Russian official: Oil's fall from $100 to $50 is abnormal

Russian official: Oil's fall from $100 to $50 is abnormal
Updated 26 February 2015

Russian official: Oil's fall from $100 to $50 is abnormal

Russian official: Oil's fall from $100 to $50 is abnormal

The Russian president’s special representative for cooperation with Gas Exporting Countries Forum on Wednesday described the shrinking oil price from $100 to $50 is an abnormal trend.
Victor Zubkov, who is also chairman of the board of directors of Gazprom, was addressing the International Energy Forum (IEF).
He said the current low oil prices are harmful not only for the producers who are now in need to support the investment cycle of gas industry but also for the consumers who are at risk to face gas shortage in the future and abnormally high prices.
The event is part of the ongoing IEF lecture series intended to inform IEF stakeholders in Riyadh and in our 74-member countries by providing a platform for ministers, CEOs, senior officials, experts and academics to present on topics relevant to the global energy dialogue facilitated under the neutral banner of the IEF.
Speaking on "World gas market’s outlook: Developments and perspectives," Zubkov stressed the need for supporting investments in the gas industry and said building an effective strategy for gas exports now, during the times of change, is a difficult task, considering the current climate in the energy markets, and complex situation in the global economy in general.
According to him, in the gas sector there are global and regional organizations uniting suppliers and consumers of natural gas such as the International Gas Union and Eurogas. “But in my opinion, the role of the International Energy Forum is one of the most important at the international energy stage.”
He said: the experts predict that the share of gas in the global energy consumption will not change until 2035, and will be around 23-24 percent, but the level of gas consumption in absolute terms may grow by one-third and exceed 4.7 trillion cubic meters.
“For almost half a century, Russian gas has been an essential resource for the economies of European countries. Now Russia is developing new centers of gas production on the Yamal Peninsula, Eastern Siberia, Yakutia, the Far East, and planning in the future to increase the use of the huge gas potential of Russian shelf,” he said.
Russia develops its unified gas supply system, which consists today of 170,000 km main gas pipelines and 26 underground gas storages with the active storage capacity of more than 70 bcm.
With nearly a quarter of the world's natural gas reserves, Russia in 2014 produced about 640 bcm of gas. Frankly speaking, this result is lower than our real capabilities; and the reason for this is the fall in the gas consumption in Europe. Later, I will address the specific features of this regional market in detail.
He held a succession of senior positions within the government of the Russian Federation, including that of deputy minister for taxes and levies, and first deputy finance minister of Russia.
Russia serves on the executive board of the IEF and was host of the IEF14 Ministerial held in Moscow last year. In June, the 21st World Petroleum Congress (WPC) was also held in Moscow that gathered roughly 5,000 delegates from over 80 countries.
On the subject of securing consumption and gas supply, the Russian expert said: “I believe that in the next 30 years, the division between world production centers and centers of consumption of natural gas will continue, although international trade will grow due to the construction of new export pipelines and new LNG trains. Both require guaranteed return on investment in the form of long-term contracts that share the risks of suppliers and consumers to protect the interests of all participants in the gas industry.”
He added: Russia is committed to principles of maximum transparency of its foreign trade gas strategy and seek for transparency its conditions. An important role in this belongs to constructive participation of Russia in the International Energy Forum and other international platforms.
For example, the difficult situation in the European gas market has become worse both in terms of the institutional conditions and in terms of volatility of demand because the oil price since last autumn, going up and down, and this price is the basis for gas prices in most supply contracts.