OPEC statistics show that in the period since 2002 Russian companies have surpassed the Saudis as the world's biggest oil producers on an on-and-off basis. The latest figures, however, have been hailed in Russia as evidence that such periodic production spikes are no one-offs and that Moscow really does have a right to lay claim to the number one spot.

According to OPEC, in June 2006 Russia extracted 9.236 million barrels of oil, which is 46,000 barrels more than Saudi Arabia. The statistics also showed that Russian production in the first half of this year increased to 235.8 million tons, a year-on-year improvement of 2.3 percent.

Traditionally, Saudi Arabia has been regarded as the world's undisputed primary source of oil and Russia has had to settle for second place. But in recent years Russia has re-nationalized and modernized much of its industry and that policy now appears to be paying off.

Even Russian analysts concede that Moscow's cause is helped by the fact that Saudi Arabia is subject to OPEC output restrictions.

The Saudis are famous for their ability to access spare capacity and raise production at short notice and if they really wanted to reassert their leadership role the feeling is they could do so easily.

Unconcerned by such "details", Russia's "toppling" of the Saudis was welcomed domestically on Tuesday, Aug. 22. The populist Komsomolskaya Pravda daily newspaper ran a story headlined "Russia takes first place in oil output rankings".

With oil prices hovering above $70 a barrel for London Brent crude because of uncertainty over Iranian supplies and BP's pipeline crisis in Alaska, Russia is enjoying an unprecedented bonanza. But analysts say its oil industry is already working close to capacity and that it will be able to manage output increases of up to only 2 percent a year between now and 2009.

There are also fears that Russia is becoming too addicted to what politicians call "the oil needle", and is doing too little to develop future revenue streams. Money from oil and gas accounts for 52.2 percent of all revenues to the state treasury and more than 35 percent of Russia's exports.

Such riches can make a country complacent, according to Alexei Kudrin, the Russian Finance Minister. "At present, we are in a dangerously carefree zone," he said recently

Researchers have registered an increase in oil reserves in oil-rich provinces where deposits were explored and have been developed for many years and where oil consumption is comparatively high. Those oil-rich areas include the Russian province of Tatarstan, Ukraine, Azerbaijan, Texas and Oklahoma in the U.S., and Mexico. Depletion of reserves is possible only in the oil and gas exploration areas where consumption levels are low, holds Professor Barenbaum. He insists that formation of oil and gas is not so geological as climatic by nature, related to the water cycle and circulation of carbon on our planet.

The decisive role in that process belongs to carbon infiltrating the earth's surface with rains in the course of their incessant circulation. Carbons entering the surface - chiefly in the form of hydrogen carbonate - along with rain waters transform into hydrocarbons, which create the basis for accumulation of oil and gas in geologic traps.

Conclusions drawn by the specialists of the oil and gas research institute have been confirmed in the course of exploratory drilling in the Moscow Region. The researchers have concluded that up to 90 percent of all oil and gas reserves on the planet are formed at the depth of 1 to 10 km and only 10 percent are formed out of organic waste. Hence, the entire process of formation takes decades, not millions of years, Russian scientists say.

This is not the first time the scientists have challenged the traditional theory of oil and gas formation, which says that oil and gas deposits are the remains of plant and animal life that died millions of years ago and were compressed by heat and pressure over millions of years.

Back in the 1950s Russian and Ukrainian geologists came up with a theory that formation of oil deposits requires the high pressures only found in the deep mantle and that the hydrocarbon contents in sediments do not exhibit sufficient organic material to supply the enormous amounts of petroleum found in supergiant oil fields.

According to their theory oil is not a fossil fuel at all, but was formed deep in the Earth's crust from inorganic materials. Based on the theory, successful exploratory drilling has been undertaken in the Caspian Sea region, Western Siberia, and the Dneiper-Donets Basin.

The abyssal, abiotic theory of oil formation has received more attention in the West recently because of the work of retired Cornell astronomy professor Thomas Gold, who is known for the development of several theories that were initially dismissed, but eventually proven true, including the existence of neutron stars, the Environmental Literacy Council reported on its website. (The ELC is a U.S.-based independent, non-profit organization, that focuses on environmental literacy, helping young people to develop a fundamental understanding of the systems of the world, both living and non-living, along with the analytical skills needed to weigh scientific evidence and policy choices, according to the Council's website).

