Oil bosses talk up prices at Russian forum

ST PETERSBURG – Top Russian energy executives gave a flurry of upbeat oil price predictions at the country’s main investment conference on Friday and westerners joined them in warning of low investment.

Encouraged by a new price rally, predictions by Russian oilmen flew as high as US$100 per barrel for 2010 after the country’s top energy policy official Igor Sechin said the world might see prices return to US$150 in two to three years.
Western oil executives expressed a similar view.
‘If we don’t invest, we will have a real problem in the future,’ BP’s chief executive Tony Hayward told reporters after a panel discussion with Sechin, in which Hayward said prices could hit US$150-$200 per barrel within 10 years.
‘Unless there is investment through the downturn, when the demand returns prices will go very high, and no one knows how high,’ and almost 25 per cent of forum participants.
Chairman and CEO of Chevron Corp, David O’Reilly, also voted and said he was concerned by low investments. ‘Are we investing sufficiently today to meet the world’s energy demand tomorrow? The answer is unfortunately no,’ he said.
NEW BULLISH
PREDICTION
Russia, which was criticised by some during the downturn for relying too heavily on revenues from oil and gas exports, had to rewrite its 2009 budget to adjust to lower oil prices.
The country badly needs prices to hold at above US$50 per barrel as it enters its first recession in a decade and expects to run budget deficits for three years in a row.
With such economic woes, having a high oil price has become an absolute necessity for Russia to allow the government to meet social obligations and avoid growing public unrest.
Russian energy firms also need high prices to service their heavy debt and develop new costly fields as western Siberia, once the former Soviet Union’s prized region, dries up.
The head of Russia’s Gazprom, the world’s largest gas producer and the country’s most indebted company, Alexei Miller, said ‘the market is now taking a price of US$100 per barrel as a target for 2010’.
‘It is good news for both producers and consumers because such a level allows to minimise risks of underinvestment in new hydrocarbon projects and as a result the risk of a prolonged deficit of supply,’ said Miller.
The market will likely take Miller’s words with a pinch of salt since it was he who predicted an apocalyptic price of US$250 per barrel last year just before it started to collapse from its peak of US$147 in July.
The boss of state-run oil major Rosneft, the most indebted Russian oil firm, Sergei Bogdanchikov, told reporters he saw prices averaging US$55 per barrel this year.
-Nampa-Reuters