BP says oil to remain under $25 despite Mid-East crisis

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The Independent Online

The oil giant BP, Britain's largest company, yesterday said it was confident that the price of crude oil would stay below $25 over the coming months.

In an unusually frank interview John Browne, the chief executive, forecast that oil prices would remain in a band between $20 and $25 a barrel during the first half of 2002. BP normally refrains from commenting on oil prices.

Despite tensions in the Middle East and world economic uncertainty, Mr Browne said he did not expect wild fluctuations in oil prices this year thanks to a closer understanding between oil producing nations and consuming countries.

"These days everyone understands that Opec needs to earn money to avoid political instability. And Western countries know their economies can support higher oil prices because they use less oil per unit of GDP these days," Mr Browne told Spain's El Pais newspaper.

"Prices in the region of $20 to $25 a barrel are fine for both sides."

He also ruled out plans for any further major acquisitions, saying the company now planned to expand the business through organic growth.

"To be big just for the sake of it is a waste of time. If the return on capital is not high enough, shareholders are not getting what they deserve," he said.

"For BP, the time for big acquisitions has passed. The best way of growing is to do it for yourself, not through acquisitions."

BP merged in 1998 with Amoco of the US, doubling the size of the company and giving it a major presence in both oil and gas markets. "But there are no more Amocos left, it's over," Mr Browne said.

A spokeswoman in London added later that Mr Browne was not ruling out smaller acquisitions. "It is a question of the scale," she said.

Mr Browne said in terms of oil exploration and refining, BP's production was growing faster than its main rivals Shell, the Anglo-Dutch oil major, and Exxon of the US.

Mr Browne said that in 20 years, BP would still be focused on its core business of oil, gas and petrochemicals, but would also have an important presence in solar energy.

"The business of solar panels is going to grow," he said, noting his company was building large plants in Spain to produce solar panels.