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Oil market overcomes peak instability in 2017 — Rosneft CEO

Further development requires that unilateral sanctions be abandoned, Igor Sechin said

KRASNOYARSK, June 21. /TASS/. The year 2017 proved to be crucial for the oil market, which managed to overcome peak instability, but further development requires that unilateral sanctions be abandoned, Igor Sechin, the CEO of Russia’s Rosneft oil company, said at an annual shareholders’ meeting.

"The year 2017 proved crucial in many aspects, as the global oil industry overcame the most acute period of instability and we even saw a new trend for price stabilization," he said. "At the same time, the industry’s further sustainable development requires that the policy of unilateral sanctions, investment restrictions and tariff decisions be abandoned," Sechin added.

According to the Rosneft CEO, the year 2018 "continues to bring troubling news about this unilateral policy taking the form of a potential full-scale trade war, which definitely runs counter to the goals and objectives of the industry’s sustainable development."

At the same time, Sechin noted that decreasing oil production in Venezuela and Iran had played a role in the overall market situation and one should be cautious when speaking about stabilization. He noted that in 2017, oil production in Venezuela had declined by 13% compared to the previous year, and as a result, prices grew and the level of stocks decreased.

While commenting on the 2017 oil supply dynamics, the Rosneft CEO pointed out that shale oil production in the United States was likely to stop growing. According to him, "the industry is already facing a lack of pipeline infrastructure, service companies and well-trained staff, as well as increasing expenditures and technical issues stemming from rising water cuts and the depletion of productive fields."

Rosneft ready for growing oil demand

At the same time, Rosneft is ready for growing global oil demand, the company’s CEO said.

""Even under the most difficult circumstances, hydrocarbon demand will be higher in 2040 than it is today," he said. "Only five years ago, few believed that at the end of 2017, hydrocarbon demand will reach nearly 100 mln barrels per day, growing by 1.3% a year. Rosneft, like no other oil company, believed in steady demand growth and the company is as ready to face growing demand as possible, having launched a number of production projects in 2017, while some projects are to be launched several months from now," the Rosneft CEO pointed out.

"The daily peak production from Rosneft’s new projects, which are highly competitive, has exceeded 1.7 mln of oil equivalent," Sechin added.

He also said that global oil shortages were expected to reach 700 to 750 mln tonees by 2025, so the company planned to take advantage of the situation to increase its share on the global market.

Role of gas to increase

According to Sechin, Rosneft expects the gas share in the globak energy mix to reach 25% by 2040 in comparison with 2016.

He added that given Russia’s huge gas reserves and well-developed gas industry infrastructure, gas will remain the foundation of the energy mix in the foreseeable future. "Taking these trends into account, the company considers its gas business as one of the strategic growth areas," Sechin said.