By Steve Gelsi

Energy stocks Monday kicked off the week with gains as oil prices advanced.

Among stocks in the spotlight, BP PLC (BP) drew several mentions in press reports about Libya's ties to the U.K., and China Petroleum & Chemical Corp. (SNP) said its profit for the first half of the year quadrupled.

Hope for a strong global economic recovery continues to rise, as energy prices continued their upward march and natural gas prices rose from a seven-year low last week.

Crude futures advanced 55 cents to $74.44 a barrel and the S&P 500 rose 0.5%, providing a double lift for energy stocks.

The NYSE Arca Oil Index rose 0.8% to 994. The NYSE Arca Natural Gas Index rose 0.8% to 477. The Philadelphia Oil Service Index rose 1.6% to 184.

BP's U.S.-listed shares rose 10 cents to $52.35. China Petroleum & Chemical's U.S. shares rose 0.6% to $91.21.

BP's ties with Libya surfaced in recent days around the political firestorm surrounding the release of convicted Lockerbie bomber Abdel Baset al-Megrahi.

Reports said U.K. Prime Minister Gordon Brown mentioned al-Megrahi during a meeting with Libyan leader Moammar Gadhafi at this year's G8 Summit in Italy. Former Prime Minister Tony Blair last visited Libya in 2007 as BP finalized a $900 million exploration deal.

Last week, Gadhafi's son, Saif al-Islam, said the release of al-Megrahi was linked to trade deals with Britain.

"In all commercial contracts, for oil and gas with Britain, (Megrahi) was always on the negotiating table," said Islam in an interview late Thursday, according to a report from AFP.

Sinopec earnings quadruple

China Petroleum & Chemical Corp., or Sinopec (SNP), said Monday it's seeking overseas investments in oil and gas resources as part of its new three-year plan to increase natural gas and oil production. Asia's largest refiner also said profit for the first half of 2009 rose by four times.

Hong Kong stocks rallied Monday in response to strong pre-weekend gains on Wall Street, with shares of Sinopec in the lead.

The Hang Seng Index jumped 2% to 20,592.77 and the Hang Seng China Enterprises Index rose 1.9% to 11,684.31

Oil industry attacks climate bill

The cost of adhering to new U.S. emissions standards under climate legislation proposed in Washington could lead to greater imported gasoline and diesel fuel, the oil industry argued in a study by the American Petroleum Institute.

"Production at U.S. refineries would drop while production at refineries in countries that do not limit their own greenhouse gas emissions would rise," the study said. "The impact on global refinery greenhouse gas emissions would be minor as reductions in U.S. emissions mostly would be offset by increases in emissions in other countries."

Iraq planning to hold new oil auction

Iraq officials plan to move ahead with a second auction of its vast oil fields after an earlier round in June managed to sell only one of six fields in the face of weak interest from overseas oil players.

Earlier, multinational companies had demanded more revenue from every barrel of increased production than the Iraqi government would allow. That reportedly kept bids from flowing.

Still, the Iraq government managed to find a buyer for its largest oil field, the Rumaila, a vast reservoir of fossil fuel in southern Iraq said to hold 17 billion barrels of oil. The auction's BP consortium, which included China National Petroleum Corp., wanted $3.99 per barrel to develop Rumaila, but then won after it agreed to lower its price to match the government level of $2 a barrel, according to reports.

Oil service firms shun hurricane insurance

Oil service firms such as Devon Energy Corp. (DVN), Rowan Cos. (RDC) and Diamond Offshore Drilling Inc. (DO) cut back on expensive wind damage coverage for this year's late-blooming Atlantic hurricane season, according to a report in The Wall Street Journal. Transocean Ltd. (RIG) has opted for a form of windstorm self-insurance.

-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com