THE WALL STREET JOURNAL: Oil News Roundup: December 12, 2006 4:40 p.m.

Crude-oil futures fell to about $61 a barrel, a fresh two-week low, on the New York Mercantile Exchange ahead of U.S. government inventory data expected to show builds in stockpiles of gasoline and heating oil. Here is Tuesday’s roundup of oil and energy news:

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COOPERATION IN SOUTH CHINA SEA: China National Offshore Oil Corp., China’s largest offshore oil producer by output, signed production-sharing contracts with U.S.-based firm Devon Energy for two deepwater blocks in the South China Sea. The agreement underlines the interest in the South China Sea that has been reignited by Canada’s Husky Energy discovery of recoverable reserves of natural gas estimated at between 113 billion and 170 billion cubic meters in June.

•Russia Pushes Iran for Nuclear-Plant Payment: The head of the Russian state company building a nuclear plant in Iran urged Tehran to keep up payments to complete construction as scheduled, the Associated Press reports, the strongest signal yet of financial disputes over the Bushehr nuclear plant.

•Defending India Nuclear Deal: India’s foreign minister defended a landmark civil nuclear agreement with the United States in the face of strong opposition from supporters of the country’s ruling coalition and the main opposition party.

•Oil Helps Shrink Trade Gap: The U.S. trade deficit narrowed 8.4% to $58.88 billion in October, thanks in part to a sharp decline in crude-oil prices.

•Nigeria Seeks New Investment: Nigeria is asking foreign investors to spend more on exploring and developing its oil and natural-gas resources — possibly a tough sell, given the persistent attacks on oil facilities and workers there.

•Nigerian Hostages May be Held Longer: For example, four hostages seized last week from a Nigerian oil-export terminal run by Eni subsidiary Agip may be held for several months, a spokesman for the militant group that has claimed responsibility for the kidnappings said.

•New Refinery for North America? Irving Oil, a privately owned Canadian company, is looking to build a 300,000 barrel-a-day crude-oil refinery in the eastern Canadian port city of Saint John, New Brunswick. If constructed, the facility would be the first new refinery built in North America in over 25 years.

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Monday’s Roundup:

SHELL MAY CEDE SAKHALIN CONTROL: Royal Dutch Shell has proposed ceding a controlling stake in its $20 billion Sakhalin-2 project to Russia’s state-run Gazprom, in an apparent victory for Russian government efforts to pressure Shell into renegotiating the terms of the landmark energy deal. Such a move would underscore the Kremlin’s opposition to foreign control of large energy projects in Russia at a time when an increasingly confident Russian state, buoyed by high oil prices, is determined to restore its domination of the country’s oil and natural-gas industry.

•Oil Industry Loses Royalties Case: The Supreme Court ruled against the oil and gas industry in a dispute over how far back the government can reach to collect on leases for federal land. In a 7-0 decision, the court refused to limit the number of years the government can reach back to collect unpaid royalties.

•Iraq Not Spending Oil Money: After years of relying on U.S. government spending, Iraq finally has some oil revenue available for reconstruction — it’s just having trouble spending it, the New York Times reports.

•Mirant to Sell Assets: U.S. energy company Mirant agreed to sell its Philippine assets to a consortium of Japanese investors for $3.42 billion in the biggest-ever acquisition in the Southeast Asian nation.

•Ethanol’s Global Impact: The rapid expansion of the ethanol industry is being felt far from American shores, the Associated Press reports.

•Fire at Baghdad Facility: A huge fire broke out at an oil-storage facility after explosions in a volatile area south of Baghdad.

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