The unusual gathering of 15 concerns including petroleum giant Saudi Aramco was expected to discuss how best to attack over capacity without damaging the industry's ability to compete for assets in emerging areas.

Organisers of the two-day closed talks played down fears the gathering would become a crisis summit on low prices that could lead to anti-consumer cartels and market manipulation. Analysts agreed that such high-profile suppliers of the lifeblood of industrial societies would be constrained from doing deals by worries about European and U.S. Anti-trust laws. They noted parts of the agenda were fairly specialist, touching not only on industry consolidation but also new fuel and drilling technology and the environment. A briefing is set for around 1500 GMT on Saturday.

"Mergers are the flavour of the day but I'M Not sure this meeting has anything to do with them," said aLondon oil equity analyst. "I wouldn't see this as a catalyst for alliances." "Avoid even the appearance of collusion with competitors," reads a note to participants from US Energy lawyer Lynn Coleman, attending to protect firms from accusations of market manipulation.But industry insiders expected the energy barons to swap notes on how to improve control over the pace of investment to ease the industry's tendency to overspend when Times are good. And a recent rash of mergers and alliances will ensure that oil analysts will watch closely for signs of new tie-ups by companies attracted by tempting economies of scale. Firms taking part in the gathering at a convent on a Venetian island include Saudi Aramco, the world's largest oil company by production, plus Organisation of the Petroleum Exporting Countries Secretary General Rilwanu Lukman.