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Royal Dutch Shell Plc .com: Oil News Roundup from THE WALL STREET JOURNAL

THE WALL STREET JOURNAL ONLINE
July 12, 2006 7:08 p.m.

Oil futures surged to nearly $75 a barrel on the New York Mercantile Exchange after China and Russia agreed to join major world powers in referring Iran to the United Nations Security Council, and the White House accused Iran and Syria of contributing to a flare-up of violence in Israel. Here’s Wednesday’s roundup of oil and energy news.

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OIL SWELLS TRADE GAP: The U.S. trade deficit bulged in May, thanks largely to the price of imported oil, which rose by $4.92 to $61.74 a barrel, on average, the biggest gain since the build-up to the Gulf War in 1990. The value of crude-oil imports rose to $19.99 billion from $16.70 billion in April, while the value of all energy-related petroleum imports rose to $27.91 billion from $23.40 billion.

CHINA KNOWS THE FEELING: Though the U.S. trade deficit with China has been a source of tension between Washington and Beijing, the U.S. and China can relate when it comes to oil imports. China said its imports of crude oil in the first half of 2006 jumped 15.6% from a year ago, underscoring Beijing’s difficulty in trying to curb its runaway appetite for energy, which has only grown stronger this year. In the first half of 2005, China’s oil imports grew just 3.9%.

•Halliburton Loses Contract: The U.S. Army will rebid the controversial, multibillion-dollar contract under which KBR, a unit of oilfield-services company Halliburton Co., has been providing services to troops around the world, after years of complaints over how the deal has worked in Iraq.

•Citgo Cuts Off Flow: Venezuela-owned Citgo Petroleum Corp. has decided to stop distributing gasoline to some 1,800 U.S. stations, forcing station owners to find other suppliers. Still, the move seems unlikely to have a long-term effect on gas prices.

•Offshore Compromise: Senate leaders produced a compromise on offshore oil and gas drilling they hoped would satisfy opponents. Reconciling the deal with a House drilling bill could be tricky, however.

•Repsol Buys BP Stake: Spanish oil giant Repsol paid BP $2.15 billion for a 28% stake in a Gulf of Mexico oilfield, the Shenzi deepwater project, Bloomberg reports.

•Still Thirsty: High prices have not damped the U.S. consumer’s appetite for gasoline, the Associated Press reports.

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MIDEAST CASH FLOWS TO ASIA: Investors from the Middle East, flush with cash from high oil prices, are expected to start funneling more funds into Asia, according to investment bankers in Hong Kong and Dubai. Arabs are looking at tie-ups with oil companies and port operators throughout Asia, Islamic-banking businesses in Malaysia and Indonesia, and infrastructure investments in Pakistan and India.

BP TAKES ROSNEFT STAKE: BP agreed to buy a stake in Rosneft, just two days before the state-controlled Russian oil giant’s IPO, the Financial Times reports. BP is just the kind of big, strategic investor Rosneft needed to help make its controversial deal a success, the FT says. “People close to the IPO expressed confidence in the deal, saying the order book would close on Wednesday, a day earlier than planned,” the FT reported.

SHENHUA AND SHELL: Royal Dutch Shell PLC and Shenhua Ningxia Coal Industry Co. — a unit of Shenhua Group, China’s top coal producer — agreed to pursue a three-year study of a coal-to-liquids plant in the remote western Ningxia region, taking another step closer to a project that could involve an investment of $5 billion to $6 billion.

•U.K. Embraces Nuke Power: The British government embraced nuclear power as a key energy source in the coming decades in a new policy unveiled Tuesday, angering environmentalists eager to promote renewable power sources such as sun, wind and waves, the Associated Press reports.

•China Shuffles Policy Makers: China has replaced two top energy officials in its National Development and Reform Commission, the country’s top energy-policy body, the commission’s media office said.

•Get Used to It: Surging auto sales in China and record U.S. gasoline demand mean oil prices will probably stay higher than $70 for quite some time, CNN/Money reports.

•Profiting From Gas Pain: Looking on the bright side, CNN/Money also reports that some consumers are profiting from high oil and gas prices in a burgeoning paraphernalia industry.

 

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