UPDATE: Russia’s Rosneft CEO sees end of oil market glut in 18 months

(Adds details in paragraphs 6–8)

VERONA, Oct 20 (PRIME) – Oversupply on the international oil market, when the commodity is trading at over U.S.$55, will end in the next 18 months, Igor Sechin, CEO of Russian state-owned oil major Rosneft, said on Thursday during the Fifth Eurasian Forum.

“We should see an end to the period of excessive oil supply on the market in the next 18 months, and the process of normalization of situation with commercial reserves of oil and oil products should begin,” he said.

“During the period, the combined level of oil production in the U.S. should remain below the record output of 2015 despite a slight increase of shale oil output in the U.S. The oil price will exceed $55 per barrel.”

He said that the shale oil production has good chances to switch to consistent growth but it “will not look like the 2013–2014 spike.”

“It will largely remain as a regional phenomenon and contribute to the balance of oil and oil products on the U.S. market,” he said.

But the oil price of above $50 per barrel will stimulate new drilling in the U.S. and a higher shale oil production. Still, the U.S. shale oil is not a competitor for Russia in the Asia–Pacific region.

“You should not forget that shale oil a resource of the U.S. market in the first place, while major growth will be experienced in the Asia–Pacific region. Shale oil will not compete with us on the Asia–Pacific region’s market,” he said.

Judging by dynamics of oil consumption, the market will stabilize at a price of $52–55 by mid-2017, he said.

Rosneft also expects growth of oil consumption at at least 15 million barrels a day by 2040, and demand for at least 40 million barrels of additional production capacities may emerge by then. “So, the world economy should find possibilities for production of new oil in amounts that are fourfold higher than the oil produced by Saudi Arabia to satisfy demand in future,” Sechin said.

Russia is able to boost its oil production and add up to 200 million tonnes to annual output in future due to projects on the Arctic shelf, in the north of Western Siberia, and in Caspian states and through development of pipeline and energy infrastructure.

Russia is capable of satisfying growing demand for oil in Eurasia by joining forces with other countries in joint projects in production, infrastructure and efficient refining, he added.

End