Of the oil potential of our country may be lost forever — so analyst Mikhail Krutikhin estimates the new agreement, OPEC+.
The member States of the organization of countries-exporters of oil (OPEC) and Russia, joined them under the agreement, OPEC+, the “extraordinary” virtual conference managed to agree on the reduction of hydrocarbon production in order to stabilize world prices. Recall that the pandemic coronavirus and the slowdown of the main drivers of contemporary world economy — China, some time ago the prices for the Russian grade of oil Urals have fallen to levels of two decades ago.
The deal is that in the next two months, starting may 1, 2020, the parties agreed to reduce production in the whole world for 10 million barrels per day. In the next six months, the reduction must be 8 million barrels, and from January 1, 2021 to April 30, 2022 6 million
Of all the signatories of the agreement Russia in the next two months should go for the biggest contraction in its production of 2.5 million barrels per day. The United States, which is today one of the largest exporters of oil, the agreement was not involved — it prevents them from anti-cartel legislation.
How seriously can affect the conclusion of new transactions OPEC in oil prices, and whether Russia can fulfill its commitments and at what price, columnist of “Rosbalt” said oil analyst, partner of consulting company RusEnergy
— How do you assess the agreements reached in the framework of the new edition of the OPEC+?
— For Russia it is humiliating deal, because according to her she needs to cut oil production more than other parties to the agreement. If you had three years in a row she reported that reduces production, and in fact have increased it, now it will have to do something real. It’s very sensational international agreement that will probably be fixed by the energy Ministers of “big twenty”.
If Russia will try to continue this fraudulent strategy as before, then it is not excluded against international sanctions. At first it will be some restrictive tariffs on Russian oil, then embargo, then sanctions against those who buy and sell. That is, apparently, will have to take up the case and start to cut production.
— How realistic is it for Russia to lower production in the scope almost 2.5 million barrels a day?
— From the current 11.3 million bpd, which produces Russia today, will have to fall to 8.75 million Is 23% of all Russian oil production. Technically, it is a very complex task.
And restore the current levels will be very difficult. Perhaps part of Russia’s potential oil production was lost forever. Plus it will be a colossal loss for the Russian budget, tens of thousands, if not hundreds of thousands of unemployed. In General, the mass of unpleasant consequences.
Already after the transaction OPEC+ Vladimir Putin in a conversation with astronauts working on the ISS, has hinted that they will continue negotiations with Donald trump “on the situation on the world markets.”
Wait… First he announced that he would not talk with the American leader, then two hours later, trump called Putin and crown Prince of Saudi Arabia Mohammed bin Salman on the phone and they talked for three hours, trying to come to some agreement. So the Americans and the Saudis on these issues, talking to Russia and, apparently, Moscow has taken recent steps under this double pressure.
But because the United States themselves refuse to participate in the deal with OPEC…
They just can’t. They have a law, “the Sherman act” of 1890 (the first anti-trust law in the United States, — “Rosbalt”), which is to ensure freedom of trade forbade any trusts and cartels. Cooperation with OPEC for the United States is legally impossible.
— As far as the non-participation of the United States in the transaction of OPEC can affect the global price of oil?
— The United States announced that because production under the influence of the pandemic fell, this reduction should be counted to them as their contribution to the stabilization of oil prices.
— In General, known in the United States has fallen now oil?
— It is suspected that 20-30%.
— The situation in which now turned out to be American companies extracting shale oil? In the Russian media write about it with an apocalyptic tone. Anyway, looks like the price of oil is low now and them.
— Yes, the price for them is also low. Many shale companies are now temporarily on hold, but they are so flexible that if prices under the impact of the current international action will go up and will go 40-45 dollars per barrel, the us shale industry will immediately revive and begin to grow if the demand is there. In this case oil, they will ensure themselves and will export it.
So mourn shale oil is not worth it. We need to look at the main. And the main thing is that in the current transaction OPEC+ Russia is the losing party.
— Add to this the decline in demand for oil in the world…
— Of course. China is now demonstrated that even after we defeat the pandemic, the demand for energy will not reach its previous levels. After the return of normal life will be restored 70-85%. The same thing will happen in other countries, if not worse. Demand for oil in such quantities, in which we would like the oil, we’ll see.
— What is the “oil age” it all ends?
— Until we see signals that indicate the acceleration of a process that began long ago.
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