By Duncan Sutherland - Exclusive to HeavyOilInvestingNews.com

The marquee event of the week was the World Petroleum Congress in Madrid, Spain. With per barrel prices hovering in the $140s, the assembly examined speculation in futures markets, rising input costs and environmental concerns. The theme for the Congress was “A World in Transition: Delivering Energy for Sustainable Growth ^[1]”. Accordingly, the meeting focused on reducing the water and energy needed for extraction, as well as biofuels, environmental impacts and corporate social responsibility. The meeting was accompanied by announcements that Angola's oil output will increase this year and that worldwide demand for LNG (liquefied natural gas) is expected to double in the next eight years ^[2]. The next WPC meeting will be 2011 in Doha, Qatar. The Qatar meeting is expected to have a greater focus on natural gas, as the emirate is a chief exporter of the commodity.

India's state-owned Oil and Natural Gas Corp (ONGC) was taking stock of Alberta's oil sands with a large investment in mind. Though the exact amount remains to be determined, Norval Scott of The Globe and Mail pegs it between “$2.5-billion (U.S.) and as much as $10-billion ^[3]”. The growing middle classes of India are helping push up the country's demand for crude, a trend that is likely to accelerate in the future. It is unclear whether industry regulators would allow the state-owned company to directly acquire land, and some analysts suggest a partnership with a junior company is more likely ^[4].

United States Representatives Tim Mahoney (D-Florida) and Rick Boucher (D-Virginia) were in Alberta examining the oil sands projects. The congressmen were on a fact-finding trip to strengthen the case for their proposed amendment to the Energy Independence and Security Act ^[5]. If passed, the amendment would exclude Albertan oil sands from the bill's requirement that the U.S. government purchase only lower carbon-footprint fuels.

Banker's Petroleum Ltd. (TSX:BNK) announced it will be acquiring the 50% stake in Albania's Kucova heavy oil field from Sherwood International Petroleum Ltd. ^[6] Kucova is estimated to hold upwards of 490 million barrels, making it “the largest onshore oilfield in continental Europe ^[7]”.

Mooncor Oil & Gas Corp. (CVE:MOO) reported Wednesday on the status of its shale-gas plays and Alberta heavy oil wells. The news was not particularly well received, and Mooncor stock continued the steady slide it has seen since the beginning of June ^[8].

The Pembina Pipeline Corporation, owned by the Pembina Pipeline Income Fund (TSX:PIF.UN) finished the Horizon Pipeline on schedule ^[9]. The pipeline is built to transport up to a quarter million barrels of synthetic crude per day from Canadian Natural's (TSE:CNQ) oil sands project to Edmonton ^[10].

Also in the Canadian oil sands, Total E&P Canada Ltd., a subsidiary of Total S.A (NYSE:TOT) got Investment Canada's approval of its $9 (CDN) per share offer to Synenco Energy Inc. (TSX:SYN). Total E&P extended the offer after it expired 7 p.m. Thursday ^[11]. Lacking the requisite number of shares to close the deal, Total E&P will continue to pursue SYN. The extension expires July 15th.

Japan-based JGC Corporation (TYO:1963), an engineering contractor landed a major contract with Saudi Aramco ^[12]. The ¥200 billion deal will see JGC providing infrastructure such as storage and water injection kit in the Manifa field, one of the world's largest. At a recent conference in Jeddah, Saudi Arabia's Oil Minister Ali al-Naimi confirmed the Kingdom's plan to greatly increase refining capacity. Approximately 2 million barrels per day of new capacity is planned in the next five years, with much of it coming from a new Saudi Aramco-Total (NYSE:TOT) joint heavy-oil refining venture in Jubail ^[13].

On July 3rd, oil prices temporarily jumped upwards past $145 per barrel based on worries of an attack on Iran. Fears of a supply disruption were heightened by intemperate language from Iranian officials suggesting they would block the crucial Strait of Hormuz in the event of an attack. Without a diplomatic breakthrough, fears of Iranian obduracy over its nuclear program will play a continuing role in driving up oil prices. Hormuz's tanker traffic accounts for roughly 20% of global oil supplies ^[14].

In the week upcoming, there are several events that may impact heavy oil and oil sands markets. The G8 meeting in Hokkaido, Japan is certainly one of them. Additionally, Hurricane Bertha is continuing to move westward across the Atlantic. Though Bertha is forecast to move towards Bermuda, it should provide a reminder that refineries on the U.S. Gulf Coast remain vulnerable to extreme weather ^[15].

Nigerian President Umaru Yar'Adua's government is trying to arrange peace talks with the Movement for the Emancipation of the Niger Delta (MEND) and other rebel groups in the oil-producing region. It remains to be seen whether the government has a winning strategy to defeat or co-opt the groups.

Debate in the U.S. Congress over whether and how government should instruct the Commodity Futures Trading Commission to regulate speculation in oil markets will continue this week as well.