Novak: world’s demand for oil to rise

 Novak: world’s demand for oil to rise

Russia's Energy Minister Alexander Novak said that world’s demand for oil will rise by up to 1% per year in the next 15–20 years. 

"I think that the oil consumption will grow in the next couple of decades. It will grow slower than the economy, but it still will grow by slightly less than 1% per year on average in the next 15–20 years,” Prime cited Novak as saying.

The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, speaking with a correspondent of Vestnik Kavkaza, noted that Novak voiced a very realistic forecast for the growth of global oil demand. "It is likely that the demand for oil will grow at an even faster pace, which depends on the pace of economic development of the main consumer countries - the US, China, and European countries. There is a steady increase in the consumption of organic fuel, so when oil is expensive, consumption of coal and gas increase, because of which oil prices decline. It is estimated that by 2035 the world will consume about 17-18 billion tons of organic fuel per year (11 billion tons now), so the minister is right, it will be the growth of about 1% per year," he said.

At the same time, Valery Bessel added that the share of hydrocarbons in the energy sector will decline. "By 2035, it will be 77-78% ( 85% now). Oil, gas and coal will be replaced by renewable energy sources," the executive vice-president of NewTech Services explained.

Speaking about the deal with OPEC, the expert expressed confidence that it had achieved its goals. "Oil has stabilized at a fairly comfortable price for all oil companies, including Russian oil producers. At the same time, we see that almost all countries have increased their oil production during this time. Russia has increased oil production by 14 million tons per year. And current prices allow to develop the oil industry," Bessel drew attention.

The deputy director of energy policy of the Institute of Energy and Finances, Alexey Belogoriev, however, noted that pessimism about the demand for oil increases every year. "If earlier it was believed that the world peak of oil consumption will be passed somewhere after 2035, now the expert community is inclined to believe that it will be the 2030s, maybe even the beginning of the 30's," he explained.

According to the expert, declining wholesale oil prices do not always directly lead to lower retail prices.

"It's clear that cheap oil prices stimulate additional demand, especially in those countries where retail prices are not highly influenced by taxation. But is not the case in many countries. In Europe, in particular, declining wholesale prices only partially affect retail prices, the same thing is in Russia," Belogoriev said.

According to the expert, the future of oil in the long term will depend on the development of electric vehicles. "Up to 60% of the demand for oil comes from transportation. And all the forecasts of oil products consumption are somehow tied to estimates of the growth in the share of electric vehicles. And this is still an unknown quantity, there are very different forecasts," the deputy director of energy policy of the Institute of Energy and Finances concluded.

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