Crude oil declined for a third day amid concerns that slower economic growth will curb consumption of oil products.

Oil has retreated more than $7 from yesterday's record of $139.89 a barrel. German investor confidence dropped to the lowest in more than 15 years in June as surging inflation hit Europe's largest economy. The U.K. inflation rate rose to the highest since at least 1997 in May, paving the way for higher interest rates.

``Worries about economic inflation on both sides of the Atlantic are bearish for oil,'' said Rob Laughlin, senior broker at MF Global Ltd. in London.

Crude oil for July delivery fell as much as $2.11, or 1.6 percent, to $132.50 a barrel on the New York Mercantile Exchange and traded at $132.92 at 12:31 p.m. London time. Yesterday, the contract touched a record $139.89.

StatoilHydro ASA, Norway's largest oil and natural-gas producer, said its North Sea Oseberg field may resume operations this week after a fire on platform A halted production June 15.

Brent crude oil for August settlement was at $132.78 a barrel, $1.93 lower, on London's ICE Futures Europe Exchange at 11:29 a.m. local time. Prices reached a record $139.32 a barrel yesterday.

Saudi Arabia, hosting a forum in Jeddah this weekend to address the impact of record prices on importers, will raise output 200,000 barrels to 9.7 million barrels a day next month, King Abdullah told United Nations Secretary-General Ban Ki-Moon, according to a UN spokesman.

`Moving Supply'
``With the pressure OPEC has seen from the Western world that they need to respond, they've been taking the tack that demand is strong,'' said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``That gives them a reason to start moving supply upward.''

The kingdom has called a meeting in Jeddah on June 22 to help stabilize prices. Crude oil fell 2.7 percent in New York last week as Saudi Oil Minister Ali al-Naimi described the surge in the commodity as ``unjustified'' and called a meeting of producers, major industrial nations and banks.

U.S. crude stockpiles probably dropped 1.5 million barrels in the week ended June 13 from 302.2 million barrels, according to a Bloomberg survey before tomorrow's Energy Department report. Gasoline stockpiles probably climbed 1 million barrels from 210.1 million barrels the prior week, according to the median of responses.

Australian-based oil and gas company Otto Energy reports the award of Area 8 Service Contract 69 offshore Philippines to the company’s wholly owned subsidiary NorAsian Energy Limited (NorAsian) for a 7 year exploration period.

NorAsian, in partnership with Filipino partner TransAsia Oil & Energy Development Corporation, were selected from a competitive bid process for this prospective offshore exploration area.

SC69 is situated between the Islands of Cebu, Bohol and Leyte, and covers the eastern Visayan Basin over an area of 7,040km2. The block lies between the two sub blocks of SC51, where Otto already has an 80% working interest.

Both made an initial application to the Australian government for environmental approval for a new production project at the Turrum oil and gas field off the southeast coast.

The Turrum Phase 2 project in the Bass Strait will involve drilling two oil wells and four gas wells and installing a new platform, Marlin-B, to be linked to the existing Marlin-A platform, ExxonMobil's Esso Australia Pty unit, operator of the Exxon-BHP gas venture in Australia, said in the document.

The Gippsland Basin venture supplies more than a third of Australia's east coast gas market from fields in the Bass Strait. ExxonMobil said last year the venture probably has more than 20 years of remaining oil production after a drilling program extended the life of some fields. Melbourne-based BHP Billiton yesterday named Turrum among potential development projects.

"The Turrum Phase 2 development project is being proposed due to the ongoing depletion of gas resources," Esso said in the application, a copy of which was published this week on the Australian environment department's Web site. The project should "assist continuity of supply," it said.

Oil production from Turrum may start in the third quarter of 2011, with gas output set to commence in 2015, Esso said in the application. The installation of the platform may begin in the second quarter of 2010, it said. The first phase of the Turrum project started in 2004.

The proposed project is going through the regulatory approvals process and initial engineering and design work is being carried out, Gemma Allman, a spokeswoman for ExxonMobil in Melbourne, said in an e-mail. She didn't say when the project may be approved for development or how much it would cost. ExxonMobil and BHP Billiton each own 50 percent of the Gippsland Basin venture.

Turrum may cost between $501 million and $2 billion, according to a BHP Billiton presentation sent yesterday to the Australian stock exchange. BHP Billiton spokeswoman Emma Meade couldn't comment.

