Global investors at Renaissance Capital Forum: Christof Ruehl
RT: Oil has been very volatile this year accumulating risk premiums but it has now come down to $90 per barrel. Where do you see it going in a short to medium term?
CR:“Well, it is interesting times following the release of emergency stocks by the IEA. Nobody can tell you exactly where the price will be at a given date. But I think it make sense to think of it as a continuum of possibilities between two extremes. One extreme would be, what I would call OPEC compliance, so they do what they said they will do and they increase output in addition to the emergency release and then you will see prices stabilizing falling at a lower level. The other extreme is like a war of attrition, if they would counter balance, if this was really perceived as a hostile movement by the IEA. It could counter their balance, in theory, these releases, just by cutting production on their side than there would be a prolonged situation. Since both alternatives are very costly for both parties I don’t think that any of the two materializes and the truth will be somewhere in the middle. So I would expect oil prices in the medium-short term stabilize at a lower level.”
RT: What could facilitate investment into the Russian oil and gas sector? Do the companies need additional tax breaks or more transparent tenders for licenses?
CR: “Yes. It’s all of the above from oil. There is no a silver bullet in Russia as it is not a different planet. So there are all the things that we know from other countries are the equal to the fair tax regime that includes taxation sort of balance between production of crude oil and finding a product exports a simple licensing regime, transparent tenders for privatization, open climate for foreign investment. What I can see and what everybody can see actually is that in those countries and regions where we do have investment private investment, I am not even talking about big international companies, simple private investment, you have a flourishing industry. US is the best example, Brazil and there are other examples. And in those countries or regions where you have state control and no possibility for private investors to enter you have stagnation and a long term falling production.”