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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: SargeK who wrote (37781)	2/18/1999 4:36:00 PM
From: Crimson Ghost	Respond to of 95453

Why oil prices will not be allowed to stay at current levels much longer BP chief warns price falls could threaten oil supplies The Scotsman SIR John Browne, the chief executive of the recently merged BP Amoco, warned yesterday of serious disruption to world energy supplies if oil prices fell much below their present level for any length of time. He told an Institute of Petroleum lunch in London that the industry was facing a period of great change and volatility after a 47 per cent fall over the last 18 months in the price of North Sea oil, which yesterday traded at about $10.45 a barrel. Sir John also called for a worldwide reduction in special oil taxes applied to the oil industry. He claimed the continued existence of oil and gas tax regimes on the top of normal corporation tax in areas like the North Sea and Alaska was a barrier to ne w activity and therefore a tax on investment and employment. "A change in that approach to taxation would provide a real encouragement to the development of the remaining resources in the North Sea and in a number of other places around the world," he said. Some forecasts have suggested that the price could fall further if the Organisation of Petroleum Exporting Countries fails to make production cuts next month. But Sir John said: "I don't believe anything much below $10 is sustainable for very long because the fundamentals of supply and demand would be disrupted by lack of investment." With the oil industry's production base declining at about 3 per cent a year from natural causes, he said that a continued flow of new investment was imperative to meet future demand. Before the recent collapse, oil prices were expected to fluctuate between $15 and $21 a barrel, based on trends over the previous decade. "Now it seems that we've experienced a real discontinuity and a shift to a lower band which in broad terms runs from $10 to $17," Sir John said. But he did not expect a rapid rebound of prices towards the top end of the range. "Demand is rising - but at a relatively modest rate - and the only thing which would produce a price increase in the short term would be further constraints on production," he said. (Copyright 1999) _____via IntellX_____ Publication Date: February 17, 1999 Powered by NewsReal's IndustryWatch ...back to top