The world economy faces a recession if the price of oil stays above $90 a barrel, the International Energy Agency (IEA) warned.

The price of oil crept up again today, reaching $95, following two days of declines caused by the collapse of investment bank Lehman Brothers and slumping stock markets. Fears of a deep recession had pushed the price below $100 a barrel for the first time in six months.

International Energy Agency executive director Nobuo Tanaka said economic growth depends on "what will happen if high prices affect the emerging economies." There has been no sign so far of a slowdown in China, India or the Middle East, he said, despite oil reaching a record $147 a barrel in July. Barclays Capital estimates the average price in the third quarter will be $97.50 a barrel.

The drop in price over the last few days was an aberration caused by investors fleeing any potentially risky assets and hoarding cash, analysts said at the time. Oil traded as low as $90.51 yesterday, when hurricane damage in the Gulf of Mexico and demand in Asia should have caused further rises, based on supply and demand.

US oil consumption has already fallen because of the record prices reached this year, Mr Tanaka said. He called on Organization of the Petroleum Exporting Countries nations not to reduce production when they meet again in December.

The Organization of the Petroleum Exporting Countries producers last week said they would cut production by 520,000 barrels a day, as prices dropped from their highs over the summer. Oil supplies are still tight, according to the IEA. Earlier this year some analysts forecast prices would reach $200 a barrel because demand from emerging economies would create a permanent shortage.

Oil prices fell again as the dollar continued to strengthen and investors turned their attention to slowing worldwide demand for crude now that concerns over the impact of Hurricane Gustav have begun to fade. At one point, the price of a barrel was trading in New York below $105.05 - its lowest level since April and sharply down on the record $147.27 seen on July 11 - before rising above $108.

But there were warnings that OPEC was unlikely to let the oil price slip much further as members of the oil producers' cartel seek to keep crude above $100 a barrel by cutting production.

Since July, oil's bull run has been stopped in its tracks amid the economic downturn in America, Europe and Japan.

"That's been a focus of the market, that the demand side has weakened, particularly in developed countries like the US," said David Moore, commodity strategist at Commonwealth Bank of Australia.

"Had it not been for the hurricane, we would have seen a lower price profile over the last week." Robert Nunan, of Mitsubishi Bank, added: "Everyone's worried about demand destruction."

As Gustav swept towards the Gulf of Mexico companies shut down 13 oil and gas platforms and evacuated personnel, pushing up the crude price.

Staff are now returning to the platforms, which escaped serious damage. In 2005, Hurricanes Katrina and Rita caused several weeks of shutdowns.

Should the oil price drift further towards $100 a barrel, analysts believe Opec will seek cuts in production to underpin the price. OPEC next meets on September 9, in Vienna.

Tobias Merath, head of commodities research at Credit Suisse, believes that production curbs will keep oil at between £100 and $110 a barrel for the rest of the year.

He told the Reuters news agency: "On oil, I think the bulk of the correction is behind us. We think it can test $100 or drop slightly below it in a couple of weeks, but it should not remain below $100 on a sustained basis."

Mr Merath said that weaker demand for crude from the US and OECD countries in recent months has offset higher demand from emerging markets like China and India, keeping overall consumption flat.

"At the same time, OPEC countries are producing quite a bit of oil since March and that is apparently working. But the moment oil drops below $100, they will be quick to cut back production," he said. "We expect a recovery in oil prices in 2009. We expect prices to hover between $115 and $120 in 2009."

At the moment OPEC remains split on production cuts. Venezuela has led demands for cuts, but Ecuador's oil minister, Galo Chiriboga, said yesterday that output levels should remain unchanged.

Reliance Industries is likely to see a 2-3 week delay in gas production from its prolific eastern offshore D6 field after two of its vessels went out of operations following shipping authorities issuing new norms. US-operators of Helix Eclipse and Helix Express, that were doing undersea installations in D6, took off their vessels from operation on July 12 after Shipping Authorities refused to renew their operational licence in view of a ban of vessels over 25 years in age. The vessels were, however, back in business on July 23 after the Shipping Ministry clarified that its 25-year vintage criteria will not apply to oil vessels who will be judged only by their classification.

The 10-day halt in installation work will see gas production from D6 being delayed by at least 2-3 weeks, an industry official said. "Gas will not flow before August-end."

He said initial production will be 15 mn standard cubic meters per day, which will ramp up to 40 mmscmd by December.

Reliance is investing USD 5.2 billion bring to production Dhirubhai-1 and 3 gas fields - two of the 18 finds made in the KG-DWN-98/3 (D6) block in Krishna Godavari basin. Alongside, it is also developing the MA oil field in the same block.

Oil production is also likely to start by September. Volumes will ramp up to 80 mmscmd within first year of production. Peak oil output is seen at 40,000 barrels per day (2 mn tons per annum).

