Baku, Azerbaijan, Jan. 29
By Elena Kosolapova - Trend:
If oil prices rise, the US producers of shale oil will increase production immediately, which again will lead to excess in production and fall of prices, Head of the Energy markets sector of the Russian Institute for Energy and Finance Nikolai Ivanov told Trend.
"Therefore, such a stalemate emerged on the market that everyone accepts prices the way they are," said Ivanov.
He went on to add that the extraction of shale oil in the US has completely changed the view on the global energy market, because it is fundamentally different from conventional production.
"Conventional production requires large investments, followed by small operating costs," said Ivanov. "In case of shale oil it is all the way around - one can instantly start a project without prospecting and exploration stage, because it happens there during production, but shale extraction requires large operating costs."
Thus, the US shale companies may stop production at low oil prices and resume it at any time, as soon as market conditions seem right to them, said the expert.
He noted that shale companies note the possibility of reducing production at low oil prices even in the memorandums for investors.
In fact, America has become the second "balancing" supplier of the oil market after Saudi Arabia, he said.
"Previously, only Saudi Arabia could smoothly cut production, and then increase it. Features of this country's deposits allow doing this," said Ivanov.
He noted that five years ago, when a sharp rise in shale oil production began in the US, it was not as noticeable, because it was compensated by a production decline in Libya and Iraq.
"But in recent years it has become obvious that the US has increased production by 3-4 million barrels per day and is steadily moving towards energy independence," said the expert.
Moreover, Ivanov recalled that the US lifted a 40-year ban on the oil export in December 2015 and entered the global market with its high-quality, low-sulfur shale oil, by exaggerating the situation.
The expert also said that the US companies are actively increasing their efficiency and developing technologies.
Ivanov said that until recently the increase in their production efficiency was ahead of the fall in prices.
Ivanov said that moreover, the traditional oil producers can not coordinate their actions with the US because shale oil production is a rather independent phenomenon.
Ivanov added that it is not supported by the government and is not a topic of the international agreements.
"The production depends on the efforts of dozens and hundreds of large and small private companies," he said. "It is impossible to regulate it and somehow come to an agreement with them."
According to the US Energy Information Administration (EIA), the total oil production in the US, including shale oil in 2015 was 9.43 mbd.
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