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To: Haim R. Branisteanu who wrote (5031)	1/30/1999 7:30:00 PM
From: Haim R. Branisteanu	Respond to of 99985

Chevron says rise in oil prices is possible, not inevitable Copyright © 1999 Nando Media Copyright © 1999 Reuters News Service KUWAIT (January 30, 1999 11:50 a.m. EST nandotimes.com) - The Chevron Corporation said Saturday that world oil prices could return to $18 in a "few years," predicting a drop in supplies to the market by small producers crushed under the current price slump. Chevron Chairman Ken Derr told Reuters in an interview in Kuwait that the San Francisco-based world oil corporation had forecast a 1999 price for West Texas Intermediate of $13 to $14 a barrel -- slightly above recent levels. "We think prices will return to the $18 level but it could take some period of time before that happens," he said, adding that a balance between supply and demand could return to the over supplied market "in a few years ...." "We are already seeing, (and) another six months of low oil prices you are going to see fairly significant reductions in non-OPEC productions. "We see small producers shutting oilfields in the United States right now, and we will see more of that. They are reducing budgets, not just oil companies but also governments ... Everybody is spending less money," he said. The production cost in most Gulf Arab states is around a $1 a barrel compared with much higher levels - $6 to $8 - in areas like the North Sea and parts of the United States. The oil price drop to 12 year lows triggered a 51 percent decline in Chevron's fourth-quarter net income to $431 million. Derr refused to comment on rumors that Chevron, the third largest U.S. oil company, could be taken over by Royal Dutch/Shell Group as world oil majors merge. "The one subject I never comment on is speculation about mergers ... Absolutely no comment," he added.