UPDATE: Minister: World oil consumption to rise 1.5–1.6 mln bpd in 2017

(Adds details in fifth, sixth paragraphs 5–8)

MOSCOW, Oct 24 (PRIME) – International oil consumption will increase by 1.5–1.6 million barrels per day (bpd) in 2017, Russian Energy Minister Alexander Novak said on Monday at a Russia Calling investment forum.

“The key factor for improvement of the economy is higher demand for oil. At the beginning of the year everyone expected a 1.2 million barrel increase in demand on average in the year, while now estimates show an increase of world demand by 1.5–1.6 million barrels until the end of the year,” Novak said.

INVESTMENT IN OIL SECTOR

He also said that international investment in the industry will return to the level of 2014 only in 2020.

“We see a return of investment into the sector. I can say that in 2015–2017, the industry lost U.S. $750 billion of investment…In 2017, we see a slight rebound of investment of about 3% – it is an increase of combined international investment in the sector … Our estimates show that the dynamics will allow to reach the level of investment in the industry of the year of 2014 only by 2020,” he said.

He said that Russian investment in oil production and oil refining may grow to 1.3 trillion rubles in 2017 from 1.2 trillion rubles in 2016, a significant increase compared with 800–900 billion rubles before the crisis. Even though investment has contracted, in U.S. dollar terms, rubles account for 80–85% of expenditures of Russian companies, he said.

The share of foreign investors in the Russian oil industry has increased.

“Before the crisis, the share of foreign investors in the combined output stood at about 25%, while now, even during the crisis and taking into account geopolitical and external political problems connected to sanctions, these investors expressed even more initiative in investing in the Russian oil and gas sector,” he said, adding that the share of foreigners increased to 37%.

Economic Development Minister Maxim Oreshkin said that the ministry and the Energy Ministry are developing a new program for investment in the energy sector.

OPEC+ DEAL

He also said that OPEC and non-OPEC states have fulfilled their oil production cut agreement by 102% in January–September 2017, up from 99% in January–August. OPEC states, excluding Libya and Nigeria, fulfilled their obligations under the agreement by 100%, while non-OPEC states fulfilled them by 106%, he said.

The OPEC states agreed to reduce production by 1.2 million barrels daily to 32.5 million barrels in November 2016. In December 2016, 11 non-OPEC countries including Russia agreed to cut their combined output by 558,000 barrels. The agreement was concluded for January–June and prolonged for nine more months in May.

End