CEO of Italy's ENI tells newspaper that runup in crude did nothing to turn down air conditioning in U.S. restaurants.
Reuters Oct. 7, 2006
It has been clear that the Western world can live with oil above $70 a barrel as consumers continue to drive SUVs.
ROME - Current oil prices are not very high and crude is actually cheaper than Coca-Cola, the chief executive of Italy's oil company ENI said in an interview with the New York Times.
"Sixty dollars a barrel is not very high," Paolo Scaroni said in the interview published Saturday.
"Today, a barrel of oil is worth half a barrel of Coca-Cola. So you should put things into perspective," he said, adding that the fact that consumers had not significantly changed their behavior proved that they were not particularly feeling the pinch.
"It has been clear to everybody that the Western world can live with oil above $30, $40, $50, $60, $70 a barrel and economies expand, inflation is low, and consumers continue to drive SUVs and air-conditioners are so high in American restaurants that you have to put on a coat otherwise you get sick," he said.
Asked whether he feared economic sanctions would be imposed against Iran, where ENI is involved in a series of projects and lifts 30,000 barrels of oil per day, Scaroni said companies had to live with the fact that oil is often found in potentially risky places.
"I often say that unfortunately you don't find oil in Switzerland. I cannot choose. Since oil is not in Switzerland but it is in Russia, in Iran and Kazakhstan, we have to be there," he said.
"Then we modulate our presence according to terms and conditions. Terms and conditions that change all the time. But if you are not there, you are out," he said.
He added that the faltering production rate in Iran was probably linked to the limited foreign investment in the country, accused by the United States of trying to build a nuclear bomb.
Scaroni also appeared to suggest that oil firms should be ready to renegotiate agreements they have with producing countries at a time when some governments are making access to their reserves more difficult for foreigners.
"When oil prices move from $50 to $60 you cannot expect that this $10 difference falls into your pocket. You'd be happy if half of it went to you. All over the globe there has been a big push to change the terms of agreements over the past three years," Scaroni said.
"The same thing happens when prices fall. This time we renegotiate. When oil prices went down in the 1990s, we renegotiated. But if renegotiation goes too far, and international oil companies leave, then production starts to drop," he said. "At that point governments understand that the terms and conditions are important and that we have our own interest."
Scaroni said earlier this month that pressure on Western energy groups in Russia had delayed the signing of a deal with Gazprom on oil, gas, power and liquefied natural gas, even though he still hoped to seal the accord by Oct. 15.
Negotiations have continued for months.