The Turrum field, about 26 miles) off Ninety Mile Beach in eastern Victoria state, lies beneath the Marlin field in the Vic/L02 license in about 58 meter-deep water, ExxonMobil said. Oil and gas liquids will be processed on the new platform and exported to the Longford gas plant in Victoria through an existing pipeline, it said.

Gas will initially be re-injected into the field before a new onshore gas-processing plant is built at Longford by 2015 to remove carbon dioxide from the gas.

Is nuclear power the answer to the energy crisis? The world's first large-scale nuclear power plant opened at Calder Hall in Cumbria, England, in 1956 and produced electricity for 47 years.

Nuclear power is generated using uranium, a metal that is mined as an ore in large quantities, with Canada, Australia and Kazakhstan providing more than half of the world's supplies.

Nuclear reactors work in a similar way to other power plants, but instead of using coal or gas to generate heat, they use nuclear fission reactions. In most cases, heat from the nuclear reactions convert water into steam, which drives turbines that produce electricity.

There are different kinds, or isotopes, of uranium, and the type used in nuclear power plants is called uranium-235, because these atoms are easiest to split in two. Because uranium-235 is quite rare, making up less than 1% of natural uranium, it has to be enriched until the fuel contains 2-3%.

Inside a nuclear reactor, rods of uranium are arranged in bundles and immersed in a giant, pressurised water tank. When the reactor is running, high-speed particles called neutrons strike the uranium atoms and cause them to split in a process known as nuclear fission. The process releases a lot of energy and more neutrons, which go on to split other uranium atoms, triggering a chain reaction. The energy heats up the water, which is piped out to a steam generator.

To make sure the power plant does not overheat, control rods made of a material that absorbs neutrons are lowered into the reactor. The whole reactor is encased in a thick concrete shield, which prevents radiation escaping into the environment.

In Britain, nuclear power stations provide 19% of our electricity and account for 3.5% of our total energy use. All but one of those reactors are due to close down by 2023. Some groups oppose nuclear power stations because they produce radioactive waste and could release radioactive material if there was an accident. But nuclear power plants do not release greenhouse gases, which cause coal and gas-fired power plants to contribute to global warming. Without nuclear power stations, UK's carbon emissions would be 5% to 12% higher than they are.

In 1957, the world's first nuclear power accident occurred at Windscale in west Cumbria. A fire in the reactor caused a release of radioactivity, which led to a ban on milk sales from nearby farms. The site was later renamed Sellafield. Modern reactors are designed to shut down automatically. The worst nuclear power accident in history took place in Chernobyl in 1986 when a reactor there exploded, killing tens of people instantly and exposing hundreds of thousands more to radiation.

In January, the government reaffirmed its plans to expand nuclear power in Britain to help it meet stringent targets to reduce carbon dioxide emissions.

Nuclear weapons
There are two main types of nuclear weapon: atomic bombs, which are powered by fission reactions similar to those in nuclear reactors, and hydrogen bombs, which derive their explosive power from fusion reactions.

The first atomic bomb was produced at Los Alamos National Laboratory in America under the Manhattan Project at the end of the second world war. An atomic bomb uses conventional explosives to slam together two lumps of fissionable material, usually uranium-235 or plutonium-239. This creates what is known as a critical mass of nuclear material, which releases its energy instantaneously as atoms inside it split in an uncontrolled chain reaction.

Atomic bombs unleash enormous shock waves and high levels of neutron and gamma radiation. In atomic bombs, uranium is enriched much more than fuel, to about 85% uranium-235.

On August 6 1945, an atomic bomb called Little Boy was dropped on the Japanese city of Hiroshima, followed three days later by another, called Fat Man, on Nagasaki.

Hydrogen, or thermonuclear bombs, work in almost the opposite way to atomic bombs. Much of their explosive power comes from fusing together hydrogen atoms to form heavier helium atoms, which releases far more energy than a fission bomb. Two types, or isotopes, of hydrogen are used - deuterium and tritium. A deuterium atom is the same as a hydrogen atom, except the former has an extra neutron in its nucleus. A tritium atom has two extra neutrons.

A hydrogen bomb has a built-in atomic bomb, which is needed to trigger the fusion reaction. Hydrogen bombs have never been used in war and are thousands of times more powerful than atomic bombs.

The first test of a hydrogen bomb was at Enewatak, an atoll in the Pacific Ocean. It released a three mile-wide fireball and a mushroom cloud that rose to nearly 60,000 feet, destroying an island in the process.

