Sechin predicts the absolute reduction in global oil production already in 2016

VERONA, October 22. The effect of previous sanctions has been weakened and, according to some estimates, in 2016 you can expect an absolute reduction of global oil production. About this stated the head of “Rosneft” Igor Sechin, speaking at the IV Eurasian forum in Verona.

But this is the path to price balancing the oil market, he said.

“There is, perhaps, not very hard but steady relationship between size of investment and the volume of produced oil: the decline of investment in two to three years leads to a decrease in drilling and seriously threatens the production. Observed in the last year and a half production growth, obviously, is associated mainly with investments of previous years and using new technologies”, – says the head of “Rosneft”.

“The world oil market over the past year and a half has changed dramatically,” he said . These changes are associated primarily with the phenomenon of shale and the fact that the balancing that was conducted before OPEC, has moved essentially to the regional US market, which has become the most important regulator of global scale.

“In the short to medium term trends in the global oil market is also largely will be determined by the U.S. market,” says the President of “Rosneft”.

“In the long term, the main factor determining the future of the oil market, is the state of the resource base. Currently available estimates indicate that the expected growth in oil consumption in the world can be assured only by production, including fields with a sufficiently high level of cost,” predicts Sechin.

“Despite the unfavorable pricing environment, are in a strong financial indicators “Rosneft”. The company consistently reduces the size of debt burden: liabilities under syndicated loans fell by more than 2 times,” he boasts.

Sechin calls for contractors take a closer look at the prospects of work with “Rosneft”. “By the end of 2015 the total volume of material and technical resources, works and services purchased by the company will be not less than 21.9 billion euros. The approved business plan until 2017 and the plan for 2018, assuming an increase of total procurement to 23-24 billion euros a year,” he said.

Thus, says the head of “Rosneft”, “European companies began to lose its historical advantage in imports for the needs of “Rosneft”. The amount of eurocontracts on the results of procurement procedures of 2015 turned out to be 9 times less than the volume of deliveries in the same period in the previous contracts. The substitution of suppliers is fast enough, the beneficiaries, as a rule, are companies from Asia-Pacific countries and the USA.

“I believe that European suppliers can and should regain its position,” – said Sechin.