UPI Energy Watch

Paris-based Total announced it has signed an agreement with Azerbaijan.

Total will work with the State Oil Co. of Azerbaijan Republic to set out the main terms of a production-sharing agreement for a drilling and exploration license in the Absheron area.

Total will be the operator of the Absheron Block, with 60 percent interest and SOCAR holding 40 percent. The block is located in the Caspian Sea, off the coast of the capital, Baku.

This latest exploration contract will strengthen Total's ties with Azerbaijan, and the company said it hopes to continue to support the development of Azerbaijan's oil and gas industry over the long term.

Total has been present in Azerbaijan since 1996. Its production averaged around 11,000 barrels of oil equivalent per day in 2007.

The group's operations are primarily concentrated on the Shah Deniz field, in which it has a 10 percent interest. Total also has a 10 percent stake in the South Caucasus Pipeline Co., which owns the pipeline that carries Shah Deniz gas to Turkey and Georgia.

In addition, the group has a 5 percent interest in the Baku-Tbilisi-Ceyhan oil pipeline from Baku to the Mediterranean Sea. In 2007, the pipeline was used in particular to export condensate from Shah Deniz.

Cairn India was awarded a new exploration license in Sri Lanka.

The oil and gas firm controlled by Edinburgh-based Cairn Energy now has a new prospect off the coast of Sri Lanka.

Cairn said the government of Sri Lanka had awarded it exploration rights for a large block in the Mannar Basin, off northwest Sri Lanka.

Cairn Energy floated its Indian business in January last year, but retained a stake of 65 percent in the new company.

Shares of oil exploration firm Cairn India on Friday surged more than 9 percent following the company's announcement of winning the exploration licenses from the Sri Lankan government.

The Petroleum Resources Agreement for the offshore block still needs to be signed. Cairn India is currently focused on exploration and production in India, where it has a working interest in 14 blocks, two of which are producing hydrocarbons.

Australian leaders said they will focus on coal-to-liquids fuels.

The nation's oil and gas industry has welcomed comments by Australian Resources Minister Martin Ferguson, who said the government will look at future tax breaks and financial concessions for offshore exploration as traditional supplies dwindle and prices continue increasing.

Speaking in Canberra yesterday, Ferguson said he would push for more deregulation of global energy markets but also support local projects to deliver low-emission fossil fuels, including coal-to-liquids, and renewable energy.

An upcoming review will look at barriers to investment in "large-scale downstream gas processing projects in Australia, the challenges faced by remote gas developers and consideration of the future policy framework for new sunrise industry investment in Australia's gas sector, including new liquefied natural gas and gas-to-liquids."

Ferguson said in a recent speech that the new technologies were attracting a growing premium as low-emissions energy resources.

The Department of Resources, Energy and Tourism is working on an Action Agenda with gas-to-liquid and coal-to-liquid developers.

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Closing oil prices, June 6, 3 p.m. London

Brent crude oil: $123.37

West Texas Intermediate crude oil: $123.89

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