Page 17 - FSUOGM Week 15

FSUOGM
FSUOGM
falling market and a continuing global crisis,” he said.
“But I am sure that we will cope with
the situation. We have everything for that including willingness, competences, support of the government, of the prime minister, and of the president... We will work in a team to overcome the problems and restore the economy after solving the coronavirus problem.”
Novak said that from the beginning of self- isolation, Russia’s fuel consumption through the filling stations fell by 30% like in many countries, which reduced global demand for crude by an unprecedented 15–20%.
“Keep in mind that the 2016 OPEC+ deal was struck in conditions of growing demand, and crude overproduction amounted to around 2mn barrels per day that time. And now (oversupply) is seen at 20mn, which is 10 times more than three years ago,” he said.
“Economic activity declines, 4bn people are self-isolated, aviation travel has fallen sharply, which resulted in a 30–50% fall in oil product sales at the filling stations around the globe, insufficient loading of oil refineries, and halving of air fuel consumption.”
Gazprom Neft to start oil production reduction in May
Russian oil major Gazprom Neft plans to reduce oil production already in May in line with the OPEC+ deal, but does not rule out difficulties, CEO Alexander Dyukov said in an interview with Kommersant business daily released on
April 14.
“The only difficulties will be with
contractual obligations. In fact, we have already placed all volumes of oil for May on the market,” he said.
“We will set the task of reducing (oil production) in May. June is still easier. We will be able to reduce the number of spot cargo so as to meet our quota,” Dyukov said.
Oil prices may reach $40–45 per barrel by the end of 2020 in case of a favorable scenario with coronavirus, he said.
“We assume that the second quarter will be the most difficult, but we hope that the removal of quarantines and the restoration of business activity will begin in summer, and in autumn, oil demand can reach a level close to the pre-crisis one. In this optimistic scenario, by the end of the year, the price could reach $40–45 per barrel, with further growth in 2021,” Dyukov said.
The market situation will force the company to reduce its investment program, he also said.
“But we do not expect a reduction in
the physical volume of investment activity
by more than 20%. It is important that the company entered the crisis in a stable financial condition. We have low debt, a significant part in rubles. A number of investment projects are not in the active phase, which adds flexibility in making decisions,” he said.
Dyukov also said that OPEC+ should target growth of demand for oil, but not reserves.
“As I’ve already said, we need a stable market, and for a long time we see that the price level around $50 per barrel is stable. And the right market regulation strategy for
OPEC+ is to target the share of demand. That is, simplified, OPEC+ should choose for itself some part of the increase in demand, say, 50% – when there is a growth in demand,” he said.
EASTERN EUROPE
Belarus seeks discount on Russia’s natural gas
The Belarusian government seeks reducing the price for Russian natural gas for Belarus in 2020 has been raised, Energy Minister Viktor Karankevich said on April 9.
According to the minister, global prices
for energy resources, including prices for natural gas, are falling, and the Belarusian side approached Russia’s Gazprom with a request to consider reducing the price for natural gas supplied to Belarus in 2020, state news agency BELTA reported.
Belarus has suggested buying certain amounts of natural gas via commodity exchanges at competitive prices, Karankevich added. The terms of implementing this mechanism will be discussed at forthcoming negotiations with the Russian side.
In February, Belarusian President Aleksandr Lukashenko said that the country should pay about $90 per 1,000 cubic metres for Russian natural gas in 2020 instead of the current price of $127 per 1,000 cubic metres.
“As for natural gas, it costs less than $110 in Europe today. It was not our minister who told me that, but a major Russian
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