India's natural gas production will more than double to 170 million standard cubic meters per day by 2011-12 after fields such as Reliance Industries' eastern offshore KG-D6 reach peak output.

In 2007-08, domestic production at 79.40 mmscmd and 31.50 mmscmd from import LNG met some 60 per cent of the demand, according to latest projections made by the Petroleum Ministry.

State-run Oil and Natural Gas Corp (ONGC) will produce 47.06 mmscmd of gas this fiscal, almost unchanged from 47.19 mmscmd of 2007-08. This output will rise to 51.65 mmscmd by 2011-12, while Oil India Ltd will contribute 10 mmscmd.

Reliance Industries' KG-D6 will start producing this year at an initial rate of 40 mmscmd, rising to 60 mmscmd in 2009-10 and to 80 mmscmd in 2011-12. When KG-D6 hits peak, the share of fuel produced by fields operated by private sector firms would touch 102.57 mmscmd (in 2011-12).

The projections anticipate an additional 2 mmscmd output from Mahanadi basin NEC-25 field of Reliance in 2011-12 and 4.5 mmscmd from Gujarat State Petroleum Corp's Krishna Godavari basin field.

India's import of liquefied natural gas (LNG) is also slated to more than double to 23.25 million tons by 2011-12 from 9 million tons in 2007-08 after Dabhol, Kochi and Mangalore terminals become operational.

Petronet LNG's Dahej terminal will see capacity doubling to almost 12 million tons and Shell's Hazira terminal is seen operating at 2.5 million tons, unchanged from present times. Dabhol may import 5 million tons, Kochi 2.5 and Mangalore 1.25 million tons, the projections stated.

Together with 81.38 mmscmd of LNG, the country's total gas availability will touch 252.09 mmscmd in 2011-12 from 110.9 mmscmd now.

Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein consolidated his power.

Exxon Mobil, Shell, Total and BP, the original partners in the Iraq Petroleum Co., along with Chevron and a number of smaller oil companies, are in talks with Iraq's Oil Ministry for no-bid contracts to service Iraq's largest fields, according to ministry officials, oil company officials and a U.S. diplomat.

The deals, expected to be announced on June 30, lay the foundation for the first commercial work for the major companies in Iraq since the U.S. invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.

There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq's Oil Ministry.

For an industry being frozen out of new ventures in the world's dominant oil-producing countries, from Russia to Venezuela, Iraq offers a rare and prized opportunity.

While enriched by escalating prices, the oil majors are also struggling to replace their reserves as more of the world's oil patch becomes off limits.

The Iraqi government's stated goal in inviting back the major companies is to increase oil production by half a million barrels per day by attracting modern technology and expertise to oil fields now desperately short of both. The revenue would be used for reconstruction, although the Iraqi government has had trouble spending the oil revenues it now has, in part because of bureaucratic inefficiency.

The Iraqi Oil Ministry, through a spokesman, said the no-bid contracts were a stopgap measure to bring modern skills into the fields while the oil law was pending in Parliament.

The oil price spiralled to a new all-time high today of almost $140 a barrel after worse-than-expected manufacturing data for the world's biggest economy weakened the dollar.
A barrel of US crude for delivery in July hit $139.89 in US trading, breaking through the previous high of $139.12 set last week. The sharp rise startled traders, who had expected the promise of increase production from Saudi Arabia to keep a lid on the oil price.

Brent crude also hit a record high today, touching $139.32 a barrel. The jump was sparked by the latest New York State manufacturing index, which fell for the fourth time in five months. This pushed the US currency down against other major currencies, affecting the oil price, which is quoted in dollars. Oil has more than doubled in value in the last year, driven by rising demand, weakness in the dollar and traders betting that the price will keep rising. This has pushed up motoring costs for business and consumers, fuelling inflation fears.

This has caused blockades in Spain, and protests in South America and Indonesia. In the UK, drivers have also been hit by the ongoing strike action between Shell and hundreds of its drivers.

