Attackers armed with AK-47 rifles and dynamite blew up a police houseboat on Bonny Island, an oil and gas export hub in Nigeria's southern Niger Delta, a police spokeswoman said on Saturday.

No oil and gas facilities were damaged. Royal Dutch Shell has an oil export terminal at Bonny and the Nigerian Liquefied Natural Gas company has its installations there.

Ireju Barasua, a police spokeswoman in the Rivers state capital Port Harcourt, said the attackers blew up a marine police houseboat, torched some cars and also aimed explosives at the compound of the traditional ruler of Bonny. One man was seriously hurt.

The raid took place in the middle of the night near the main jetty on Bonny and the attackers fled in speedboats before dawn.

A security expert working for an oil major said the suspects were a local group that had recently written to state and federal authorities complaining that oil company funds meant for development of the region had been diverted by politicians.

The authorities had tried to negotiate with community chiefs to avert a crisis, but the attempt had failed and local youths had threatened attacks, the source said.

Such conflicts are frequent in the Niger Delta, home to Africa's biggest oil industry which produces 2.1 million barrels per day.

Under corporate social responsibility programs, oil firms provide funding for what they say are development programs, but human rights activists say the money often gets used to pay off extortion racketeers, or is pocketed by politicians.

Competition for oil money has fuelled many local wars between communities in the delta and numerous revenge attacks on police and troops, seen as agents of a hostile state.

In some cases attacks are carried out by politically motivated rebels pressing for greater control of oil revenues by impoverished local communities.

But more often, raids are the work of criminal gangs involved in extortion rackets, turf wars with rival gangs or revenge attacks sponsored by politicians.

Oil futures retreated from a new overnight record above $103 as the dollar gained strength and Turkish forces withdrew from northern Iraq.

The slumping dollar and tension in the oil-rich Middle East have been among the factors in crude's dramatic 19 percent rise in February.

Still, many analysts believe any declines may be temporary and that oil is poised to rise above $103.76 a barrel. That's the price many believe to be oil's all-time high, on an inflation-adjusted basis, set in early 1980 during the Iranian hostage crisis.

Gasoline and diesel prices, meanwhile, continued to soar.

Gas prices rose 0.3 cent overnight to a national average of $3.164 a gallon, creeping closer to last May's record of $3.227 a gallon, according to AAA and the Oil Price Information Service. Diesel prices jumped 1.5 cents to a new record national average of $3.642 a gallon.

While most Americans fuel their cars with gasoline, most of the products they buy are transported by trucks, trains and ships that burn diesel. While gas prices are unlikely to rise as high as $4 a gallon, diesel may well pass that psychologically important level this spring, boosting prices of nectarines, computers, clothing and virtually every other consumer product, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J.

"It's everything that gets shipped," Kloza said of diesel fuel's impact on the economy. "That is the one that is much scarier."

Gas and diesel prices are following light, sweet crude oil, which spiked to a new record of $103.05 overnight before falling 75 cents to settle at $101.84 a barrel on New York Mercantile Exchange.

In London, Brent crude futures fell 80 cents to settle at $100.10 a barrel on the ICE Futures exchange.

Analysts cited profit-taking by investors who have bought into oil's recent runup for Friday's declines.

The dollar rose against the euro Friday, reversing one of the factors that has attracted huge flows of investment capital 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 falling. That logic tends to reverse itself when the dollar strengthens.

Also giving investors reason to sell was Turkey's decision to withdraw its forces from northern Iraq, which they invaded earlier this week in search of Kurdish rebels. Turkish attacks on Kurds in northern Iraq — and the concern that Kurds would retaliate by cutting off oil supplies — have helped propel oil to new records in recent months.

Traders also continue to fret over OPEC, which meets next week to consider production levels. The prospect that the Organization of Petroleum Exporting Countries might cut production has helped fuel oil's recent rise. But with prices holding above $100, most analysts now expect OPEC to hold production steady.

Despite oil's modest retreat Friday, many analysts believe the investment flows that have pushed prices higher this year are not about to dry up.

"We've just got a huge, huge speculative drive going on here," said Jim Ritterbusch, president of Ritterbusch and Associates, an energy consultancy in Galena, Ill. "The fresh buying brings in new buying."

Many analysts believe the underlying fundamentals of oil supply and demand do not justify such high prices. Some predict speculative investing could push oil prices as high as $120, while others argue prices have formed a bubble, and could crash back to the $70 range.

Other energy futures were mixed Friday. In other Nymex trading, March heating oil fell 0.59 cent to settle at $2.8397 a gallon while March gasoline futures rose 1.66 cents to settle at $2.5123 a gallon. Both contracts expired after the close of trading.

April natural gas futures fell 7.7 cents to settle at $9.366 per 1,000 cubic feet on the Nymex.

Addax Petroleum Corporation today confirms that it has signed an agreement with the Kurdistan Regional Government (KRG) amending the production sharing contract it holds together with Genel Enerji in respect of the Taq Taq license area in the Kurdistan Region of Iraq (the Taq Taq PSC).

