Date
11 December 2017
Zhou Xiaochuan said in Davos low oil prices will be good for China's economy and aid in job creation. Photo: Reuters
Zhou Xiaochuan said in Davos low oil prices will be good for China's economy and aid in job creation. Photo: Reuters

Low oil prices could hold back renewable energy: PBOC chief

People’s Bank of China governor Zhou Xiaochuan said low oil prices could slow down China’s development of renewable energy projects, BBC News reported.

Speaking at the World Economic Forum in the Swiss resort of Davos, Zhou said: “We worry a little bit that the price signal may give disincentive for new energy types to develop and could reduce investment in new non-fossil energy.”

But he said lower prices would be good for the economy and job creation, because China was dependent on imported oil and gas.

Meanwhile, BP boss Bob Dudley said oil prices could remain low for up to three years.

He told BBC News the oil giant was planning for low oil prices for years to come.

That is expected to lead to job losses and falling investment in the North Sea oil industry and elsewhere, curbing supply and eventually forcing the price back up.

Also in Davos, Italian oil group Eni said the next price spike could be to about US$200 a barrel.

Eni’s chief executive, Claudio Descalzi, said the oil industry would cut capital spending by 10-13 percent this year because of slumping prices.

Descalzi said that would create longer-term shortages and sharp price rises in four to five years’ time, if the Organization of the Petroleum Exporting Countries fails to cut supplies.

OPEC secretary general Abdullah al-Badri, also speaking at Davos, defended the cartel’s decision in November not to cut output.

He said: “Everyone tells us to cut. But I want to ask you, do we produce at higher cost or lower cost?

“Let’s produce the lower-cost oil first and then produce the higher-cost. We will go back to normal very soon.”

Oil prices have sunk by almost 60 percent since June to below US$50 a barrel because of a large supply glut.

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CG/FL

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