BG Group Plc, the U.K.’s third- largest oil and gas producer, said oil prices are too high to be sustained. “The current prices, if you look at the underlying long run marginal cost of oil production, are too high to be sustained,” BG Chief Executive Officer Frank Chapman told the Australian Broadcasting Corp. “There is a good deal of speculative anxiety because of geopolitical effects, holding the price up.” Crude oil has more than doubled in the past year to a record $142.99 a barrel in New York on June 27th. The price of oil will climb to $170 a barrel before year’s end because of the declining dollar and political conflicts, OPEC President Chakib Khelil predicted yesterday. “We’re screening projects still down as far as $30 a barrel. We think around mid-fifties is a price that could be sustained if you take away all of the anxiety,” Chapman said. “We have to make sure that our investments are taking account of that low case as well as looking at what might happen in a high case.” BG is offering A$13.8 billion ($13.3 billion) in its hostile bid for Origin Energy Ltd., Australia’s biggest producer of gas from coal seams. “It’s a very good business, an extremely well-run business and we would like to add that to BG’s portfolio and pursue all those businesses, retail, power generation and the coal seam gas business,” said Chapman.

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