Oil shale will not save. The world faces an acute shortage of oil

© RIA Novosti / Evgeny to Odinakovymi in votebanned produced at oil and gas condensate field named after Vladimir Filanovsky in the Northern part of the Caspian seaOil shale will not save. The world faces an acute shortage of oil© RIA Novosti / Evgeny to Odinakovymi the image Bank

The Russian government has laid the long-term oil prices at the level of 50-55 per barrel. Meanwhile, investment Bank Goldman Sachs and the International energy Agency warned that in the middle of the next decade the world will face a shortage of black gold and gas more expensive. Who is right and why Russian officials are reinsured — in the material RIA Novosti.

Pessimists and optimists

On Thursday the Russian government approved the forecast long-term socio-economic development to 2036, prepared by the Ministry of economic development. A key trend, according to government experts, the decline in oil prices. It is estimated that in the foreseeable future quotes will be fixed at around $ 50 per barrel.

This is consistent with the forecast presented in early October, the Russian Ministry of Finance. The Finance Ministry expects prices to fall to $ 52 per barrel in the years 2026-2030 with a consequent increase to 54.9 per dollar in 2031-2035.

The Bank of Russia has also voiced its expectations. On Wednesday the head of the Central Bank Elvira Nabiullina presented in the state Duma the basic directions of monetary policy in 2019, 2020 and 2021.

The baseline scenario of the Central Bank stipulates that the oil will drop to $ 55 per barrel. In the optimistic scenario, prices will remain at the current level, but pessimistic admits a collapse to $ 35 per barrel.

Negative expectations cover not only domestic experts. Bank JP Morgan Chase this week also lowered its forecast for the average price of Brent crude oil in 2019.

However, these estimates significantly higher. If earlier, JP Morgan Chase predicted average annual price at 83.5 dollars per barrel, now says about 73 dollars. This is almost half more than the promises of the Russian Ministry of economic development.

However, analysts at JP Morgan believe that black gold will continue to become cheaper and already in 2020, the average annual price of Brent crude will fall to $ 64 per barrel.

More — less

In the medium and long term evaluations diverge even more radical. Thus, the international investment Bank Goldman Sachs warns that by the middle of the next decade, the world economy will face a shortage of oil and prices rise sharply.

The fact is that due to the decline in prices in the last five years, oil and gas companies around the world have reduced investments in exploration of new deposits, open and already able to satisfy the growing global demand.

While costs for exploration and field development will grow rapidly, so the search for new sources of oil will only the world’s largest companies with deep financial resources.

«Only a few oil and gas companies will be able to afford a full investment in the development of new oil fields, so in the twenties, the world will face an obvious physical shortage of oil», — said the head of the European office of energy research Goldman Sachs Michele Della Vigny in a recent interview with CNBC.

The international energy Agency (IEA) also warned about the risk of a significant shortage of oil in the world market by the middle of next decade.

«We are seeing a serious problem, — said the head of the organization, Fatih Birol. — On the one hand, strong demand for oil fueled trucks, airplanes, ships, and-perhaps most important — the petrochemical industry. On the other — when we look at investments and approved projects for today, we see a serious gap between demand growth and the prospects of gain.»

On the US oil shale industry may not count. «To avoid a significant shortage of supply by 2025, it is necessary to increase production to ten million barrels a day — said Birol. — It would be a miracle».

Dried slate

In the US shale industry is brewing a serious problem. According to analysts Wood Mackenzie, the performance of the us fields are rapidly declining. For five years, the return oil from the wells fell 15 percent and more, two to three times exceeding the initial expectations of lower production.

As a result, the shale operators are forced to increase year after year, the pace of drilling. That is, costs are constantly rising, and production is at best maintained at a constant level.

In addition, experts note that shale wells produce the resource much faster than traditional deposits. At Goldman Sachs this issue devoted a separate study and found that «the shale becomes less important driver of global supply».

To confirm this, analysts at investment Bank indicate that the stocks of the largest deposits of shale oil are reviewed to reduce the size and capacity of the wells is not increased.

Last year, noted in Goldman Sachs, the industry has shown explosive growth performance, but now he slowed down, and in the fields of the Eagle Ford and Delaware Basin production volumes are falling fast.

Besides the increased costs of oil companies taking advantage of the rising prices of black gold, the company dramatically increased drilling activity and, accordingly, costs. If oil prices do not rise, these costs will not pay off and many shale operators will face the prospect of bankruptcy.

At Goldman Sachs believe that, at least until 2020, the US oil shale industry will add every year one million barrels per day. But by 2025, experts say the Bank, manufacturers begin to see how «their stars are going out».

The stock does not pull

«At the moment the global oil markets do not suffer from a shortage of supply, but the possibility of increasing supplies from Saudi Arabia, the leading OPEC producer, is limited. In the longer term, a significant decline in production for the key exporters are able to exert a negative impact on the markets», — said the head of the IEA, Fatih Birol, at a conference in Slovakia in mid-November.

In other words, domestic economic development in the forecast prices of oil is likely too pessimistic. However, to understate forecasts of oil prices — a long tradition of Russian officials.

This allows you to build reserves for a rainy day, listing more money in the national welfare Fund in accordance with the budget rule. Although the coin has a flip side. A number of experts indicates that Verstov budget drop in oil prices, the Finance Ministry obviously limits on the financing of economic development and social programs.

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