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Russia ready to resume energy dialogues with EU, but Europe delaying it — Novak

May 29, 2016, 16:29 UTC+3 MOSCOW

"Our position is simple: if the Europeans need gas, we are ready to sell it. We would like them to choose the route," Russian Minister of Energy Alexander Novak said

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Russian Minister of Energy Alexander Novak

Russian Minister of Energy Alexander Novak

© Sergei Savostyanov/TASS

MOSCOW, May 29. /TASS/. Russia is ready to resume energy dialogue with the European Union in the format of talks about gas supplies to Europe but the European Commission is delaying it, Russian Minister of Energy Alexander Novak said on Sunday.

"We are ready to resume energy dialogue. The European Commission is dragging this issue despite the agreements reached back at the year beginning. The European Commission promised us to issue its recommendations to adjust the format of this dialogue. They haven’t done that so far," he told journalists.

He said the Russian side wants European partners to finally come out with their proposals on the route of gas supplies to Europe instead of the South Stream project. Russia, in his words, is ready to sell its gas.

"Our position is simple: if the Europeans need gas, we are ready to sell it. We would like them to choose the route," he underscored.

Oil’s share in global economy to go down

The share of oil in the global economy will go down from 32 to 26% by the year 2040, Novak said. 

"By 2040, the share of oil will go down from 32 to 26%," he said at a Vesti Finance forum. He also said that by that year the share of gas is expected to go up as it will be much widely used as a more environment-friendly energy source.

Oil price forecast

Russia’s ministry of energy does not rule out a short-term downwards oil price rebound on the backdrop of overall upwards dynamics, Novak said.

"I don’t rule out a short-term price rebound but the overall tendency is upwards. Why do I think such rebound is possible? Because there are impacting factors, namely emergency situation in a number of countries, if the situation there normalizes it might create supply on the market," he said.

However, in his words, there are no grounds to revise his oil price forecasts. Thus, according to such forecasts, oil price will be at 40-50 U.S. dollars in 2016, and at 60-65 U.S. dollars in 2017.

U.S. may increase shale oil production

U.S.’ oil companies may increase their shale oil production in the second half of 2016 following the production drop bottom in July-August, Novak said.

"We expect that starting from the second half of 2016 and up to the yearend shale oil production will regain upwards tendencies with such prices (about 50 U.S. dollars per barrel), he said at a Vesti Finance forum.

However, in his words, shale oil production dynamics depend on not entirely oil prices. "According to our estimates, production will go on decreasing even under such prices to reach its bottom in July-August. It will go further down by about 700,000 barrels in the United States despite the fact that the price has recovered to a level sufficient to continue production," he said. "But the key factor is the lack of financial resources and investor mistrust in further investments."

The idea to freeze oil production is no longer topical

The idea to freeze oil production is no longer topical, Alexander Novak said.

"Now that the oil prices have rebounded and have rebounded rather high as compared with the year beginning, this idea of ‘freezing’ has lost its topicality. Let us wait and see how the situation develops further on," he said at a Vesti Finance forum.

Earlier, Novak said oil producing countries are no longer in talks on the oil production freeze but in case such negotiating are resumed, Russia is ready to get back to the discussion of that matter.

A meeting of delegates from 19 oil producing countries was held on April 17, 2016 in the Qatari capital city Doha. Ahead of the meeting, Iran, the 19th participant in the meeting, refused to discuss a possible freeze of oil production saying it has just get rid of international sanctions.

The 12-hour talks failed to yield any agreement on stabilizing oil production at the January 2016 level. In a final statement, participants said they need more time to think whereas the oil market is in a fit condition.

Russia’s energy minister said back then that the meeting had yielded no agreement because of a change in the position of a number of countries. Thus, in his words, the sides agreed that OPEC would hold additional consultations with its member countries that skipped the meeting before an OPEC summit this June.

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