Crude and condensate production rose 0.5 percent compared with revised data for October and 1.5 percent from November of last year, according to CDU-TEK preliminary data received today by e-mail.

President Vladimir Putin has called for Russia to maintain production at above 10 million barrels a day for at least the next decade and ordered the government to prepare new tax breaks to encourage development of the continental shelf and unconventional oil reserves. Oil production climbed above that level in September 2009 for the first time since the collapse of the Soviet Union.

Exports declined to 5.12 million barrels a day last month, a 1.3 percent decrease from October.

Natural-gas production was 57.64 billion cubic meters, according to the data. Output at OAO Gazprom, the world’s biggest producer of the fuel, was 42.5 billion cubic meters in November.

Soviet-era crude and condensate output in Russia peaked at 11.4 million barrels a day in 1987, BP Plc (BP/) data show. Russian production, including natural gas liquids, was higher than Saudi Arabia’s in 2009 and 2010, according to BP

The company's reputation was ravaged after an April 20, 2010 explosion on the BP-leased Deepwater Horizon rig killed 11 workers and unleashed the biggest marine oil spill in the industry's history.

It took 87 days to cap BP's runaway Macondo well 5,000 feet (1,500 meters) below the water surface as it spewed some 4.9 million barrels (206 million gallons) of oil into the Gulf of Mexico.

Thursday's settlement does not close the book on the British energy giant's lengthy and complex legal battle over the devastating spill and must still be approved by a federal judge.

BP is also still on the hook for economic damages, including the cost of environmental rehabilitation, and could pay as much as $18 billion in civil penalties.

The massive criminal fine — which will be paid over six years — will be relatively easy for BP to absorb. It has a market value of $127 billion and last month hiked its shareholder dividend after posting a bumper third quarter profit of $5.43 billion.

BP also signaled it will continue to aggressively pursue damages from rig operator Transocean and subcontractor Halliburton, which was responsible for the well's faulty cement job.

"Today's agreement is consistent with BP's position in the ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations," the oil giant said in a statement.

BP vowed to "continue to vigorously defend itself against all remaining civil claims and to contest allegations of gross negligence in those cases.

" Thursday's settlement includes an agreement to plead guilty to 14 criminal charges, 13 of which are "based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon," BP said.

The obstruction of Congress charge stems from two false statements BP made about flow rate estimates from the runaway well.

The fines include a record $4.0 billion to settle the criminal charges and $525 million to settle securities claims with US regulator the Securities and Exchange Commission.

Group chairman Carl-Henric Svanberg said the "resolution is in the best interest of BP and its shareholders.

" BP shares rose slightly on the news even as the energy giant said it will increase the amount it intends to set aside to cover all compensation costs to almost $42 billion from $38.1 billion. Much of that charge has already been absorbed on its balance sheets.

Environmental group Greenpeace was quick to slam the settlement as inadequate.

"This fine amounts to a rounding error for a corporation the size of BP

," Greenpeace senior investigator Mark Floegel said. "Nothing in this proposed settlement gives any oil company incentive to be more careful in future operations.

Cutting corners and skimping on safety will still be the rule of the day." BP chief executive Bob Dudley issued a statement expressing the company's deep regret for the loss of life during the accident and for the spill's impact on the Gulf coastal region.

"From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf," Dudley said.

"We apologize for our role in the accident, and as today's resolution with the US government further reflects, we have accepted responsibility for our actions.

" Earlier this year, BP reached an agreement to settle claims from fishermen and others affected by the disaster for $7.8 billion, but it must also still be approved by a federal judge. Over the past two years, BP has so far sold non-core assets totaling more than $35 billion to help fund the cleanup and compensation costs.

BP recently unveiled a massive strategic deal with Russian state oil firm Rosneft in an attempt to reposition itself after the Deepwater Horizon catastrophe.

Analysts believe that the Rosneft deal could lead to major exploration projects in the Arctic.

- AFP/fa

The International Energy Agency, which advises industrialized nations on energy policy, cut its global oil demand growth projection for 2011-2016 by 500,000 barrels per day (bpd) compared to its previous report in December 2011.

As a result, the pressure on OPEC to produce more oil will ease dramatically and the cartel will have to produce no more than 31 million bpd until 2017 to balance global demand — less than it produces at the moment.

"Expectations of economic growth through the forecast period have been reduced amid persistent OECD debt concerns, especially in the euro zone. Even China, the main engine of demand growth in the last decade, is showing signs of slowing down," the IEA said in its Medium-Term Oil Market Report.