However, Gold has also been wrong. He was a proponent of the "steady state" theory of the universe, which has since been discarded for the "Big Bang" theory. Gold's theory of oil formation, which he expounded in a book entitled "The Deep Hot Biosphere", is that hydrogen and carbon, under high temperatures and pressures found in the mantle during the formation of the Earth, form hydrocarbon molecules which have gradually leaked up to the surface through cracks in rocks. The organic materials which are found in petroleum deposits are easily explained by the metabolism of bacteria which have been found in extreme environments similar to the Earth's mantle. These hyperthermophiles, or bacteria which thrive in extreme environments, have been found in hydrothermal vents, at the bottom of volcanoes, and in places where scientists formerly believed life was not possible. Gold argues that the mantle contains vast numbers of these bacteria.

The abiogenic origin of petroleum deposits would explain some phenomena that are not currently understood, such as why petroleum deposits almost always contain biologically inert helium. Based on his theory, Gold persuaded the Swedish State Power Board to drill for oil in a rock that had been fractured by an ancient meteorite. It was a good test of his theory because the rock was not sedimentary and would not contain remains of plant or marine life. The drilling was successful, although not enough oil was found to make the field commercially viable. The abiotic theory, if true, could affect estimates of how much oil remains in the Earth's crust.

The abiogenic origin theory of oil formation is rejected by most geologists who argue that the composition of hydrocarbons found in commercial oil fields have a low content of 13C isotopes, similar to that found in marine and terrestrial plants; whereas hydrocarbons from abiotic origins such as methane have a higher content of 13C isotopes. In an April 2002 letter published in the science journal Nature, Barbara Sherwood Lollar and her colleagues from the Stable Isotope Lab at the University of Toronto reported their analysis of the Kidd Creek mine in Ontario. An unusual ratio of 13C isotopes and the presence of helium provided evidence of hydrocarbons with abiotic origins, but they argued that commercial gas reservoirs do not contain large amounts of hydrocarbons with a similar signature. Gold and other geologists who argue that there are significant amounts of oil from abiotic origins maintain that as oil seeps up through the layers of Earth closer to the surface, it mixes with oil from biological origins, and takes on its characteristics.

U.S. crude for October delivery rose 38 cents to $70.09 a barrel by 1217 GMT, while London Brent crude gained 51 cents to $70.37.

Both contracts on Tuesday closed below $70 a barrel for the first time since June.

The breach of the key level was viewed as a strong pointer to lower prices, but analysts said a deeper selloff was being prevented by worries political tension could lead to supply disruption.

"There will be a limit to how low prices can fall this quarter. There are still a lot of geopolitical risks," said Eoin O'Callaghan of BNP Paribas.

"When there are milestones in the (Iranian) dispute, there tends to be a rally."

The United Nations Security Council has told oil producer Iran to suspend nuclear enrichment by Thursday or face possible sanctions, but Iran has repeatedly said it will not comply.

"Peaceful nuclear energy is the right of the Iranian nation... it wants to use it and no one can stop it," Iranian President Mahmoud Ahmadinejad said on Tuesday.

Analysts were not expecting immediate action against Iran.

Russia and China have called for a return to talks, while key allies of Washington, Britain and France, have quashed U.S. predictions of a swift resort to sanctions.

U.S. SUPPLY AND DEMAND

For the next snapshot of the health of oil supplies in the world's biggest energy consumer, traders were awaiting U.S. government data to be released at 1430 GMT.

Crude oil inventories were expected to have fallen by 1.5 million barrels last week as refineries boosted operating rates, while gasoline stocks were seen dropping by 700,000 barrels, according to a Reuters poll of analysts.

Analysts are decreasingly concerned about gasoline inventories. The U.S. summer driving season is considered to end with next week's Labor Day holiday.

More attention could turn to data on gasoline consumption following figures on Monday that showed U.S. gasoline demand grew in June by less than half the rate previously implied.

The focus will also be on winter fuel supplies. Stocks of distillates, including heating oil, were forecast to have risen by 1.3 million barrels, the poll found.

RUSAL, SUAL and Swiss commodities trading house Glencore all declined to comment. RUSAL is the world's third-largest aluminum producer after U.S. Alcoa Inc. and Alcan Inc. of Canada.

The Financial Times estimated the value of the deal at $30 billion and said the combined company would be chaired by Brian Gilbertson, the head of SUAL, and run by Alexander Bulygin, who is chief executive of RUSAL.

