Minister of Energy calls Arctic exploration promising for oil and gas industry development
Alexander Novak made this announcement during a ministerial panel discussion at CERAWeek 2017 in Houston.
Russian Minister of Energy Alexander Novak spoke at the ministerial panel discussion that opened the business programme of the CERAWeek 2017 International Conference the Ministry of Energy’s press service reported. During the speech, Novak spoke about the future of the hydrocarbons market and prospects for Russia’s oil and gas industry.
The Minister said it would be premature at best today to declare the start of the decline of the hydrocarbon era.
“Changes to the fuel and energy balance are inevitable, however we do not anticipate any serious shocks in the coming decades – the share of hydrocarbons may decline from 80% to 75%, while gas will remain the primary type of fuel and will occupy an even greater niche. Thus, any changes to the global fuel balance will likely be more evolutionary than revolutionary”, the Ministry of Energy’s press service quoted Novak as saying.
Promising areas for the development of Russia’s oil and gas industry include the exploration of the Arctic, the development of the Yamalo-Nenets Autonomous District, improvements to gas and oil infrastructure, the implementation of such projects as East Siberia–Pacific Ocean and the Power of Siberia as well as the development of liquefied natural gas production. “Russia could increase LNG production eight-fold by 2040 and boost its market share from 5% to 15%”, the Minister said.
Commenting on the state of the Russian fuel and energy sector, the Minister noted that the oil industry, like the Russian economy as a whole, is successfully coping with the economic crisis.
“We expect to return to GDP growth of 1.5%–2% this year and inflation is expected to slow to 4%. Despite the decline in oil prices and the sanctions, the Russian oil and gas sector has demonstrated positive operational results: over the last two years the volume of oil production in Russia has increased by roughly 400,000 barrels”, Novak said.
In addition, the financial position of Russian oil companies is significantly better than their foreign counterparts for the most part, in particular they have less loan debt, he said.
“Russian companies have also managed to reduce the cost of developing traditional oil reserves to USD 10–15 per barrel, which is among the lowest indicators in the world”, Novak added.
These factors along with a good incentive system for the development of new and existing fields as well as flexible tax policy facilitate the competitiveness of Russian companies on the global market, the Minister said.
“Today, Russian companies are among the most undervalued in the world. This presents great opportunities for investors. The Russian government is taking consistent steps to ensure equal, fair and attractive conditions for foreign investors to work in Russia”, Novak said.
The main lessons learned from the latest crises are high price volatility and uncertainty, he said. “Everyone needs stability. Thrill-seekers can go to Las Vegas for uncontrollable risk since it is open, transparent and not too far from here”, Novak said, noting that Russia expects more constructive cooperation in energy relations with the new US administration.
Following the panel discussion, Novak met with leading asset managers from Wall Street. The meeting was attended by the heads and representatives of US investment companies and global investment funds such as Fidelity Select Energy, Wellington Management Company, Capital Group Companies, Och-Ziff Capital Management Group, Thiel, First Reserve, Blackstone Energy Partners, Ares Management, Point State Capital, Abu Dhabi Investment Authority, China Investment Corporation and the Silk Road Fund.