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THE WALL STREET JOURNAL: Oil-News Roundup 10 May 2006

Oil-News Roundup

May 10, 2006

Crude-oil futures rebounded, settling at more than $71 a barrel on the New York Mercantile Exchange, in part because of fresh anxieties about Iran's nuclear program. Here is today's well of news about oil and fuel prices.

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CASTRO'S OIL BONANZA: Cuba plans to let China and other countries drill for oil in its half of the Florida Straits, which lie between Cuba and Key West, the New York Times reports. U.S. laws have long banned drilling on the U.S. side, but rising energy prices have inspired a growing chorus of voices to call for the prohibition to end. Fidel Castro split the area with the U.S. in a 1977 treaty, and Cuba's side alone might have some 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas. “This is the irony of ironies,” one lobbyist to end the U.S. drilling ban told the Times. “We have chosen to lock up our resources and stand by to be spectators while these two come in and benefit from things right in our own backyard.”

IRAN BRANCHES OUT: Iran announced plans to pump crude oil and cash into an Indonesian refinery project meant to help satisfy China's seemingly unquenchable thirst for petroleum products. The refinery, which could cost up to $5 billion to build, is scheduled to come online in 2010 and will process up to 300,000 barrels of oil a day, a representative of Indonesia's state-owned oil company said. The deal will help Iran build ties with the world's biggest Muslim country and find a new market for its exports, possibly helping it survive potential sanctions by the U.S. and other Western nations.

A Tariff Too Far: House Majority Leader John Boehner, (R., Ohio), called for temporarily lowering the tariff on imported ethanol, saying it would make the gasoline additive more affordable. The idea stands little chance of coming to fruition any time soon, however, given the strong opposition of U.S. farmers.

Solar Stock Hot: Shares of Norway's Renewable Energy Corp., which makes materials for solar-energy panels, soared 16% in their first day of trading, Aftenpost reports, in what was Norway's biggest IPO since state-owned oil company Statoil sold shares in June 2001.

BP's Dutch Auction: BP said it plans to sell off its Dutch oil exploration and production and gas infrastructure businesses this summer.

Resource Nationalism: Stanford professor David Victor decries the world's “dysfunctional energy politics” in a Financial Times opinion piece.

Extra Capital: The Kerr-McGee Corp. board of directors approved $170 million of additional capital for its 2006 program for onshore drilling and infrastructure expansions, the Associated Press reported.

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Monday's Roundup:

SHELL BUYS BLACKROCK: Shell Canada Ltd., a unit of Royal Dutch Shell PLC, agreed to buy Canadian bitumen producer BlackRock Ventures Inc. for about $2.17 billion. Shell and other major oil companies have been scrambling to pump more oil and natural gas out of the ground. BlackRock (not to be confused with the famous New York private-equity firm) specializes in squeezing bitumen, a low-grade, sticky crude oil, from oil-sands deposits in Alberta. While turning oil sands into crude is a costly and difficult process, it has become an increasingly attractive alternative as oil prices have skyrocketed along with political tensions in parts of the world where crude comes easier.

HEDGING AT THE PUMP: While many Americans are paying $3 or more a gallon for gasoline, others are paying much, much less. Among those lucky few are customers of First Fuel Banks, a Minnesota company that bills itself as the only gasoline retailer in the country where customers can buy fuel for the future and hedge against rising prices, the Associated Press reports.

$100 Oil?: International Energy Agency executive director Claude Mandil warned that oil prices would likely stay high and could climb to $100 a barrel, Australia's Courier Mail reports.

Telecommuting to Cope: Some cities are better suited for telecommuting than others, making them the best-prepared to handle a gas-price shock, the Wall Street Journal Online reports.

Japan Gas Prices: Japan's average retail gasoline price has hit about $4.56 a gallon, its highest level in more than 15 years, the Associated Press reports.

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