Energy as the foundation of economic growth and public well-being

A policy of sanctions has been implemented with the aim of hindering economic growth in countries that are displeasing to the US. However, the countries which have been put under sanctions have benefitted from additional opportunities and development. Such a policy pushes countries to free themselves from a dependency on imports, and to develop their infrastructure. Challenges need to be addressed, and multilateral cooperation is required in order to secure economic growth, ensure development, and improve people’s quality of life. This was the conclusion reached by participants attending the Global Energy Award Ceremony. The session, entitled The Global Oil and Gas Market: Navigating a Period of Turbulence, took place as part of Russian Energy Week.

KEY CONCLUSIONS

Sanctions have spurred countries to take optimal decisions

“If we focus on the Asia-Pacific region today, and develop infrastructure and friendly ties accordingly, then it becomes clear that energy consumption in the future will mainly centre specifically on this region. We were also working on this before [the sanctions – ed.]. All that’s happened is that we have been spurred on to make the decisions we have regarding the development of port, highway, and pipeline infrastructure; boosting the liquefied natural gas sector; and increasing production. That is because, as our President has said, regasification terminals already exist in 55 countries, and this number is going to grow,” Alexander Novak, Deputy Prime Minister of the Russian Federation.

Approaches to the global energy agenda are changing

“As far as fundamental factors are concerned, we are seeing a change of approach to the climate agenda. <...> It has become more sensible, more proper. This is also true of approaches to assessing the energy transition and the fourth energy revolution which we have been going through in recent times. <...> There is no need to artificially change the energy mix; it should be an evolutionary process, which is what we are seeing today,” Alexander Novak, Deputy Prime Minister of the Russian Federation.

PROBLEMS

A lack of investment in the global energy sector

“For several years now, we have been living in a state of underinvestment in the global energy sector. Whereas the oil sector used to invest around USD 700 billion per year, in the past few years investment in the sector has been around USD 350–400 billion. Global underinvestment has already exceeded the USD 1 trillion mark in just a few years. And we are very well aware that within a few more investment cycles, hydrocarbons will take a dominant place in the energy mix at the very least. That is because in order to ensure that the global economy has a steady supply of energy resources, there needs to be a return on investment, and the conditions need to be put in place to enable the sector to operate in a stable manner,” Alexander Novak, Deputy Prime Minister of the Russian Federation.

Short-sighted policies

“We can see false pride manifest itself in Europe. They do not want to admit their catastrophic errors. However, sooner rather than later, they will have to sit down and think about how to restore normal [energy – ed.] supply chains,” Radovan Viskovic, Prime Minister of the Republic of Srpska.

SOLUTIONS

Taking a more proactive approach to switching over to national currencies for payments

“We have taken purposeful steps towards ensuring the stable operation of our fuel and energy sector. I am referring to switching over to national currencies in our trade with friendly countries. Today, we have minimized our trade done in the dollar or euro, and have switched over to settlements in roubles and other currencies. <...> This trend is not limited to our country,” Alexander Novak, Deputy Prime Minister of the Russian Federation.

“The energy market works in dollars. <...> However, the US itself accounts for just 20%. The secret lies in de-dollarization,” Delcy Eloina Rodriguez Gomez, Executive Vice President of the Bolivarian Republic of Venezuela.

Employing digital settlement solutions

“There are problems associated with mutual settlements. However, we can move towards digital settlements and use blockchain technology. Then we won’t need any global currency here. This is a totally different approach. In order to get there, we need to join forces and work together in this area. That includes under the BRICS umbrella, which is gradually expanding,” Alexander Novak, Deputy Prime Minister of the Russian Federation.

Developing science and innovation in efforts to move away from import dependency

“In our efforts to attain technological sovereignty, we have secured an enormous order – trillions of roubles generated by the oil and gas industry for our industry, science, higher education institutions, and academic institutions. We have learned to make things that we used to buy. A few years ago, the oil and gas industry was 60% dependent on imports. Today that figure is 30%. The Government of the Russian Federation has set the objective of attaining technological sovereignty for all key technologies. This work is being done in cooperation with oil and gas companies, both as customers, and as industrial enterprises,” Alexander Novak, Deputy Prime Minister of the Russian Federation.

“Thanks to our efforts and the initiatives of our specialists in the oil and gas sector, we have become self-sufficient. <...> We have the ability to manufacture a great many different turbo compressors, turbo generators, pumps and equipment that are used in oil production and refining, both on land and offshore. <...> With all the support and resources we’ve had over the last 40 years, we have been able to become self-sufficient in all sectors while under sanctions. Not a single foreign advisor can be found at our production sites,” Javad Owji, Minister of Petroleum of the Islamic Republic of Iran.

Diversifying markets and routes

“Turbulence has served to demonstrate that more diversification is needed. That is also true of supplier countries which are not only interested in diversifying markets, but routes as well. Azerbaijan has always been guided by this principle. The country well understood that this path would always serve the interests of stability on the market, and would assist with the implementation of its plans. We have diversified our markets and routes to a fairly large extent. Today, our oil goes to the international market via Turkey. And our gas transportation routes have also been diversified,” Parviz Shahbazov, Minister of Energy of the Republic of Azerbaijan.

For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en.

The Russian Energy Week International Forum is a key global platform for discussing current trends in the development of the modern fuel and energy sector. This event is traditionally held at the highest level, featuring the participation of leaders from the largest companies in the energy industry. In 2022, more than 70 events, with the involvement of over 270 speakers, were held as part of REW. The Forum attracted over 3,000 participants and media representatives from Russia, as well as 83 foreign countries and territories. The Forum is organized by the Roscongress Foundation and the Ministry of Energy of the Russian Federation, with the support of the Moscow City Government.

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