Energy demand around the world increases together with economic growth
“Oil and gas will basically remain the pillar of global energy and economy in the foreseeable future. This conclusion is true not only for large producer countries, but also for consumers <…> According to the International Energy Agency, in 2017 global demand for liquid hydrocarbons increased by 1.6 million barrels per day reaching 8 million barrels per day. About 35% of increment in value accrues to the countries of Asia-Pacific Region. Even Europe <…> demonstrates gain in consumption. Last year it was 360 thousand barrels per day. We see no real threats to the oil market on the part of demand,” Igor Sechin, Chairman of the Management Board, PJSC Rosneft.
Global oil market has reached balance between demand and supply
“Last year due to joint efforts of responsible participants the industry was able to overcome a critical period of political instability that could lead to devastating consequences. <…> The most important factor of achieving balance between demand and supply in the oil market is responsible and skilled behaviour of the majority of producers,” Igor Sechin.
Depreciation of capacities calls for a large investment inflow into the industry
“Even in the most challenging scenarios the demand for hydrocarbons by 2040 will be higher than today. We should also keep in mind that in the coming years the retired capacities will have to be replenished with new resources in the volume of 40 million barrels per day by 2040, which will require a stable and considerable inflow of investments into the industry,” Igor Sechin.
Sanctions threaten stability in the energy market
“Using sanctions to gain competitive advantage in productive economic industries is becoming common practice. At the same time, such actions in the opinion of their irresponsible initiators do not need any arguments to be justified. The US has consistently pursued a policy of non-acceptance of treaties that would allow challenging their actions on the international platforms. In fact, judicial defence and fair market arbitration are excluded,” Igor Sechin.
“The decision of the USA to leave the multilateral nuclear agreement with Iran on 8 May puts 5% of world production and about 10% of world proved oil reserves at the risk of sanctions. The total volume of hydrocarbons unilaterally limited for development is about one third of the world oil reserves. This is a unique negative record of sorts. Nothing like that ever happened in the history of the global market," Igor Sechin.
“If the preliminary framework agreement between the USA and People’s Republic of China is going to be implemented despite the recent comments by Mr. Trump, it can double energy supply from the USA to PRC in the coming 3-5 years, according to the estimates. These agreements result in direct losses for other countries, some of them being simultaneously sanctioned by the US administration,” Igor Sechin.
“Policy of sanctions and ultimatums in relation to hydrocarbon markets cannot but lead to a permanent sanctions bonus to the price. I don't rule out that quite soon we'll be able to talk about the sanctioned commodity ‘super cycle’ and shortly we'll see new price records. The new level of price will be ultimately paid for by American and European consumers,” Igor Sechin.
Reduction of investments and resource potential
“We consider that there is a serious trend, when newly developed deposits become smaller and smaller in size. Thus, the resource potential of many oil companies <…> remain fixed for the future. Due to the lack of investments in 2014-2016, a reduction by 6 billion per day or 5% by 2030 is quite possible and it is a significant reduction,” », John Wallace, Chairman, DeGolyer & MacNaughton Consulting Company.
Transition of cars to alternative fuel
“The prospects for the development of electric vehicles and relevant expectations of reduced demand for oil remain one of the constantly mentioned factors affecting the oil market. At the same time, many regulatory initiatives including subsidies for production of zero emission vehicles continue to deform the economy of automobile industry,” Igor Sechin.
Absence of responsible regulation in the oil industry
“We’re witnessing a total absence of responsible regulation that our industry needs so badly. Again and again, regulatory decisions are taken against the logic of the industry development and in contradiction with the interests of market players. These decisions are too hasty and too global, while also falling out of the existing production and logistics chains. A vivid example is a new initiative of the International Maritime Organization related to restrictions on the use of petroleum coke,” Igor Sechin.
Stimulating investments in the energy industry
“We all have to think carefully how to come back to market methods of attracting investments. Today investment promotion depends on taxation, cooperation between countries, and modern technologies,” Alexander Novak, Minister of Energy of the Russian Federation.
Development of modern technologies
“We make substantial investments in the associated and natural gas utilization and flares liquidation. In our company alone, the investments have reached USD 2 billion for the last 5 years, which is comparable with the green energy efforts from the largest companies of the sector. As a result, we consistently reduce the amount of greenhouse gas emissions,” Igor Sechin.
“If the governments allow for the development of various technologies, the markets will further perfect them. These tasks will be resolved,” Robert Dudley, CEO, BP oil and gas company.
“We transition into the era of digitalization that opens new opportunities, in particular, reducing gas combustion in the flame. It results in savings as well as downtime reduction,” Lorenzo Simonelli, President, GE Oil & Gas SpA.
Attracting a new generation of specialists
“We have to attract people of the new generation and prepare them to face the future in our industry. This is the platform for our future success. We attract people, who will lead us into the digital era,” Neil Duffin, President, ExxonMobil.
“We manage to attract young people, because our product is ready for future with a smaller carbon footprint,” Ivan Glasenberg, CEO, Glencore.
More detailed information is available on the website of the Roscongress Foundation information and analytical system.