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The Wall Street Journal: Oil News Roundup: week ending October 6, 2006

THE WALL STREET JOURNAL ONLINE
October 6, 2006 6:21 p.m.

Oil futures slid lower amid uncertainty over whether the Organization of Petroleum Exporting Countries will cut output to shore up prices. The front-month November crude-oil contract fell 27 cents to settle at $59.76 a barrel. Here is Friday’s roundup of oil and energy news.

OPEC PRODUCTION DEAL: OPEC’s president aims to secure a supply-cut deal by Monday that will remove about one million barrels a day of crude from oversupplied markets and brake oil’s rapid decline. After a drop of almost $20 in oil since mid-July, and brimming fuel stockpiles around the world, six of OPEC’s 11 members, including top exporter Saudi Arabia, have already made voluntary cutbacks, said OPEC President Edmund Daukoru.

•EnCana, Conoco in $11B Oil Sands Deal: EnCana Corp. and ConocoPhillips are spending almost $11 billion in a partnership to connect oil sands production in Alberta.

•Talks Between U.S., Shell Partly Done: The U.S. government’s negotiations with Shell Oil Co. to recoup some of the billions of dollars in lost royalty revenues from the Gulf of Mexico are partly done, a Shell official said Friday.

•Japan Cutting Stake in Iran Oil Project: A Japanese oil-development company will reduce its stake in Iran’s Azadegan oil field because of slow progress in removing land mines from the area.

• Lukoil to Invest $100 Billion in Next Decade: Russia’s OAO Lukoil will invest $100 billion in the coming decade in an effort to increase output by 50%, to three million barrels per day, the company president said Friday.

•China Builds Strategic Oil Reserve: China has started filling the tanks of a strategic oil reserve meant to insulate the country from disruptions in supplies, an official said Friday.

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Thursday’s Roundup:

OPEC TALKS PRODUCTION CUT: OPEC’s president is scrambling to broker an agreement among the cartel’s members to cut oil output, in an attempt to shore up tumbling crude prices. But contentious issues need to be resolved before ministers reach an agreement. Meanwhile, OPEC’s attempt to orchestrate an output reduction is raising alarm bells in major consuming countries.

•Iran Sanctions Debate Next Week: The U.N. Security Council will start discussing a resolution next week that would impose sanctions on Iran for refusing to suspend uranium enrichment.

•Iran, Japan Still Talking: A senior Japanese trade official said Japanese and Iranian oil companies were still in discussions over a $2 billion project to develop Iran’s Azadegan oil field.

•Seeking More Canadaian Production: ConocoPhillips and EnCana, Canada’s largest hydrocarbons producer, said they will spend $10.7 billion in the next decade to boost Canada’s oil production.

•Santos Bids for Queensland: Takeover activity in Australia’s energy sector heated up, with Santos Ltd. launching a $452 million bid for coal-seam gas producer Queensland Gas Co. Analysts said they expected a higher price or a competing bid from one of the other major coal-seam gas producers.

•Search for Nigerian Soldiers: Troops launched a search-and-rescue mission for Nigerian soldiers missing after militants ambushed a military-escorted supply convoy in the oil-rich south, and the president called an emergency meeting with security chiefs.

•Warming Warning: Global warming could strain the Northeast’s power grid, farms, forests and marine fisheries by the next century unless carbon dioxide emissions are reduced by 3% each year, according to a Union of Concerned Scientists report released Wednesday.

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Wednesday’s Roundup:

CHINA DEMAND COULD PROP PRICES: A number of investors — and some analysts — say they believe the four-year, Asia-led commodity boom is finally running out of gas. Don’t bet on a market rout, though. There are lots of reasons why commodity prices should stay high. And they might even climb again, especially if new geopolitical dramas emerge to add jitters to the market.

•EU Warns Spain: The European Commission Wednesday warned that Spain will face legal action if it doesn’t lift restrictions on German energy giant E.On AG’s bid for Endesa SA. The commission last week ordered Spain to lift restrictions on E.On’s bid. But on Tuesday, the country’s energy regulator reiterated a list of restrictions on the deal.

