Nigerian oil advisor warns oil prices could fall further

Apr 18, 2005 02:00 AM

Oil prices could fall further in their current downward trend, Edmund Daukoru, Nigeria's Presidential Adviser on Petroleum and Energy warned.
"They could fall further, though we have been witnessing a curious disconnect between stock levels and price since 2004," he said in a keynote address at the start of a three-day Nigerian Oil and Gas conference and Exhibition.

Oil prices aren't at a level "that one can honestly consider to be a true reflection of underlying existential factors in producing countries," he said.
He said the current fall in price followed a rebuilding of stock levels. But he said even current high prices still don't account for all the costs born by producers and producing countries, pointing to development and environmental damage.

He also said that consuming countries still take a bigger slice of oil profits than producers through high gasoline taxes.
"If all these factors are taken into account, it is clear that the so-called high revenues of the producing countries are no more than nominal," he said. "If I may hazard a guess, I would say that even the range of $ 40-$ 50 per barrel, that is being advocated by some analysts, does not truly reflect all the factors," he said.

He said timely investment to renew and expand capacity is essential to maintain secure supplies and moderate prices.
"There is insufficient spare capacity to compensate for interruptions in supply," he said.

Source: Dow Jones
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