Completion of the takeover would crown RUSAL's 38-year-old owner, Oleg Deripaska, as Russia's undisputed aluminum king after a long and often brutal struggle for control of industry assets in the 1990s known as the 'aluminum wars'.

Deripaska, Russia's sixth-richest man with a fortune estimated at $9 billion by Forbes magazine, has excellent establishment connections -- he is related by marriage to former President Boris Yeltsin.

He met President
Vladimir Putin for one-on-one talks earlier this month, and is likely to have received Putin's blessing for the aluminum deal to go ahead.

The new company would be listed on the London Stock Exchange within three years under a non-binding agreement signed by the three parties last Friday. "This idea is under consideration," a second source said, declining to elaborate on the IPO's terms.

Banking sources told Reuters that UBS and JP Morgan were advising on the deal. Both investment banks declined to comment.

RUSSIA INC. GOES GLOBAL

Putin has capitalised on booming oil and commodities prices as a means to recover Russia's lost status as a great power. A national aluminum champion would join state-controlled gas monopoly Gazprom in projecting power abroad.

"If it materializes, the RUSAL-SUAL deal would be another sign of Russia Inc. expanding in the world," said Bob Foresman, deputy chairman of Russian investment bank Renaissance Capital and a seasoned investment banker on the Russian scene.

"Russian strategic sectors, represented by mammoth companies that are leaders in their industries, are asserting themselves on the world stage," Foresman added. "This shouldn't be surprising, given Russia's great wealth and natural resources."

Under the deal, RUSAL would own 64.5 percent of the new firm, SUAL 21.5 percent and Glencore 14 percent, the second source said.

Investment bankers said, however, that details still needed to be hammered out. "This is going to be a massive deal. There might be a huge M&A financing requirement," said one.

Another said: "The two companies have a lot to work out."

The first source said Glencore would contribute its alumina refining assets to the new company, including the Auqhinish refinery in Ireland, which it owns outright, and Windalco and Alpart in Jamaica, where it has 93 and 65 percent respectively.

It will also contribute its 44 percent stake in the Eurallumina refinery in Italy and its wholly owned Kubikenborg Aluminum AB aluminum smelter in Sweden.

RUSAL produced 2.8 million tonnes of the metal last year, while SUAL produced 1.1 million tonnes. RUSAL has said it plans to raise its output to 5 million tonnes by 2013 and SUAL to 2.2 million tonnes by 2012.

Industry analysts said the reported $30 billion price tag on the deal appeared plausible. Moscow's Aton brokerage said that if the merged entity was priced in line with the global industry it would be worth nearly $29 billion.

Aton based its calculation on a global industry average of nine times enterprise value to EBITDA -- or earnings before interest, taxation, depreciation and amortization. Enterprise value is a company's combined equity and debt.

An inflation gauge favored by the Federal Reserve - a measure of personal consumption expenditure prices minus food and energy - was revised slightly downward to a 2.8 percent gain from an originally reported 2.9 percent rise. The last time there was an equivalent rise in the category was in the first quarter of 2001.

Businesses spent more on buildings, plants and factories than originally thought in the second quarter. The 22.2 percent rise was the biggest gain in nonresidential fixed investment in structures since the second quarter of 1994.

However, in a sign the housing sector is cooling rapidly, investment on residential structures fell 9.8 percent, the biggest decline since a 12.2 percent fall in the second quarter of 1995, the Commerce Department said.

Investment in inventories, exports, and spending by state and local governments were also higher than first thought.

But business investment in equipment and software was revised to a larger decline of 1.6 percent, the biggest drop since the fourth quarter of 2002.

Corporate profits after taxes rose 2.1 percent in the second quarter, a much smaller gain than the 14.8 percent rise in the first three months of the year.

The Federal Reserve has been counting on a slowdown in economic growth to keep inflation in check. Minutes of the Fed's August 8 meeting - when the Fed halted a two-year string of interest rate increases -- showed policy makers concerned about rising prices but patient on the need for more rate hikes as they awaited further economic data.

Two analysts declined to comment until they had more information from the company, which did not immediately return a call from Reuters.

The retailer said it now expects earnings in the range of 68 cents to 71 cents per share for the fourth quarter that ends September 3, including 3 cents per share in costs for an income tax reserve. Analysts, on average, expected 77 cents, according to Reuters Estimates.

