The Indian company offered to buy Russia-focused Imperial in August for £1.3 billion ($1.88 billion) when global crude-oil prices were above $120 a barrel. Crude has since fallen closer to $40 a barrel, leading to the questions over whether the deal was worthwhile.

“We had sought to optimize the deal but couldn’t,” ONGC Chairman R.S. Sharma told reporters in December.

ONGC made the offer to Imperial shareholders in December after failing to get an extension for the deal from the U.K.’s takeover panel.

ONGC had to convince the Indian government, its largest shareholder, earlier in December that the acquisition was still attractive considering the long-term outlook for crude-oil prices and because it couldn’t back out of the deal, according to people familiar with the matter.

ONGC’s new investment, Imperial Energy, has a focus in Russia with assets in Tomsk, a region in western Siberia. These reserves amount to around 920 million barrels according to the company.

This oil and gas investment is particularly important for ONGC because it doesn’t have a strong track record completing major acquisitions at a time the government has pressed the state-run company to make investment in overseas oil and gas assets. India, with its rapidly growing economy, currently imports close to 75 percent of its crude oil needs.

Gazprom’s second-quarter net profit nearly tripled to 300 billion rubles ($10.2 billion). But the rapidly freezing Russian and Ukrainian economies, tightening credit, tumbling energy prices and a weak ruble have transformed the picture. Troika Dialog, an investment bank, reckons that if oil prices remain around $40 a barrel, Gazprom would have to sharply reduce capital spending. Operating cashflow would shrink to around $17.5 billion in 2010 from $32 billion in 2009. Gazprom currently plans cap-ex of around $30 billion in 2009.

The most pressing problem Nigeria faces in promoting its oil and gas industry is the Niger Delta where an armed rebellion against the government has ended all for the foreseeable future.

While working to improve these conditions the Nigerian government is hoping to boost its proven reserves of crude from a little over 36 billion to 40 billion barrels over the next year.

From Business Day:

There is no gainsaying the fact that oil  and investment in the sector constitute  the main artery that supports the life of the nation’s economy. Nigeria has a population of over 140 million people and an abundance of natural resources, especially hydrocarbons. It is the 10th largest oil producer in the world, the third largest in Africa and the most prolific oil producer in Sub-Saharan Africa. The Nigerian economy is largely dependent on its oil sector which supplies 95 percent of its foreign exchange earnings.

According to the 2008 BP Statistical Energy Survey, Nigeria had proven oil reserves of 36.22 billion barrels at the end of 2007 or 2.92 percent of the world’s reserves. The Nigerian government plans to expand its proven reserves to 40 billion barrels by 2010. Most of this is produced from the prolific Niger River Delta. Despite problems associated with ethnic unrest, border disputes and government funding, Nigeria’s wealth of oil makes it most attractive to the major oil-multinationals, most of whom are represented in the country, with the major foreign stakeholder being Shell.

Statistics show that the country in 2007 had natural gas reserves of 5.29 trillion cubic metres, 2.98 percent of the world total. Due, mainly, to the lack of a gas infrastructure, 75 perecent of associated gas is flared and 12 percent re-injected. The country has set a target of zero flare by 2010 and is providing incentives for the production and use of gas. The government also plans to raise earnings from natural gas exports to 50 percent of oil revenues by 2010.

Oil could top $200 per barrel by the end of 2009, say local energy economists. Right now long-term contracts are much higher than the current price of light, sweet crude. All signs are pointing toward higher petroleum prices and increased investment in the oil and gas industry.

From the Houston Chronicle:

I recently spoke to a group of local energy economists, though, and they weren’t worried about how low prices would go, but how high.

The market, too, is more focused on how much prices will rise in the coming year.

As my colleague Lynn Cook wrote last week, oil markets are experiencing a pricing condition known as contango, which sounds like a ZZ Top album but isn’t. In contango, long-term futures contracts are priced higher than short-term ones. In other words, traders are betting that prices will rise during the next couple of years.

