Hilmi Panigoro, the head of Indonesia’s PT Medco Energi Internasional, believes that crude oil is a good long-term investment, despite widespread efforts to reduce consumption of fossil fuels. He told Bloomberg in an interview that world oil prices were likely to hover around $60 per barrel in the short term but could go higher than $100 per barrel in the long term.
According to Panigoro, higher demand for jet fuel and petrochemicals will push crude prices up within the next decade or two, even as upstream companies scale back their exploration efforts. “[In] the long run, it will be a different story, as not enough investment is happening upstream to replace declining production,” he commented.
This perspective is driving Medco’s business development strategy, he added. The company is trying to acquire new onshore assets around the world so that it can boost its output from 120,000 barrels of oil equivalent per day (boepd) to 300,000 boepd within five to 10 years, he explained.
Medco is more interested in onshore fields than in deep-water offshore sites because they typically cost less to develop, Panigoro said. The company is only considering sites where the cost of production does not exceed $10 per barrel, he noted.