Global oil prices are unlikely to drop below $100/b until 2025, supported by OPEC's market management efforts and crude demand growth in Asia, Leonid Fedun, vice president of Lukoil said Tuesday, presenting key findings of the company's first public long-term global industry outlook.
"Under our estimates, prices aren't going to drop below $100/b, with the [oil pricing] dynamics to be determined by three factors...softening or hardening of the [US monetary] policies...growing demand [for crude] in Asia and, in the longer term, African markets, and OPEC's stabilization efforts," Fedun said in an interview with Russia's Business FM radio station.
The so-called shale boom in North America is unlikely to have a visible downward effect on oil prices, according to Lukoil's outlook, Fedun said.
"The [production] technologies deployed in North America allow for very high initial inflow rates but then output [from the wells] drops," he said.
US oil output rose by 13.9% to 8.905 million b/d in 2012 from 7.868 million b/d in 2011.
Fedun dismissed concerns that growth in Chinese demand for oil and oil products may slow in the longer term.
"Currently, just over 40 out of 1,000 families in China have cars. [The figure] will grow at least to 200 [out of 1,000] by 2025... which will be enough to triple China's demand for fuel," he said.
According to Platts estimates, Chinese apparent oil demand in May reached 9.53 million b/d, up 2% year on year.
Lukoil also said it believes crude production in Iraq, currently seen as a key challenge for OPEC's market management efforts, will not rise above 6 million b/d in the long term, Fedun said.
Iraq, now OPEC's second-biggest producer after Saudi Arabia, saw output edge down to 3.1 million b/d in May from 3.15 million b/d in April.
As a result, Lukoil does not see any significant developments that may trigger excessive crude supply in the long term, Fedun said.
Lukoil plans to present details of its global industry outlook Monday, according to the company's Tuesday statement.
Lukoil's outlook differs from that of a number of experts, who expect crude oil prices to drift lower to some $80-90/b in the long term on the back of weaker demand and higher supply supported by the North American shale boom.
According to World Bank's Global Economic Prospects report issued last week, by 2025, the global oil price is set to drop to $80/barrel, a level consistent with the real cost of producing oil from Canada's tar sands.
The amount of new supply would likely push oil prices down to a "$90/b ceiling by the end of the decade," Citi Investment Research's senior associate of Commodities Research, Eric Lee, said last week at the Asia Oil & Gas Conference in Kuala Lumpur.
Wood Mackenzie Chairman David Morrison told the conference that oil prices are unlikely to see a dramatic collapse, but they may drift lower as US crude output grows.
