Madrid (Platts)--30Jun2008

Top international oil company officials said Monday in Madrid that it was
wrong to blame speculators for the run-up in oil prices that last Friday took
US light crude futures to an unprecedented $142.99/barrel.

Shell chief executive Jeroen van der Veer told a press conference at the
World Petroleum Congress underway in the Spanish capital that there was no
current shortage of oil but that it was wrong to blame speculation for record
high oil prices.

"There is no physical shortage today," he said. But, he added, "I don't
think that you can blame speculation for the oil price...to blame them [the
speculators] is hard to prove."

Van der Veer said, however, that oil was becoming more difficult to
produce. "The easy oil is very limited," he said. "Most of the new oil will be
difficult."

Current oil market psychology reflects anticipation of future market
conditions, he said.

BP CEO Tony Hayward, addressing the opening session of the WPC, said it
was a "myth" that speculation was the cause of high oil prices. "There is more
to it than that," he said. "It is a fundamental signal, not about
speculation," he said. "Investors are investing in the oil market because they
believe the price will go up, based on fundamentals," he said.

"Record high oil prices "are telling us that supply is not responding
adequately to rising demand," he told the opening session of the WPC.

Hayward said the era of cheap energy was over. Demand for energy was
moving "relentlessly upward," driven mainly by demand from China and India,
which was being met "barrel for barrel" by Russia, "where production has begun
to decline."

As a result, the OECD will have to rely more on frontier areas such as
oil sand, heavy oil and deep water Mexico, he said.

Antonio Brufau, CEO of Spain's Repsol, said demand was outstripping
supply. "Fundamentals in the industry are the reason for the increase in
prices," he said.

Brufau told a press conference that the weak US dollar was also a
destabilizing factor, helping to drive up prices.

TAXATION 'DANGEROUSLY HIGH'

BP's Hayward, meanwhile, warned that "dangerously high" taxation would
deter further investment in new resources.

He noted that while demand had risen in 2007, OPEC had actually cut
supply while other producing areas were maturing fast or were in decline as
was the case in Russia and the UK continental shelf. In the UK, he said, crude
oil production fell by 10% last year.

"The problem is above ground, not below ground," he said, calling for a
new type of partnership between national oil companies, which he said held 80%
of global reserves, and international oil companies, which possess the
technology.

WORLD NOT RUNNING OUT OF OIL

Another myth, Hayward said, was that the world was running out of oil.
This was not the case, he said, adding that current reserves of crude oil were
enough to last 40 years, gas 60 years and coal, the fastest growing fossil
energy source, 120 years.

The world had so far produced 1 trillion barrels of oil and there was
another 1 trillion of proven reserves but the remaining reserves "will be
expensive to extract," the BP boss said. The problems were political and not
geological, he said.

The energy world needed new joint ventures and alliances between the
state-owned oil companies and the multinationals, "a new contractual
relationship rather than the historical models" that exist today, Hayward
continued.

With two thirds of crude oil traded across international borders, lower
tariffs were needed, Hayward said, adding that taxation was now "dangerously
high" and could impact future investment.

"High taxes mean businesses have less money to invest in new production,"
he said, citing an International Energy Agency estimate that $22 trillion
would be needed between now and 2030 to meet future demand for fossil fuels,
which he said would still represent the bulk of the energy mix by then.

Another way of making sure future demand was met would be to raise
recovery rates from existing fields. If the global recovery rate, currently
averaging 35% could be raised to 50%, this would provide an additional 170
billion barrels of production, or the equivalent of five years of supply.