The Taq Taq license area includes the Taq Taq field and the Kewa Chirmila prospect. The purpose of the amendments is to bring the Taq Taq PSC into conformity with the Oil and Gas Law of the Kurdistan Region - Iraq (the 'Oil and Gas Law') and Model PSC, including the royalty, cost recovery and profit share components.

Commenting today, Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said: 'We are pleased to be working closely and in a spirit of cooperation with our partners at the KRG to arrive at a result that is beneficial to all parties. The new terms of our Taq Taq PSC are now in line with the recently enacted legislation and our stakeholders will be pleased to know that our economic and operational interest is materially unchanged. The results from our appraisal campaign at Taq Taq to date have been extremely positive and we are encouraged by the exploration potential we are uncovering through seismic surveys. We look forward to continued strong relations with the KRG as we seek to implement a full field development program with the potential of first oil as early as next year.'

The review and renegotiations were conducted between the KRG, Genel Enerji and Addax Petroleum in accordance with Article 54 of the Oil and Gas Law which required review of the Taq Taq PSC by the Regional Council for the Oil and Gas Affairs of the Kurdistan Region - Iraq (the 'Regional Council'), taking into consideration the prevailing conditions when the Taq Taq PSC was originally entered into.

The most significant changes to the terms of the Taq Taq PSC include i) the combination of previously separate terms for the Taq Taq and Kewa Chirmila areas, including the synchronization of the government back-in rights at up to 20 per cent, ii) a reduction in the maximum Cost Oil recoverable in a given year, which is partially offset by an effective increase through an interim period that accelerates the recovery of the initial capital investment by the Contractor, and iii) the introduction of a 'R factor' in the Profit Oil calculation, which adjusts the financial returns to the Contractor and Government based on relative level of cumulative capital spending and cumulative revenue.

The ultimate financial impact of the amendments to the terms of the Taq Taq PSC is dependent on operational outcomes, including reserve, production and cost levels. However, the Corporation believes that under most of the likely scenarios and considering the further exploration potential of the PSC area, the amendments do not result in a material change to the financial or operational interests of Addax Petroleum.

Venezuela and the Italian oil company Eni have agreed to spend $10 billion to develop a large oil field in the prolific Orinoco Belt, site of Venezuela’s heavy oil deposits.

The joint-venture agreement, which was signed Friday in Caracas, comes a week after Eni and Venezuela’s oil company, Petróleos de Venezuela, known as Pdvsa, ended their disagreement over the 2006 nationalization of another oil field called Dación. The Italian company agreed to $700 million compensation, a much lower figure than it had originally sought.

The deal shows that despite a strongly nationalistic approach to its energy resources, Venezuela’s government is able to attract foreign investors to develop its large deposits of heavy oil.

For the last two years, Venezuela’s government has sought to gain a majority stake in its oil ventures with international companies. Most have agreed to the government’s new terms, becoming minority partners and paying higher taxes, recognizing that they have few alternatives.

One company, Exxon Mobil, has adopted the most aggressive approach, opting to shut down much of its operations last year, and seeking higher compensation from the government. Exxon recently won a court order freezing up to $12 billion in Venezuelan assets.

For Eni, the agreement is a small coup that allows it to enter a country with vast unconventional oil reserves. The Orinoco Belt is estimated to hold about 240 billion barrels of extractable heavy oil, nearly as much as Saudi Arabia’s proven deposits. The oil from the Orinoco, however, is more costly to extract than conventional oil and is harder to refine.

The Italian company will invest $4 billion in the joint project; $6 billion will come from Pdvsa.

“I have always felt it was important for us to be there,” Paolo Scaroni, Eni’s chief executive, said before the agreement was signed.

The field, Junin Block 5, is about 340 miles southeast of Caracas. According to Eni, it has already been tested by “several wells” and has a resource potential equivalent to more than 2.5 billion barrels of oil. Oil production from the field is eventually expected to reach 300,000 barrels a day.

Saudi Arabia's oil minister believes oil prices are set to stay above a minimum price of 60-70 dollars per barrel, signalling a new era for world energy markets, he said in an interview released Sunday.

"For a country like Saudi Arabia ... one of the most important sources of energy to look at and to develop is solar energy," Ali al-Nuaimi told French oil newsletter Petrostrategies.

He added: "One of the research efforts that we are going to undertake is to see how we make Saudi Arabia a centre for solar energy research and hopefully over the next 30 to 50 years we will be a major megawatt exporter.

"In the same way we are an oil exporter, we can also be an exporter of power."

Saudi Arabia produces more than 10 million barrels of crude oil a day.

Nuaimi said that Saudi Arabia was also set to invest in carbon capture and storage programmes to develop technology allowing carbon dioxide to be extracted from the atmosphere and stored underground.

"There are a lot of countries that are willing to cooperate with us," he said.

At a summit in Riyadh last November, Gulf OPEC members pledged 750 million dollars (500 million euros) to a new fund to tackle global warming through financing research for clean technologies, with the emphasis on carbon capture and storage.