•Violence in Nigeria: Security forces battled militants in Nigeria’s oil-rich southern delta after attacks on an oil company convoy and a pumping station, officials said.

•Saudi Vows ‘Reasonable’ Prices: Saudi Arabia will work with OPEC to keep oil prices at a “reasonable level,” the kingdom’s ambassador said.

•BP Sees Production Drop: BP said it expects to report a 0.6% drop in output year-to-year for the third quarter, its fifth consecutive quarterly production decrease, following a partial shutdown at its Alaska Prudhoe Bay field.

•Big Bet on LNG: The New York Times profiles Cheniere Energy, which has defied expectations to invest in building new liquefied natural gas terminals in Louisiana.

•Another Disappointing Debut: BreitBurn Energy on Wednesday marked the second energy deal in the past week to face a discount, a sign the IPO market could be tiring of energy deals in the face of softer oil prices and a selection of already-public deals.

•County Sells Methane to Army: Maryland’s Anne Arundel County will sell methane gas produced at its landfill to Army Fort Meade, providing a new energy source to serve an expansion of the post.

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Tuesday’s Roundup:

CHEMOIL PULLS IPO: Chemoil Energy Ltd. said its initial public offering of up to $374 million in stock, set to be Singapore’s second-largest share sale this year, has been withdrawn. Chemoil, a U.S.-based marine-fuel supplier half-owned by Itochu Corp. of Japan, said it pulled the IPO “due to considerations relating to valuation.” Some market participants have said the recent fall in oil prices resulted in potential investors demanding a less-expensive valuation.

•Unite Here Fund Sues BP: The retirement fund of Unite Here, a union representing industrial, textile, hotel and restaurant workers, has sued executives and board members of BP for a string of operational disasters the union claims have hurt the U.K. oil giant’s shareholders.

•GDF Privatization a Step Closer: French lawmakers voted to approve legislation to privatize Gaz de France SA, as widely expected — helping to clear the way for the natural-gas company’s state-backed merger with Suez SA.

•Tokyo Out of Inpex Talks: Long-lasting talks between Japan’s Inpex Holdings Inc. and Iran on a project to develop the Azadegan oil field are running out of time, but Tokyo won’t intervene, Japan’s trade minister said.

•Militants Release Some Hostages: Militants who attacked a military convoy escorting oil workers in the restive southern delta region freed nine of the 25 Nigerians taken hostage, even as more violence flared.

•Surviving Without Iranian Oil: The world’s emergency crude reserves could replace Iranian oil exports for 18 months, the Government Accountability Office said.

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Monday’s Roundup:

NEW BIDS IN LIBYA: Libya’s National Oil Corp. has announced that 45 companies and two consortia are qualified to bid in its third licensing round since it reopened to foreign investment, the NOC website said. This is the first bidding round under Libya’s new oil chief and the third for Libya since it reopened to foreign investment after U.S. sanctions were eased in 2004. Decades of sanctions have left Libya’s oil sector vastly underexplored.

•Idemitsu Sets IPO Range: Idemitsu Kosan, one of Japan’s largest refiners by capacity, set a tentative price range of 9,000 yen to 9,500 yen ($76.19 to $80.43) per share for its initial public offering later this month, which is expected to be one of Japan’s biggest this year.

•Violence in Nigeria: Dozens of militants sank two military patrol boats in Nigeria’s oil-rich, southern delta in an attack that killed five soldiers and left nine others missing, an army spokesman said.

•Death in Siberia: The chief engineer for Anglo-Russian oil producer TNK-BP Holding’s unit Rusia Petroleum was found shot dead in Siberia Saturday, Russian news agency RIA Novosti reported Monday.

•Prudhoe Shortfall: BP is still producing 350,000 barrels a day of crude oil out of its Prudhoe Bay field in Alaska, 50,000 below an earlier forecast.

•Lisburne Field Restored: Still, BP said it had restored 25,000 to 30,000 barrels a day of production at its Lisburne oil field near Prudhoe Bay, three days after shutting it down due to a natural gas leak.

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