MOSCOW, June 7, 2021 /PRNewswire/ -- Igor Sechin, Chief Executive Officer of Rosneft, delivered a keynote speech at the Energy Panel "Transformation of the Global Energy Sector" at the XXIV St. Petersburg International Economic Forum.
The event, sponsored by Rosneft, was attended by BP CEO Bernard Looney, ExxonMobil Senior Vice President Neil Chapman, CNPC Chairman and PetroChina Chairman Dai Houliang, OGCI Oil & Gas Climate Initiative Chairman Robert Dudley, ONGC Videsh Managing Director and CEO Alok Kumar Gupta and other industry representatives.
The head of Rosneft presented a detailed analysis of the global economy in the context of the pandemic and drew the attention of the energy panel to the underestimation by market participants of the risks of global instability.
With the growing scale of vaccination and reducing impact of the pandemic on the global economy, the demand for oil will recover and we have to be prepared for that, Igor Sechin said in his report.
The energy demand will keep growing, and new waves of virus disease can only slow down this process, but these cannot stop it, Rosneft CEO said. Nevertheless, the long-term stability of oil supplies is at risk due to underinvestment. This is due to both requirements of various stakeholders to completely cease investments in the petroleum sector and the aspirations of majors to increase shareholder value and shareholder returns through stronger dividend payout and share buyback.
As a result, oil and gas reserves additions have been at their historical minimum over the past years, so that certain deficit of resources can already be forecast. "This trend may become a "new norm" for global majors and result in resource base depletion. The world runs the risk of facing an acute deficit of oil and gas," Igor Sechin said.
According to him, the cornerstone of balanced energy development should be healthy, market-based competition of all types of generation, ensuring a stable supply of clean and affordable energy to consumers with minimal impact on the environment.
The reduction of oil and gas production by the majors, coupled with the failure to deliver enough solar and wind energy to the market, could lead to a new wave of mergers. Consolidation of the majors would allow them to increase investments in the energy transformation, strengthen their competitive position and improve their investment attractiveness, says the head of Rosneft.
"Possible energy shortages could be a significant barrier to economic recovery," said Jeremy Weir, chairman and chief executive of Trafigura.
The head of Rosneft recalled that the investment community praised the Vostok Oil project.
Jeremy Weir, Chairman and CEO of Trafigura also said: "Investment in oil production has fallen to the point where existing reserves, far from being replaceable, are being depleted. In this context, Rosneft's investment in Vostok Oil, the largest mainland oil and gas production project, is particularly significant. We at Trafigura are proud and honoured to be part of it. Vostok Oil is already producing low-cost, low-carbon, high-quality oil that will be in demand for years to come. Rosneft plans to reduce its carbon footprint and this will certainly guarantee demand for Vostok Oil's products," says the Trafigura executive.
In line with the highest environmental standards, Rosneft is implementing a number of first-class oil and gas projects with low unit production costs of USD 2.6 per barrel of oil equivalent.
"We are ready to share the success story and welcome Western and Eastern partners, equipment and service providers with their best practices," said Igor Sechin.
