India to become key driver of oil demand growth, Russia aims to develop infrastructure to boost export efficiency - Russian deputy PM

MOSCOW. May 12 (Interfax) - India will become the primary driver of oil consumption growth, and Russia intends to become the leading supplier in the Asian market by 2050, Russian Deputy Prime Minister Alexander Novak said in a column in the Energy Policy magazine.

"The development of infrastructure to improve the economic efficiency of oil supplies will allow Russia to become the number 1 player in Asia's oil market by 2050 and fully meet the industry's needs with its own tanker fleet. Plans also include expanding the system of trunk pipelines and port and railway infrastructure, including increasing the throughput capacity of the East Siberia - Pacific Ocean network," he said.

"The main increase in oil supplies after 2030 will come from OPEC+ countries, including Russia. Meanwhile, the key driver of oil demand growth will be India, where consumption according to OPEC estimates will rise from 5.3 million bpd [barrels per day] in 2023 to 13.3 million bpd by 2050. Other leading consumers will include China, as well as other Asian, Middle Eastern, and African nations," he said.

Previously, most analysts considered China the primary driver of demand growth.

"The steepest decline in oil demand is expected in European countries, where consumption will drop from 13.4 million to 9.2 million bpd. That said, we can affirm that peak demand for gas and oil has not yet been reached. This milestone may occur beyond 2050," he said.

The Russian government believes the share of renewables in the global energy mix will grow from 2.5% in 2023 to 10% in 2050 in the balanced scenario; however, renewable sources will not be able to satisfy global energy demand fully.

"Oil and gas will continue to predominate in the global energy balance up to 2050, by which time they will account for 33.2% and 26% of the global energy supply respectively, compared with 36.9% and 26.1% in 2023. Demand for oil will grow 12% from 2023 to 2050, from 102 million barrels per day to 114 million bpd, and demand for gas will grow 24% from 4.1 trillion cubic meters to 5.1 trillion cubic meters," Novak said.

The deputy prime minister also said that electricity consumption by data centers in the coming decade would grow between 2-fold and 4-fold from its current level of over 400 trillion TWh or more than 1% of global electricity consumption.

Novak said that Russia intended to return to its former annual production level of 540 million tonnes of oil with condensate in coming years and sustain this until 2050, but this involves tapping hard-to-recover oil reserves (HRR) and implementing more up-to-date technologies.

He said that hard-to-recover, watercut and depleted reserves currently made up around 60% of the total. "In order to encourage their development, the fiscal system needs to be fine-tuned to make new types of reserves and technologies profitable for investors. This will lead to a surge in investments and reinforce the oil industry's role as a driver of Russian industry and science," Novak said.

He said that Russia would continue to enhance geological exploration and mineral development incentive mechanisms, which includes creating test grounds for new technologies. This will allow it to bring into development over 5 billion tonnes of new reserves and achieve an 100% reserves recovery ratio, as well as tapping and developing strategically important regions such as the Arctic, East Siberia and the Far East.

"By coordinating efforts, oil and gas companies and the state have already boosted import substitution significantly. We expect to substitute practically all of our imports in the oil sector by 2027 and intend to achieve an important position among technological services and goods exporters, a new niche for Russia," Novak said.

A key task for the oil sector is to complete modernization programs at oil refineries, enabling 48 new units to be added and a 72% light product yield to be achieved by 2036.

Russia plans that its petrochemical industry will double bulk polymer production capacity by 2036, increasing the proportion of light hydrocarbon crude, namely ethane, LPG and naphtha, used in petrochemicals to 45% by 2036. Russia will also continue to develop exchange tools that will help balance the market for feedstock, the deputy prime minister said.