ISTANBUL, June 27 World oil prices will drop to
the low $60 range by the beginning of next year as long as the
security premium in the world oil market does not rise, said
Daniel Yergin, chairman of Cambridge Energy Research
"Our basic sense is that oil prices for next year will be
around $60 per barrel, Yergin told Reuters on the sidelines of
"We are in a period when there is a security premium," he
The effect of the conflict in Nigeria on world oil prices
has been underestimated despite Nigerian oil accounting for
one-third of the supply to the United States, Yergin said.
Other conflicts such as the U.S.-led war in Iraq and the
ongoing square-off between the West and Iran have also added to
tension on the oil market.
One of CERA's long-term oil price scenarios sees oil prices
falling $20 from present price levels as long as current
conflicts are contained, Yergin said, adding, however, that a
second scenario sees a security premium pushing prices up
Long-term price estimates, however, will take into account
nonconventional oil products as the industry taps into broader
types of oil resources.
"The one change we do see is the roles of nonconventional
oil, (like) oil sand, ultra-deep water," Yergin said, "We see a
subsequent build-up of capital coming in the next 10 years."
He said he saw the role of nonconventional oil accounting
for 40 percent of the global supply stream by 2017.
Russia's newly announced South Stream project will not
affect other gas pipelines planned for the region as the amount
of natural gas consumption in Europe is expected to skyrocket
in coming years, Yergin said.
"Europe is going to be a big market for natural gas, so the
South Stream does not preempt other natural gas contracts," he
Kazakh and Turkmen gas will also find its way to European
markets, he added, as Central Asia joins the Middle East,
Western Africa and Russia to be one of the largest energy
producers in the world.
"Turkmenistan is back in the game, and the question is
where the resources are going," he said, adding that Kazakhstan
has expressed that it wants pipelines going in all directions
out of the country.
Central Asia, among more traditional producers, will be
focusing on growth in China and India as fast-growing Asian
economic powerhouses continue to affect demand on the world
In 2004, the consumption growth of China and India grew by
2.5 percent, Yergin said.
"The China factor still looms large and it's making people
rethink the impact of China on the world market. China is less
than 10 percent of the total demand but it's growing fast,"