By Sarah Kent
The slump in oil prices could cause the oil industry to cut
expenditure by 10% to 15% this year, but companies should be wary
of overreacting to the cyclical downturn, risking a future price
spike, the chief executive of Italian oil company Eni SpA said
Wednesday.
Claudio Descalzi, speaking at the World Economic Forum in Davos,
warned that steep cuts in investment now could lead to price spikes
in the coming years to $150 or even $200 a barrel.
He said that Eni itself intended to reduce its costs this year,
though it will press on with all its planned projects in Africa,
where costs are relatively low. He didn't detail how much the
company is planning to cut back.
He added that the oil industry needs a "central bank" to prevent
wild swings in the market, a role historically filled by the
Organization for the Petroleum Exporting Countries. Amid the recent
slump, OPEC has said it is no longer interested in playing that
role, refusing to cut output in order to hold onto market share
instead.
Write to Sarah Kent at sarah.kent@wsj.com
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