BP Chief Exec Claims Fall in Oil Prices Will Increase Demand

Falling oil prices will spur a recovery in demand for crude, according to Tony Hayward, chief executive officer of BP Plc, Europe’s second-biggest oil company.

Oil’s 54 percent drop from its July record in New York was caused by higher OPEC output, slower economic growth and lower U.S. consumption, Hayward said in a speech to the Abu Dhabi International Petroleum Exhibition and Conference in the United Arab Emirates.

Lower oil prices haven’t stopped or stalled the pace of industrialization, he added. Oil futures declined 33 percent in October, a record monthly drop, on signs that the economic slowdown in the U.S. and Europe will spread to emerging markets, curbing fuel consumption.

U.S. crude consumption fell by 1.1 million barrels a day in the first nine months of the year, “the largest fall since 1980-81,” and slid by 2.1 million barrel a day during the past four weeks, Hayward said. “Clearly the economic slowdown and recession fears played a significant role in this accelerating decline.”

Hayward cited so-called unconventional projects, including oil sands and Arctic reserves, as key sources of new oil supply.

“Lower trade barriers and tariffs are welcome and necessary” to help add oil reserves, he said. “So are strict and enduring fiscal and regulatory policies.”

BP’s CEO cited the example of the U.S., which managed to increase oil and gas output for the first time last year since 1991, following policy changes.

He also extolled the virtues of Enhanced Oil Recovery, which involves injecting gas into fields to bring heavier, harder-to-pump oil to the surface.

A 5 percent increase of oil-in-place would add 170 billion barrels to global oil reserves, enough for five years of supply.

“We believe we could add 15-20 percent to recovery rates with EOR,” Hayward said.

Author: Jo Amey