THE WALL STREET JOURNAL ONLINE: Oil News Roundup: December 21, 2006 4:47 p.m.

Crude-oil futures fell from a three-month high to less than $63 a barrel on the New York Mercantile Exchange as forecasts for warmer-than-average weather in the U.S. Northeast threatened heating-oil demand and as traffic in Texas shipping lanes started to return to normal after a week of heavy fog.

Here is Thursday’s roundup of oil and energy news:

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SHELL DEALS WITH RUSSIA: Royal Dutch Shell and its partners agreed to hand over 50%, plus one share of the Sakhalin-2 oil project to OAO Gazprom, the state-controlled Russian giant, for $7.45 billion in cash. By most estimates, the deal provides Gazprom with extremely attractive terms, essentially allowing it to buy into the project late in its development stages with little project risk and at a price that would be similar to one it could have paid as a ground-floor investor. But it does greatly improve Shell’s longer-term chances of remaining a big player in Russia.

CHINA DEALS WITH IRAN: China National Offshore Oil Corp. signed a $16 billion deal with National Iranian Oil Co. to develop a natural-gas field, according to Iranian media. Chinese oil companies are courting Iran for supplies of liquefied natural gas, the shippable form of the fuel that Beijing hopes will reduce its heavy reliance on highly polluting coal. But U.S. sanctions on Iran and a global shortage of skilled workers pose a major challenge to any deals, The Wall Street Journal reports.

•Cautious Oil-Shale Boom: There may be 800 billion barrels of recoverable shale oil in the U.S., more than three times the proven oil reserves of Saudi Arabia — but the hurdles to squeezing any of it out of the rock are high, the New York Times reports.

•More Violence in Nigeria: Armed men attacked two foreign oil facilities in southern Nigeria, and Shell began evacuating families of foreign workers, citing worsening security.

•Turkmenistan President Dies: Saparmurat Niyazov, president of the arid, resource-rich country of Turkmenistan, died early today. Turkmenistan has the world’s fifth-largest natural gas reserves, but Mr. Niyazov failed to convert that into prosperity for his people. Instead he tapped the country’s wealth for outlandish projects, including a huge, man-made lake in the Kara Kum desert.

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