Saudi Arabia is OPEC's largest oil producer, and yesterday it tried to take some of the heat out of rising fuel prices with plans to increase production next month. The Saudi move followed a weekend of talks between the UN secretary general, Ban Ki-moon; the Saudi ruler, King Abdullah, and the country's oil minister Ali al-Naimi.

Shares of natural gas, oil producers and oil services companies rose Thursday, with oil prices falling back from a fresh record above $135 a barrel and the broad market advancing.

The Amex Oil Index (XOI: 1,626.49, +1.20, +0.1%) rose 0.4% to 1,632. The Amex Natural Gas Index (XNG: 729.15, -2.73, -0.4%) rose 0.4% to 735. The Philadelphia Oil Services Index ($OSX: 341.43, -3.68, -1.1%) rose 0.5% to 347. Sector leader ExxonMobil (XOM: 93.04, -0.63, -0.7%) rose 22 cents to $93.89.

Crude prices rose 65 cents to $133.82, but traded lower than the new record of $135.09 set earlier in the day. See Futures Movers. The Wall Street Journal reported the IEA is attempting to assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but it is clear that future crude supplies could be far tighter than previously thought, the report notes.

The IEA has predicted previously that supplies of crude and other liquid fuels will keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently, according to the report, which added that the agency now is concerned that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day over the next two decades.

Royal Dutch Shell (RDSA: 87.11, -0.21, -0.2%) was upgraded to buy from hold at ING, which also lifted its oil price estimates to $115 a barrel this year and next, up 21% and 44% from an earlier view, and its oil view for the long term by 50% to $90 a barrel.

StatoilHydro (STO: 42.70, +1.60, +3.9%) was upped to hold from sell. "The market continues to ignore fundamentals," the broker said. "Instead, forward curves assume straight-line demand growth with no substitution, efficiency gain or high price economic offsets. The market also sees only a limited supply-side response at best. While we remain cautious of the speculative support in prices, and the daily trading of up to six times daily oil demand, our view on oil industry cycles or medium-term supply/demand elasticity is unlikely to affect momentum."

Shares of Royal Dutch Shell fell 23 cents to $87.09. Statoil rose 4.5% to $42.94. Among coal shares, Alpha Natural (ANR: 73.00, +1.33, +1.9%) rose 3% to $73.82. Merrill Lynch upgraded the stock to buy from neutral.

Energy stocks moved higher Wednesday as oil topped $132 a barrel for the first time on an unexpected draw down in petroleum supplies.

Phil Flynn of Alaron Trading cited supply problems from the Gulf of Mexico as fueling the latest record run in oil prices, as investors dive into the commodity to flee a falling dollar and turmoil in the financial sector. Bullish sentiment is outweighing the laws of supply and demand as traders look toward $135 a barrel as the next possible point of resistance.

The Amex Oil Index (XOI: 1,660.15, +30.06, +1.8%) rose 1.3% to 1,651. Royal Dutch Shell (RDSA: 88.40, +3.22, +3.8%) led gains among oil producers with a rise of 3.6% to $88.21. Gains accelerated after fresh data showing crude supplies falling by 5.4 million barrels to 320.4 million for the week ended May 16, according to the Energy Department Wednesday. Supplies had climbed over 12 million barrels in four weeks. Refinery utilization rose to 87.9 % of capacity from 86.6% a week ago. Following the news, July crude topped $132 a barrel for the first time.

The Amex Natural Gas Index (XNG: 749.05, +7.81, +1.1%) rose 0.5% to 745, cooling from an earlier rise of 1%. The Philadelphia Oil Service Index ($OSX: 355.01, +4.28, +1.2%) rose 0.6% to 353. National Oilwell Varco (NOV: 86.55, +5.68, +7.0%) jumped 5.3% to $85.16. Meanwhile, average U.S. retail gasoline prices continued their move into record territory on Wednesday, with a rise of a penny to $3.81 a gallon for regular unleaded, according to the Daily Fuel Gauge Report from AAA. A month ago, the average price was $3.50 a gallon and a year ago it was $3.21 a gallon.