Nuclear waste
One of the biggest problems the nuclear industry faces is what to do with the radioactive waste it produces. Some of it will remain radioactive and hazardous for hundreds of thousands of years.

High-level waste is the most dangerous because it can melt through containers and is so radioactive it would be fatal if someone was near it for a few days. This type of waste makes up just 0.3% of Britain's total volume of nuclear waste, which is mostly waste from spent fuel rods. The largest amounts of radioactive waste are made up of nuclear fuel cases, reactor components and uranium.

Today, high-level waste is dealt with by cooling it in water for several years and then mixing it into a molten glass, which is poured into steel containers. These canisters are then stored in a concrete-lined building.

This is only a temporary measure, though. Scientists know that eventually they need to find a way of storing nuclear waste safely for thousands of years. Some countries, such as America and Finland, plan to store nuclear waste in deep underground bunkers. For this to be safe, scientists have to be sure the material could never leak out and contaminate water supplies or rise up to the surface.

Britain already has more than 100,000 tonnes of higher activity radioactive waste that needs to be stored. Large amounts of low-level waste are already stored in concrete vaults in Drigg in Cumbria. Other plans for disposing of nuclear waste have included dumping it at sea and blasting it into space.

BG Group has made a £6bn approach to buy an Australian gas company - its biggest takeover bid ever - after reporting a 78% increase in first-quarter profits from soaring oil and gas prices.

The approach to Origin Energy is aimed at bolstering its position in the fast-growing Asia-Pacific liquefied natural gas (LNG) market by taking control of the Australian utility's reserves.

Shares in BG fell 5% in early trading as City analysts worried about its outline offer of A$14.70 (£7) a share in cash, a 40% premium to Origin's closing price of A$10.47 on Tuesday.

BG said yesterday that net profit rose to £767m from £432m in the same period last year and its results compare with a 12% rise in first-quarter profit at Shell and a 48% rise at BP.

BG's core upstream, gas and oil production unit had a 50% jump in profit thanks to a more than 10% rise in average gas prices and a rise of about 70% in crude prices. Frank Chapman, chief executive of BG, denied that the company was profiting at the expense of British homeowners, who have faced energy price increases of about 17% recently. Analysts said the purchase of Australia's second-largest energy retailer would help fill a hole in BG's LNG business, which is booming and soaking up shipments originally expected to land in the US.

David Thomas, a Citigroup oil analyst, said: "Strategically, such a purchase looks sound, based on BG's aspirations to have regional supply of LNG to Asia-Pacific markets."

But others fretted about the value being put on Origin. "It's a pretty high price and premium," said Sydney-based Jason Mabee, a utilities analyst at ABN Amro. Colin Smith, analyst at Dresdner Kleinwort, said the market would also need to be convinced about the logic of BG, Europe's fourth-largest non-government-controlled oil and gas company by market value, buying Origin's electricity assets.

BG Group Plc, the U.K.'s third- largest oil company, made an unsolicited $A12.9 billion ($12 billion) bid for Origin Energy Ltd. to add reserves for an Australian gas venture and reported record first-quarter profit.

Talks will take place with Origin, BG said today in a statement after posting a 78 percent jump in net income to 767 million pounds ($1.5 billion). The cash offer values shares of Australia's biggest coal-seam gas producer at A$14.70 each, 40 percent more than yesterday's close. BG has ``got a lot of cash to make major acquisitions,'' Peter Hitchens, an analyst with Seymour Pierce in London, said in a phone interview. The Reading, England-based company ``is remarketing its cargos in places like Europe and Asia and making a huge amount of money on the back of it.''

The U.K. gas producer will gain access to gas fields as it seeks more opportunities to supply liquefied natural gas to Asia after linking with Queensland Gas Co., or QGC, for an A$8 billion LNG export project in Australia. Prices for LNG paid by utilities in Japan, the world's biggest importer of the fuel, have reached almost double the U.S. benchmark, consultant Facts Inc. said. BG fell 5.9 percent to 1,231 pence in London. That was the stock's biggest drop in more than a month, paring its gain for the year to 7 percent.

`Strong Run'
`The shares have had such a strong run and people are now looking at the acquisition and thinking it's a bit steep,'' Hitchens said. ``But I'm not worried by the price.''

BG plans to supply LNG to Singapore from Australia, Chief Executive Officer Frank Chapman said on a conference call. He declined to comment further on the bid for Origin.