"Readings suggest a gradual easing of prices over the forecast period."

In its previous report in December 2011, the IEA said it expected global oil demand to rise by around 8 percent between 2010 and 2016 but said it saw markets becoming less tight than in previous years.

Ten months later, it paints an even more comfortable picture, saying oil demand will rise by less than 7 percent between this year and 2017, when it will reach 95.7 million bpd.

"The demand outlook looks more subdued, while the transformative power of nonconventional oil production technologies applied in shale and tight formations in North America exceeds earlier expectations," it said.

Last year, the IEA said US production of light tight oil from shale formations was "a game-changer in the making". This year it says the impact of the new oil streams is increasing.

Global production capacity is expected to increase by 9.3 million bpd by 2017 to 102 million bpd, effectively exceeding demand by over 6 percent.

"Around 20 percent of liquids growth comes from Iraqi capacity and 40 percent from North American oil sands or light tight oil production," the IEA said.

OPEC will also spend heavily on boosting capacity, which is projected to more than double to 5-7 million bpd, a level unseen since before the 2003-2008 oil price rally.

OPEC's spare capacity is seen as the main cushion against supply disruptions and worries about dwindling capacity have been one of the main reasons behind oil price spikes in recent years.

Despite the IEA's benign outlook, the agency said there was exceptional uncertainty about the global economy and heightened regional geopolitical risks.

"Last year's string of supply disruptions, in Syria, Yemen, Sudan, the North Sea, Brazil and the Gulf of Mexico, illustrated the possibility of a 'perfect storm' of coincidental disruptions in many oil provinces," it said.

"Even those realized disruptions, however, pale in comparison with the new threat of unrest and political turmoil spreading further at the heart of the Middle East producing region," it added. Oil prices approached $130 per barrel earlier this year, not far from their 2008 peaks of $147 per barrel, due to worries over supply disruptions from Iran. "

The situation remains highly unpredictable and the sustainability of the sanctions over the longer term is evidently untested," the IEA said.

Last year,the IEA said tighter sanctions on exports of oil equipment to Iran could result in production capacity declining by almost a quarter to under 3 million bpd by 2016.

Ten months later, Iran is already producing less than 3 million bpd as Western sanctions stifle exports.

The IEA said in a separate monthly oil report yesterday that it estimated Iranian crude oil production had declined by 220,000 bpd in September to a new multi-decade low of 2.63 million bpd. .

In a report on Friday, the International Energy Agency estimated Iranian supply fell by 220,000 barrels per day (bpd) to 2.63 million bpd in September, a steeper decline than other estimates of Iranian output last month.

The drop in Iranian supply is supporting oil prices and hurting Tehran's oil revenues, deepening hardship for a population deprived of basic imports and adding pressure on the government over its nuclear programme.

Some industry sources had expected to see Iranian exports bottoming out in August and September as customers found ways to get around difficulties in obtaining insurance, such as by using Iranian tankers. The IEA did not confirm this.

"We had expected compliance to erode slightly at the margin – some of the participants were trying to evade constraints on shipping – but we haven't seen any evidence of that yet," said Antoine Halff, head of the IEA's Oil Industry and Markets Division.

The European Union banned Iranian crude from July 1 and other countries have cut purchases in response to tighter U.S. sanctions. The EU ban prevents EU insurance firms from covering Iran's exports, hindering imports by some non-EU buyers.

Industry sources said on Friday Iranian shipments may fall further in coming months as Iran's tanker fleet has been struggling to meet delivery schedules and customers have found securing adequate insurance cover a challenge.

"The Asian buyers have shipping issues around deliveries," said a source with a company that used to buy Iranian oil. "If they don't find solutions around shipping, we may see a further decline in exports."

Total, which is following U.S. rivals into the area, was warned by Baghdad on Tuesday it faced "severe" consequences for buying the stakes in the Harir and Safen blocks from U.S. peer Marathon Oil (MRO.N) without the government's consent.

"We will punish companies who sign deals without the approval of the central government and the oil ministry," said Faisal Abdullah, a spokesman for Iraq's Deputy Prime Minister for Energy Hussain al-Shahristani.

"Unless Total reviews the deals, it will face severe consequences… Total will be blacklisted for violating Iraqi law," he said without giving further details.
 

Total, seeking to tap Iraqi Kurdistan's vast oil reserves and bank on more attractive terms than in the south of the country, ignored earlier veiled threats to refrain from deals with the Kurdish region.
 

"The Baghdad authorities were kept informed of Total's intentions," a Total spokesman said on Tuesday, declining to comment further after the Iraqi official's comments.
 

