Global oil demand will continue to grow despite record-high global oil prices, which saw a near-40 percent increase over 2004. Hurricanes and other factors such as U.S. televangelist Pat Robertson calling for the assassination of Venezuelan President Hugo Chavez made energy prices more fragile and, in some instances, volatile.

With soaring demand from China's burgeoning economy, a key factor in global oil markets, and Indian consumer markets, oil producers operate close to maximum capacity. The Paris-based International Energy Agency predicted in December that oil demand will increase 7.8 percent in 2006, mostly due to China's growth in demand.

But Iran is pushing for a cut in oil produced by the Organization of Petroleum Exporting Countries and Iraq's energy infrastructure is unable to meet targeted output, while non-OPEC producers such as Russia could look to boost production to capitalize on growing global energy demand.

Chavez has used oil as a weapon to spread his style of socialism in the region and the Caribbean, while Russia is aspiring to become a major global natural gas player as it hopes to erase the year's events with Yukos from people's minds and tighten control over its energy policy.

Lucrative prospects drove many of the deals sealed in 2005. The merger with Unocal gave Chevron operations in the Asia-Pacific, the Caspian and the Gulf of Mexico.

"This merger provides current and long-term investment value, and Unocal is an excellent strategic fit with Chevron's assets and corporate culture," David J. O'Reilly, Chevron's chairman and chief executive officer, said at the time of the deal. "Chevron has proven technical and financial capabilities to maximize the full value of Unocal's world-class assets."

To the surprise of some, ConocoPhillips did not wait for energy prices to drop in late winter-early spring before it quickly decided to purchase the natural gas producer Burlington Resources for $35.6 billion, which was the last major deal of the year. This has been a major year for other global energy majors with firms from China and Russia inking deals from Venezuela to Kazakhstan, where China recently signed a $700 million pipeline deal.

Natural gas has made several strides in 2005 with the assistance of Russian gas giant Gazprom. After securing a deal -- for an undisclosed amount -- with Belarus President Alexander Lukashenko this week, following a number of failed attempts, Gazprom strengthened its control over the gas network that supplies 10 percent of Russian gas to European markets.

But Gazprom's major feat for 2005 was when it signed a contract with Royal Dutch Shell to acquire a 25 percent stake in the $20 billion Sakhalin-2 gas field on Russia's Pacific coast and begin preparation to for the multibillion dollar Shtokman gas field project in the artic Barents Sea.

Shtokman has an estimated capacity of up to 113 trillion cubic feet of natural gas and could cost some $10 billion to $20 billion to develop. By comparison, major gas exporters Canada and Indonesia have proven reserves of 56.5 trillion and 91.8 trillion cubic feet, respectively.

In addition to hoping to increase its influence in European energy markets, Gazprom wants to expand its production facilities as it aims to become a major global energy player. The company is looking to target market capitalization of approximately $250 billion to $300 billion in the next five to seven years.

Despite the lucrative deal signing in 2005, some energy firms hit a couple serious setbacks.

A top industry expert told United Press International at the time of the Shtokman shortlist announcement Gazprom's decision not to include Shell in the project might have been attributed to the difficulties Shell encountered in implementing the Sakhalin-2 project, where cost overruns nearly doubled to some $20 billion with delays pushing back production.

Despite the successful acquisitions around the world, China lost -- or rather withdrew from -- a bidding war over Unocal, which Chevron secured for $17-plus billion.

India folded on a multibillion dollar project in Nigeria after India's Cabinet Committee on Economic Affairs turned down a $2 billion proposal from state-run Oil and Natural Gas Corp. to acquire a 45 percent stake in a Nigerian oil and gas field, giving Chinese firms an upper hand.

Competition between India and China could grow fiercer in 2006 as both countries aim to meet soaring demand.

It also remains to be seen whether the pipeline transporting Iranian gas through Pakistan to India will ever materialize, as the United States fears any profits Iran may earn will go toward financing its nuclear projects, which Iran insists are for peaceful purposes. Or, whether India and Pakistan will be able to continue to realize the economic and diplomatic benefits of such a deal.

China has also not shied away from investing in countries the United States has poor relations with such as Sudan and Iran. Sen. Joseph Lieberman, D-Conn., warned this year about potential U.S. military conflict with China, if the two sides do not work together.

More than half of the U.S. defense budget goes to protecting energy coming from unstable areas of the world, a top energy official told UPI in November.

Although efforts and projects to diversify energy sources to reduce dependence on oil and promoting energy efficiency will increase, oil and gas demand will continue to be a major and growing source of energy consumption in 2006.

Industry analysts foresee a rise in the volume of energy deals in 2006 -- partially due to a growing struggle to secure increasingly scarce energy resources around the globe.

Experts predict fewer mergers such as Exxon's $80 billion merger with Mobil will occur in the future, while smaller but influential deals will be predominant, especially with major energy players such as China, Japan and India. Smaller acquisitions and mergers will most likely be the common theme in 2006.

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