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What Will 2015 Bring For Oil and Gas?

Ferguson Group Ltd News and PR from Ferguson Group Ltd - Published 23 December 2014 Well we do live in interesting times, with Brent dipping below $60/bbl earlier but coming back a bit to just over the $60 mark, represents an almost halving of the price since the early summer.
This is proving problematic for a number of countries whose economies are highly dependant on Oil revenues, Nigeria, Iran, Venezuela (and Cuba, which depends on aid from Venezuela) and of course Russia. That last mentioned being hit by a double whammy of sanctions too.

Global production is now around 94 million bbl/day with demand hovering around the 92–92.5 million bbl/day. It is this fundamental imbalance, which has caused the price drop. Other theories around the price being manipulated to make Shale uneconomic/ make Russia suffer/bring Iran into line may have some credence but the basic arithmetic defines the issue.

Increased production /reduced imports for the US, combined with a real slackening in demand from China and Europe has caused a production ‘overshoot’ which will in time sort itself out.

Saudi Arabia, despite all of the predictions is still the ‘swing producer’ and is not cutting back in the short term, the other OPEC producers who are feeling the pinch will not cut back as they need the revenues to balance their budgets, so it’s a bit of a Catch 22.

There have been concomitant changes in exchange rates, with the virtual collapse of the Rouble and the substantial reduction in the value of the Norwegian Kroner.

The rest of the global economy is however feeling the benefit of lower energy costs, which may well help the Eurozone somewhat and in the UK inflation has been reduced significantly.

Gas prices too have reduced quite a bit although not to the same degree as oil.

LNG markets have been affected, with India becoming a major market for LNG which may help sustain prices.

Much focus is on China rightly because of the slow down in its booming economy, but India, continues to grow largely because of the growth in its domestic market.

The Indian Government has been out to tender for the building of three LNG gas carriers to service the future LNG requirements of the nation. With current re-gasification capacity at 23.7 million tonnes/ year there are plans to double this to 47.5 million tonnes by 2015–16 with a commensurate increase in the gas distribution pipeline network from the current 9000 km to
15000 km by 2016.

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https://medium.com/@_FergusonGroup/what-will-2015-bring-for-oil-and-gas-b6c5f78e34d

Well we do live in interesting times, with Brent dipping below $60/bbl earlier this month

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