Oil and Gas

BP chairman rejects "apocalyptic" talk of $250 oil

BRUSSELS (Reuters) - The chairman of British oil major BP BP.L rejected as "apocalyptic" a prediction by the head of Russian gas giant Gazprom GAZP.MM of oil prices soaring to $250 a barrel by the end of next year.

A commuter exits a subway station as fuel prices at a BP petrol station are advertised in New York June 8, 2008. . REUTERS/Joshua Lott

BP chairman Peter Sutherland told the European Policy Centre on Wednesday there was no problem with available supplies of fossil fuels in the medium term, but there was a need for more investment to develop those resources.

“(I) personally don’t believe in some of the more apocalyptic predictions,” Sutherland said when asked about Tuesday’s forecast by Gazprom CEO Alexei Miller.

“I don’t believe we’re in for a spike to $250 as suggested in price per barrel.”

Oil traded at just above $132 a barrel in Asia on Wednesday.

Sutherland also said he did not believe speculation was a major cause of the quadrupling of the oil price in the last five years, contrary to recent comments by Saudi Oil Minister Ali al-Naimi.

The main factors were increased demand, a shortage of investment in developing new oil and gas resources and political instability risks in production areas such as Iraq, Venezuela and Nigeria, Sutherland said.

“I’m hopeful that we won’t have dramatic further escalations in the price per barrel,” the former European Commission and World Trade Organisation chief said.

Speaking in Deauville, France, on Tuesday, Gazprom’s Miller said he expected the price of crude oil to almost double within 18 months and to take gas prices hither with it.

“We think it will reach $250 a barrel in the foreseeable future,” he said.

reporting by Paul Taylor, editing by Pete Harrison