UPI Energy Watch

June 12, 2008 at 6:23 PM
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Gazprom has predicted $250 per barrel oil by next year.

Gazprom Chief Executive Officer Alexei Miller said high oil prices aren't from speculators, they're from competition for resources, The Times of London reported.

Miller's deputy, Alexander Medvedev, added that an equivalent gas price would be about $41 per million BTU, more than three times the rate at which Gazprom currently sells its fuel to European utilities.

Following Gazprom's bitter battle with Ukraine over unpaid gas bills that led Gazprom to cut off its supply, many European leaders are troubled by such brazen predictions from the Russian giant.

In addition, the International Energy Agency has been trimming its forecast of non-OPEC oil supply growth and it now reckons that the great might of the world's multinational companies, including Russia and China, will barely produce any extra oil this year -- just 770,000 more barrels per day.

That's alarming as the steady increase in Russian oil output over the last decade has helped curb the growth in demand for crude in China.

Western investors are making ever more frantic warnings about Russia. Rex Tillerson, Exxon's chief, said recently there was little confidence in the rule of law in Russia, and Tony Hayward, BP's chief, gave warning that the world's energy problems are political, not geological.

The Alberta government has launched a $178 million new technology plan.

The government's goal is reportedly to help the province commercialize technological breakthroughs, hoping to lead the economy away from over-reliance on the oil and gas sector, especially as oil prices remain more than $130 a barrel, the Globe and Mail reported.

Leaders believe the region is at risk of developing the economic phenomenon of "Dutch disease," in which money floods into commodity-driven industries such as oil and natural gas at the expense of conventional sectors, such as agriculture or services.

Alberta's new plan is intended to build on the technological expertise in Alberta and help prevent the economy from being too focused on energy, Premier Ed Stelmach said.

The strategy outlines nine actions to increase technological innovation, including a research and development tax break and the creation of a new $100 million enterprise corporation designed to attract venture capital to the province. The plan is expected to take between 10 and 15 years to be fully implemented.

India's Reliance Industries is continuing to expand.

Reliance Industries, led by Mukesh Ambani, will commission its new refinery at the city of Jamnagar this year. The new refinery will process an estimated 580,000 barrels of crude every day. With the addition of the new facility, the total refining capacity at its Jamnagar complex will go up from 0.66 million barrels to 1.24 million barrels, leading Jamnagar to account for 2 percent of global petroleum refining capacity, the Business Standard reported.

RIL will also be commissioning 900,000 tons of polypropylene capacity this year, making it the third-largest polypropylene producer in the world, Ambani said.

RIL, India's largest company by market value, will also start selling natural gas this year at the equivalent of a fifth of global prices, easing the nation's import bill at a time of record crude oil costs.

Reliance will sell gas at $25.20 a barrel of oil equivalent, compared with more than $135 in global markets, Ambani told shareholders in Mumbai.

Gas piped from the Krishna Godavari basin off India's eastern coast will cut $27 billion from the country's import bill, he said.

Reliance Industries is investing $5.2 billion to develop Krishna Godavari, the nation's largest field, which is expected to more than double India's gas output.


Closing oil prices, June 12, 3 p.m., London

Brent crude oil: $133.90

West Texas Intermediate crude oil: $134.80


(e-mail: energy@upi.com)

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