Oil supply warning as US bans drilling in deep water

The massive oil slick in the Gulf of Mexico and the moratorium imposed by President Barack Obama dominated discussions at the World National Oil Companies Congress in London.

Transocean president Steven Newman, owner of the destroyed Deepwater Horizon rig that has spewed millions of gallons of oil into the Gulf, said the ban, which is being reviewed by a US federal judge, was unnecessary.

"There are things the administration could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit," he said.

Mr Obama's ban reflects growing unease about oil companies seeking to drill further out to sea and deeper than ever before. The process is expensive, risky and largely uncharted, highlighted by the April 20 explosion at the BP-operated rig that killed 11 workers and set off the worst oil spill in US history.

But the US moratorium has been challenged in court and a judge will make a decision on it today.

Chevron executive Jay Pryor said the US government's move would "constrain supplies for world energy". "It would also be a step back for energy security," said Mr Pryor.

BP chief of staff Steve Westwell, who was heckled during a speech in which he stood in for chief executive Tony Hayward, said "regulators around the world will obviously want to know what happened" to cause the blown-out well in the Gulf and change their procedures accordingly.

But he said deepwater drilling was needed as supplies of land and shallow water oil diminished.

"The world does need the oil and the energy that is going to have to come from deepwater production going forward," he said. "Therefore, the regulatory framework must still enable that to be a viable commercial position."

Mr Hayward pulled out of the conference after criticism for spending Saturday at a yacht race.

Mr Westwell was interrupted twice during his address by protesters from Greenpeace shouting "we need to end the oil age!" The hecklers were escorted out by security.

Shukri Ghanem, the head of Libya's National Oil who serves as the North African nation's de facto oil minister, said he was happy for BP to continue to operate in his country's territorial waters.

Mr Ghanem, who said he planned to meet Mr Hayward while in London, said the spill was "a real tragedy, but in a way it's exaggerated". "It is unfortunate, but it is an opportunity to be more careful in the future," he said.

BP signed an exploration and production deal with National Oil – worth at least $900m (606m) in June 2007, going back in to Libya for the first time in more than 30 years.

Libya's oil reserves are the ninth largest in the world.