Reduction of oil prices aggravated structural and institutional problems of the sector

29 january 2015

The Analytical Сenter issued the next energy report ‘Consequences of Low Prices for Oil Sector’.

Experts of the Analytical Сenter prepared the report which describes possible consequences of oil price slashing in details. The main part of oil production in Russia is effective also at lower prices (less than $50 per barrel) however there's a difficulty with the budget, future projects get to risk zone (scavenger oil, the shelf), profitability falls, there is a question of expediency of separate projects.

The situation in the world slowly started to change — production in the IV quarter of 2014 continued to grow, as before, with respect to North America, but activity in the area of sinking in the U.S. started to decrease. In this context structural and institutional problems of fuel and energy sector which haven't been solved at excess profits became aggravated. Institutional problems will affect the situation during 2015 as they are based on the fundamental reasons and, respectively, don't give instant effects.