The annual session of the Eurasian Economic Forum Roscongress and the Let’s Get to Know Eurasia Association opened in Verona on Thursday – its main topic was the green transition in the energy sector, and the result was the principled support of the theses of the head of Rosneft, Igor Sechin, chaired this year by the leaders of the world’s largest energy suppliers. Demands to take into account alternative views on decarbonization and the future of the energy market are supported by BP, Exxon, Trafigura, Qatar’s Foreign Ministry: market imbalances due to EU policy can keep high energy prices in the world for a long time.
The XIV Eurasian Economic Forum in Verona opened on October 28 with a special session “Structural Changes in the Economy and the Future of Energy”. The European energy crisis, decarbonization and the future of energy markets are the central themes of the Roscongress forum, and the report of Igor Sechin, Chief Executive Officer of Rosneft, who chairs it this year, was devoted to Russian views on them.
The Verona Forum is known for its conservative approaches to politics and economics, but the reports of the honorary president of Intesa Sanpaolo Giovanni Bazdoli and the head of the board of directors of the bank Intesa and the president of the Association “Explore Eurasia” Antonio Falliko on the eve of the special session were even harsher than the speech of the head of Rosneft. The main theses of his report are that the “gas” crisis and ultra-high prices in Europe are not the result of a specific reason, but a combination of circumstances, but it is caused by imbalances in the European energy market due to not always thoughtful and uncoordinated actions of both the EU and its members. countries and the United States as a supplier of LNG to the EU in the framework of accelerated decarbonization.
Russian companies share the idea of green development (Rosneft, in particular, is preparing a new strategy based on the green agenda), but believe that the discussion of greening plans was insufficient and superficial.
The imbalances caused by irrational decisions in the energy sphere can affect other sectors as well. Igor Sechin named the global deficit of magnesium (auto industry), lithium, cobalt and rare earth metals (for the production of electric vehicles) as topical threats, and to cover it with a high probability it will be necessary to launch projects with a large “carbon footprint”, as well as the lack of unity in recognizing green atomic generation.
Energy suppliers to the EU, the head of Rosneft stressed, have been on the green agenda for decades and have accumulated experience and technologies. Recently, however, they have faced the interests of uneconomic shareholders and are under pressure (the example of pressure on Shell in the Dutch judicial system in 2020-2021 is given), although the abandonment of large companies from projects with a large carbon footprint does not solve the problem: they are continued by new buyers.
For the entire hydrocarbon production and processing industry, the problem of underinvestment in production projects with a potentially strong growth in demand, including from China and India, is becoming more and more urgent.
Igor Sechin referred to JPMorgan’s estimates of the global investment deficit in oil production until 2030 at $ 600 billion. strong mid-term rise in hydrocarbon prices due to increased demand in both Europe and Asia.
Rosneft’s positions at the special session were supported by representatives of the world’s largest hydrocarbon suppliers: Neil Chapman, Senior Vice President of ExxonMobil, and Trafigura CEOs Jeremy Weir, BP Bernard Looney and Baker Hughes Lorenzo Simonelli. They were joined by the head of the Foreign Ministry of Qatar, Mohammad al-Thani. Comments of former BP heads Robert Dudley (now head of the OGCI oil and gas climate initiative) and Glencore Ivan Glazenberg confirmed the consensus in the formulation of Karin Kneissl, a member of the Rosneft board of directors: alternative views, and the green transition course needs to be aligned with the industry.
It is well known that relations with the Russian Federation in the world energy sector differ significantly from foreign policy (problematic in recent years).
But the constructive position of the Russian Federation on the politicized green issue in the EU gives Russia a chance to forge strong relations with the parties to the EU political systems that do not share the climate enthusiasm of the Greens and Social Democrats.
We also note that the scenario of long-term growth in oil and gas prices due to the excesses of the energy transition is not taken into account in the plans and forecasts in the Russian Federation (the Ministry of Finance and the Ministry of Economy are guided by a decline in prices after 2023), although the assumption of a “commodity renaissance” is based on imbalances and an increase in the number of violent conflicts around commodities all over the world looks justified.
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