For example, crude for January delivery closed Friday at $33.87 a barrel on the New York Mercantile Exchange. For June delivery, the price was $50.05, and the price increases for later months. It was $55.97 for January 2010 and $62.63 for January 2011.

In other words, no one believes that $40 oil is going to last, and they’re willing to bet that as the economy rebounds, so will demand.

“You’ve got a situation in the front where supply is greater than demand, and a situation in the back where demand is greater than supply,” said William Kovach, executive vice president for Koch Supply and Trading in Houston. “Contango is how the market solves those imbalances.”

Right now, there’s more oil than people want. Supplies have increased by 8 percent from a year ago, to 321 million barrels, according to the Energy Information Administration. That’s where speculators come in. You remember them, those convenient villains that some in Congress wanted to blame for last summer’s price spike.

One potential driving force for a rapid price increase in oil is the current cut in production, such as the recently announced two million barrels a day cutback from OPEC.  Odds are when international demand for crude rises production won’t be able to immediately ramp to meet that demand. In the coming year look for increased demand, price and investment in the oil and gas industry.

Citing U.S. officials and advisers to the government, the site reports that the Iraqi government will likely form a specialized police force to protect electricity and oil facilities. About 13,000 guards now under Iraq’s electricity minister will become part of the Interior Ministry, which is responsible for national and local police numbering some 380,000 (compared to 60,000 under the regime of Saddam Hussein). In addition to guards transferred from the Electricity Ministry, internal guard forces from all ministries except the Industry and Minerals Ministry would join the Interior Ministry as part of new police reforms.

“Electricity is the number-one complaint in this country, is the number-one essential service shortage,” Major General Mike Milano, a senior government adviser who heads U.S. efforts to build up Iraq’s police, said in an interview with Reuters Tuesday.

The additional guards needed to safeguard electrical facilities would be combined with a special Oil Police to form a Power Sector Police Directorate.

Many Iraqis still receive only hours of power a day. Some pay for private generation. This is because oil and power facilities have been targets of repeated insurgent attacks during five years of war.  Improved power and, most importantly, improved security will be required to convince foreign investors to come to Iraq.

The government of Prime Minister Nuri al-Maliki hopes to attract the world’s biggest oil companies to bid for oil and gas fields and sign deals to provide equipment to update Iraq’s dilapidated power system.

U.S. officials said they further hope that the Oil Police, which is expected to grow in number to 5,000 next year, will be competent to take over guarding Iraq’s oil pipelines by the end of 2010.

It is interesting to note that, for years after the U.S.-led invasion, the police were despised and feared by many Iraqis as sectarian or militia pawns. Milano credited Jawad al-Bolani, an independent Shi’ite, for purging the police force.  However, Milano said, the police still lack skills, training and basic resources such as fuel, arms and ammunition.

For the first time in more than 20 years, EIA’s new reference case projects virtually no growth in U.S. oil consumption, reflecting the combined effect of recently enacted fuel efficiency standards, requirements for increased use of renewable fuels, and an assumed rebound in oil prices as the world economy recovers.

EIA expects crude oil prices to rebound steadily when the economy recovers, reaching $189 per barrel (bbl) in 2030, or $130 bbl in 2007 dollars. The assumption of a higher world oil price path reflects tighter constraints on access to low cost oil supplies, in a setting where the forces driving growth in long-term demand in non-OECD countries remains as strong as previously expected.

EIA’s last report predicted that prices would be only $57 bbl in 2016, as new supplies came on stream, rising thereafter to only $70 bbl in 2006 dollars, or $113 bbl in nominal dollars.

Increasing emphasis on energy efficiency will cause U.S. dependence on foreign oil to decline sharply, EIA says, with liquid fuel imports, primarily oil, accounting for only 40 percent of U.S. consumption by 2025, compared with 58 percent last year.

