BP chairman dismisses talk of $250 oil

The chairman of UK oil major BP has rejected as “apocalyptic” a prediction by Gazprom chief executive Alexei Miller that oil prices would soar to $250 a barrel by the end of next year.

Peter Sutherland said yesterday there was no problem with available supplies of fossil fuels in the medium term, but there was a need for more investment to develop these resources.

His comments at the European Policy Centre coincided with the launch of BP’s 2008 statistical review of world energy and came just a day after the head of the Russian gas giant said he expected the price of crude oil – which settled up more than $5 at $136.38 a barrel last night in New York – to almost double within eight months and to take gas prices higher with it.

Mr Sutherland said: “I personally don’t believe in some of the more apocalyptic predictions. I don’t believe we’re in for a spike to $250 as suggested.”

BP’s chairman also dismissed the idea that speculation was a major cause of the quadrupling of oil prices in five years, contrary to recent comments by Saudi oil minister Ali al Naimi.

Mr Sutherland said the main factors were increased demand, a shortage of investment in developing new resources and political instability in some regions.

BP said in its annual review that the world’s fossil fuel resources were sufficient to support growing levels of production, but growing consumption meant the oil and gas industry faced major challenges in maintaining secure energy supplies.

It said global oil production had fallen last year for the first time since 2002, while demand kept on rising.

World oil output fell by 130,000 barrels per day (bpd) last year to 81.53million, according to BP.

It added, however, that usage rose by 1.1% to 85.22million bpd, outweighing production by nearly 5%. It said the soaring consumption was because of increased demand in emerging economies such as China, and in Latin America and Africa.

BP chief executive Tony Hayward added: “The defining feature of global energy markets remains high and volatile prices, reflecting a tight balance of supply and demand. This has put issues such as energy security, energy trade and alternative energies at the forefront of the political agenda worldwide.”

According to BP, oil reserves dipped slightly to 1.237trillion barrels last year, compared with 1.239trillion in 2006.

Saudi Arabia had the biggest share, at 21.3%, followed by Iran, with 11.2% and Iraq with 9.3%.

UK reserves at the end of last year were 3.6billion barrels, unchanged from 2006, but 31% down on a decade ago and just 0.3% of the world total, said BP.

The oil giant said global oil reserves were sufficient to meet current production levels for more than 41 years.