DG Shipping had in April banned operation of all vessels of more than 25 years age, potentially crippling offshore oil and gas production. It later announced that vitange will not be the criteria for oil vessels. Oil vessels will be judged by the their safety certifications.

The 5,200 sites identified for the development of small hydro power (SHP) projects have failed to attract private investments due to state bureaucracy and infrastructure bottleneck. The government has been able to implement less than 12% projects so far. Out of total 618 SHP projects being set up, only 143 plants are developed through private investments.

According to experts, delay in getting clearance from respective state government, forest and other departments is posing a serious threat to investments in SHP projects. While the state governments are responsible for allotment of sites for SHP projects, the procedure is too long in most states and needs to be streamlined. SHP developers have to take several clearances related to land, environment, forest and irrigation before starting their project.

In a concerted bid to charge that scenario, the MNRE is currently in talks with several state governments to develop agreements, drafts regulatory tariffs and other modalities in order to speed up the clearance process required for setting up SHP plants. “That exercise is expected to address industry worries over the government merely identifying sites, instead of also providing adequate data on priority regarding the location, available resources and tariffs,” an official said.

“Although states claim that there is a single window clearance system and a nodal agency is expected to co-ordinate the clearances developers, by and large, have to move to different departments for clearances,” he said.

Developers also face lack of clarity in tariff—which is decided by the state electricity regulatory commission—due to which they are often unable to work out the economic viability of their projects before starting them.

“Large number of sites have been identified in states like Andhra Pradesh, Arunachal Pradesh, Himachal Pradesh, Jammu and Kashmir and Uttrakhand. However, there is lack of resources and required infrastructure to develop such projects,” Indian Renewable Energy Development Agency (IREDA) chairman & managing director Debashish Majumdar said.

According to Mr Majumdar, even if some investors set up their plants against all odds, they are quite likely to face big losses since state governments even fail to provide transmission lines to evacuate the generated power.

“SHP projects are very tricky as they are site-specific. The government should not just identify sites but adequate data regarding the location, available resources and tariffs needs to exist,” PricewaterhouseCoopers executive director (energy & utilities) Shubhranshu Patnaik said.

“Many sites have already been allotted to private developers but the progress for installation is not up to the desired level for various reasons. The government is now planning to look into these factors and give momentum to promote and facilitate small players in this sector,” a government official said.

Small hydro-power projects generating up to 25 mw power are categorised as renewable sources of energy. The country has an estimated potential of about 15,000 mw power generation through small hydro-power projects, but the cumulative power generation from these projects have been only 2,045.61 mw.

A 100 billion dollars! That's the valuation CM Narendra Modi declared on Thursday for the natural gas find by Gujarat State Petroleum Corporation (GSPC) in Krishna-Godavari basin. Modi said the valuation was based on the assessment of top experts in the field.

Modi said Gujarat State Petroleum Corporation would now be able to fulfil energy requirements of Gujarat for a long time to come. Modi and his ministers flew on Thursday to the KG-22 well near Kakinada, which has created a lot of excitement as its estimated gas reserve of three trillion cubic feet (TCF) is said to be the highest ever from any single well in India.

Modi told reporters that the estimate of gas find would be ‘‘ much higher than 20 TCF which was estimated earlier'' . In value terms, the total gas in the Gujarat State Petroleum Corporation's Deendayal block, which is under exploration right now, would be to the tune of Rs 4 lakh crore, or $100 billion.

The value is based on the price at which ONGC and Reliance sell gas in India, $4.5 metric million British thermal unit (MMBTU), the accepted unit for calculating the price of natural gas. However , if one were to calculate it on the basis on the current international rate, $18 dollars per MMBTU, it would be $300 billion.

So far, Gujarat State Petroleum Corporation has drilled 10 wells. Of these, gas was found in six wells. Three wells were found to be dry. The result of one well is still expected. The corporation plans to drill four more wells. The director general, hydrocarbons (DGH) has so far given estimate for only one well, KG-8 , which it put at 1.8 TCF.

Asked whether Gujarat State Petroleum Corporation would go public by coming up with an IPO, Modi said, ‘‘ The GSPC is financially strong. It doesn't need any outside help. It is a profitmaking organisation.''

Gujarat State Petroleum Corporation valued at $22.5 billion. Going by the claim of Modi that the K-G reserves of GSPC are worth $100 billion, then the state PSU's valuation would be $22.5 billion, according to investment bankers.

At Rs 90,000 crore, this valuation would make GSPC among the top-10 companies in India. It would be placed sixth after RIL, ONGC, Bharti Airtel, NTPC and MMTC, at valuations calculated at the close of markets on Thursday.

A goldmine for the Gujarat government, Gujarat State Petroleum Corporation has invested Rs 3,000 crore in a 1200-km gas grid in Gujarat and is involved in exploration in Egypt, Yemen, Australia and East Temor. It has planned LNG terminals at Mundra and Pipavav. It also plans to invest Rs 8,000 crore in city gas distribution system covering all towns in Gujarat.

