VERONA, October 20. /TASS/. Russia may add up to 200 mln tonnes annually to its oil production in the long run, Chief Executive Officer of Rosneft Igor Sechin said on Thursday at the Eurasian Forum in Verona.
Such production growth is possible throughout the period by 2045, Rosneft’s press secretary Mikhail Leontyev told reporters.
"If the market demands it and relevant technological and economic preconditions emerge, Russia will be able to boost oil production significantly over the long term, estimated as up to 200 mln tonnes of incremental annual production," Sechin said.
Deputy Energy Minister Kirill Molodtsov said earlier oil production in Russia could be 540-545 mln tonnes and more in 2016. Russia has also set a new average daily oil production record of more than 11 mln barrels per day on September 8, the official said before.
Russia has been boosting its oil production for several years now.
Demand for extra oil production capacities
The manager noted that demand for extra oil production capacities would stand at 40 mln bbl/day at least by 2040.
"Nearly all forecasts, including computations made by Rosneft, show increment in oil consumption by at least 15 mln barrels daily by 2040. Let us reduce incremental shale oil volumes aggressively estimated at 6-8 mln barrels per day as expected by experts and add 5-7% of organic oil production decline at brownfields - these are over 30 mln barrels daily. We may ultimately have the demand for extra oil production capacities of at least 40 mln barrels daily," Sechin said.
Sechin expects oil offer surplus on the market to end within the next 18 months.
"We are to see the end of offer surplus period on the market and initiated normalization of the situation with commercial stocks of oil and oil products. Despite certain recovery of shale oil production in the US, the overall level of US oil production will probably remain lower than the 2015 highs," Sechin said.
"The oil price will be over $55 per barrel. The level of investment activity in large-scale and complex projects, particularly those developed by majors, will remain low because economics of these projects require stable and higher prices," he added.
The official has also pointed out that Rosneft might offer projects valued at $100 bln to European partners in the course of developing ties along Russia - Europe and Russia - Asia-Pacific countries power bridges.
Rosneft sees the most diverse opportunities for the European business when working with Russian partners all over Eurasia, Sechin said. "Furthermore, proactive development of our ties with partners in the Asia-Pacific does not create competition but opens new opportunities for our esteemed European colleagues. These are greenfield projects, opportunities for oil swaps, equipment supplies, participation in joint production and logistical projects, portfolio investments and bank financing," he added.
Saudi Arabia looks for allies in stabilizing oil prices due to its budget deficit
According to Sechin, budget deficit is the main reason behind Saudi Arabia’s decision to curtail the struggle for a greater share on the oil market to focus on the search for allies in stabilizing oil prices.
In 2015, Saudi Arabia’s state budget deficit stood at 15% of the GDP. This year it will range between 10% and 12% of the GDP.
"This level is not stable even on the five-year horizon. Saudi Arabia will have to either slash spending, first and foremost, reduce employment, or boost oil revenues. This is precisely the reason why that country lately made a turn away from the struggle for a greater share on the oil market to start the search for allies in stabilizing market prices," Sechin said.
On September 5, Russia and Saudi Arabia, which control the production of more than 21% of crude consumed around the world, clinched a deal on the sidelines of the G20 summit for the purpose of stabilizing the market of oil. In part, they agreed to take joint bilateral action, or in cooperation with other oil producers for maintaining the stability of the oil market and ensuring a stable level of investment in the long term.
Also, it was agreed to go ahead with consultations on the market of oil and to create a joint group for monitoring fundamental oil market parameters and draft recommendations on measures and joint actions to keep the market stable and predictable.
The OPEC member-states at the informal meeting on September 28 on the sidelines of the 15th International Energy Forum in Algeria managed to agree a freeze of oil production at a level of 32.5-33 million barrels a day despite originally skeptical forecasts. Iran’s Oil Minister Bijan Namdar Zangeneh said OPEC would create a coordinating committee that in November would produce its final proposal for restricting oil production. Individual quotas for each country are to be established. Russian Energy Minister Aleksandr Novak said that Russia would come up with its own oil production proposal after the OPEC makes a final decision.