News



Energy panel

Energy panel

KEY CONCLUSIONS

The global energy market is undergoing major changes

“Four transformations are taking place. The first is the North American shale revolution; the second is photovoltaic technology; the third is the Chinese green revolution using natural gas instead of coal; and the fourth is the use of energy for the electrification of cities, the production of large data arrays, electric cars, etc. Investments are becoming increasingly important in this sector”, Chairman of the Sasakawa Peace Foundation and Executive Director (2007–2011) of the International Energy Agency Nobuo Tanaka said.

“In the coming years, we will experience a huge energy transformation, and energy will remain an important part of our economy in the medium and long term,” Minister of Finance of Qatar H.E. Ali Shareef Al-Emadi said. 

Hydrocarbons will continue to play a leading role in the energy sector over the next 20 years

“Demand for energy will grow at a rate of 1.5–2% per year until 2040. There will be changes in the structure of demand due to the introduction of energy conservation technologies and commitments to reduce emissions, but overall the dynamics are quite positive and are dictated by continued GDP growth and higher living standards in the coming decades. Gas demand will grow by 2% per year. Demand for oil will grow steadily at around 1% per year. Its role as the foundation of modern energy will remain central”, Rosneft CEO, Chairman of the Management Board, and Deputy Chairman of the Board of Directors Igor Sechin said.

"We see that global demand for energy will increase by 40% by 2040, and oil, gas, and coal will have to account for 70% of this [growth]”, Glencore CEO Ivan Glasenberg said.

“We see a growing role for gas,” Russian Minister of Energy Alexander Novak said.

“Fossil fuels are vital to the needs of developing countries”, Vitol Group President Russell Hardy said.

“Oil and gas will remain the main components of our energy basket. India is very interested in increasing the gas component because we want to become a gas-based economy”, Ambassador Extraordinary and Plenipotentiary of the Republic of India in the Russian Federation Datla Bala Venkatesh Varma said. 


PROBLEMS 

The negative impact of geopolitics on the development of the energy sector

“Energy has become the first hostage of the one-sided political agenda, and there are signs that this ‘disease’ is spreading to other industries. Today we are seeing changes in geopolitics have a greater impact on energy markets. The main troublemaker is the policy of the current administration of the United States. We see that its actions aim to reformat the global political and economic space, smash the market ties that have formed over decades, and eliminate the rules of competition. The United States seeks to slow down the quantitative and qualitative growth of its main competitors. Examples of this include continuous expansion in the range of sanctions and blocking opportunities for competing companies in other countries”, Sechin said.

Growing competition in oil production 

“This year, oil production in the state of Texas has already reached 5 million barrels per day, which is more than the total production of Iran, Venezuela, and Libya. This result was achieved not so much due to the implementation of the shale project as it was to the imposition of new sanctions, which resulted in a sharp decline in production in Iran and Venezuela”, Sechin said.

“The United States is increasing oil exports at an extremely fast pace. Compared with 2015, they have grown sixfold and already reached 2.7 million barrels per day, which is comparable to the production of such countries as Brazil, Kuwait, and the United Arab Emirates. The geography of supplies is expanding”, Sechin said.

“Tech leaders, most of whom have American roots such as Google and Apple, are infiltrating the oil and gas industry. Moreover, these investments are being made at an unprecedented speed and on a global scale”, Sechin said.

Shortcomings in oil industry taxation in Russia

“In recent years, the United States has taken unprecedented measures to support the industry by reducing the tax burden and regulatory impact. In particular, the profit tax has been slashed from 35% to 21%. In Saudi Arabia, the profit tax rate has decreased from 85% to 50%. The Chinese authorities have also begun developing methods to stimulate the economy through targeted subsidies and tax cuts. Russian regulators are finding a balance between the goal of padding the budget and stimulating economic growth while at the same time finding a solution to social problems through the market”, Sechin said.


SOLUTIONS

Return to the use of market principles in the global energy industry

“A key issue is getting back to the market. Trade wars and sanctions create uncertainties that prevent us from planning quickly and strategically”, Novak said.

“Let’s make the market great again”, Sechin said.

“We need to ensure the sustainable development of oil and gas markets. We have to create a platform for cooperation between producer and consumer countries”, Venezuelan Vice President Tareck El-Aissami said.

Launch of new projects in the industry

“The Russian oil industry’s most important competitive weapon is not only its current production costs, [but also] the world’s best portfolio of promising new projects. The launch of new projects will increase”, Sechin said.

“The resource potential of the Russian Arctic for possible Rosneft projects exceeds 20 billion tonnes of oil”, Sechin said.

Introduction of new technologies 

“The entry into new regions will be supported by the non-stop technological overhaul of the Russian oil industry”, Sechin said.

Transition to new environmental standards

“This year, the conservation issue has become even more important. We must accept this as an industry. We announced that 50% of our [carbon] emissions will be reduced by 2030 and [we intend to] reach zero emissions by 2050”, said Lorenzo Simonelli, Chairman of the Board of Directors, President, and CEO of Baker Hughes, a GE Company.

For more information, visit the Roscongress Foundation's Information and Analytical System at roscongress.org/en

Read also