Global decrease of investments in oil and gas sector to result in shortage of facilities in 3-5 years
Global changes in the energy market destroyed the world’s stable system of oil transportation
Global investments in the oil and gas sector are currently 20-25% lower than in the pre-pandemic period. In 3-5 years, this will lead to insufficient launching of new facilities, Pavel Sorokin, Deputy Minister of Energy of the Russian Federation, said at the 6th International Youth Applied Research Forum “Oil Capital”, according to the Ministry’s press center.
According to the official, “the burden of compensation for the lost volumes will fall on the OPEC+ deal participants”.
Pavel Sorokin also said that the global changes in the energy market that took place in 2022 destroyed the world’s stable system of oil transportation that had been existing for over 50-60 years. “Russian oil and petroleum products used to go from the Baltic region to Rotterdam for about 7-10 days and the Arab countries used to supply their closest markets thus ensuring cost optimization on a global scale while all routes have ceased to be optimal by today,” he said. According to Pavel Sorokin, Russian oil now goes to distant markets with the shipment time up to 50-60 days. This has led to an overall increase in costs and has affected the end customers: the cost of gasoline and diesel fuel in Europe exceeded the average level of the recent decade by 30-40%.
Pavel Sorokin added that the Russian fuel and energy complex has coped with the major challenges of the past year having redirected its export flows while the global economy will be affected by the consequences of negative changes for a long time. He also believes that the introduction of a “price cap” set a dangerous precedent of artificial reduction of the product price which can now be applied to any exchange commodity.
Pavel Sorokin also said that amid the restrictions imposed, Russia intends to create its own energy export system and to take advantage of the favorable opportunity to build an independent financial and transport infrastructure.