Costco has struggled with weak margins from its gasoline business in recent quarters, but it was not clear whether that was the culprit behind Wednesday's warning. Indeed, many on Wall Street had expected gasoline margins to hold up in the current period as oil prices retreated from recent highs.

Costco has gas stations at many of its 358 U.S. stores, and typically replenishes supplies daily, which makes it particularly sensitive to rapid price swings. Most gas stations buy supplies weekly.

Costco usually charges less for gas with the hope that customers will then buy merchandise from its stores.

Wall Street is keeping an especially close eye on the U.S. retail sector for clues on consumer spending, which accounts for some two-thirds of U.S. economic activity.

Costco said its August sales rose 7 percent at stores open at least a year, with particularly strong demand in its international business. Total sales for the four weeks that ended on August 27 rose 11 percent to $4.55 billion.

Costco said it remained "positive" in its outlook for the next fiscal year, but did not provide a specific forecast. The Issaquah, Washington-based retailer said it expects to open at least 35 new stores in the coming year.

Shares of Costco fell $2.25 to $47 in premarket trading on the Inet electronic brokerage. They closed at $49.25 on the Nasdaq on Tuesday.

Such rapid growth in what already is the world's fourth-largest economy has alarmed Chinese leaders. They worry about a possible upsurge in inflation or financial problems and have raised interest rates twice this year to cool off a boom in construction and borrowing.

President Hu Jintao's government wants to keep overall growth fast to reduce poverty. But it worries about excessive investment in real estate, textiles, auto manufacturing and other industries and has targeted them with special restrictions.

The official growth target for this year is 8 percent, but communist leaders appear to be willing to accept much higher rates so long as inflation stays low. The Statistics Bureau said consumer prices rose 1 percent in July from a year ago.

The World Bank and other outside experts say growth this year could be as high as 10.4 percent.

The newly revised 2005 figures raise output by about 70 billion yuan ($8.8 billion) to 18.3 trillion yuan ($2.3 trillion), the Statistics Bureau said on its Web site.

The revision reflects the struggles of China's communist planners to keep up with rapid changes in an increasingly capitalist-style economy.

In December, the government increased the official size of China's economy over the past decade after carrying out the first nationwide survey of private businesses and finding higher-than-expected output from emerging service industries.

Also Wednesday, the government announced yet another measure aimed at cooling off the economy, raising the amount of foreign currency deposits that Chinese banks must hold in reserve, reducing the amount available for lending.

That follows an earlier move to raise reserve ratios for Chinese currency deposits.

Banks have to keep 4 percent of their foreign currency on deposit with the central bank as of Sept. 15, up one percentage point from the previous requirement, the government said.

The impact should be modest because only a small fraction of China's bank accounts and loans are in foreign currency, the official Xinhua News Agency said, citing unidentified analysts.

The step is expected to remove $1.6 billion from the economy, Xinhua said.

MetLife, one of the largest life insurers in North America, said in July that it might sell the two complexes, which it built nearly 60 years ago with government help. It has hired a broker, who started registering bidders last week for the 80-acre property along First Avenue between 14th and 23rd Streets.

Behind the scenes, the sale has already drawn interest from dozens of prospective buyers, including New York's top real estate families, pension funds, international investment banks and investors from Dubai, according to real estate executives, even though the marketing book will not be released to bidders until next week.

The deal is likely to lead to profound changes for many of the 25,000 residents of the two complexes, where two-thirds of the apartments have regulated rents at roughly half the market rate. Any new owner paying the equivalent of $450,000 per apartment is going to be eager to create a money-making luxury enclave, real estate executives say.

The sale would only add to the seismic cultural shifts already under way in New York City and especially in Manhattan, where soaring housing costs have made the borough increasingly inhospitable to working-class and middle-class residents. It would be another challenge to Mayor Michael R. Bloomberg's effort to stabilize and expand the number of affordable apartments in the city.

"It's really sad," said Suzanne Wasserman, a historian and filmmaker who has lived in Stuyvesant Town since 1989. "New York has always attracted people who aren't just interested in money - people interested in culture and poetry and music and dance and those young people who are the creative capital of the city. They aren't going to have a place here and probably really don't already. I think it affects everything about city life."

Rumors of an impending sale began circulating among residents several years ago when MetLife was in the midst of $300 million in upgrades that included new landscaping and playgrounds, spruced-up fountains, new wiring, air conditioning, carpeting and lights. Rose Associates took over management three years ago.