Among movers, PETROBRAS (PBR: 76.86, +2.75, +3.7%) rose 3.2% to $76.46. On Tuesday, the company said it plans to contract 40 drilling ships and platforms to operate in deep and ultra-deep waters by 2017.

Chesapeake (CHK: 56.73, -0.53, -0.9%) fell 1.3% to $56.53 after it priced its offering of $1.2 billion of contingent convertible senior notes. The company upped the size of the deal from $500 million. The natural gas producer also announced that it priced $800 million of 7.25% senior notes.

Four British investors in ExxonMobil are combining to throw their weight behind the Rockefeller family and vote in favour of the separation of the roles of chief executive and chairman on the board of the American oil major.

F&C Asset Management, the Co-Operative Insurance Society, Morley Fund Management and the West Midlands Pension Fund have taken the unprecedented step of publicly confirming that they will back a special motion at the company's annual meeting next week in Texas to split the roles of current incumbent Rex Tillerson.

The quartet, who have not revealed their individual shareholdings in ExxonMobil, have been joined in their support by British corporate governance specialist PIRC. The campaign to divide the roles currently held by Mr Tillerson is being spear-headed by descendants of John D Rockefeller, who founded the oil business that remains at the core of ExxonMobil.

The Rockefeller family shareholders in ExxonMobil, comprising around 100 descendants and corralled by Neva Rockefeller Goodwin, argue that ExxonMobil has largely ignored calls for a shift to green energy, and believe that it will be left behind as rivals such as BP and Royal Dutch Shell continue to invest in eco-power.

By separating the roles, the Rockefeller descendants believe a non-executive chairman could provide another point of view on the board, one that would not be all controlling as is the situation currently.

Karina Litvack, director of governance and sustainable investment at F&C Asset Management, said: "Despite top-notch individual directors, the company's record over the last decade, particularly regarding climate change, demonstrates that debate has been lacking."

Royal Dutch Shell is facing a showdown with investors over its plans to pay £3m to directors simply to stay on the board for three years.

The oil giant is giving shares equivalent to their annual salary - around £1m each - to finance director Peter Voser, exploration and production director Malcolm Brinded and gas and power director Linda Cook 'to enhance retention ahead of the forthcoming board successions'. Chief executive Jeroen van der Veer is due to retire next June, while Robert Routs, head of its downstream and chemicals business, will leave by the end of the year. Royal Dutch Shell is keen to keep the three directors on board to ensure continuity.

But one investor said the payments were pointless: 'I have not seen a business it works in. The executives still leave.'

Corporate governance monitor PIRC is also recommending that its members vote against the remuneration report, saying: 'PIRC does not support the use of retention awards, in particular when no performance conditions are applied.'

Higher oil and natural gas prices helped Royal Dutch Shell and BP report record first-quarter profits Tuesday, beating analysts' expectations and prompting share gains across the industry.

The two biggest oil companies in Europe more than offset declining refining margins as crude oil nears $120 a barrel. A move by investors to commodities as an alternative to the shrinking dollar, combined with a spate of supply disruptions, helped to push U.S. crude futures to a record $119.93 on Monday.

Shell's net income in the first three months of the year rose 25 percent to $9.08 billion. BP reported its profit increased 63 percent to $7.62 billion. Shares of Shell and BP trading in London rose more Tuesday than they had in at least two years, leading other oil companies, like ConocoPhillips and ExxonMobil, higher.

"The results are very good because of the high oil price but also without it because we had expected the refining margins, which collapsed, to affect earnings," said Christine Tiscareno, an oil analyst at Standard & Poor's in London. "Both companies did an excellent job controlling costs."

Tiscareno and other analysts warned that while a rising oil price might for now benefit Shell and its rivals, it would at some point start to hurt demand for gasoline, as customers became unable to afford the higher prices. Peter Voser, chief financial officer at Shell, told analysts during a conference call that it was "too early" to say how and when the higher oil price would affect demand.

