Oil price ‘should remain’ under $80—Petronas CEO

KUALA LUMPUR – Malaysian state energy firm Petronas said Monday that the crude oil market’s current fundamentals call for lower oil prices.

“Given the current state of market fundamentals and cost environment, I believe prices should remain within the range of $75 to $80 a barrel,” Shamsul Azhar Abbas, the oil company’s chief executive officer said at an industry gathering.

Oil was mixed in Asian trade Monday ahead of a key OPEC meeting this week in Vienna, analysts said.

New York’s main contract, light sweet crude for July delivery, rose eight cents to $100.30 a barrel and Brent North Sea crude for July delivery lost six cents at $115.78.

Referring to the current high oil prices, Shamsul asked: “How have we reached these price levels, this early in the economic cycle, given the absence of any real evidence of shortages in the physical market?”

The 12-nation Organisation of the Petroleum Exporting Countries (OPEC) will meet Wednesday in the Austrian capital amid growing fears that high crude prices could further dent faltering world economic growth and energy demand.

Turning to oil demand in Asia, Shamsul predicted that this fast growing region will have consumed more than 250 billion barrels of oil between now and 2030 — more than six times its current proved reserves of about 40 billion barrels.

Warning that oil production in the region was expected “to peak and subsequently decline,” within the next 20 years, he said Asian producers should prolong (oil) field life and step up the hunt for oil to satisfy strong demand.

Shamsul said geology-based assessments have indicated that undiscovered oil in Asia was about 50 billion barrels — equivalent to one-and-half times the combined proved reserves of Indonesia, Vietnam and Malaysia.

“Our challenge is thus to make them commercially attractive (for exploration),” he said.