At the same time, MetLife sought to oust tenants not listed on leases. And as rents for more apartments hit the legal threshold of $2,000 a month, MetLife has been able to charge new tenants market rates for those apartments when they became vacant. Under that threshold, the rent stabilization law limits increases to a fixed percentage each year for about a million apartments. About 27 percent of the tenants at Peter Cooper and Stuyvesant Town are now exempt from it and pay market rents.

But most, like Marilyn Phillips, 52, a nurse who has lived in Stuyvesant Town for 14 years, pay stabilized rents. She and her husband, a social worker, pay $1,700 a month for a two-bedroom apartment. News of the sale worried her. "It may mean we may no longer be able to live here," she said. "The management is intent on making this luxury apartments and driving the working class out."

MetLife and real estate investors view the sale far differently.

"It'll be the largest sale of a single property in U.S. history," said Dan Fasulo of Real Capital Analytics, a real estate research and consulting firm. "No doubt in my mind. It's truly an unprecedented offering and an irreplaceable property. It would be impossible today to get a property of that scale in an urban location. And that neighborhood has become so desirable."

Stuyvesant Town and Peter Cooper Village together are nearly as large as the biggest single residential development in the country: Co-op City in the Bronx, which has 15,372 units in 35 towers and 236 two-family houses. The MetLife land itself is about one-tenth the size of Central Park.

To market the properties, MetLife has hired Darcy Stacom, a broker at CB Richard Ellis. According to real estate executives, the company began registering potential bidders last week, telling them that MetLife hoped to select a winner by November.

The company reserves the right not to sell if the offers fall short, but Robert Merck, who oversees real estate investments for MetLife, said, "We think the current market conditions are very favorable."

Already there are signs that bidding will be feverish. As one executive involved in the sale put it, "This is the ego dream of the world: 80 acres, 110 buildings, 11,000 apartments, covering 10 city blocks in Manhattan."

According to several bidders, the list of buyers who have signed up includes the most active developer in New York City, the Related Companies; one of the largest landlords, Glenwood Management; Tishman Speyer, which controls Rockefeller Center; two publicly traded real estate companies, Archstone and Vornado; the international bank UBS; and the Blackstone investment firm, as well as the Rudin, Durst and LeFrak real estate families.

Given the size of the deal, buyers are expected to team up. "You'll see some interesting people stepping up to the plate for this one," said William Rudin, whose family owns about 2,000 apartments in New York.

This is the latest big transaction for MetLife. Last year the insurer sold its landmark tower at 1 Madison Avenue and the skyscraper at 200 Park Avenue, the former Pan Am building, for more than $2.6 billion. But it is not getting out of the real estate business. It has a $40 billion portfolio of properties around the globe. But its presence in New York City is far smaller today than when its headquarters, with its signature clock tower, lorded over Madison Avenue.

The company played a major civic role in the last century, building and running vast housing complexes like Parkchester in the Bronx and Riverton in Harlem, as well as Peter Cooper and Stuyvesant Town. Parkchester and Riverton were sold long ago.

At the urging of the public works czar Robert Moses, MetLife built Stuyvesant Town and its slightly more affluent sister, Peter Cooper Village, in 1947, as housing for returning veterans where the city's Gashouse District once stood. The company excluded blacks and unmarried people at first, until protests and lawsuits in the 1950's and 60's forced it to drop the barriers.

The city acquired some of the land for the project through eminent domain and gave MetLife all the streets in the 18-block area. The city also froze property taxes for 25 years at the value of the land before redevelopment, according to Samuel Zipp, a historian who wrote his Ph.D. dissertation on urban renewal in New York City.

Mr. Zipp, a visiting assistant professor of history at the University of California at Irvine, said that Stuyvesant Town and Peter Cooper Village served as a kind of urban Levittown, an early model for a new sort of city landscape that inspired later efforts in the 1950's and 1960's aimed at keeping city life affordable to the middle class. Among them was Lefrak City, a complex of 20 18-story buildings on 40 acres in Corona, Queens.

Stuyvesant Town and Peter Cooper are already undergoing great changes. Older residents are dying off. Young well-heeled professionals are willing to pay the higher rents. There are students from New York University - here one year, gone the next. There are fewer families and more single people, some of them subdividing one-bedroom apartments with partitions. A seven-story banner hanging down the side of a building on 14th Street announces, "Luxury rentals."

