CERAWeek: $43 a barrel (on average) for 2009

Getting any knowledgeable energy watcher to prognosticate about oil prices is like pulling teeth. But Terry Hallmark, director of political risk and policy assessment for energy consultancy IHS, did just that this afternoon at CERAWeek in Houston.
Hallmark said the benchmark price for crude oil will probably average between $40 and $50 a barrel in 2009, and added “$43, specifically, if my numbers are correct.”
Rising oil prices often translate into rapidly morphing fiscal regimes for foreign investment in oil-producing countries. The higher the oil price, the bigger the take most host governments want on every deal. Governments are slower to renegotiate better terms for companies when prices fall, of course.
Hallmark sees a handful of countries, especially those where government coffers have already been hit hard by falling oil prices, that might be willing to give better contract terms to energy companies inking deals in 2009.
They include:
• Canada, where several potential oil sands projects have already been derailed by low crude prices;
• Nigeria, where deep water and ultradeep water projects are no longer economically viable in the current low price environment;
• Russia, which already has shown positive movement toward revisiting contract terms;
• Azjerbaijan & Kazakhstan, which are likely to follow Russia’s lead.
Hallmark said, “A loss of interest in these countries by foreign companies–or even a perceived drop off in interest–increases the chances there could be an improvement in terms.”
LYNN COOK

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