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Sinopec VP: China not behind high oil price
(Agencies)
Updated: 2005-06-30 10:18
The rising costs of finding and producing oil have pushed crude prices to a
record level, Qiu Xianghua, a vice president at China's Sinopec (SNP), said
Wednesday.
"The rise of reserve replacement and operating costs," has helped sustain
higher oil prices, Qiu said at a Cambridge Energy Research Associates industry
conference in Istanbul. Oil demand by China wasn't to blame, he added.
Many analysts have blamed China's surging oil demand as the chief factor
behind strong oil prices.
"I don't quite agree with that view," Qiu said, adding Chinese oil demand
growth was a fraction of that experienced by the U.S. last year.
In 2004, Chinese demand grew some 17%. This year demand should be about half
that, yet the People's Republic remains one of the fastest-growing oil consumers
in the world, having surpassed Japan.
The flood of new investors into oil also fueled crude price rises, Qiu said.
In addition, the rising cost of finding and extracting oil to replace the
expiring supply of cheap and easy-to-reach oil underpinned prices, he added.
The prices of crude in New York earlier this week homed in on $61 a barrel,
though it has fallen a hefty 5.6% since to $57.60 ahead of key U.S. petroleum
inventories data due Wednesday.
"Oil prices must maintain at a high level for companies to have the financial
incentive to expand reserves," Qiu said.
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