Novak considers a “fair” price for oil at $50 per barrel in 2016

Novak considers a “fair” price for oil at $50 per barrel in 2016

MOSCOW, December 28. Minister of energy Alexander Novak considers a “fair” price for oil at $50 per barrel in 2016. He declared it in interview to TV channel LifeNews.

“It is unlikely that prices will grow strongly. Fair today, in my opinion, the price would be around $50 (per barrel), based on economic parameters, the balance of supply and demand and cost of production of oil,” he said.


Oil prices for 30 years


Novak emphasized that the indicator “average year”. “Today we see $38 – volatility, and at the beginning of the year prices were higher, on average, by 2015 the prices were a little above $50, so we hope that in 2016 about (to be) the same price,” he added.

According to Novak, the cost of production of shale oil in the US range from $40 to $50 per barrel. Earlier he said that critical for most shale projects oil price of $50-60 per barrel.

“The cost variety from $20 to $80, on average, in our opinion and according to the experts, is between 40 and 50 per barrel”, – said the Minister.

Novak stressed that the cost of production of shale oil will continue to have a decisive impact on the price of oil.

“Today, investment in shale oil is a benchmark that allows us to speak about how in the future the market will develop, and how will it be price. The cost of oil will be the indicator that will form a long-term trend in the price of oil,” he said.

Earlier Novak said that shale oil is losing influence on the world market, and the decline in its production is a stable trend of recent months. According to the Minister, because of low prices leaving investments, reduced the number of drilling rigs in the United States. If a year ago there were 1.6 thousand, now about 600. He also noted that over the past three months there was a decrease in the volume of shale oil production by 300 thousand barrels.

About the energy supply of the Crimea

Complete energy independence of Crimea will come after the completion of construction of power plants in Simferopol and Sevastopol in 2017, said Novak.

“If we talk about reliable energy supply of the Crimea, the issue should be about building a generation that is already realized. Only by the end of 2017, when we will Commission the first two generating units with a total capacity of 470 megawatts. It will create additional reserves of capacity, which will allow to speak about full-fledged, reliable energy supply,” he said.

SPECIAL project

New Crimea
What was the Crimea during the year, together with Russia and what has changed in the life of its inhabitants – in a special project

According to Novak, if you talk about the balance of power, the power that is needed Crimea, the introduction of 3 and 4 strands power bridge from Krasnodar Krai will be enough.

He noted that after entering the first units of the Crimea will be supplied with electricity is stable, because the region is enough on-site generation. “190 megawatts – thermal own generation is about 260 MW mobile gas turbine power plants that were transported last year for reliable energy supply of the Crimea. The total flow capacity of 850 megawatts. In total it will be more than enough for the welfare of the Crimea”, – he explained.

The first units under construction in the Crimea CHP in Simferopol and Sevastopol with the capacity of 940 megawatts will start in 2017. December 2 was launched the first line of the power bridge from the Krasnodar region, enter the second leg took place December 15, power was reduced to 400 MW. Two more strands of the power bridge total the same capacity to be commissioned in the spring.

On gas for Ukraine

Ukraine will need the purchase of Russian gas in January-March, but until payment has been received, said the Minister of energy of the Russian Federation.

“Ukraine will not replace the gas that she needs to supply its own consumers. I believe that in January, February, March gas you need,” he said in an interview with LifeNews, noting that deliveries for January is currently not paid. According to him, “in any case, Russia will buy gas”.

Novak noted that gas supplies to Ukraine are carried out in the mode of payment. “As our Ukrainian partners will pay for gas, so it and will be supplied to consumers of Ukraine”, – said the Minister, adding that currently the supply for January is not paid.

Russia does not seek to completely abandon the transit of gas through Ukraine, but on unfavorable conditions, this will not do, said Novak. According to him, Ukraine on the reverse gas purchases more expensive than you could get from Russia.

Inefficient capacity

According to Novak, the government plans to create conditions for the decommissioning of inefficient facilities, which were commissioned in 50-60 years.

“Soon will be released a government resolution that will allow to create conditions for conservation capacity. We don’t want all the unnecessary generation, which is now not being used, completely out of operation. It will stand to wait,” he said.

The last time the consumption is at the same level and not increased by more than 1%, said the Minister.

Previously JSC “so UES” (“System operator”) was proposed to complement the Russian capacity market, new mechanisms and advocated for the decommissioning of ineffective generating equipment, as well as the conservation part of the excess capacity.

The need for preservation of the current excess capacity System operator explained the necessity of considering scenario of a return to sustainable growth in the consumption of electricity and capacity in the following years, as well as the “risks of retirement of generating equipment due to technical reasons or due to exhaustion of its resource”.

As previously reported, in 2013-2014 with the participation of the System operator were developed proposals for the formation of economically supported mechanisms for decommissioning and preservation of obsolete and inefficient generating equipment. In particular, proposals for the conservation of excess generation contain a financial mechanism for owners of mothballed generation to be paid for what their equipment is actually in “long term reserve”.

Mandatory condition of such preservation must also be periodic checks of the ability of the generating equipment included in the network.

If the government will take a decision on the introduction of mechanisms and preservation of generating equipment, they can be implemented in the next two years, predicted earlier “System operator”.