 million last year. Operating income was US$ 60.01 million, compared to US$ 49.86 million in the earlier year.

TransGlobe Petroleum International Inc. or TGPI, a wholly owned subsidiary of TransGlobe Energy Corp., acquired all of the shares of Dublin International Petroleum Ltd and Drucker Petroleum Inc. for US$ 59.0 million, plus working capital adjustments, as at July 1, 2007. On February 5, 2008, TGPI acquired all of the shares of GHP Exploration Ltd. for US$ 40.2 million, plus working capital adjustments, as at September 30, 2007.

TGA is currently trading at $5.20, down $0.17 or 3.17%, on a volume of 0.22 million shares on the Nasdaq.

TGL.TO is currently trading at US$ 5.17, down US$ 0.16 or 3.00%, on a volume of 69,300 shares, on the Toronto exchange.

Chevron Corp. to start work on big Gulf of Thailand gas project

2008-03-10T10:12:00.000-07:00

Chevron Corp. and two partners will start work on a $3.1 billion natural gas project in the Gulf of Thailand.

David O'Reilly, Chevron's chairman and CEO, traveled to Bangkok in late October to extend leases the San Ramon company picked up when it bought Unocal in 2005.

Now the company will start building the Platong Gas II project, which should start working in the first quarter of 2011. It will put out about 420 million cubic feet of natural gas per day.

Chevron hopes to eventually boost gas production from its leases in this area to 1 billion cubic feet per day. The leases are in the center of the gulf bounded by Thailand on the north and west and Cambodia and Vietnam on the east. The Unocal contracts from the Thai government were set to expire in 2012 and have now been extended to 2022.

Platong and the other lease areas -- named Erawan, Satun, Funan, Banpot, Plamuk, Yala and Pla Daeng -- are along a rough north-south line to the west of another area where Cambodia and Thailand have disputing claims going back to 1972.

Chevron (NYSE: CVX) shares the leases with Mitsui Oil Exploration Co. and PTT Exploration and Production Public Co. Chevron has a 69.8 percent stake in the Platong Gas II project, and is also its operator. Along with its venture partners, Chevron, which has about 180 platforms in the gulf, has paid about $3.5 billion in royalties to Thailand since 1981.

Chevron has 195 platforms in the Gulf of Thailand producing both oil and natural gas.

India to set up national electricity fund

2008-03-10T10:10:00.000-07:00

India said its planning document has recommended the setting up of a national electricity fund to improve the distribution system.

Power Minister Shushil Kumar Shinde said Monday the Planning Commission had intimated that the 11th plan document, approved by the national development council, recommended the setting up of a national electricity fund for supportive measures to bring about major improvement in the distribution system.

"It has been decided that plan panel will explore the option of establishing a national electricity fund to provide soft loans to states to improve their distribution infrastructure," Shinde said while responding to a question in the upper House of Parliament.

Addax Petroleum Presents At Upcoming FirstEnergy / Societe Generale Global Energy Conference

2008-03-10T10:09:00.000-07:00

Addax Petroleum Corporation (TSX: AXC and LSE: AXC) ("Addax Petroleum" or the "Corporation") announces that Mr. Michael Ebsary, Chief Financial Officer, will be presenting at the FirstEnergy / Societe Generale Global Energy Conference in London, on Monday March 17, 2008 at approximately 3:50 p.m. London U.K. Time / 11:50 a.m. Eastern Time.

Investors are invited to listen to the live webcast via the following link: http://remotecontrol.jetstreammedia.com/14831

The presentation slides will be available prior to the presentation on Addax Petroleum's website at http://www.addaxpetroleum.com/.

Petroleum Feeds Patriarchy

2008-03-10T10:08:00.000-07:00

Our gas-guzzling ways have long been associated with a variety of problems, but disturbing evidence now points to a new dimension of our love affair with petroleum: Oil consumption and high oil prices hurt the political, social and economic development of millions of women in oil-producing nations.

You read that right. The more gas you pump and the higher oil prices get, the more likely you are to harm women's empowerment.

The surprising finding, based on more than four decades of data from 169 countries, provides a novel explanation of why women in Middle Eastern countries such as Saudi Arabia and the United Arab Emirates still do not have the right to vote. Oil wealth, not Islam, is the primary reason that these nations have regressive gender policies, said political scientist Michael Ross at the University of California at Los Angeles.

As implausible as the connection between oil wealth and gender rights might seem, Ross's work is based on a widely observed pattern: As oil prices soar to more than $100 a barrel, oil-producing countries get rich atop a tidal wave of foreign currency. The tsunami of cash strengthens their currencies and makes it cheaper for them to buy everything from textiles to cars from other nations, instead of manufacturing such goods at home.

As a result, the economies of oil-producing nations invariably have stunted manufacturing sectors while boosting construction and services sectors. This pattern is now so familiar that it has a name -- the "Dutch Disease" -- following the reshaping of the Dutch economy after natural gas discoveries set off a boom in the Netherlands.

Ross's insight is that this realignment punishes women, because low-wage manufacturing jobs -- especially in the textile industry -- have long been the entry point into the workforce for millions of poor women across the world. Oil booms cause these jobs to vanish. By contrast, the boom in construction helps men, because the industry is heavily male-dominated. Oil booms do create retail jobs, but in many countries these are also closed off to poor women, either because they are uneducated or because traditional mores frown on women interacting with strangers.

The loss of jobs has profound consequences on women's political engagement and power. Several studies show that across the world, leaving home and entering the workplace produces greater political awareness and participation among women. These, in turn, help produce egalitarian family and inheritance laws, and increased voting, economic and legal rights.

"Patriarchal norms are often very deeply embedded in society, and it takes a very powerful force to begin to break them up," Ross said. "Women's employment in these industries has historically been that powerful force, that foot in the door, that first rung on the ladder."

Ross's data show that when a nation's oil profits soar, the number of women in the workforce invariably declines the next year. In turn, this leads to reduced political clout. For every $1,280 increase in per capita oil profits, Ross shows there is a 2 percent decrease in the number of elected female leaders, an effect that is powerful because it grows cumulatively over time. Oil wealth -- and perhaps mineral wealth in general -- similarly explains many other social, economic and political disparities between men and women in nations ranging from Azerbaijan and Russia to Chile, Botswana and Nigeria.

Ross is not saying oil wealth is the only factor behind women's rights. Rich countries generally have more equality than poor countries, and the world as a whole is moving toward greater equality.

On average, Islamic countries have less gender equality than non-Islamic countries, but oil turns out to be a more important factor than religion in these countries. When Ross compared Muslim countries, he found that oil-poor Tunisia and Morocco had much higher percentages of female legislators compared with oil-rich Algeria. The richest oil producers generally had the most regressive gender laws on issues as diverse as voting rights and veils.

"Oil is a mixed blessing," said Ross, who published his study last month in the American Political Science Review. "It would be an exaggeration to say it is a curse, but it has unexpected and perverse effects, and one of those is to short-circuit the process that leads to greater gender equality."

Reducing economic opportunities for women in oil-producing nations has far-reaching consequences -- for one thing, a lack of jobs is associated with increased support for religious fundamentalism. In one analysis of 18 Muslim nations, political scientists Lisa Blaydes and Drew Linzer found that women who lacked financial independence and job opportunities were systematically more likely to support religious movements that hearkened back to an imagined golden age.

"Women who don't have good job opportunities create economic security for themselves by becoming better marriage-market candidates," said Blaydes, who works at Stanford University. "They try to show how pious they are because there is value for piety on the marriage market. When there is a large gap between men's and women's wages, you see higher support for fundamentalism cross-nationally."