While Russia is preparing to establish a new index that will compete with the Brent oil pricing index used as the basis for international oil trade, experts are warning about the problems Russia needs to overcome.
The new pricing index will be initiated at the end of next year with the aim to support the Russian economy, which has suffered due to the decreasing oil prices. However, energy expert Richard Mallison spoke to Anadolu Agency (AA) and stressed that it is extremely hard to create an index that can rival the Brent oil pricing index since various conditions need to be met for oil markets to accept it. Furthermore, according to Mallison, oil production that will meet whole demand should be warranted, as an adequate number of consumers and adequate amount of Russian rubles is required.
Asserting that the international oil tradesmen will not welcome the ruble, Mallison said the new index will not be able to reach the required number of consumers.
The chairman of the Russian Energy and Finance Institute's Economy Department, Marsel Salikhov, said Russia needs to resolve various problems with the current regulations and codes. He also stressed that support of the Russian oil companies is essential for the project as well. "Yet, Russian oil manufacturers may also not be pleased about this project, which will radically change the trade they are used to conducting using traditional methods," Salikhov added.
Highlighting the fact that the production of Brent type oil, produced in the Nordic Sea and used as the oil pricing index in the whole of Europe is decreasing, Salikhov said the transparency of Brent pricing is raising suspicions. Currently, the Ural oil produced by Russia is meeting 50 percent of the demand in Europe; therefore, Russia will gain an important economic advantage by establishing its own pricing index, according to Salikhov.