Sechin forecasts oil above $55 per barrel in next 18 mths
VERONA. Oct 20 (Interfax) - Rosneft chief Igor Sechin forecast that the price of oil would rise above $55 per barrel in the coming 18 months.
"In the next year-and-a-half we should see an end to the period of surplus offers on the market and the beginning of the normalization of commercial oil inventories. In this period, despite some production recovery in the U.S., its total oil production level will remain below the 2015 maximum. The price of oil will exceed $55 per barrel," Sechin said at the Eurasian Forum in Verona.
He said that the low level of investor activity will be maintained for large and difficult projects, most of all for developing majors, because the economy of these projects requires more stable and higher prices.
He said that practically all forecasts, including calculations carried out by Rosneft, demonstrate an increase in consumption oil volumes in the daily amount of no less than 15 million barrels on the 2040 horizon. "We subtract from this the additional volumes of shale oil expected by experts, optimistically estimated at 6 million-8 million barrels a day. And we add volumes of the natural 5%-7% decrease in production at mature fields, this is more than 30 million barrels a day. As a result, we may have a need for additional production capacities at no less than 40 million barrels a day. So, in this perspective, in order to meet global energy needs, opportunities for production of new oil volumes should be sought out, which exceed the current production of Saudi Arabia by four-fold," the Rosneft chief said.
"Concerning oil supply, I would like to also remark upon several factors. In 2015 the state budget deficit of Saudi Arabia amounted to 15% of GDP - this is the highest level since 1987. Despite the budget consolidation, in 2016 the budget deficit will be 10%-12% of GDP. Such a level is not sustainable even for the upcoming five-year period. Saudi Arabia either needs to sharply reduce the level of spending, in the first place due to the decline in employment, or raise the level of oil revenues," Sechin said. "This also acted as an impetus for change of this country's most recent position - the transition from a fight for the expansion of market share to the search for allies in order to stabilize price on the market," he said.
He said shale oil has good chances of transitioning to a trajectory of moderate growth, but with the expected market performance, it will not have the explosive characteristics it did in 2013-2014. To a significant extent, it will continue to have a regional influence, making a contribution to providing the balance of oil and petroleum products on the largest U.S. market, Sechin said.