Tuesday PM March 4th, 2008

Energy Department blames market speculation for oil price spikes…BP increases funds reserved to settle claims from 2005 Texas City refinery blast…Pride International discloses evidence of payments to government officials in ten countries…

A top Energy Department official is blaming market speculation for the recent spike in oil prices, saying it may have added as much as ten percent to crude oil costs, or around $12. And Guy Caruso, head of the department’s Energy Information Administration, told a Senate hearing the peak may be yet to come. Caruso told a Senate hearing that supply and demand would suggest a price of about $90 a barrel. Prices fluctuated around $102 a barrel Tuesday after surging to a record $104 a barrel on Monday. Caruso told the Senate hearing that market speculation, the decline of the dollar and money moving into commodities have added to the upward pressure on crude oil prices.

President Bush is chiding OPEC for failing to pump more oil as energy prices soar and the U.S. economy slumps. After an oval office meeting Tuesday with Jordan’s King Abdullah II, Bush said the OPEC countries should understand the consequences of high energy prices. Bush said it’s a “mistake to have your biggest customers’ economies slowing down as a result of higher energy prices.” Key oil ministers signaled Tuesday that OPEC has virtually ruled out pumping more oil to ease record-high prices. The president of OPEC says that’s because of the U.S. economic slowdown, political turmoil in the Middle East and expectations of slackening global demand for crude. Pressure has mounted on OPEC to raise output, which would put more crude on the market and help pull down prices which have been holding above $100 for weeks. But the group contends that there is an ample supply of crude, and since demand typically eases in the second quarter, no action is expected at Wednesday’s meeting in Vienna. Bush has called for increased oil production as demand and prices continue to rise.

Candidates are vying in today’s primary for a chance to guide the state’s policies in the oil and gas industries. For the Texas Railroad Commission, three candidates are battling for the Democratic nomination. Art Hall of San Antonio, Dale Henry of Lampasas and Mark Thompson of Hamilton seek a seat on the three-person agency that regulates Texas’ oil and gas industry, gas utilities, pipelines and other areas. The winner will advance to the November election to face Republican Michael L. Williams, who chairs the commission.

BP says it’s increased funds reserved to settle claims arising from the deadly 2005 blast at its Texas City refinery. The British oil giant says it’s expanded the reserve by about a third to $2.13 billion. The company also disclosed that chief executive Tony Hayward received a larger bonus in 2007 than the award granted to predecessor John Browne in 2006. But it said he missed out on a long-term share package worth around $4.8 million because of BP’s poor past performance. The disclosures were contained in BP’s annual report. The revised figure for claims relating to the Texas City accident, which killed 15 workers, expands on the $1.6 billion provision previously disclosed by the company. BP says it remains in talks with the U.S. Chemical Safety Board on final recommendations to be drawn from the accident after the board’s report a year ago.

Houston-based Pride International says it found evidence that its employees made payments to government officials of several countries from 2001 to 2005 to handle customs, immigration and tax issues, according to the Houston Chronicle. The driller disclosed payments to Venezuela and Mexico from 2003 to 2006 that may have violated the U.S. Foreign Corrupt Practices Act in a filing last Friday with the Securities and Exchange Commission. Pride indicates it found evidence that its employees made payments directly or indirectly to government officials in Saudi Arabia, Kazakhstan, Brazil, Nigeria, Libya, Angola and the Republic of the Congo. The payments were to help get equipment through customs and resolve issues with customs, immigration, tax, licensing or merchant marine authorities. The company is also looking into payments made to officials in India in 2003.

Anadarko Petroleum is selling its 50 percent interest in an oilfield offshore Brazil to StatoilHydro, according to the Houston Business Journal. The Woodlands-based Anadarko is also selling its 25 percent interest in a Gulf of Mexico prospect about 250 miles south of New Orleans to the Norwegian company. Anadarko could make $1.8 billion on the two properties, with an additional $300 million payable by 2020, depending on future oil prices.

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