Prime Minister Narendra Modi inaugurated the India Energy Week (IEW) 2023 on Monday. Participants from different countries gathered to discuss the most pressing energy issues.
Rosneft Chief Executive Officer Igor Sechin also visited India Energy Week.
Sechin participated in a meeting with Prime Minister Narendra Modi and the heads of global energy companies, and in the ministerial session on price and supply volatility. He also discussed energy cooperation between Russia and India.
According to the IMF’s recent estimates, India and its neighbours will account for half of global economic growth this year. In contrast, the contribution of the US and the Eurozone will amount to only 10 per cent. And India’s “enlightened national interest” principles are highly respected.
Based on these principles, the government implements an independent, pressure-free economic policy in harmony with its partners. Cooperation opens up new horizons.
According to Sechin, India, as the world’s most populous nation, has become a leader in global economic dynamics, demonstrating rapid improvements in the lives of its people. It is a big country with a young, ambitious population, where dynamics are of the utmost importance.
It is no coincidence that analysts and experts predict growth rates of up to 7 per cent per annum for India. In turn, Russia achieved a result more significant than many of the world’s leading economies in the face of unprecedented sanctions, pressure, and confrontation with almost the entire Western world, the Rosneft CEO noted.
“Despite the evolving situation around us, implementing major economic programmes has already proven to be a tremendous psychological victory. This will determine our success in other spheres,” Sechin emphasised.
According to the Rosneft CEO, the actions of the world hegemon, in an attempt to preserve its hegemony by all means, destroyed the single energy market. To date, there is no single global energy market. Energy security is no longer a global concern.
“As a result of these actions, all the principles of market trading have been destroyed,” Sechin underlined. “Market pricing, contract law and, in general, the possibilities of legal protection of market participants have been abolished. In addition, logistics chains built up for decades have been forcibly severed. The blown-up Nord Stream project serves as an illustrative example.”
He cited the reformatting of the European gas market as an example.
At first, contrary to common sense, Europe was first made to abandon long-term contracts and switch to spot pricing, which led to an unprecedented price increase before the events in Ukraine in the midst of the forced green transition and underinvestment in conventional energy. After eliminating Russian competition from the European market through sanctions and pressure, the Americans offered to return to long-term contracts that guarantee a return on investment.
“This is a banal case of unfair competition,” Sechin said. “Consequently, Europe has lost its key competitive advantage — access to cheap and reliable Russian energy carriers — and is forced to pay three to five times higher prices for gas.”
According to Bloomberg, the rejection of Russian gas has already cost Europe about 1 trillion euros.
Sechin said the main beneficiaries of the crisis are the US oil majors, which, as a result of their reasonable rejection of the accelerated energy transition, have focused on producing conventional hydrocarbons and become the leaders in terms of capitalisation.
By the way, BP, the leader of the green agenda, demonstrated a different approach. They could not, like their competitors, take advantage of the current situation.
Based on the results published in its annual reports, we could reasonably assume that BP may announce a return to the strategy of conventional production and a reduction in green investments that generate losses. The total amount of announced write-offs is $38 billion.
“It is also observed in the audited annual reports that BP, Rosneft’s 20 per cent shareholder, has revised the value of Rosneft’s stake to $24 billion based on Rosneft’s results,” Sechin noted. “BP is still with us, and I take this opportunity to send greetings to our friends and partners. … I would like to assure you we will work hard to justify the confidence of our shareholders.”
The answer to the destruction of the global market and the severance of logistics chains is regionalisation of markets, and the development of new safe logistics.
The regionalisation of markets means forming regional payment systems with their own regional settlement and reserve currencies.
Obviously, the main risks of volatility are unprecedented sanctions pressure, including the so-called ‘price caps’. Non-market interventions must be treated calmly. Experts know how to find a solution.
According to Sechin, “if there are no supplies to Europe, then there can be no reference price there. This means the reference prices will be decided in other markets, where it actually arrives.” He then went on to quote the Ecclesiastes: “If something is crooked, it can’t be made straight; if something isn’t there, it can’t be counted.”
The fundamental reason for the energy crisis, Sechin said, is primarily underinvestment in the industry as consumption grows and the pace of resource replenishment is insufficient.
The annual OPEC report indicates the opinion of Secretary-General Haitham Al Ghais: that to meet the growing oil demand alone by 2045, investments to the tune of $12 trillion are needed.
Consumption today is 100 million barrels per day and continues to grow. The four countries with the highest resource base, however, remain the same: Venezuela, Russia, Saudi Arabia and Iran.
Russian companies, Rosneft in particular, are among the few that have not reduced their level of investment in development over the past decade. Today, Rosneft is implementing the world’s largest investment project to create a new oil and gas province in Eastern Siberia, Vostok Oil, with a resource base of 6.5 billion tonnes.
One of the drivers of Rosneft’s low carbon operations is Vostok Oil. The flagship project’s carbon footprint is only a quarter of the average global indicators of projects in the modern oil industry.
The Vostok Oil project is distinguished by its uniquely low sulphur content of 0.01-0.04 per cent. The indicator is comparable to the Euro-3 standard for diesel fuel. Vostok Oil actually produces green barrels with the help of advanced technologies.
Rosneft is one of the leaders of the low-carbon agenda. The company was the first in the domestic energy sector to set a net zero target by 2050 for Scopes 1 and 2.
Rosneft can and will work wherever there is growth potential and an intent to protect our interests, despite external pressure. Such countries constitute the largest and growing part of the world’s energy consumption.
Dynamic economic growth in India means large-scale energy consumption and growth of energy demand.
This development of the global energy sector is in Russia’s interests. Therefore, it will do everything it can to support India’s plans. The speed of adapting our economies to new conditions will be of key importance.