The state and prospects of the oil industry in Russia are most often assessed on the basis of output, reserves and exports, write the Analytical Center experts in their new energy bulletin. In their opinion, in conditions of severe competition in the global markets the various in supply and demand of hundreds of thousands of barrels per day are having a serious impact on oil prices.
The oil experts revenue in Russia, which in 2017 grew by 30% on the 2016 level, are extremely important for oil exporters, the analysts note. The OPEC+ agreement helped reducing oil price volatility and created an opportunity for the stabilization in the global oil market over the next couple of years as companies get rid of excess oil stocks. In the meantime, investments in the oil industry both in Russia and in the rest of the world are shifting from uncoordinated expansion of capacity towards modernization and efficiency improvement.
As for the energy supply of Crimea, it remains critically important for the long term economic development in the peninsula, despite numerous foreign policy problems. The construction of the Kerch bridge, supplies of natural gas from Kuban, increasing oil output and local power generation capacity should over the next couple of years complete the creation of a quality infrastructure in Crimea, the analysts believe.
The experts also consider options for developing maritime transportation. Over the next few years they may undergo major changes as a result of stricter environmental protection requirements and lead to wider use of LNG instead of bunker fuel oil. This will shift demand from oil to natural gas even more. However, this won't occur instantly, rates are going to have to go up to shift the balance in which fuels are more attractive options, however, more importantly, LNG refueling infrastructure needs to be created in all major ports around the world and some of the older ships will have to be converted to LNG even as new ships are built. According to experts, it is only a matter of time.
For more see the bulletin The Oil Industry: the results of 2017 and short term prospects.
For other issues of the Energy Bulletin, see the Publications section.