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Sinopec VP: China not behind high oil price
The rising costs of finding and producing oil have pushed crude prices to a record level, Qiu Xianghua, a vice president at China's Sinopec (SNP), said Wednesday. "The rise of reserve replacement and operating costs," has helped sustain higher oil prices, Qiu said at a Cambridge Energy Research Associates industry conference in Istanbul. Oil demand by China wasn't to blame, he added. Many analysts have blamed China's surging oil demand as the chief factor behind strong oil prices. "I don't quite agree with that view," Qiu said, adding Chinese oil demand growth was a fraction of that experienced by the U.S. last year. In 2004, Chinese demand grew some 17%. This year demand should be about half that, yet the People's Republic remains one of the fastest-growing oil consumers in the world, having surpassed Japan. The flood of new investors into oil also fueled crude price rises, Qiu said. In addition, the rising cost of finding and extracting oil to replace the expiring supply of cheap and easy-to-reach oil underpinned prices, he added. The prices of crude in New York earlier this week homed in on $61 a barrel, though it has fallen a hefty 5.6% since to $57.60 ahead of key U.S. petroleum inventories data due Wednesday. "Oil prices must maintain at a high level for companies to have the financial
incentive to expand reserves," Qiu said.
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