Oil will not feed Russia

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Нефть не прокормит Россию

The period of low oil prices could be delayed, and global demand for Uglevodorody will decline. In the end, most producing countries except the United States and Saudi Arabia, will face a serious decline in production. In Russia, it could reach nearly 8% by 2025, predicts the International energy Agency.

The international energy Agency (IEA) is not waiting in the years of high oil prices. In its annual report World Energy Outlook 2017 it has reduced the forecast level of oil prices from $18 to $83 per barrel by 2025.

Long-term forecast has also been reduced — by 2040, the IEA experts expect that the oil barrel will cost $111, although last year’s expected price of $125.

The IEA does not exclude the worst variant of development of events: according to the conservative forecast of experts, the oil may not rise above $70 per barrel after 2040.

In this case, global demand, according to IEA, from 2016 to 2025 will grow by an average of 0.7 million barrels/day each year, and after 2025 the pace of demand growth will slow to 0.3 million barrels. Thus, by 2025 the demand for oil will increase to 100.3 million barrels per day by 2040 — up to 104,9 million barrels per day.

This year, according to the IEA, global oil demand will amount to 97.7 million barrels a day in 2018 — 98,9 million barrels per day.

According to international experts, oil prices are holding back growth estimates of recoverable reserves of shale oil and gas condensate in the United States (in the present report, the IEA, this figure has increased by a third compared to last year and amounted to 105 billion barrels), as well as reducing the cost in traditional production the ROI of certain projects on exploration and production of oil declined from $70-80 per barrel in 2014 to $30-50.

Earlier, Russian energy Minister Alexander Novak noted that the cost of oil production in Russia averages $10 to $15 a barrel, but acknowledged that the value for different fields is very different.

“At existing fields, where depreciated assets, the cost can be two, three, and five dollars where a new field, the Arctic shelf, the cost, for example, not less than $50 a barrel, $40,” — said the Minister.

Continues to be a key factor in determining the price of oil are supply and demand. Recent events show that the producing countries may well agree with the aim of preserving this balance, says Nina Kozlova, the General Director of FinExpertiza.

Not so terrible prices, as the decline

In the Russian oil industry is a progressive scale of taxation, seizes most of the revenue from rising prices for the company’s net sales excluding taxes and transport in Western Siberia: when oil price of $50 per barrel is around $15/barrel. at $100 per barrel to $26/barrel. notes senior consultant at VYGON Consulting Darya Kozlova.

Predictable — as the current oil prices are not low, and in historical perspective — even the most high, says chief economist BCS global markets, Vladimir Tikhomirov.

For Russia, the lowest can be regarded as the price is below $40 per barrel, based on the parameters of budget planning and the official macroeconomic forecast, anything above that is comfortable for the budget and the economy as a whole.

IEA predicts Russia other problem — oil production in the country by 2025 can be reduced by approximately 8% to 10.5 million barrels per day from 11.3 million in 2016.

Against the background of depletion of reserves of explored deposits, this trend will continue in the long term by 2040, the IEA expects oil production in Russia will fall to 8.6 million barrels per day.

“Shift the main Russian production in Eastern Siberia and the Arctic zone will not be able to fully offset natural production decline in depleted fields in Western Siberia and the Volga-Ural region”, — stated in the report.

Russian experts agree that the decline of oil production at existing fields will occur at a more rapid rate than production growth due to new deposits, however, believe that a significant decline will begin only after 2025.

In the future, the next 5-7 years there will be growth of production in Russia is the wave of the launch of major new projects, such as Yurubcheno-Tokhomskoye, at kuyumbinskoe, messoyakha, the Novoportovskoye field and many other fields, emphasizes Kozlov. By the year 2025 can really start the decline due to natural aging of the underlying asset, in recent years compensation for decline the challenge Foundation wells at brownfields due to new drilling and well intervention is about 90%, the expert emphasizes VYGON Consulting.

Many existing fields in Russia, particularly in Western Siberia, has entered into a natural phase of declining production, the situation is exacerbated by the sectoral sanctions imposed by Western countries, which limit access to technology enhanced oil recovery (particularly SRC), draws attention to the expert of the Energy centre of the SKOLKOVO business school Catherine Grushovenko. Sanctions also affected and new projects: even after the sanctions package 2014 was delayed development of some projects on the Arctic shelf and development projects of shale oil, said Grushovenko.

But, according to experts, this situation is not irreversible. The trend in the decline can be changed by developing its own production technologies, especially the technology of hydraulic fracturing, which can simultaneously ensure the maintenance of production at existing fields and development of new notes, Grushovenko.

To keep the increase may be due to geological exploration and increasing the economic and technological CIN (oil recovery) on operating assets, highlights Kozlov. For this, in her opinion, it is necessary to change the current system of taxation and to encourage the development and introduction of new technologies in the industry.

The potential positive effect of increasing the recovery factor of 5%, the search and exploration of onshore development of tight oil reserves, according to experts, could reach about 250 million tonnes by 2035.

Fall all, except the United States

However, according to the IEA, traditional oil production will gradually decline around the world. Algeria and Venezuela will reduce production by about 0.25 million barrels per day each. Decrease the indicators in Angola and Nigeria. Enablenegotiate the members of the cartel from 2016 to 2025 production will decrease by 0.8 million barrels.

Growth will be mainly in USA and Saudi Arabia. According to the forecast, by 2025, oil production in the United States, primarily due to the growth of the oil shale sector will reach 16.8 million barrels per day, Saudi Arabia 12.3 million barrels. Also actively to increase production is Iraq — to 5 million barrels per day, Iran n to 5.1 million barrels per day.

The IEA is not the objective and is built mostly around the idea of US dominance in the field of mining, the analyst doubts ALOR Broker Kirill Yakovenko. The assumption that the United States, where 60% of reserves are hard to extract shale oil will increase production to 16.8 million barrels a day against the current 9.5 million barrels per day, while other countries with the highest proven reserves, will reduce production, rather controversial, the expert said. In the development of better technology today in the interest of all.

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