BP plans green fuels lab

15 June 2006

BP plans to develop biofuels
Will spend £275m on research centre
BP chairman predicts fall in price of crude oil, too

BP is funding research into biofuels - and its chairman predicts a fall in oil prices

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BP plans to spend more than £275million in establishing a laboratory to develop greener car fuels.

The company is currently talking to universities in the UK and in the US about where to have its 'BP Energy Biosciences Institute,' but aims to start early research programmes by the end of next year.

The institute would initially look at developing and improving biofuels.

BP chief executive Lord Browne said: 'We expect demand for biofuels to rise significantly through the next decade to meet consumer desire for more environmentally responsible products, and to satisfy the requirements of governments for more energy to be home-grown.'

Meanwhile, last weekend Lord Browne said he expected oil prices to drop to $40 a barrel, and even to $25 - but not in the short term.

'It is very likely that oil prices will range in the medium term around an average of $40,' he told German newspaper Der Spiegel. "In the long run it could even be $25 to $30."

Crude oil currently costs more than $70 a barrel, pushing petrol pump prices towards £1 a litre. If crude oil prices do fall to Lord Browne's expectations, UK petrol prices will follow, but by how much remains unclear.

Ray Holloway of the Petrol Retailers Association said: 'How far pump prices would come down depends on the Chancellor.

'Currently, for a litre of petrol, 47.1p is made up of excise duty - then there is the VAT on the retail price, which works out at around 15p. So today's cost price of petrol is around 30p a litre and any drop in price of crude oil would affect this.'