Oil flows around sanctions

As predicted by most oil and gas executives in 2015, the year 2016 was marked by a growth in oil prices, with the price of a barrel going up from USD 34 to USD 56. This year, the survey has found that only half of the respondents remain optimistic about a potential boost in prices in 2017.

Many of the respondents surveyed have replied that Russia and other countries will see oil demand continue at the same level while gas will enjoy a growth. This may have an impact on hydrocarbon prices because retaining and growing production levels usually come from obtaining a higher recoverability from traditional deposits and exploring new ones, including those with complex barrels that require large-scale investments, as noted by more than 80 percent of the respondents.

With high capital intensity and complicated access to funding, almost half of the surveyed respondents believe Russian oil and gas projects will see more participation from foreign companies in 2017.

At the same time, 80 percent of the experts expect more stringent government regulation in the Russian oil and gas industry within the next five years while particularly stressing a potential growth in mineral extraction tax (MET) for gas condensate and oil. The Russian Government has submitted a draft of Tax Code amendments to the State Duma, requesting a higher MET for the oil and gas industry as well as an increase in excise rates that would allow the oil industry and the public budget to adapt to a slump in global oil prices.