BP's Hayward Says Lower Oil Prices Will Spur Demand

By Ayesha Daya

Nov. 3 (Bloomberg) -- Falling oil prices will spur a recovery in demand for crude, according to Tony Hayward, chief executive officer of BP Plc, Europe's second-biggest oil company.

Oil's 54 percent drop from its July record in New York was caused by higher OPEC output, slower economic growth and lower U.S. consumption, Hayward said in a speech to the Abu Dhabi International Petroleum Exhibition and Conference in the United Arab Emirates.

Lower oil prices haven't stopped or stalled the pace of industrialization, he added.

Hayward cited so-called unconventional projects, including oil sands and Arctic reserves, as key sources of new oil supply.

``Lower trade barriers and tariffs are welcome and necessary'' to help add oil reserves, he said. ``So are strict and enduring fiscal and regulatory policies.''

BP's CEO cited the example of the U.S., which managed to increase oil and gas output for the first time last year since 1991, following policy changes.

He also extolled the virtues of Enhanced Oil Recovery, which involves injecting gas into fields to bring heavier, harder-to-pump oil to the surface.

A 5 percent increase of oil-in-place would add 170 billion barrels to global oil reserves, enough for five years of supply.

``We believe we could add 15-20 percent to recovery rates with EOR,'' Hayward said.

To contact the reporter on this story: Ayesha Daya in Abu Dhabi at adaya1@bloomberg.net