``At this level, assuming full debt funding, we see the deal as broadly neutral on a cash flow basis,'' Mark Iannotti, a London-based analyst at Merrill Lynch & Co., wrote in a report.

Goldman Sachs Group Inc. and Gresham Advisory Partners are advising BG on its bid. Origin will be advised by Macquarie Group Ltd., company secretary Bill Hundy said by phone. ``Acquiring Origin to secure its Asia Pacific footprint is logical for BG,'' Richard Griffith, an analyst at Evolution Securities Ltd. in London, wrote in an e-mailed report. ``However last year a proposed merger between Origin and AGL Energy Ltd. collapsed so a successful offer is not a foregone conclusion.''

AGL Energy, Australia's biggest electricity and gas retailer, is the largest shareholder in Queensland Gas, with a 27.5 percent stake. Origin rejected a merger bid from AGL in February last year that at the time valued Origin at A$7.5 billion.

Beat Estimates
Profit excluding disposals and other one-time items was 789 million pounds. That beat the 715-million pound median estimate of eight analysts surveyed by Bloomberg. Profit was buoyed by higher commodity prices as oil traded at $100 a barrel for the first time on Jan. 2. Japan boosted LNG imports after an earthquake in July shut the Kashiwazaki Kariwa nuclear power plant.

Chapman said BG plans to invest 3.1 billion pounds in projects this year, including 300 million pounds in QGC. The company generated 1.6 billion pounds in cash from operations in the first quarter.

Total output increased 4 percent to 60.7 million barrels of oil equivalent (667,000 barrels a day) during the quarter, BG said. The median estimate of six analysts surveyed by Bloomberg was for production of 662,500 barrels a day.

Cargoes Diverted
``Seasonal demand from Asia was strong, resulting in 90 percent of cargoes being diverted,'' the company said. BG sold 58 LNG cargoes in the quarter, of which only six were shipped to the Elba Island terminal in the U.S., without any deliveries to the Lake Charles point. Chapman expects operating profit from marketing and shipping to rise to about 1.1 billion pounds this year. The LNG ``market is tight, there is a very strong demand at the moment,'' he said.

Japan increased imports of the fuel for immediate delivery in March to the highest level since October. It purchased 640,894 metric tons from Algeria, Egypt, Nigeria, Norway and Trinidad & Tobago, according to Ministry of Finance data.

BG, the biggest LNG supplier from the Atlantic Basin to Asia, this month won a 20-year contract to provide the fuel to Singapore's first import terminal from 2012.

The company reiterated today that its Dragon LNG import terminal being built in Wales will be completed by December.

Areva SA., the world's biggest nuclear-reactor manufacturer, is investing more than $7 billion in uranium mines and an ore enrichment plant to satisfy rising demand for non-polluting atomic energy.

The Paris-based company is deepening its investment in atomic fuel as it expects more than 300 gigawatts of nuclear capacity to be added globally by 2030, Areva SA Board Member Luc Oursel said at a nuclear energy conference in Tokyo.

Demand for atomic energy is spurring orders for reactors and boosting contracts to prolong the lifespan of existing plants while manufacturers intensify efforts to extract, enrich and recycle ore. Areva and Mitsubishi Heavy Industries Ltd. said they are expanding their alliance to include nuclear fuel sales.

``The world wants more energy for less carbon dioxide,'' Oursel said at the annual Japan Atomic Industrial Forum today.

Areva will invest more than $2.3 billion in uranium mines and at least 3 billion euros ($4.7 billion) in an enrichment plant. ``Areva is preparing to contribute to the nuclear renaissance,'' Oursel said. ``Our ambition is to make the renaissance certain.''

He forecast installed nuclear capacity to rise to 635 gigawatts in 2030 from 372 gigawatts in 2006. The estimate is moderate compared with other forecasts, some of which are as high as 800 gigawatts, said Oursel, who is also the chief executive officer of the company's reactor-building unit Areva NP.

Nuclear Renaissance
Orders for reactors and atomic fuel are rising at the fastest pace since the 1990s as demand for cleaner-burning fuels grows, crude oil prices surge and nuclear plant builders reassure the public that atomic energy is safe. An explosion at the Three Mile Island plant in Pennsylvania in 1979 and a reactor meltdown in Chernobyl in 1986 had sparked safety concerns.

Areva, the world's third-biggest uranium producer, on April 11 said it will team up with Mitsubishi Heavy to sell nuclear fuel, mainly to Japan. Separately, it won 2 billion euros of fuel supply contracts from Japanese utilities, Chief Executive Officer Anne Lauvergeon said.

