The influence of oil prices on the world oil and gas industry development priorities

UDK: 338.45:622.276
DOI: 10.24887/0028-2448-2017-2-8-12
Key words: world oil market, prices, forecasts, the global economy and energy, the costs and expenses, of development priorities
Authors: A.M. Mastepanov (Oil and Gas Research Institute of RAS, RF, Moscow)
The article deals with the complex of issues related to the prioritization of the global oil and gas industry development in the conditions of high and low energy prices. It shows the change in these priorities in a slowing global economic growth and falling oil prices. At the high oil prices in the global balance of liquid fuels the resources of expensive oil began to be actively attracted (deepwater fields, Arctic shelf, tight oil and oil of low-permeability reservoirs of the United States, oil sands in Canada, extra heavy oil of Venezuela, and others). Were actively working on the. In the corresponding projections made in 2012 - early 2014, the world's leading analytical centers provided a significant increase in the production of these expensive hydrocarbons. However, in the recent years the situation has changed dramatically. The slowdown in 2014 of the global economic growth has caused the weakening of demand for oil, and in September 2014, the prices began to decline, and then completely collapsed. It is shown that the reaction to falling oil prices from its manufacturers was to be expected: the rejection of costly new projects and improving of technology in order to reduce production costs. The low oil prices firstly affected the developing deepwater and Arctic resources of traditional hydrocarbons, as well as oil-bearing sandstones, and heavy oil. Based on the analysis of various factors, including macroeconomic, it was concluded that the period of low prices would last at least 5-7 years. In these conditions we can expect further fierce competition for the place in the energy mix (balance) of the hydrocarbons, produced on the Arctic shelf, made as a result of improving oil and gas producing fields and development of deep-water and unconventional oil and gas. Each of these areas has a significant resource base, corresponding to the "pros" and "cons" associated with the conditions of production and delivery of products to the markets. Therefore, the priorities in their development in the first place will be determined by the latest technical and technological solutions, allowing cost effective production of hydrocarbons with acceptable environmental risks and impacts.

References

1. Mastepanov A.M., About pricing factors the world oil market and the

role of shale oil in the process (In Russ.), Neftyanoe khozyaystvo = Oil Industry,

2016, no. 9, pp. 6–10.

2. BP Statistical Review of World Energy, 65th edition, June 2016, URL:

http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-

review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf

3. World Energy Outlook 2013, OECD/IEA, 2013, URL: http://www.iea.org/publications/

freepublications/publication/WEO2013.pdf

4. Goldman Sachs 360 projects to change the World 2012, URL:

http://www.europarl.europa.eu/document/activities/cont/201411/20141

106ATT92794/20141106ATT92794EN.pdf

5. International Energy Outlook 2013, With Projections to 2040, 2013, July,

312 p., URL: http://www.eia.gov/forecasts/ieo/pdf/0484(2013).pdf

6. BP Energy Outlook to 2035, London, January 2014, URL:

http://www.bp.com/content/dam/bp/pdf/energy-economics/energyoutlook-

2016/bp-energy-outlook-2014.pdf

7. World Energy Investment Outlook. Special Report, OECD/IEA, 2014, URL:

http://www.iea.org/publications/freepublications/publication/WEIO2014.

pdf

8. Gromov A., Perspektivy razvitiya rossiyskoy neftyanoy otrasli v usloviyakh

nestabil’nosti na mirovom neftyanom rynke (Prospects of development of

the Russian oil industry in the conditions of instability of the world oil market),

Proceedings of Scientific seminar on energy economics and the environment

of MSE of MSU., 17 March 2016, URL: http://mse-msu.ru/11/

9. EIA report shows decline in cost of US oil and gas wells since 2012, 30 March

2016, URL: http://www.eia.gov/todayinenergy/detail.cfm?id=25592

10. Ivanov N.A., Slantsevye tekhnologii i neftyanaya kon»yunktura: v

poiskakh vykhoda (Shale oil technology and market conditions: in search

of a way), URL: http://www.fief.ru/img/files/2016.04.20_N.A.Ivanov.pdf

11. URL:http://www.rystadenergy.com/NewsEvents/PressReleases/globalliquids-

supply-cost-curve

12. Mastepanov A.M., The world oil market situation: Several estimates and

forecasts (In Russ.), Energeticheskaya politika, 2016, no. 2, pp. 7–20.

