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UPI Energy Watch

By ANDREA R. MIHAILESCU, UPI Energy Correspondent

WASHINGTON, Jan. 30 (UPI) -- Iran's oil bourse draws little attention in West

Western media is paying little attention to Iran's oil bourse, which is expected to open on March 20 using a euro oil-trading mechanism.

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The move will allow investors to buy or sell oil for euros to transact on the exchange, thereby circumventing the U.S. dollar and Europeans will no longer have to buy and hold dollars to secure their payment for oil.

Iranian media said talks were held with foreign investors, and Iran gave the Asian Capital Partners and the Future Bank of Bahrain permission to invest 100 million euros each in the Iranian stock market.

Iran also authorized three private Lebanese investors to invest up to 50 million euros in the stock market.

The new euro-based oil trade could become a competitor to the two leading oil exchanges -- the New York Mercantile Exchange and London's International Petroleum Exchange -- but a number of international issues facing Iran will require a resolution before the undertaking becomes a success.

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Iran is not the first country to push for non-dollar oil prices.

On Dec. 30, Venezuela's central bank said it plans to approve the use of the euro to service demand from foreign companies as well as to further distance the country from its dollar dealings.


Turkey's gas imports still below normal

Turkey continues to receive gas imports below normal levels, despite increased flows from Iran, the ministry of energy and natural resources said last week.

Iran exports less than 8 million cubic meters, still lower than normal. The flow of gas from Russia through a pipeline from the West also dropped from 42 million to 37 million cubic meters per day.

But the natural gas supplies passing through the Blue Stream system increased by approximately 5 million cubic meters per day to help balance the loss.

Turkey is struggling to acquire natural gas imports, particularly from Iran in the winter, since Iran reduces its supply of natural gas to Turkey for various reasons in the winter.

Turkey attempted to convince Iran in an international arbitration to agree to reduce the cost of natural gas it sells to Turkey, but the two sides failed to agree on an arbitrator, Turkish officials were cited in local media as saying.

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Because Iran failed to maintain supplies according to the agreement, Turkey gained the right to cancel the bilateral agreement, but Turkish officials said they chose not to cancel the contract as the demand of gas continues to rise during the winter months.

Turkey is also looking to increase its use of alternative sources of energy with little success.

The country hopes to secure an agreement with Azerbaijan soon on the construction of its first underground storage depot, while increasing the amount of natural gas and liquefied natural gas imports from Egypt by 2007.


China to produce gas from disputed field soon

China National Offshore Oil Corp., the country's largest offshore oil producer, completed infrastructure work at a disputed oil and gas field in the East China Sea.

CNOOC expects production to start by July, Executive Vice President Yang Hua told a news conference last week.

He said the five offshore projects, including the Chunxiao field, are ready to commence production in the first half of 2006.

"Regarding the Chunxiao project, I should say that technology, construction and infrastructure works had finished at the end of 2005, conditions were ripe for production," Yang said.

"But when production will start is not up to the producer," he said.

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Japan says the Chunxiao field, which is located some 2 kilometers inside China's claimed side, is the median line separating the two countries' 200-nautical-mile exclusive economic zones in the East China Sea.

China does not recognize that median line.

The two sides failed to reach an agreement on the demarcation of their respective exclusive economic zones, an area that allows under international law coastal countries to control maritime resources up to 200 nautical miles offshore.

But the area between Japan and China is not enough to give the two countries such zones: The width of much of the East China Sea is less than 400 nautical miles.

Japan says it fears China might siphon off resources that could be buried under the seabed on the Japanese side of the median line.


Thailand reduces reliance on oil imports

In an effort to reduce reliance on oil imports, Thailand's PTT Public Company Ltd, or PTT, secured a deal to purchase crude oil from the domestic supplier Jasmine oilfield of Pearl Oil Co.

Under the agreement, PTT will purchase a whole amount of crude oil produced at the Jasmine oilfield operated by Pearl Oil, which has a daily production capacity of around 10,000 barrels, according to local news reports.

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PTT's President Prasert Bunsumpun and Keeth Cameron, president and CEO of Pearl Energy Co. subsidiary Pearl Oil, signed the agreement before Energy Minister Viset Choopiban.

Purchasing crude oil from the oil fields would enable local traders to reduce the oil import value by 10 percent in 2006, Prasert said.

PTT dominates Thailand's oil industry and the government holds a 68 percent stake in the company with no plans to sell its controlling stake in the near future.

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Closing oil prices, January 30, 3 p.m. London

Brent crude oil: $65.42

West Texas intermediate crude oil: $67.42

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