Next two weeks crucial, page-8

Hi All

I think Mandurah's views are pretty close to the mark.

Every indication is Senegal is going to be a massive oilfield; I remain optimistic about that. Less obvious, though, is whether we will derive a big profit from it.

Lower-for-longer interest rates reflect a sombre outlook for World growth. As Mandurah says, add a stronger US dollar into the mix and the outlook for commodities is bleak.

The bigger threat, though, is coordinated government action on climate change. One senses the chance of this has come a long way since the bunker mentality of Copenhagen just six years ago. I hasten to add I fully support climate change initiatives; without them there will soon enough be no planet to argue over. I always reasoned, though, that any impact on oil usage would be far enough in the future to have little or no impact on FAR. Now I'm not so sure. Not that I'm saying oil use will drop off immediately - for various reasons that can't happen - but I do now think forward prices for oil in the ground will likely be markedly lower than historic levels. In other words, we will still sell our reserves but maybe not at bonanza prices.

Markets are brutally efficient once sentiment turns for or against a particular sector or company. Just ask Slater and Gordon, or BHP for that matter. Have markets turned on oil? Not yet, but one senses they are eyeing it suspiciously, and the outcome from Paris might just heighten that suspicion about its medium term future.

Part of me hopes this is too pessimistic. I recall an English cricket author writing how as a boy he would pray for Bradman to make a century in a total Australian score of 120. Is it too much to ask that FAR be the last oiler on Earth to be handsomely rewarded before mankind magically saves itself from a problem of its own making?

OOO