Canada oil execs wary of boosting capital spending

By Jeffrey Jones

CALGARY, Alberta (Reuters) - A doubling of oil prices in the past six months has yet to convince many Canadian oil companies to fatten capital spending, partly because natural gas markets remain depressed, executives said on Monday.

Crude has climbed above $70 a barrel in recent weeks as traders have wagered that the worst of the recession, which has cut sharply into global oil demand, may be past.

But oil executives at the Canadian Association of Petroleum Producers' investment symposium said they are not convinced today's prices are sustainable, given the demand fundamentals.

"I think we're going to be a bit patient," said Marvin Romanow, chief executive of Nexen Inc (NXY.TO), Canada's No. 4 independent explorer and producer.

"In many ways I think we're a bit surprised at how quickly the commodities have rallied. The rally in the commodity is coming on the basis that economies are shrinking at a lower rate."

Nexen, whose Long Lake oil sands project is in startup mode, has budgeted C$2.56 billion ($2.27 billion) in spending this year.

Romanow said oil prices surged through the middle of 2008 because of supply shortages, and that will likely happen again when economies recover.

"But I think it's a bit early for the rally because there still is a lot of oil around the world and demand is still not completely strong," he said.