UPI Energy Watch

Iran, Venezuela urge OPEC to cut production

Iranian Oil Minister Gholamhossein Nozari and Rafael Ramirez, president of Venezuela's state-owned Petroleos de Venezuela, are asking members of the Organization of Petroleum Exporting Countries to cut their output as the September meeting of the cartel begins.

Some oil-producing countries are pointing to oversupply as the reason that crude oil prices have dropped from more than $147 in July to just over $100 last week, India's domain-B reported.

Nozari said Iran is pushing for a cut of 1.5 million barrels a day, nearly 5 percent of the current output, saying the market is flooded and if oil falls any lower, producers will be hurt by the costs of service and engineering.

As oil prices reached record highs in the spring and summer, Saudi Arabia increased its production to ease prices. The world's biggest oil producer pumped an extra 300,000 barrels a day from May and increased its production again by 200,000 in July.

Analysts are unsure whether Saudi Arabia, Kuwait, the United Arab Emirates and Qatar will agree with Iran and Venezuela on the issue of production cuts. With economic concerns worldwide, the lower price of oil is helping to provide some stability.

Some analysts predict that OPEC will support an unofficial production cut to save money for themselves and still save face amid economic worries.

Turkey, Azerbaijan meet on oil and gas

Turkish Energy Minister Hilmi Guler arrived in Azerbaijan Monday to attend a conference on oil and gas potential in Azerbaijan and Turkmenistan, the Turkish newspaper Hurriyet reported.

The visit follows a recent report that Turkey has plans to demand an increase in Azeri gas exports. The reports suggest Turkey is planning to increase natural gas deliveries from Azerbaijan for winter, and Turkey's energy minister would visit Baku to make the request.

The Turkish Ministry of Energy and Natural Resources reportedly wants to increase daily gas delivery from Azerbaijan to 12 million to 15 million cubic meters from 8 million cubic meters.

The move would reduce Turkey's dependence on Russia for its natural gas. Currently, Russian energy giant Gazprom provides 60 percent of Turkish natural gas demands.

Azerbaijan is also working to develop its Shah Deniz field in the Caspian Sea to increase its energy independence from Russia. The field currently produces about 25 million cubic meters a day and is expected to produce 30 million cubic meters a day when the fifth commissioned exploratory well begins production.

Guler reportedly will meet with Azeri President Ilham Aliyev, Azeri Energy Minister Natiq Aliyev and Georgian Energy Minister Alexander Khetaguri.

ConocoPhillips invests big in Australia

The U.S.-based oil and gas exploration firm and Australia's Origin Energy announced plans to create a long-term Australasian natural gas business focused on coal bed methane and liquefied natural gas.

The deal still must receive approval from Australia's Foreign Investment Review Board and Origin Energy's shareholders.

Under the plan, ConocoPhillips would invest $5 billion in a joint venture and would carry Origin Energy for its first $942 million in joint venture expenses.

After the newly formed company begins making some progress, ConocoPhillips would be allowed to invest an additional $8 billion and acquire a 50-percent interest in Origin Energy CSG Ltd., which holds Origin Energy's coal bed methane assets in the state of Queensland.

According to the plan, Origin would operate the joint venture's coal bed methane development. Origin estimates there are 42 trillion cubic feet of coal bed methane resources in the Bowen and Surat basins in Queensland. ConocoPhillips would operate the liquefied natural gas project, which would sell LNG to Asian countries.

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Closing oil prices, Sept. 8, 3 p.m. London

Brent crude oil: $105.05

West Texas Intermediate crude oil: $106.97

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(e-mail: energy@upi.com)