BAKU, Azerbaijan, Nov.24
By Leman Zeynalova – Trend:
The worst case scenario for oil prices is $40 per barrel, while $50/bbl is quite reasonable, Trend quoted Vice President for Strategic Development of PJSC LUKOIL Leonid Fedun as saying.
It is necessary to invest in technologies and spend large amounts of funds in order to keep the production going even with $40/bbl, he told Russian media.
“At present, it we need to prevent any reduction in production, since after some time, the existing reserves of the companies will disappear. All companies have reduced the drilling. It is necessary to replenish resources so in a cost-effective way. Therefore, a long and correct dialogue with the government is necessary, and one of the most important issues that need to be discussed is adaptation to climate change and the creation of an effective tax system for the oil and gas complex,” Fedun added.
He also pointed out the importance of maintaining the OPEC+ deal.
“Currently, almost 15 million barrels per day have been artificially taken out of the market. If the countries fail to regulate the market, those barrels will return to the market causing a shock that was observed when OPEC+ and Saudi Arabia couldn’t reach an agreement in March and consequently, the prices collapsed,” noted Fedun.
The US Energy Information Administration (EIA) expects that as global oil demand rises, forecast inventory draws in 2021 will cause some upward oil price pressures. EIA forecasts Brent crude oil prices will average $47/b in 2021.
“Brent crude oil spot prices averaged $40 per barrel (b) in October, down $1/b from the average in September. Brent prices fell in October as previously disrupted crude oil production in Libya came back online and as COVID-19 cases began increasing in many countries, which could reduce oil demand in the coming months. Despite these developments, the U.S. Energy Information Administration expects global oil inventories to continue falling in the coming months,” reads the updated EIA report.
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