13. World Energy Outlook 2015, OECD/IEA, 2015, URL:

http://www.iea.org/bookshop/700-World_Energy_Outlook_2015 .

The article deals with the complex of issues related to the prioritization of the global oil and gas industry development in the conditions of high and low energy prices. It shows the change in these priorities in a slowing global economic growth and falling oil prices. At the high oil prices in the global balance of liquid fuels the resources of expensive oil began to be actively attracted (deepwater fields, Arctic shelf, tight oil and oil of low-permeability reservoirs of the United States, oil sands in Canada, extra heavy oil of Venezuela, and others). Were actively working on the. In the corresponding projections made in 2012 - early 2014, the world's leading analytical centers provided a significant increase in the production of these expensive hydrocarbons. However, in the recent years the situation has changed dramatically. The slowdown in 2014 of the global economic growth has caused the weakening of demand for oil, and in September 2014, the prices began to decline, and then completely collapsed. It is shown that the reaction to falling oil prices from its manufacturers was to be expected: the rejection of costly new projects and improving of technology in order to reduce production costs. The low oil prices firstly affected the developing deepwater and Arctic resources of traditional hydrocarbons, as well as oil-bearing sandstones, and heavy oil. Based on the analysis of various factors, including macroeconomic, it was concluded that the period of low prices would last at least 5-7 years. In these conditions we can expect further fierce competition for the place in the energy mix (balance) of the hydrocarbons, produced on the Arctic shelf, made as a result of improving oil and gas producing fields and development of deep-water and unconventional oil and gas. Each of these areas has a significant resource base, corresponding to the "pros" and "cons" associated with the conditions of production and delivery of products to the markets. Therefore, the priorities in their development in the first place will be determined by the latest technical and technological solutions, allowing cost effective production of hydrocarbons with acceptable environmental risks and impacts.

References

1. Mastepanov A.M., About pricing factors the world oil market and the

role of shale oil in the process (In Russ.), Neftyanoe khozyaystvo = Oil Industry,

2016, no. 9, pp. 6–10.

2. BP Statistical Review of World Energy, 65th edition, June 2016, URL:

http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-

review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf

3. World Energy Outlook 2013, OECD/IEA, 2013, URL: http://www.iea.org/publications/

freepublications/publication/WEO2013.pdf

4. Goldman Sachs 360 projects to change the World 2012, URL:

http://www.europarl.europa.eu/document/activities/cont/201411/20141

106ATT92794/20141106ATT92794EN.pdf

5. International Energy Outlook 2013, With Projections to 2040, 2013, July,

312 p., URL: http://www.eia.gov/forecasts/ieo/pdf/0484(2013).pdf

6. BP Energy Outlook to 2035, London, January 2014, URL:

http://www.bp.com/content/dam/bp/pdf/energy-economics/energyoutlook-

2016/bp-energy-outlook-2014.pdf

7. World Energy Investment Outlook. Special Report, OECD/IEA, 2014, URL:

http://www.iea.org/publications/freepublications/publication/WEIO2014.

pdf

8. Gromov A., Perspektivy razvitiya rossiyskoy neftyanoy otrasli v usloviyakh

nestabil’nosti na mirovom neftyanom rynke (Prospects of development of

the Russian oil industry in the conditions of instability of the world oil market),

Proceedings of Scientific seminar on energy economics and the environment

of MSE of MSU., 17 March 2016, URL: http://mse-msu.ru/11/

9. EIA report shows decline in cost of US oil and gas wells since 2012, 30 March

2016, URL: http://www.eia.gov/todayinenergy/detail.cfm?id=25592

10. Ivanov N.A., Slantsevye tekhnologii i neftyanaya kon»yunktura: v

poiskakh vykhoda (Shale oil technology and market conditions: in search

of a way), URL: http://www.fief.ru/img/files/2016.04.20_N.A.Ivanov.pdf

11. URL:http://www.rystadenergy.com/NewsEvents/PressReleases/globalliquids-

supply-cost-curve

12. Mastepanov A.M., The world oil market situation: Several estimates and

forecasts (In Russ.), Energeticheskaya politika, 2016, no. 2, pp. 7–20.

13. World Energy Outlook 2015, OECD/IEA, 2015, URL:

http://www.iea.org/bookshop/700-World_Energy_Outlook_2015 .



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