Rosneft CEO: Era of cheap energy may be coming to end

VERONA, Oct 28 (PRIME) -- The era of low energy prices may be coming to an end, Igor Sechin, head of Russian oil giant Rosneft, said at an economic forum on Thursday.

“The era of relatively low energy prices, which lasted for almost 100 years and was a major driver of global economic development, may be coming to an end,” Sechin said.

According to Sechin, although renewable energy sources will not be able to replace fossil fuels fully any time soon due to the lack of technology, and carbon neutrality doesn’t entail full riddance of oil, gas and coal consumption, the green agenda is already actively affecting the market, forcing major companies to decrease exploration and geological works expenses, which have already dropped by 67% in the last decade. The OPEC+ countries cannot increase oil output mainly due to higher pressure under the current environmental agenda, the official said.

“As a result, oil and gas reserves replenishment in the world has declined for a fourth year in a row, and the risks of supply shortages are already built into the prices, hurting revenues of the European and global consumers,” Sechin said.

Due to the uncertainty about long-term demand and oil prices, many oil and gas companies have no plans to increase investment. The shortfall in investment needed to meet global oil demand by 2025 may amount to U.S. $135 billion, he said.

The high gas prices also affect crude oil dynamics, making oil companies increase their prices as well.

There are objective factors to reduce oil consumption in the future. Companies work on the technology and efficiency of green projects and increase investment in their development. Rosneft is also developing a new strategy to prioritize adapting to the challenges of energy transition and integrating the green agenda into business, he said.

Forcing companies to withdraw from oil and gas projects, like it was in the environmental lawsuit against Shell, does not help reduce emissions, Sechin said. Neither will environmental agenda change the fact that our planet’s climate never was or will ever be static. Climate will continue to change even if the world reaches the 2050 carbon neutrality goals, he said.

The world needs a unified approach to solving the so-called climate problem, rather than finger-pointing and using restrictions that only widen the energy gap between the developed and developing countries, Sechin said.

It is important to ensure coordination between the regulators, suppliers, and consumers, which at this point cannot be done because of the capitalistic nature of the market, Sechin said.

At the same time, energy transition should be based on real economic patterns, rather than demands of climate activists. The green energy companies should care about consistent energy transition, rather than capitalization growth. The costs and efforts to create green energy must be properly distributed between the producers and the consumers and reliability of energy supplies should become the top priority, Sechin said.

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