Rosneft CEO warns of ‘new super-cycle’ in oil, gas markets on rapid demand growth
Rosneft CEO Igor Sechin warned Nov. 12 of a potential super-cycle in oil and gas markets amid fears of a continued rapid growth in demand outpacing supplies.
The warning comes as pressure mounts on the need to ease surging energy prices, with oil hovering near three-year highs and volatility in European gas prices amid the looming winter season.
“As structural discrepancies between supply and demand on global energy markets are further revealed, we may witness a new super-cycle on the oil and gas markets,” Sechin said.
For its part, Rosneft, Russia ‘s largest crude producer, has increased investments in new projects to meet demand growth, Sechin added.
“Despite the uncertainty in the global economy due to the difficult epidemiological situation, we observe a rapid growth in demand for traditional energy resources,” Sechin said.
S&P Global Platts assessed Dated Brent at $83.02/b on Nov. 11, almost double the price of $43.195/b seen a year ago.
Platts Analytics forecasts global oil consumption reaching 103.2 million b/d in 2022, some 700,000 b/d above pre-COVID-19 levels.
Commenting on the company’s financial and operational results in the third quarter, Sechin said he remained certain of Rosneft’s ability to raise production and investments in current market conditions.
Rosneft saw its liquids output increasing by 3.2% on the quarter and 1.8% on the year to 366.1 million barrels, or 3.98 million b/d, in the reporting period.
The increase was driven by gradual easing of OPEC+ production restrictions imposed in May 2020 to counter the impact of the coronavirus pandemic.
Rosneft cut its oil production by about 730,000 b/d when OPEC+ restrictions came into force, against pre-crisis level of 4.3 million b/d in March 2020, according to the energy ministry’s data.
Since then, Rosneft has restored over 50% of its production cut, as Russia aims to fully reach pre-crisis output volumes by May 2022.
Rosneft sees its production recovery in line with improving demand and rising oil prices, which have been helped by successful vaccine rollouts and the lifting of lockdown measures
S&P Global Platts assessed Russia ‘s Urals crude at $74.53/b CIF Med at the start of the third quarter on July 1, reaching $76.105/b by Sept. 30.
Rosneft’s production of hydrocarbons rose to 468.2 million barrels of oil equivalent in the third quarter, or 5.09 million boe/d, up by 3.4% on the quarter and 3.9% on the year.
Meanwhile, gas output rose 4.3% on the quarter and 12% on the year to 16.76 Bcm in the reporting period.
“The rise is mainly attributed to the increase in natural gas production at the Rospan project,” Rosneft said.
In the third quarter, Rosneft saw its refining throughput in Russia rise to 24.1 million mt, up 2.8% on the quarter and 7.2% on the year, due to growing demand for petroleum products on the domestic market.
The company’s oil refining throughput in Germany remained flat on the year at 3 million mt in the reporting period, having increased by 2.4% on the quarter on easing of restrictive measures in the country.