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9 March 2011
 The web-site of the Russian State Radio Broadcasting Company «The Voice of Russia» has published an interview with Alexander Epishov, the Principle Analyst of the MIEF:
The disturbances in the Arabic world may «reformat» the hydrocarbons market and that will be a serious problem for Russia – says the expert Alexander Epishov.
The political instability in Libya has provoked the deepest energy crisis in recent decades and a further reduction of the oil supply from this country – as the expert forecast – may raise the world oil prices up to USD 130.
By now, the black gold price has exceeded the threshold of USD 100. The experts claim that, if the events in the Arabic world follow the Libyan scenario, the oil price will even double. It should seem profitable for Russia. However, as certain experts believe, the high oil prices may become a big problem for Russia.
Why have the Libyan events influenced the world oil prices so much? How can their growth affect Russia? Alexander Epishov, the Principal Analyst of the Moscow International Energy Forum «Russian Fuel and Energy Complex in the XXI Century», answers these questions in his interview to «The Voice of Russia».
- Why have the Libyan events influenced the world oil prices so much, when this country is not a major supplier of black gold and its oil market share is as little as 1%?
- To answer this question, one has to understand the whole set of the factors influencing the pricing on the world oil market, and – above all – to note that the fundamental market reasons have given way to the conjuncture and the speculators’ activities. Therefore, any panic to occur on the oil market – regardless of its scale— immediately heats up the market, the speculators display activity and – in the conditions of such a flurry – the oil price grows. Still, I agree with you: the consequences of only the Libyan events are, certainly, minimal, since it is far from being a leading country in OPEC.
- What consequence may follow further oil price growth? Will they be favorable for Russia or not?
- The matter is that now everybody cannot but comment on these events saying that the prices are growing and the events will spread to Saudi Arabia. I think that time will pass, so everything will settle down and these countries’ new ruling regimes – whatever they are – will soon restore their oil economy, since it is, so to say, their geese laying the golden eggs.
Though as for the long-term tendencies and prospects, they are quite questionable, since, in fact, high oil prices are adverse both to the producers and to the customers. They are bad for OPEC too, as high oil prices stimulate the developed countries – the major consumers, including the USA and China – first of all, to look for alternative decisions.
The events in the Northern Africa and the Middle East will urge this process which has brewed for a long time. So, in the coming years we can expect a radical reformatting of the world oil and gas markets, since the USA and China are sure to promote their programs actively. Beside own extraction and alternative power sources, such programs will include an absolutely new factor – the unconventional hydrocarbons sources.
Of course, in the long-term prospect, the events may come to the situation when the members of OPEC, realizing that their programs will gain strength, reduce the oil prices and make efforts to keep their market positions. In this situation, Russia will be sure to remain a loser, since we have not still diversified our economy and we have big problems with this issue.
Broadcast Audio http://rus.ruvr.ru/listen_audio/46898581.html
Translated from Russian into English by Literra translation bureau
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