Total's investment comes as it seeks to grow its annual oil production by 2.5 percent on average at a price of $100 a barrel through to 2015. But lower output in this year's second quarter due to several disruptions led Total to refrain from reiterating the target for this year, referring to an investor day in September for details.
 

A spokesman for the autonomous Kurdistan Regional Government (KRG) did not immediately answer a request for details.
 

In Paris, the Energy Ministry and the Prime Minister's office had no comment on the matter.
 

Total's Chief Executive Christophe de Margerie had signaled in February that the group was considering investments in Kurdistan since contractual conditions there were better than in the rest of Iraq where it and its partners began production at the south-eastern Halfaya field in June.
 

Both fields in the Marathon Oil deal are located south of Iraq's border with Turkey. Seismic exploration of both fields is expected to be completed by September.
 

The first exploration well on the Harir field was drilled on Monday and the first exploration well on the Safen field will be drilled next year, Marathon Oil said.
 

"These are enormous blocks. There's rarely a disappointment in exploration in Kurdistan," said a Paris-based analyst who declined to be named.
 

"They have a permit in the south of Iraq and at the worst the government could renegotiate concessions or withdraw the license. But these wells are not very profitable," he said.
 

He cited the exit of Statoil and Exxon as evidence of their disappointment with the wells and the terms that Baghdad has set for oil majors to operate them.
 

He said the challenge for Total and its peers doing business in Kurdistan would be to transport the product, as Baghdad could block the use of its pipelines in the south.
 

The deal will further strain ties between Baghdad and the KRG which is caught up in a long-running political feud over oil rights and disputed territories along its hazy internal border.
 

Exxon Mobil (XOM.N) became the first oil major to move into the northern region of Iraq in mid-October when it signed a deal with the KRG. Norway's Statoil (STL.OL) is also looking closely at KRG exploration deals, industry sources have said.
 

The Iraqi central government in Baghdad considers that any oil contracts signed with Kurdistan are illegal and it blacklisted Chevron Corp (CVX.N), which followed Exxon into Kurdistan this month, over such a deal.
 

Autonomous since 1991, Kurdistan has its own government and armed forces, but still relies on the central government for its budget drawn from the OPEC nation's oil revenues.
 

Kurdish officials accuse Iraqi Prime Minister Nuri al-Maliki, a Shi'ite, of amassing power at the expense of Sunni and Kurdish minorities, but Baghdad says Kurdistan is breaking with the constitution by signing deals with foreign companies.
 

Increasingly chafing against Baghdad's authority, Kurdistan is testing the central government with proposals for a more independent energy policy.
 

Now one of the most prosperous parts of Iraq, Kurdistan has been isolated from the violence and sectarian strife that still beset the rest of the country.

The insurance will be made possible through a new multi-billion-dollar line of state credit, Iran's OPEC representative, Mohammad Ali Khatibi, was quoted as saying.

"Iran is ready to give total insurance for the transport of its oil… and the commitments by Iranian insurers are no different from those by Western insurers and therefore all risks and dangers are insured," state-run newspaper IRAN reported him saying.

Crude buyers have the option of using Iran's fleet of 47 oil tankers or their own, he said.

"Deliveries that don't obtain insurance from other countries will be insured by Iran," Khatibi told the weekly news magazine Mosalas in an interview.

The Fars news agency cited an unnamed official saying the government had given the central state insurance agency, Bimeh Markazi, a line of credit worth several billion dollars to insure the tankers.

It said 10 percent of the money had already been transferred.

The measure expands on a promise of insurance for deliveries of its oil using Iranian tankers to major customers China and India. South Korea is also mulling joining that offer.

Iran is suffering a cut in oil sales abroad of up to 40 percent, according to the International Energy Agency (IEA), because of an EU embargo on Iranian crude imports and a related ban on European insurers providing cover for deliveries of Iranian oil anywhere in the world.

European insurers accounted for 90 percent of coverage for Iran before the EU sanctions took effect on July 1.

Iran is striving to maintain a semblance of business as usual in its oil exports.

"Export volumes are the same as before" the sanctions, Khatibi told Mosalas.

By attempting to fill the insurance gap itself, Iran faces several obstacles.

US sanctions targeting Iranian financial transactions worldwide make it unclear how Iran could pay out any claims arising from accidents involving its tankers.

Oil tankers are typically insured for up to $1 billion because of the risk of oil spills.

A European analyst in Tehran noted that the 40 tankers in Iran's fleet owned by the NITC, formerly known as the National Iranian Tanker Company, each had a long-distance capacity of up to two million barrels of oil.