The last june 22, Gordon Brown today clashed with leading oil producing nations by insisting that fundamental market imbalances, rather than speculative pressures, were driving up oil prices and creating the world's third and worst oil shock.

Gordon Brown was in Jeddah at an unprecedented one-day oil summit of producers and consumers convened by Saudi Arabia, saying it was the duty of the world leaders to address the biggest crisis facing the world. Brown was the only major world leader to travel to the summit among the 35 nations attending the hastily convened conference.

Gordon Brown's analysis of the causes of record oil costs was at odds with the OPEC president, Chakib Khelil, who reiterated opposition to increased production by saying that "the price is disconnected from fundamentals" of supply and demand.

"We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply."

The Indian finance minister, Palaniappan Chidambaram, agreed. He said producers and consumers should "wrest control" of oil trading by agreeing to restrict prices.

"Surely demand and supply cannot explain what has happened over the last 12 months," Chidambaram said. "Oil prices were $70 a barrel in August 2007 and how is it that they've doubled when there has been no dramatic change in demand?"

But in the increasingly divisive debate on the cause of the quadrupling of oil prices since 2000, Brown has support from the US and least some OPEC members, notably Saudia Arabia, the largest oil producer. Under diplomatic pressure from America and Europe, Saudi Arabia increased production in May by 300,000 barrels a day, to 9.45m barrels a day. Oil minister Ali al-Naimi has said he will increase production by 2%, to 200,000 barrels a day, next month.

Brown addressed the conference with an offer of a long-term deal whereby the oil consuming nations will diversify energy supplies, moving into nuclear and renewables, and the oil producing countries will increase production, and invest some of its $3 trillion oil revenues in western renewable technologies.

In the short term, there was a clear need for extra oil production Gordon Brown said. In a speech to the conference he said "all of us need credible future commitments on increased oil supply because even with further action we propose to tackle climate change, demand for oil will continue to be strong over the medium term."

He claimed his new deal could bring an end to "the zero sum game between producers and consumers" from which no one benefits. He insisted the world has to address not just short term under-production of oil, but the long-term boom in demand likely to come from China and India, a surge that requires the west to look for new sources of secure energy.

He told reporters in Jeddah that over the next few years China will see car ownership grow from 37m to 100m, a further 100 airports will be constructed and 1,000 cities built.

He said: "Anyone looking at it knows there is more demand than supply, and it is the same if you look at future years due to the rise of China, India, Asia, and equally importantly, the rise in oil consumption in the oil producing countries from Nigeria to the Arab countries. So whatever the impact of speculative forces, the real issue, the concrete problem is how demand can be brought into supply with demand".

Brown said he was willing to examine the impact of speculation — billions of dollars in financial investments in oil by investors hedging against a weakening US dollar — but stressed it was not the predominant source of the crisis.

Stressing the severity of the crisis he said: "We have had the credit crunch, we have had food prices rising very fast, we have had a trebling of oil prices which is creating a huge amount of stress because of its effect on petrol, gas and electricity and the follow through to the rest of the economy. This is the third great oil shock in three decades, but this is the worst oil shock because of the severity of the rise in price, and the unpredictability and volatility in the markets."

In signs that Gordon Brown has made progress in putting himself in the vaguard of the international discussions on oil price, Gordon Brown disclosed that Britain will host the follow-up summit in London to build the shared anaylsis of what he described as the biggest problem of the world. The London meeting will probably be held in October.

The Saudi summit was seen as a high risk venture since if it fails to convince the markets there are fears that oil prices already pressing $140 a barrel will rise further this week. Light, sweet US crude oil futures closed at $134.62 on Friday, despite a 17% Chinese rise in petrol prices, the country's first rise since November.

Pointing to the fall in oil production in Nigeria prompted by sabotage at the weekend - predicted to cause a 120,000 barrels a day drop in production — Brown did not suggest that yesterday's summit itself will cause a short-term drop in the oil price.

That view was echoed at the conference by the chief executive of Royal Dutch Shell, Jeroen van der Veer. He said: "What I've heard so far are basically all good ideas, but it will probably not change the price tomorrow morning.

"The mood of the meeting is all about investment, that is the way to go. For investment we need fiscal stability and security."

Brown stressed his determination to balance the UK energy portfolio by a big expansion in nuclear and renewables, including plans to produce 15% of the UK's energy with renewables by 2020.

Gordon Brown steered clear of his recent more populist attacks on OPEC in deference to the Saudi decision to cooperate over the escalating high oil price. Instead he called for Gulf states to be given significantly more opportunities to recycle increased oil revenues — whether through sovereign wealth funds or directly into alternative energy investments in developed economies.

He said oil consuming economies should follow the UK lead that we in the UK have set by offering genuine openness and partnership in our investment marke