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Global and Russian Energy Outlook up to 2040
The protracted nature of the current global financial crisis has led to reduced forecasts of economic and energy consumption growth accompanied by an obvious accelerated increase in the share taken by developing countries. • In the long term, fossil fuels will remain dominant, against the background of a slower growth in the share of non-hydrocarbon energy resources than was estimated in the previous Outlook. The ‘shale breakthrough’ has postponed for two or three decades the threat of running out of economically viable oil and gas reserves – which had seemed so close just five to seven years ago – and has secured the predominantly hydrocarbon character of the world’s energy sector. The share of oil and gas in world primary energy consumption will remain practically unchanged (53.6 per cent in 2010 and 51.4 per cent by 2040). • The study of oil and gas price dynamics in different scenarios did not show fundamental cause for alarmist forecasts predicting either too high, or extremely low, prices within the period under review. In all cases – ranging from future success to possible failure of shale technologies – oil prices in 2040 will not move out of the range $100–130/bbl. Gas prices will be closely correlated with oil prices, but also strongly differentiated by region (which does not exclude large short-term fluctuations in prices under the influence of political and speculative factors). • Despite the integration of oil and gas markets, as international trade in oil and liquefied natural gas (LNG) expands, the trend towards regionalization of prices, resulting in considerable differences in price levels, will gain momentum. • Natural gas will account for the most substantial increase in absolute volumes of consumption, and the share taken by gas in primary energy consumption will increase more than that of any other fuel. The next 30 years could, quite reasonably, be considered as ‘the era of gas’. But Russia runs the risk of missing the resulting opportunities. • The consequences of the expected transformation of world energy and, especially, hydrocarbon markets will not significantly change the fuel markets themselves, but the positions of the leading market participants will clearly be rebalanced, while some global players will be able to gain influence. The results of our research clearly show that Russia will be more susceptible to adverse changes in market conditions during the forecast period. In the Baseline Scenario, Russian oil and gas exports to foreign markets appear to be significantly lower than the official national projections. • High costs and the current taxation system both limit the competitiveness of Russian energy resources in global markets. The Russian fuel and energy complex could face severe restrictions on external demand for energy resources at prices acceptable to Russia, resulting in additional risks for Russia’s energy sector and economy. This research provides preliminary estimates of the consequences of this impact on the country’s economic growth (one percentage point slowdown per year) and possible measures to compensate for it.