Iran, before the EU sanctions, exported around 2.5 million barrels of oil per day. The IEA estimates that has now been cut to around 1.5 million barrels per day.

Several of the NITC vessels were being used in June to store Iranian offshore crude that Tehran has not been able to sell because of the sanctions, according to industry specialists.

Iran has announced plans to quickly expand its onshore storage capacity, which has been saturated, including by subcontracting to private firms. Tehran has also ordered 12 new supertankers from China and should receive the first in December.

With about three months left before winter ice is expected to move in, Shell is waiting for construction of an oil-spill containment vessel to be completed and for the ship to make its way north to the waters off Alaska's coast. Shell can't begin work on wells in the Chukchi and Beaufort Seas until the vessel is in place.

Facing a race against time, Shell officials met with the Obama administration last week and asked for permission to do prep work without the vessel in place, people familiar with the meeting said. The administration, however, wasn't keen on the idea and Shell isn't banking on permission being granted.

Now, Shell is welcoming the ability to drill later than looming deadlines outlined by the Interior Department, people familiar with the situation said.

Shell has to wrap up drilling for oil in the Chukchi Sea by September 24 and in the Beaufort Sea by the end of October. The deadlines create a buffer of time during which Shell can respond to potential oil spills before ice moves in. Ice is still prevalant in areas where Shell wants to drill this summer, but the company believes it will be gone by the first week of August.

"No matter what our timing ends up to be, we're going to make the most of time we do have," Shell spokesman Curtis Smith said.

Shell's struggle to make the most of the 2012 Arctic drilling season is the latest challenge in what has become one of the most-politically charged oil-drilling operations in U.S. waters.

Shell has spent more than $4 billion buying leases and equipment to drill in the Arctic, becoming the first company in several years to explore for oil there.

"The limited time makes it harder for Shell to actually drill to depth, but the most important thing is that Shell demonstrate they can have a safe season and be allowed to come back," said Robert Dillon, a spokesman for Sen. Lisa Murkowski, a Republican from Alaska and a vocal supporter of energy production in the state.

Environmental groups, worried about spills and potential damage to a sensitive ecosystem, have tried to block Shell every step of the way. Several groups contested air-quality permits granted to the company by federal regulators and have sued over the legality of the leases the company holds.

The Obama administration has been forced to balance the need for safe drilling, especially in the wake of the 2010 Deepwater Horizon spill, with the desire to promote domestic oil production. An oil discovery off the coast of Alaska could help President Barack Obama tout his energy policies in an election year.

The Interior Department wasn't available for comment.

Shell's oil-spill containment vessel, the Arctic Challenger, is docked in Washington state and is undergoing construction. Once the vessel leaves Washington, it will take about 14 days to get into place. Shell's Smith said he didn't know when construction work would be completed.

Oil has gained for five of the last six days. Prices rallied on Friday after China’s economy expanded in line with expectations, easing concerns a slowdown in Europe was hurting a lot more than expected. Even though growth slowed for the sixth successive quarter, Asian shares and the euro extended their rally yesterday on signs the steps Beijing has taken so far were underpinning the economy.
 

Brent crude gained 11 cents to $102,51 a barrel by 0520GMT. Prices settled $1,33 higher on Friday, crossing the 50-day moving average below $102 for the first time since April.

US oil fell 36 cents to $86,74 a barrel, after ending $1,02 higher. The contract also pushed above its 50-moving average of $87,50 for the first time since May on Friday.

“Short-term sentiment should be good for oil as well as other risk assets. It is a combination of two factors — China’s growth coming in in line with expectations and hopes for more measures to boost the economy,” said Ben Le Brun, a markets analyst at OptionsXpress in Sydney.
 

“We are seeing prices come off a bit due to profit-taking. Any dips will face quite strong support levels.”
 

China’s Wen said efforts to stabilise the economy were working and the government would step up efforts in the second half of the year to increase policy effectiveness and foresight, the Xinhua news agency reported on Sunday. He said the economy was running at a more stable pace of growth.

Prices are also drawing support from hopes Europe’s fiscal crisis will stabilise after Chancellor Angela Merkel said on Sunday she was confident a majority of German lawmakers would back aid for Spain’s ailing banks.

“International risk markets are beginning to reposition for the possibility that the current international economic downturn is bottoming,” said Ric Spooner, chief market analyst at CMC Markets, in a report.

“Confidence, although brittle, has the potential for further improvement against a background of ongoing stimulus initiatives in China and stabilisation of the situation in Europe.”
 

