UPI Energy Watch

Despite price increases, Algeria and Venezuela still want more oil production cuts

Leaders from Algeria and Venezuela have said they would support additional cuts in production at the next meeting of the Organization of Petroleum Exporting Countries in March.

The announcement came as oil prices jumped nearly 10 percent this week on speculation that prices below $40 per barrel had hit their bottom and new legislation from U.S. President Barack Obama could increase demand for oil.

"If oil prices are still falling at the time of our meeting on March 15, I am certain that everyone will agree on a new production cut to stabilize prices and help raise them later on," Algerian Energy and Mines Minister Chakib Khelil said.

In addition to Algeria and Venezuela saying they would back further crude production cuts with OPEC, Iranian leaders said they have told the country's largest customers they will be receiving less oil in the coming months, the Tehran Times reports.

Khelil said he believes prices will stay around $45 per barrel for most of this year, but he expects prices to increase around the third quarter.

So far OPEC has agreed to 4.2 million barrels per day in production cuts. OPEC leaders believe the low oil prices are tied to oversupply, and at the same time the International Energy Agency continues to adjust its estimates of oil demand, decreasing its estimate with each new projection.

Many OPEC members have had to adjust their fiscal 2010 budgets because of the decrease in revenue from oil sales.

Ukrainian leader postpones finalizing Russian gas pact

President Viktor Yushchenko voiced concern over Ukraine's fate under the new deal, following weeks of back and forth between the two nations as consumers in Europe shivered without a major gas supply.

Russia said Ukraine refused to pay a past gas bill and couldn't agree on a new gas hike before a Jan. 1 deadline. Then Russia cut off all gas heading to Europe via Ukraine, accusing Kiev, having been cut off, of diverting gas intended for the rest of Europe.

The Russian and Ukrainian prime ministers met in Moscow over the weekend and hammered out a deal, but Yushchenko is upset Ukraine's fee to transit gas remains the same while the country pays more to purchase Russian gas.

Instead of signing off on the deal, he is requesting more information.

"I hope the meeting will take place the next Friday, Jan. 30," Yushchenko's first deputy chief of staff, Oleksandr Shlapak, said, Platts reports.

Australia's Santos Ltd. will stay stable in 2009

Santos, Australia's third largest oil and gas producer, has projected it will produce about 56 million barrels of oil equivalent this year.

In its budget, the company has set aside $20 million more for production costs this year than the previous year, due to increasing costs. The company is trying to maintain its production level from last year after it dipped in the third quarter, The Sydney Morning Herald reports.

"Moving into 2009, Santos is well positioned despite the global financial crisis," Chief Executive Officer David Knox said in the statement. "The company has a very solid financial position, reinforced by a strong cash balance."

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Closing oil prices, Jan. 23, 3 p.m., London

Brent Crude oil: $44.73

West Texas Intermediate crude oil: $44.52

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(e-mail: energy@upi.com)