Old traditions are also disappearing. The corny Christmas music and antiquated ornaments are gone, said Ms. Wasserman, the filmmaker who moved into Stuyvesant Town with her husband and son. Gone, too, is what she used to call the "friendly fascism" of the place: rules against playing on the grass, against sunbathing, against eating in the playgrounds, against running through sprinklers without shoes.

"It's becoming two different communities here - those that have the rent stabilization and those that don't," said David Weiss, a 34-year-old writer who lives in a rent-stabilized one-bedroom apartment with his wife and young son. The turnover among new arrivals is so high, he said, "My wife and I kind of joke that when we make friends with people we'll ask if they're in a rent-stabilized apartment."

Still, about 8,000 apartments remain under the city's rent stabilization system. Even three-bedroom apartments remain in the hands of longtime residents still paying well under $2,000 a month.

Investors will want a return. "They have to raise the rents or convert it to a condo," said Leonard Grunstein, a lawyer who specializes in deals involving multifamily affordable housing. "Either event removes this as affordable housing stock. If this were removed, there are probably 22,000 workers who live there, most are two-family incomes, probably 15,000 employees are there. Where are they going to go?"

Real estate executives are already poring over demographic information about the current tenants and considering long-term strategies, such as turning Peter Cooper Village into a condominium complex. That development sits on a rectangular piece of land bisected by a private road and the 3,000 apartments there tend to be larger, with more than one bathroom.

In interviews yesterday, some older tenants living in rent-stabilized apartments said they were not worried about being priced out of their homes right away. "I'm not really that concerned about it," said Elliott Landen, 77, who said he pays slightly over $1,000 a month for a one-bedroom apartment. "I don't think they'll throw me out."

But many said the people who will suffer most will be younger tenants holding out hope of raising children in Manhattan. One man, a 42-year-old computer programmer, said he and his wife had given up their rent stabilized one-bedroom unit in Stuyvesant Town when their daughter was born and had moved into a market-rate two-bedroom. He said he figured that in about two years his family would "wind up in the suburbs."

"We're at about $1,400 now," said a woman named Evelyn, who declined to give her last name but described herself as a 77-year-old retired teacher who has lived with her husband in a three-bedroom apartment in Stuyvesant Town for 43 years. "If we die, whoever comes in will pay $3,500 or $4,000. This used to be a nice middle-income place. It's no longer that."

Kam said police would not hesitate to take the necessary action to enforce the ban on public demonstrations if anyone, including foreign nationals, was caught trying to protest without a permit.

"No licence, no permit will be issued ... if it is attempted to be carried out, it will be illegal," he said. The annual meetings of the International Monetary Fund and World Bank will be held here September 19 and 20.

"We will enforce the law," he said.

In Singapore, public protests involving at least five people are regarded as illegal unless a police permit has been issued.

Any person who organises or helps in organising the illegal assembly faces a jail term of up to six months or a fine or both.

Chee, a vocal critic of the ruling People's Action Party, said the intended march was aimed at exposing the government's curbs on free speech and what he claimed was the poverty situation in the wealthy city-state.

The report, which looks at how the bank must react to this emerging challenge to its development models, was released on the sidelines of the Third Assembly of the Global Environment Facility (GEF).

Global warming is forecast to have a devastating effect on some developing countries as rising seas wreak havoc on small island states and more frequent and severe droughts destroy crops on marginal agricultural land.

Poorer nations, particularly in sub-Saharan Africa, where agriculture accounts for about 70 percent of employment, would be the hardest hit.

The World Bank said costs associated with global warming would eat into development aid and projects, forcing donors to reassess spending and infrastructure needed to help cut poverty.

"Several studies have suggested that in the absence of adaptation, the annual costs of climate change impacts in exposed developing countries could range from several percent to tens of percent of gross domestic product (
GDP)," the bank said.

"Much of this damage would come not gradually and incrementally through the years but in the form of severe economic shocks," it added.

Up to a quarter of the World Bank Group's portfolio could be subject to significant climate risk, it said.

More severe storms and drought would also make investment in the affected countries less attractive, World Bank Evironment Director Warren Evans, told Reuters.

"Almost any investment that is potentially impacted by changes in water flow, changes in drought, changes in temperature are at risk."

It was important to help countries to better manage the climate variabilities they faced today, so they can adapt to increasing changes in the future, he said.

The GEF is the world's biggest environment financing mechanism that helps developing countries fund programmes to promote biodiversity, fight climate change and land degradation.