Total believes spike in oil prices is bad for everyone

The sharp rise in oil prices is bad for everyone and tough decisions are required to both cut consumption and meet higher demand, French oil major Total's CEO said.
"There is a problem of supply and demand and this is why the price is high, even if it is exaggerated by speculation," Christophe de Margerie told on the sidelines of an energy event in the Qatari capital. "Definitely we don't see it as good news, not for producing countries, companies or consumers. It is going too fast."

De Margerie said there was sufficient oil but the market was factoring in a risk of future supply shortages, driving prices higher.
"I really think it's time to take decisions about what we can do on the one side to reduce consumption and on the other side to face additional demand for energy from emerging countries," he said.

Political problems in many producing countries were contributing to the higher prices, he added.
"The industry is getting short of access to new reserves... we are a little bit embarrassed to see projects being delayed or suppressed or facing geopolitical problems," he said. "When you add it all up, it is affecting our ability to meet the demand."

De Margerie was speaking at the inauguration of the Dolphin Energy gas and pipeline facility, the first cross-border gas project in the Gulf Arab region.
Mubadala Development Company, an Abu Dhabi-owned investment vehicle, owns 51 % of Dolphin while Total and US Occidental each have a 24.5 % stake. De Margerie said the company expected no decision on Iran's South Pars gas field in the short-term and Total was interested in the country "in the long-term".

His comments came after Royal Dutch Shell announced it had pulled out of the planned gas project in Iran, after coming under pressure not to participate from US lawmakers who were concerned about Iran's nuclear programme. Total has a memorandum of understanding with state-owned National Iranian Oil Company to develop Phase 11 of the giant South Pars field. Iran has said it wants Total to commit to the deal by the middle of this year, while the French government, which is concerned about Iran's nuclear programme, has urged Total not to invest.
"In the short-term it will be difficult to find a win-win situation," De Margerie said. "We have told them we are interested in the long-term."

He said Total and Iran still have to discuss the terms of the contract, because the costs have risen.
"We still have nothing to be signed," he said. Total said an announcement should be made "very, very soon" on its new refinery in Saudi Arabia. De Margerie declined to say if the project would go ahead but said Total and Saudi Arabia were "positive" on the project's progress.

Total and the world's top oil exporter signed a deal in 2006 to build a 400,000 bpd refinery at Jubail. De Margerie said costs were rising for energy projects worldwide, including for the Jubail project. Industry sources say the costs have risen to above $ 10 bn (EUR 6.5 bn), up from initial estimates of about $ 6 bn (EUR 3.9 bn) in 2006.
De Margerie said that Total was working with state oil giant Saudi Aramco to rein in the costs. He said a new estimate of the cost would be announced when the project is announced.