Current Oil Price `Not Expensive,’ Gabrielli Says

(Bloomberg) — Crude oil at $126 a barrel is “not expensive,” considering production costs and rising demand, said Jose Sergio Gabrielli, chief executive officer of Brazil’s government-controlled oil company, Petroleo Brasileiro SA.

“Oil is an exhaustible resource,” Gabrielli said in an interview today in Rio de Janeiro. “In order to produce new oil to replace the barrel you just used, you have to find oil that’s much more expensive than what you already produced.”


With a $112 billion, five-year investment plan, Petrobras is tapping giant deepwater reserves including the Tupi field, the Western Hemisphere’s largest oil discovery in three decades. Tupi may hold as much as much as 8 billion barrels of oil equivalent, Gabrielli said in November. That’s enough to supply every refinery on the U.S. East Coast for 15 years.

Gabrielli’s views contrast with those of Jesus Reyes Heroles, CEO of state oil company Petroleos Mexicanos, the third- largest oil supplier to the U.S. He said in a July 21 interview that the price of a barrel of oil would be about $80 without the effect of market speculation.

Bloomberg