OPEC, whose member countries together pump 40 percent of the world's oil, was expected to maintain its official output ceiling on Wednesday as crude prices trade at record highs above 100 dollars

OPEC President Chakib Khelil said the 13-member Organisation of Petroleum Exporting Countries would decide to either cut or hold its current daily output level of 29.67 million oil barrels when it meets in Vienna.

"Either we hold (output) steady or we cut in order to restore market balance and stability," Khelil, who is also Algeria's energy minister, said in a statement ahead of Wednesday's meeting.

OPEC members Iran and Venezuela are calling on the cartel to cut production when it meets in the Austrian capital, arguing that prices were likely to slide when demand for crude drops during the second quarter.

The March-June period coincides with warmer temperatures in the energy-hungry northern hemisphere, thus reducing demand for heating fuel.

But should crude futures remain close to historic highs by the time of Wednesday's meeting, the organisation would be unlikely to endorse a cut in production.

"I think we won't do anything if prices stay at this level," Libya's acting Oil Minister Chukri Ghanem told AFP on Friday.

At an extraordinary OPEC meeting on February 1 in Vienna -- called amid fears of a global economic slowdown -- the cartel agreed to hold its output quota, insisting the market was adequately supplied.

In sitting tight, the organisation ignored pleas from US President George W. Bush to increase production to help cool soaring prices which weigh on economic growth and push up inflation.

Oil prices had struck a record-high 100 dollars at the start of January. On Friday the price of New York crude hit a fresh peak of 103.05 dollars per barrel.

"Prices have been pushed higher this month (February) on geopolitical factors ... a weaker US dollar and suggestions that OPEC might agree to cut output at its next meeting," said Helen Henton, head of commodity research at Standard Chartered.

"With prices hovering around 100 dollars per barrel it will be politically difficult to officially endorse an output target cut, but in this event the members will likely begin to surreptitiously curb output ahead of weaker demand in the second quarter," she added.

The price of oil has doubled since the start of 2007 -- a major reason being soaring demand for energy from emerging economic powers China and India.

Another factor pushing up the price of crude has been unrest in oil producing countries, notably Iran and Nigeria, against a backdrop of tight supplies.

While US crude reserves are rising, oil exporting countries, with the exception of kingpin Saudi Arabia, are accused by analysts of failing to invest sufficiently in infrastructure needed to produce oil.

"Crude futures remain well supported on various factor including the weak dollar, geopolitical tensions and OPEC's resilience to boost supplies," said Sucden oil analyst Andrey Kryuchenkov.

"However, it is very unlikely that we will see more robust gains if economic jitters persist and we see a further significant slowdown in the US energy demand growth," he added.

OPEC comprises Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

Iraq is the only member without an output quota owing to persistent unrest in the country.

The U.S. risks losing its competitive edge in a global economy if it does not soon address the country's energy needs, climate change and foreign policy in a comprehensive way, the chief executive of Marathon Oil said Friday.

Clarence P. Cazalot Jr., president and CEO of Marathon Oil Corp., said that as worldwide demand for fossil fuels rises, the country's biggest challenge is dealing with these and other related issues underlying U.S. "energy security," or lack thereof.

Cazalot spoke on a panel about how the U.S. economy must adapt to remain competitive in the global economy.

Richard McCormack, vice chairman of Merrill Lynch & Co. LLC, said the U.S. needs to get its deficit under control, and start using and exporting more homemade products.

The budget deficit dropped to $162.8 billion in 2007, an $85 billion improvement over last year, and the Commerce Department recently reported that the trade deficit declined to $57.6 billion in August, down 2.4 percent from July.

James Hagedorn, chairman and CEO of lawn and garden product maker Scotts Miracle-Gro Co., agreed that debt was a major problem and said the "government needs to leave business alone to do its thing."

"There's no leadership in this town," Hagedorn said during the panel discussion sponsored by the Council of Competitiveness.

Annual, double-digit increases in health care costs also are inhibiting U.S. competitiveness.

"It's killing us," Hagedorn said, adding that the Marysville, Ohio-based company does not allow its employees to smoke and that most workers quit the habit to keep their jobs despite management's initial concerns of filling entry-level lawn technician and other positions.

The panelists also agreed that energy security should be a top priority. Merrill Lynch's McCormack said the U.S. should follow France's lead and increase its use of nuclear power as a way to address environmental concerns and reduce dependence on foreign oil.

NRG Energy Inc. recently submitted the first complete application for a new nuclear reactor in the U.S. in nearly 30 years, and the Energy Department earlier this month said it will guarantee loans for up to 80 percent of the total construction cost of new reactors.

On the issue of how to pay for environmental policies designed to reduce carbon emissions, Cazalot prefers a direct tax on the primary gas blamed for climate change, as opposed to cap-and-trade programs that allow a company with reduced emissions to sell a credit to another business that needs to exceed the emissions limit to operate. But he said Congress appears headed toward a cap-and-trade policy.