Russ Oil-Gas

PORTO CERVO, Italy, June 11,2009 (UPI) -- The mechanisms defining the price of oil need reassessment to produce a favorable climate for investors, officials with Russian energy Gazprom said in Italy. Alexei Miller, the chief executive for Gazprom, spoke at the 12th Annual General Assembly of the European Business Congress in Porto Cervo, Italy, on the economic climate in the energy sector. "The imbalance in favor of 'financial' transactions on the oil market has led to a situation where the oil price mostly reflects the trends on the equity market rather than on the hydrocarbons market," he said. In the prelude to the global economic recession, Gazprom had predicted oil prices would reach $250 per barrel. Miller backed off those estimates, but said it was realistic to assume oil would settle at around $100 or $150 in the next few years. "There are objective reasons to predict the oil market has pinpointed $100 per barrel as benchmark price in 2010," he said. He stressed the need to "radically revise" the pricing mechanisms in the oil sector, saying it was falsely linked to financial conditions, not the physical oil markets, faulting speculators for the recent surge in oil prices. Russia and other international energy players, therefore, will face economic difficulties in creating an attractive investment environment to boost production and a favorable consumer climate, Miller said