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Russian Economic Development Minister Alexei Ulyukayev listens to a question from a journalist as he waits for Russian President Vladimir Putin's speech to businessmen during the St. Petersburg International Investment Forum in St. Petersburg, Russia, Thursday, June 18, 2015. The Russian economy, mired in recession, desperately needs a bump in oil prices.

Alexander Zemlianichenko/AP

Russia desperately needs high oil prices to lift its energy-fuelled economy out of recession. But according to some of Europe's top oil executives and ministers who attended Russia's version of the World Economic Forum in Davos, there will be no return to triple-digit oil any time soon.

Speaking on a panel at the St. Petersburg International Economic Forum (SPIEF), the showpiece business and investment conference of Russian President Vladimir Putin, Russian Energy Minister Alexander Novak said oil at about $65 (all figures U.S.) a barrel could endure for "two to three years."

He said the Russian budget assumes $50 oil this year and $60 next year. The price on Thursday for Brent crude, the international benchmark, was $64 a barrel. During the SPIEF conference on the same date last year, the price was $113 a barrel, and the Russian economy, in spite of the Western sanctions imposed over the country's annexation of Crimea, was still growing.

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On the sidelines of SPIEF, Russian billionaire oilman Mikhail Gutseriyev said he expects a price of $60 at the end of the year.

Putting downward pressure on prices is U.S. shale oil, the output of which has reached about 5.5 million barrels a day. While output from the seven largest U.S. shale oil fields is expected to fall marginally in July over June, Ben van Beurden, CEO of Royal Dutch Shell, said shale oil production will continue to rise even at current oil prices. "We will continue to see production growth this year and next," he said on the SPIEF oil panel. "In a much lower oil-price environment, the industry can show it can adapt."

He said technological advances and cost-cutting have driven down shale drilling costs, dropping the break-even point. He also noted that infrastructure costs are coming down because a building spree had layered the shale fields with pipelines.

Mr. van Beurden was one of several high-profile oil executives at SPIEF, which most foreign CEOs boycotted last year as the Ukraine conflict intensified. But all of the oil bosses, including those from Britain's BP, Frances's Total and Germany's Wintershall Holding, were from European companies – the Americans stayed away for the second year running.

The European oil companies are subject to looser restrictions on doing business with Russia. Europe allowed companies that already had contracts when sanctions were imposed to continue working with Russian partners. A few are even expanding their business in Russia.

On Thursday, the opening of the three-day SPIEF conference, Shell, the German utility E.ON and the Austrian oil company OMV signed a deal with Russia's Gazprom, the world's biggest natural gas company, to expand the Nord Stream gas pipeline, which crosses the Baltic Sea, from Russia to Germany, ensuring that country can receive gas that has not passed through Ukraine.

While the European oil executives were not calling for a quick bounce-back in oil prices, partly because of rising U.S. shale oil output, they were bullish on prices in the long term because the declining investment is inevitably curtailing new oil projects. At SPIEF, Peter Parry, global head of the oil and gas practice at Bain & Co., said industry capital spending is down 20 per cent or more over a year. He said the reduced spending means 1 million to 1.5 million barrels a day of capacity will not be built every year. "Over time, it leads to a significant reduction in capacity," he said.

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Alexander Dyukov, CEO of Gazprom Neft, the oil division of Gazprom and Russia's fourth-biggest oil producer, said that, in the long term, oil will have to return to $100 or more to bring on the expensive projects that will be required to fill the production gap. Some of that oil will come from the Arctic, they said, where the resource is potentially vast.

In response to a question on the Pope's encyclical on the environment released on Thursday in Rome, Mr. van Beurden, the Shell CEO, said he agreed that human activity is behind climate change and that the world has to move to a low-carbon economy. But he also said that "we have a second moral obligation – to provide affordable energy" to the developing world, to help alleviate poverty.

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