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Global energy market risk factors

It can be stated that today in the world the main problems of energy production have been solved. Most countries have achieved significant diversification of energy sources and, as a result, an acceptable level of energy independence.

In the structure of the world energy balance, oil belongs to the leading position, energy coal occupies a slightly smaller share. The third most important resource is natural gas. Other sources, such as nuclear energy, hydropower and renewable energy sources, still occupy a more modest place.

The current structure is explained, firstly, by the fact that hydrocarbon raw materials are extracted in a significant number of regions and countries, and, secondly, by the fact that these types of energy resources can be transported. At the same time, alternative energy sources are developing locally. Hydropower resources come into industrial use exclusively in those regions where a system of water bodies is present, nuclear energy requires a high level of technology development, in turn, renewable energy sources can develop only where acceptable natural and climatic conditions occur.

The activities of international energy companies are influenced by global risks associated with the changing structure of production and production of energy products, geopolitical developments, in particular international military, political and economic conflicts, changes in the balance of political and economic forces on the world stage, strategies of the largest energy cartels, deployment of existing and potential energy resources, emergence of new technologies of production, production, transportation of power products, growth of the competition for leadership in the field of investment attractiveness with the digital companies.

The following risk factors of the global energy market, affecting financial activity and financial risks of leading companies, were identified and systematized:

  • significant complication of oil refining processes with increasing of their depth;
  • unprecedented growth in shale oil and gas production, characterized by high resource recovery depth, at a low average cost, with still high costs of oil recovery from oil shale;
  • changes in the composition of oil exporting countries through the development of shale fields;
  • transformation of the oil and gas market model in terms of the leadership of companies with partial or complete state control. Among the largest oil and gas corporations in terms of revenue, the leaders are Chinese companies, as well as the largest companies of Saudi Arabia and Kuwait with the participation of the state in the capital and, accordingly, the financial result of oil and gas corporations, which allows balancing national budgets with oil and gas revenues, stimulating investments in new fields through tax incentives and preferences, as well as providing guarantees in unstable market conditions;
  • "monetization" of gas by increasing the efficiency of its use in the economy through the production of "unconventional" natural gas, the involvement in the economic turnover of low-bite deposits, the extraction of methane from coal seams, the utilization of associated petroleum gas, the transportation and storage of gas in liquefied form;
  • transformation in the field of gas transportation technologies with increasing demand for LNG, in particular from Japan and the gas chemical complex, as well as investments in exploration, production, development of gas fields;
  • the gradual displacement of coal with cleaner resources and the expected contraction of the coal market, as well as the need to introduce new technologies in the construction of coal-fired power plants in the face of increased environmental requirements;
  • transformation in nuclear power industry, reduction of use of this resource due to insufficient safety of operation of nuclear power plants;
  • impressive growth of renewable energy sources (RES), production of which has increased 40 times since 1991;
  • reducing the impact of the energy sector on the global economy in recent decades, with a growing share of new industries representing mainly IT services. Over the past 5-6 years, the return on capital invested in the oil and gas sector has steadily decreased.