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Last Updated: Sunday, 11 June 2006, 14:35 GMT 15:35 UK
BP boss says oil prices will fall
Lord Browne
Lord Browne has overseen a period of powerful growth at BP
Lord Browne, the chief executive of oil firm BP, has said he expects crude prices to fall from current near-record levels as more supplies are discovered.

However Lord Browne, speaking in an interview with German magazine Der Spiegel, said there was not likely to be any dip in prices in the short term.

He said prices will probably settle at an average of about $40 a barrel in the medium term, before falling lower.

Prices have surged this year amid fears about supply and global instability.

No certainties

A combination of these factors pushed oil to more than $75 a barrel in April, amplifying concerns that the increased raw material costs would seriously impede global growth.

There was a short respite and dip in oil prices at the end of last week when top militant Abu Musab al-Zarqawi was killed in a US-led operation in Iraq this week.

Consumers are ready to pay for the protection of the environment
Lord Browne

A barrel of New York light crude was trading at $71.63, while a barrel of London benchmark Brent crude was at $70.48.

"We cannot really count on oil prices easing very much in the near future," Lord Browne told Der Spiegel in an interview due to be published on Monday.

"But is very likely that oil prices will range in the medium term around an average of $40," he continued. "In the long run it could even be $25 to $30."

Lord Browne said that companies were finding large oil deposits in the Caspian Sea, while there was good production potential in countries such as Russia and regions including Western Africa.

He also said that improved efficiency would help boost crude extraction.

"In the past we managed to get out 20% to 30%," Lord Browne said. "At the moment it's maybe 40% to 45%. I can see no reason why we could not reach 50% or 60%."

Green issues

One of the factors to emerge from the recent high oil prices has been an increased focus on developing alternative sources of energy.

Lord Browne said in the future consumers would have a large role to play in deciding the success of new technologies.

"Consumers are ready to pay for the protection of the environment," he explained. "In Europe more and more people get green electricity despite coming at a higher price. Ten years ago this would have been unimaginable."

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