Russia’s oil output may drop 14 pct by 2020-2025
Russia’s oil output may drop to 460 million tonnes in 2020-2025 from last year’s 534 million tonnes as oil prices stay low and oil firms cut capital expenditure, according to a “stress scenario” published by Russia’s energy ministry.
Under the scenario oil prices are assumed to stay at $31-33 per barrel in 2016-2017, rising to $42 by 2020, the ministry said, forecasting a continued mismatch in supply and demand.
Oil output in Russia would decline until 2020-2025 and only start rising slightly in the following years.
The scenario could be prompted by a combination of several factors, including slower growth in China and other Asian economies, growing supplies of cheap crude from the Middle East and a rise in U.S. shale oil and gas output.
Higher hydrocarbon output in other oil-producing countries, aided by cost cutting and devaluations of their currencies, and lack of control over prices by the main market players would keep oil prices low this year and next, the scenario envisages.
Capital expenditure in Russia’s oil industry would decrease by at least 10 to 15 percent by the 2020-2025 period, assuming oil companies do not take out new loans and service all obligations on their outstanding debt.