Russian and foreign outlook on Russian oil and gas sector

2 december 2014

Experts of the Analytical Center prepared an energy bulletin "Long-term prospect of oil and gas sector: outlook from 2014".

Global energetics experience sweeping changes: long-term technology shifts in resources extraction and consumption, shifts in inter-fuel competition and demand geography during economic stagnation in eurozone, BRICS countries growth deceleration. There are also market factors, energy policies and ukrainian politico-social collapse, which grew into military flare-up and hard economy crisis.

In this whirlpool a shift in prices down to $80-85 p/b occurred, this price could have been customary in 2009-2014 if Fukushima Daiichi nuclear disaster and Libya crisis had never happened. The most difficult part for now is to separate politics and environment combination from secular trends, according to the expert. OPEC meeting on November 27 foreseeable didn't lead to quota lowering, which could constrain the supply to the level of current demand (about 1,5 million b/d). " We considered that would not happen because that would create a precedent of direct market control. Previous evident interference in autumn 2008 took place when the fall accounted not for 20% but three times - from $130 p/b in August to $40 p/b in October", said experts.

These reports offer a spacious approach to global and Russian oil and gas industry development problems, to projected extraction. This is of importance for new Russian energetics development strategy creation, which is discussed in Russian expert circles. In this regard inland energy markets development in Russia becomes of paramount importance for global competition and enhancement of the role of fully fledged gas manufacturers, and relations change-over between "Gazprom" and fully fledged gas manufacturers become a conditioning factor. The Ukrainian coal crisis vice versa implicitly becomes a destabilization factor up to the winter 2014-2015. Ukrainian economy gas and oil problems look like a strike into families' prosperity in this crucial period for the country, which seeks for stabilization.

For more information on Russian and foreign outlook on Russian oil and gas sector and long-term prospects for oil market, please, read this energy bulletin (in Russian)