EIA also is forecasting relatively strong growth in the use of renewable energy and new vehicle technologies. Total consumption of marketed renewable fuels is forecast to grow by 3.3 percent per year in EIA’s reference case.  The rapid growth reflects the EISA2007 renewable fuel standard and strong growth in the use of renewables for electricity generation that is spurred by renewable portfolio standards for electricity generators in many states.

EIA expects a sharp increase in the sale of unconventional vehicle technologies, such as flex-fuel, hybrid, and diesel vehicles, and a significant decline in the light-truck share of total light-duty vehicle sales. Hybrid vehicle sales are projected to increase from 2 percent of new light-duty vehicle sales in 2007 to 38 percent in 2030.

EIA only issues an advance summary of the annual long-term forecast in December. The full report is due out in January.

Saudi Arabia, the world’s biggest oil exporter, has led by example — reducing supplies to customers even before a cut has been agreed to help push prices back toward the $75 level Saudi King Abdullah has identified as “fair.”

Ali al-Naimi, the kingdom’s oil minister, was first to publicly call for curbs of 2 million bpd ahead of the meeting.

“The purpose of the cut is to bring the market into balance and avoid the gyrations of the price,” he said. “The cut may lead to higher prices or may not.”

Others in the group that pumps more than a third of the world’s oil said at least two million barrels needed to go from daily output to prevent a massive build in inventories.

“A minimum of two million we think needs to be cut so we can balance the market,” Iraqi Oil Minister Hussain al-Shahristani told Reuters.

The production cut is the third from the 12 members of OPEC this years and comes on the heels of a drop in price of over a $100 per barrel from a high in July of more than $147 per barrel. The cut represents a five percent reduction in world oil supplies.

Other oil producers, such as Russia and Azerbaijan, attended the meeting as observers and were encouraged by OPEC to reduce their daily production as well.

“Credit will start flowing again,” said Charles Swanson, Houston area managing partner for Ernst & Young LLP. “When it does, companies will be subject to much greater scrutiny. Those who are successful at raising capital should be the companies with their financial house in order.”

The current downturn provide the opportunity for larger, well-capitalized companies to take advantage of easier, cheaper access to producing properties and possibly talent that many of the smaller energy companies possess. Other companies are relying on alternative financing methods. Volumetric production payments and other mineral conveyance opportunities familiar to oil and gas companies, such as farm-ins and carried interests, have been used in the past and are being used again to fund the acquisition of businesses and property for exploration and production.

Also from the release:

Right now, oil and gas companies should be in a capital allocation mode that is based on a long-term view of pricing and demand, according to McCarter. “It’s critical to maintain a long-term outlook to take advantage of the right investment opportunities and bargains that will undoubtedly be available in the medium term. Be disciplined,” he said. “Take the emotion out of it. And stay the steady course.”

Because both the volume and dollar value of deals are currently down, Ernst & Young believes a new wave of oil and gas industry consolidation is likely to begin soon.

COMMANDER of the military Joint Task Force (JTF), in-charge of Delta and Bayelsa states, Brigadier-General Nanven Wuyep Rimtip, says the  Movement for Emancipation of the Niger-Delta (MEND) has been hijacked by hostage takers, armed robbers and other criminals, but, the militant group replied him, saying, it is a lie.
Brigadier-General Rimtip who was reacting to the threat by the MEND that it would join hands with some militants in Delta state to fight the task force because of the siege on oil thieves said, “I will not be surprised if the criminals that have hijacked MEND want to support oil thieves in Delta State in the name of Niger-Delta struggle”.

He spoke in an exclusive interview with Sunday Vanguard in Warri but the MEND in a counter reaction said the commander does not know anything about  the real MEND struggle and should, therefore, mind his comments. According to Brigadier-general Rimtip, “There is real MEND and the fake one.
The real MEND is for development while the fake MEND is perpetuating evil. The faction of MEND that wants development has laid down arms and its members are agitating for development of the region, but it is  unfortunate that the criminal MEND has overshadowed the genuine MEND.”