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Oil industry exec says prices falling as confidence in long-term oil projects lost

January 24, 2015, 1:11 UTC+3 MOSCOW
“OPEC has stopped regulating the volumes of output and the volumes of supply to the global market,” the President of the Russian oil corporation LUKOIL Vagit Alekperov said
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MOSCOW, January 23. /TASS/. OPEC feels reluctant to take on the role of a regulator of the global oil market, believes the President of the Russian oil corporation LUKOIL, Vagit Alekperov.

“OPEC has stopped regulating the volumes of output and the volumes of supply to the global market,” he said in an interview published by the Vedomosti daily.

“It is now worried by the situation where hectic growth of unconventional expensive oil prompts the member-states (of the oil cartel) to presume that they will stop controlling this oil after some time,” Alekperov said.

“The fact testifies to their unwillingness to take the regulator’s mission on themselves,” he said, adding that OPEC nations were producing about 30% oil across the world but controlling more than 70% of the oil market.

“Confidence over investing in expensive projects has been lost today,” Alekperov said. “If it is really so easy to push the prices downhill to $ 40 per barrel from $ 115 within a mere half a year, who will venture to guarantee then this won’t happen again in the future?”

“And recall that the investment cycle in the oil industry lasts from fifteen to twenty years,” he said. “If a decision on deepwater drilling is taken today, first produce will be obtained only in ten to fifteen years.”

“This uncertainty - both on the part of banks and on the part of ourselves as project operators - is the main objective of this downfall of the market, I think,” he said.

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