The deals with Japan's utilities came almost a year after the French company said it would be getting more than 1 billion euros for an order from Korea Hydro & Nuclear Power Ltd., a unit of Korea Electric Power Corp., to enrich uranium. Ore must be enriched before it can be used to fuel light-water reactors.

Enrichment Plant
Areva, which accounts for 25 percent of the world's enrichment capacity, is currently building the Georges Besse II plant in South France to enrich ores. Commercial operation is slated for the middle of 2009.

The atomic reactor builder has stakes in uranium mines in countries such as Niger, Australia and Canada. It bought UraMin Inc., a South Africa-based mining company, for about $2.5 billion last year, when uranium prices touched a record $138 a pound.

Currently, 439 reactors are in operation worldwide, according to the International Atomic Energy Agency.

China bought a stake in BP Plc, its second investment in a European oil company as the nation seeks to secure resources and boost returns on the world's largest foreign-exchange reserves.

BP, Britain's largest company by market value, is aware a Chinese sovereign fund bought shares and welcomes the investment, spokesman David Nicholas said today. The fund purchased just less than 1 percent of BP, with the stake worth about 1 billion pounds ($1.97 billion), the Daily Telegraph reported.

The BP stake adds to Chinese investments in France's Total SA, Europe's third largest oil company, and Rio Tinto Group, the world's third-largest miner. China is buying assets across the globe as commodity prices rise to records and its foreign currency reserves swell to $1.68 trillion.

``It could be the beginning of a wave of investments in major oil companies as oil prices keep racing higher,'' said Victor Shum, senior principal at energy consultant Purvin & Gertz Inc. in Singapore. ``It shouldn't raise any political concern as the Chinese are not gaining management control. It's passive.''

China Investment Corp., the nation's $200 billion sovereign wealth fund, last year spent more than $8 billion on stakes in Blackstone Group LP, manager of the world's largest buyout fund, and Morgan Stanley, the second-biggest U.S. securities firm.

``We're aware of the Chinese shareholding and we welcome all shareholders,'' said Nicholas. He declined to comment further.

BP Shares, Oil
BP shares have fallen 11 percent this year to 549 pence at the close in London yesterday. They gained 8.4 percent last year. Crude oil for May delivery rose to a record $112.45 a barrel on the New York Mercantile Exchange. It was at $112.43 at 10:48 a.m. in Singapore. Prices are up 77 percent from a year ago.

Wang Xiaoya, a Beijing-based spokeswoman at China Investment, which manages the nation's $200 billion sovereign wealth fund, declined to comment on the report. Zhao Hongtao, a spokeswoman for China's $70 billion national pension fund, said the agency hasn't made such investments.

A Beijing-based official at China's foreign-exchange regulator declined to comment on today's report. SAFE Investment Co., a Hong Kong-based subsidiary of the foreign-exchange watchdog, bought a stake of less than 1 percent in Australia & New Zealand Banking Group Ltd. in December.

The U.K. government is aware of the stake-building by the fund, and is understood to be monitoring the situation closely, the Telegraph said, citing unidentified people in banking. The holding in BP, with a capitalization of 104 billion pounds, was bought over a period of time, according to the report.

Cnooc - Unocal
The rising influence of state-owned capital pools has prompted the U.S. and Europe to demand more transparency and disclosure. Cnooc Ltd., China's largest offshore oil explorer, was thwarted in August 2005 when U.S. lawmakers helped block its $18.5 billion bid for Unocal Corp., citing threats to national energy security.

``Our investment mode is close to that of pension funds or university endowment funds,'' said Bai Xiaoqing, a general director at China Investment, at a Paris conference yesterday. ``Our investments are long term and passive,'' and ``we're not interested in taking control of companies.''

The Kuwait Investment Authority is among several other sovereign funds from other countries to also hold shares in BP, the Telegraph said, without saying where it got its information.

A No. 2 core was brought to the surface showing oil, as the company looks for contact with water. Two 24-metre cores cut over three days all had “good oil shows” throughout a 48.6 m sampling.

”This latest well appears to point to a potentially significant gross hydrocarbon column both at the Dunsborough-2 well and for the field as a whole,” a statement said.

Shareholders were told it was “to early” to comment on reserves, but said the field could be comparable to the nearby producer Cliff Head and its 16 million barrels.