World oil industry anxious about U.S. regulation

NEW YORK (Reuters) - Uncertainty around a wide-sweeping array of green energy and anti-speculation rules proposed by U.S. President Barack Obama's administration has put the world oil industry on tenterhooks.

The proposed regulations -- ranging from climate change to fuel efficiency to how investors trade on the markets -- will tilt the competitive playing field and affect how companies in oil, gas and power invest, executives told the Reuters Global Energy Summit this week.

"The devil is in the detail. These complexities, issues of liability, issues of things like carbon credits and allocations, those are highly complex and obscure," said Greg Ebel, chief executive of pipeline and energy storage company Spectra Energy Corp (SE.N)

"Before we make any significant investment those are the type of details that we'll have to get."

U.S. lawmakers are hashing out the particulars of a climate bill that Democrats hope will be finalized by the end of the year. In its current form, the proposal would be similar to the European system, curbing carbon emissions by distributing and auctioning a certain number of permits that can be traded.

The bill comes alongside other initiatives around fuel efficiency and alternative energy and has stirred the most vocal opposition from the U.S. refining industry, which says it would put marginal fuel producers out of business and open the doors wide to foreign competitors not bound by the same rules.

Utilities, meanwhile, have said they are relatively pleased by the number of permits they would initially be given for free under the current climate proposal, but said there is a continued risk the law would harm consumers through higher electricity bills.

"Customers cannot handle huge price spikes. We need to give the industry enough time to phase in any changes needed to reduce carbon dioxide emissions." said Ted Craver, chief executive of Edison International (EIX.N).

The Canadian oil industry is also worried by the U.S. environmental agenda's potential impact on Alberta's oil sands, a growing source to the United States widely criticized by environmentalists for contributing to global warming.

"Our main point is that we don't think that it's in the interests of Canada or the United States to discriminate against oil sands crude simply because it's from oil sands," said David Collyer, president of the Canadian Association of Petroleum Producers, the nation's top oil group.

"Establish environmental policy and we'll compete against other crudes that are supplying the U.S. market," he said.

The U.S. government is also mulling over anti-speculation proposals that would aim to improve transparency in the notoriously murky energy markets, and is working with other governments on cross-border cooperation.

Energy experts have said they are concerned that the legislation could eventually include wide-reaching elements that would raise costs and constrict positions.

The proposed regulation is a smaller issue for Asia than for the United States and Europe, and could drive trading activity there, the head of the new Hong Kong Mercantile Exchange said.

Top Libyan oil official Shokri Ghanem said if the United States adopts draconian legislation, the impact to investment trends could be permanent.

"It's not easy to bring back the genie into the bottle," he said.

Oil producer group OPEC, which has long accused speculators of adding volatility to world crude markets, said that a balance should be struck between the amount of oil traded by commercial users and that traded by investors.

"The paper market should be a reasonable percentage of the physical market, of the real barrels," said OPEC Secretary General Abdullah al-Badri said.

Energy companies, while concerned by the potential details of the looming legislation, have widely agreed that greater transparency would be a good thing in the energy markets.

"We believe that we need to have trust and to build trust in this market and to do that we need to have continued transparency. That's our long-term perspective," E.ON Energy Trading Chief Executive Officer Tony Cocker.

(For summit blog: blogs.reuters.com/summits/)

(Additional reporting by Jeffrey Jones, Scott Haggett, Barbara Lewis, Ikuko Kao, Harpreet Bhal, Vera Eckert, Scott Disavino and Bernie Woodall; Writing by Richard V)