US will overtake Russia in the production of crude oil

Last week, the US Department of Energy's Energy Information Administration published an annual forecast report on the state of the United States energy industry with a forecast for its development in the coming years.

Judging by the data published in the forecast report, in five years the United States will overtake Russia in crude oil production: according to the Energy Information Administration, by 2020, the average daily crude production in the USA will be 11,58 million barrels per day, while Russia will produce 10,15 million barrels.

How important are crude oil and petroleum production for both countries? What do the figures indicate? The correspondent of the Russian service "Voice of America" ​​asked these questions to some Russian economists.

Mikhail Krutikhin: US entry to the oil market will be revolutionary

According to the analyst of the oil and gas market, partner of the consulting agency Rusenergy, Mikhail Krutikhin, “The US will turn into a net exporter of oil immediately after 2020, i.e., they will export more oil than they import, and this impact on the world market will be truly revolutionary: first, prices will fall, and, secondly, the card for trade in crude oil and oil products will be redrawn. ”

In an interview with the Russian service of Voice of America, the expert predicts that the impact of this new US role in the oil sector will be serious for Russia: “I think that Russia will have to give up its place in this market in many ways, although this will happen not only because The United States will suddenly enter the market with its oil. But this output will be largely decisive: so far North America has entered the market with very small quantities of very specific grades, very light grades of oil. But if the volume of this export is significantly increased, and so, apparently, it should happen in 2020, Russia will give up its markets - first of all, in Europe. ”

According to the expert, “Russia will to some extent retain its position in Asia, since it is easy for it to send a serious amount of oil to China and the Pacific Ocean, but on the whole, the export volume of Russian oil should be greatly reduced also because production will decrease volume. "

“In Russia, 70 percent of the remaining oil in the ground is difficult to extract reserves. And in order to start extracting them, in many cases there is no technology either in Russia or in the West. Therefore, optimism regarding the development of these reserves is, in general, not justified, and I adhere to the so-called conservative scenario for the development of the Russian oil industry (it is formulated in the state project of the energy strategy of Russia), which says that by the year 2020 oil production in Russia will be shrink already, and by 2035, instead of 525 million tons per year, Russia will produce 476 million tons per year, i.e. significantly less. And since it needs some oil to satisfy its domestic needs, it will gradually withdraw from foreign markets, ”- this is the conclusion made by Mikhail Krutikhin.

The forecast of Mikhail Krutikhin regarding the development of the oil industry in Russia is not too optimistic: “We can recall the speeches of officials from the Ministry of Energy of Russia about 3 a year ago. They said that if something serious was not undertaken in terms of oil exploration and production, then somewhere in the 2030-2035 year Russia would become a net importer of oil, that is, it would cease to supply oil to the external market: oil production barely cover their own internal needs. "

Dmitry Butrin: Russia will face strong competition in the oil market

Dmitriy Butrin, economic analyst, deputy editor-in-chief of the Kommersant newspaper, says that there are nuances on the way for the United States to take leadership in the field of crude oil production and approval as an exporter of petroleum products: . If they continue to remain low, this level will remain approximately until 2025, despite the fact that the United States will still import and export petroleum products. With high oil prices, the United States expects somewhere in the year to 2020 a complete balance in oil and oil products, and this means that somewhere in 2020, with relatively high prices - 80-90 dollars per barrel of oil - the United States becomes independent of world oil market ".

According to Dmitry Butrin, expressed in an interview with the Russian service of Voice of America, “under the scenario when the price of oil rises somewhere in 5 years to the level of 90, the USA is already becoming a fairly large supplier to the world market compared to Russia, however this event is not instantaneous. ”

A much more serious factor in the weakening of Russia's position in the oil industry is that Kommersant’s economic analyst believes Iran’s return to the world oil market: “This return rather significantly reduces Russia's prospects for the next 5 years, since it is expected that Iran will, first of all, export its own three to countries that Russia intends to consider as the main export markets for increasing exports — China, India and Turkey. ”

“Iran can somehow get along in the Chinese market together with Russia, but part of the Chinese market, Iran, in the case of increasing production, will undoubtedly take Russia away, in the sense, will add its oil to this market. Russia can maintain the current level of production in about the same way as it has supported the last 10 years, and sit quietly on long-term contracts with its current suppliers, but there are almost no prospects for opening new markets, ”Dmitry Butrin believes.

The expert believes that the Russian leadership in vain does not take into account the prospect of intense international competition for hydrocarbon markets: “As I understand it, the Russian leadership at the moment believes that if it finds any internal reserves for investment in the development of Russian oil and gas production, gas due to growing world markets, growing consumer economies can be sold in unlimited quantities. So, there are people who think that the world markets are huge, and you can send an unlimited amount of oil there, at least, or less gas, there are a lot of them. Not only Russia thinks about this, Iran thinks about it, they even think about it in Brazil. ”

“The assumption that we can always wait a little longer, then accumulate investments and perfectly enter the Chinese market, the Turkish market, into any market with a large volume of oil — this assumption seems to be false,” Butrin said. “And the further it goes, the more false it becomes.” “Not only that,” the expert sums up, “with low oil prices, it still works, but with high oil prices, this is not very good.”