A fresh warning by Iran to block the Strait of Hormuz, a conduit for 40% of the world’s sea-borne oil exports, if its security is threatened, is also supporting prices.

Tehran will increase its military presence in international waters, said Ali Fadavi, naval commander in Iran’s elite Islamic Revolutionary Guard Corps.

Brent has slipped 20% from the highs for the year touched in March despite concerns over supply disruptions in the Middle East as investors worry about demand growth amid a slowdown in the West.

A slew of announcements over the weekend that have helped improve the supply outlook are, however, capping price gains.

Dubai-based Dragon Oil, Kuwait Energy, India’s ONGC Videsh, Brazil’s Petra Energia, Pakistan Petroleum , Thailand’s PTT and Turkey’s TPAO join Exxon Mobil in their intention to bid by the October deadline.

Afghanistan is seeking bidders for the exploration, development and production of oil and gas in six blocks in the western portion of the Afghan-Tajik Basin in the country’s north, which the Ministry estimates contains several hundred million barrels of oil equivalent.

Thirty years of war have prevented exploration of Afghanistan’s energy and mineral resources, of which very little is known. The Soviet Union, vying for influence in the region in the lead-up to its 1979 invasion, conducted primary research.

Ordinary Afghans and officials alike have said global interest in their natural resources, which the Economy Ministry says could produce $12 billion annually in government revenue, could help the country achieve stability after most foreign troops leave in 2014.

Widespread graft, a weak rule of law and poor governance pose potential headaches for foreign investors and energy companies looking to explore in Afghanistan.

Interest from oil majors such as Exxon Mobil is a good sign, however.

“Exxon is so big and they’re in so many countries that they can afford to say no. So they don’t appear unless they think they can make it work,” said Brigadier General Ricky Waddell, head of NATO’s anti-corruption task force in Afghanistan.

The Mining Ministry has said it expects the tender process for the blocks in the Afghan-Tajik Basin to be completed by early next year, when the contracts will be awarded. Afghanistan signed a deal late last year with China National Petroleum Corp (CNPC) for the development of oil blocks in the Amu Darya basin, also in the north.

But highlighting the difficulties of exploration in Afghanistan, that project has met fierce resistance from militia loyal to former warlord and army chief of staff General Abdul Rashid Dostum.

Government officials said Dostum demanded a share of the proceeds and sent armed men to intimidate the Chinese engineers on the ground, a claim that Dostum denied.

The dispute between Chinese state refining giant Sinopec and the National Iranian Tanker Co (NITC) threatens to delay the sale of millions of barrels of crude exports from Iran as it faces tough Western sanctions targeting its oil sector.

China and Iran appear to be negotiating freight terms on a tanker by tanker basis and at least 4 million barrels of Iranian oil are on their way to Chinese refiners, said a Chinese crude trader familiar with the negotiations.

"Looks like the freight negotiations are not a package, but voyage by voyage," said the trader, who declined to be identified due to the sensitive nature of the matter.

China is Iran's top trading partner and buys an increasing share of its oil exports which have dwindled after traders cut or halted imports to comply with U.S. and EU sanctions aimed at curbing Iran's civilian nuclear program.

The EU sanctions bar tankers carrying Iranian oil from accessing the Western-dominated insurance market and have forced Sinopec to rely on NITC for delivery of the 500,000 barrels per day of crude it buys from Iran.

NITC wants Sinopec to pay a premium to use its tankers since the Iranian shipper is handling the insurance, but the Chinese refiner is seeking a lower freight rate.

China last month requested that Iran deliver July-loading oil to Chinese ports and provide price quotes on a cost-insurance-freight basis.

"The Iranians believe they have a right to ask for higher freight since they are bearing the shipping risks," said the Chinese trader. "The Chinese believe their request is also reasonable, since refineries are cutting back on runs and they don't need that much crude."

China has nominated about 15 million barrels of Iranian oil for July, sources have told Reuters, a level steady from April, when the two sides resolved a dispute over 2012 contract terms.

If all the 15 million barrel shipments, worth some $1.35 billion, are loaded, China would account for nearly half of Iran's total July exports, estimated at 1.1 million bpd.

Sinopec, Asia's largest refiner, buys Iranian oil via its own trading arm Unipec and state trader Zhuhai Zhenrong Corp in separate contracts with the National Iranian Oil Company.

Zhuhai Zhenrong, formerly an affiliate of China's defence industry, has dealt with the Iranians for longer but Unipec plays a more dominant role in annual supply talks and the freight negotiations, sources said.