Despite recent disruptions at BP, oil and natural gas production was unchanged at 3.9 million barrels of oil-equivalent a day, while output at Shell remained unchanged at 3.5 million barrels of oil-equivalent a day. BP closed a pipeline system Sunday after a strike at a refinery in Scotland cut supplies. Some investors are particularly worried about supplies from Nigeria, which produces the higher quality crude needed in the United States to meet the demand that is expected to increase during the upcoming summer driving season. This month, five police officers guarding an oil terminal in Nigeria were killed by armed militants, who aim to damage exports from the oil-rich Niger Delta.

Shell said attacks in Nigeria had halted 164,000 barrels of oil-equivalent a day of production in the country. Voser said Shell planned to invest up to $27 billion to add one million barrels a day of production.

To improve earnings, Tony Hayward, who succeeded John Browne as chief executive of BP last year, is focusing on restoring production capacity and finding new projects. BP began oil production at the Deep Water Gunashli field in the in the Azerbaijan section of the Caspian Sea this month and expects its Thunder Horse production platform in the Gulf of Mexico, which cost more than $1 billion to build, to start production this year following a three-year delay. The company also completed some repairs at its plant in Whiting, Indiana, and the Texas City refinery, where an explosion killed 15 people in 2005.

Edward Westlake, an analyst at Credit Suisse in London, said that the earnings were "strong" and that the "results have captured increases in oil and gas pricing, while keeping costs increases muted."

BP and Shell are both trying to regain investor confidence damaged by delays and higher costs associated with new projects last year. In the case of BP, a lack in safety measures led to the Texas explosion. Hayward pledged to remove layers of bureaucracy to make managers more accountable for their businesses and improve efficiency.

Oil companies are also under pressure to find new projects to grow as its traditional fields age. They are also facing competition with state-run oil companies in Russia and the Middle East.

Other oil companies that profited from higher prices included ConocoPhillips, whose first-quarter profit rose 17 percent to $4.14 billion. ExxonMobil, the world's largest oil company, is set to report its figures May 1, followed the next day by Chevron.

The defendants that agreed to the settlement included BP, Royal Dutch Shell, ConocoPhillips, Chevron, Marathon Oil, Valero Energy, Citgo and Sunoco. Six other companies named in the lawsuit, including Exxon Mobil, did not agree to the deal, said Scott Summy, a lawyer at Baron & Budd and a counsel for the plaintiffs.

In the lawsuit, the plaintiffs, which include 153 public water systems in New York, California and 15 other states, claimed that the additive, a chemical called methyl tertiary butyl ether, or MTBE, was a defective product that led to widespread contamination of groundwater. The suit contended that the chemical was used by oil companies, even though they knew of the environmental and health risks that it posed.

Low levels of MTBE can make drinking water supplies unpalatable because of its "offensive taste and odor," according to the U.S. Environmental Protection Agency.

The agency has also found that the compound caused cancer in laboratory rats that were exposed to high doses.

Since the mid-1990s, hundreds of lawsuits have been brought against oil companies for their use of the chemical. This deal, if approved, would be the largest settlement to date. MTBE has been used since 1979 to increase octane levels in gasoline but its use became more widespread after the 1990 Clean Air Act mandated the use of an oxygenate in certain cities to reduce smog and other pollutants.

When mixed with gasoline, the additive ensured that the fuel burned more thoroughly, thereby reducing air pollution.

But after being widely adopted, it was found to corrupt groundwater. Even in small amounts, the additive makes water smell and taste like turpentine.

In 2005, some 130,000 barrels a day of MTBE were produced, involving about 1 percent of the nation's gasoline. Oil companies stopped using it in 2006.

The oil industry has fought hard to avoid penalties related to its use of the additive, arguing that it should not be forced to pay for the cleanup of a product that it was mandated to use. Estimates of the cost of a total cleanup of MTBE have run to the tens of billions of dollars.

"No court has ruled that gasoline with MTBE is a defective product," said Rick Wallace, a lawyer at Wallace King Domike & Reiskin in Washington, who represents Chevron and Shell. "This settlement does not concede the point. Quite the contrary, the settling companies are prepared to vigorously defend the product."

The risk has prompted the oil industry to stop using it and look for another additive. That eventually led to the development and use of ethanol.