Several of the world’s largest oil-producing countries have recently made public plans to increase their production capacity. The reason: peak oil demand is looming and countries are determined to make the most of their oil resources while they can. .
“Everything that can happen will have to happen as long as there is a call to sell it,” the head of the Duma’s power committee, the Russian parliament, said last month in presenting a draft document for this in particular. .
“The main thesis of this strategy is the monetization of existing reserves and resources, i. e. the monetization of exports,” Pavel Zavalny also said at the event.
Russia is one of the world’s 3 largest oil exporters, along with Saudi Arabia and the United States, has enough oil to continue generating at current rates until at least 2080, with enough fuel reserves for another 103 years. a billion-dollar investment – $110 billion to be exact – in the progression of new oil reserves in eastern Siberia to exploit one hundred million tons of new crude oil consistently with the year, representing about one-fifth of the country’s annual production in 2019.
Much of this oil will update depleted fields in western Siberia. According to the country’s Ministry of Energy, Russia does not seem to have any objective of particularly expanding existing production rates. In the last prepandemic year, the daily production rate of 11. 3 million b/d, a record level. Today, the Department of Energy sees the existing, restricted production rate of 10. 3 million b/da 11. 1 million b/d through 2029 before beginning to decline. In other words, Russia has 8 years to take credit for developing global oil demand on its own backstage.
However, there are other scenarios for the oil peak: BP, for example, has predicted that in the worst case, the oil peak has already arrived, and it will arrive by 2030. peak one day in 2027 or 2028, Rystad Energy forecasts a peak demand in five years, and the International Energy Agency expects a peak in demand over the next decade. Overall, the forecast is in the 2030 range.
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This means that manufacturers such as Russia, Saudi Arabia, Iraq and the Gulf countries have very little time to make the most of their oil reserves before demand starts to fall 20. Production, the festival in the oil market is even harder than it is now.
In terms of competition, Russia is more local than its Middle Eastern partners, has been less dependent on oil export earnings than Middle Eastern producers, and has recently intentionally reduced this dependence. product, but with things like hydrogen attracting the Kremlin’s attention, diversification is slowly but actually underway. However, there are all those billions of barrels of oil in the ground, and it would be a shame to keep them there, hence plans to revive production, but who’s going to buy?
In terms of export destinations, Russia has a combined opportunity: its main visitor is through faraway China, which is smart for long-term plans to monetize oil assets; its visitor at the moment is Europe, and the continent will reduce its oil consumption if all goes well in accordance with the EU’s energy transition programme plan. This means that Russia will have to locate new buyers for all the new oil it will extract from eastern Siberia.
India is an apparent candidate. The country imports 80% of the oil it burns, and it likes reasonable for that. In India, Russia will compete with its OPEC partners and the United States, for which India is also a more sensible oil export destination. Emerging Asia will also be a key market for oil exporters as peak demand approaches.
Oilmakers are in a hurry to sell as much oil as possible while there are still buyers, apparently based on a call to forecasts, but the fact is that peak oil demand can actually occur in ten years or less, however. That doesn’t mean that demand for oil will fall off a cliff, unless some other pandemic hits the planet, that is. In the absence of such an unnoticed event, oil demand is expected to decline relatively gradually, giving forward-looking manufacturers enough Russia has sufficient time to reduce oil and fuel revenues as a percentage of GDP, so it is not yet known whether it will use this time wisely to achieve those targets. .
By Irina Slav for Oilprice. com
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Irina is a Oilprice. com with more than a decade of delight in writing about the oil and fuel industry.
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