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French oil giant says demand could catch supply

chron.com

Houston Chronicle

June 4, 2008, 10:28AM

French oil giant says demand could catch supply

World demand for oil may soon outstrip supply as the cost of replacing reserves reaches $80 a barrel, according to the head of Total SA, Europe’s third- largest petroleum company.

“If we aren’t careful in the next few years there will be a shortage of oil and gas to cover demand,” Total Chief Executive Officer Christophe de Margerie told French deputies at a National Assembly commission in Paris today. “New forms of energy won’t come quickly enough to compensate.”

Total, along with Exxon Mobil Corp. and Royal Dutch Shell Plc, the world’s two biggest publicly traded oil companies, are facing increasing barriers to oil and gas reserves as resource- holding nations favor national champions. The Paris-based company is also facing political pressure as French truckers and fishermen blockade refineries and ports to protest fuel prices.

Total’s de Margerie fielded a barrage of questions from French deputies over the size of global reserves, rising oil prices and their impact on consumers.

The $80 a barrel cost of producing crude is a new “technical” floor for oil prices, he said, adding that oil prices are likely to remain high in the future.

“What has hurt most isn’t the level of oil prices but the rate at which they have risen,” he said.

Total said two days ago world oil production will reach a plateau of 95 million barrels a day before 2020, placing a limit on growing energy demand.

Raising crude output will depend on “convincing producing countries it is in their interest to produce more,” de Margerie said today. He has stressed that world shortages in supply will come from lack of access rather than dwindling reserves.

Politicians around the world must “measure the impact” of their decisions that will affect production in countries such as Iran, Iraq and Alberta, Canada, de Margerie said.

www.bloomberg.com

http://www.chron.com/disp/story.mpl/business/5818068.html

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