Alexander Novak comments on global potential of Russian energy industry at EEF 2018

The energy agenda of the fourth Eastern Economic Forum continued on 12 September with the panel session ‘New Energy Markets: The Far Eastern Vector’, which featured a discussion of the development of cooperation with countries of the Asia-Pacific region, the potential of new projects, the forecast for growth in global energy consumption, and Russia’s advantages in the industry.

“Energy is the cornerstone of the economy and the driver of the country’s development. Energy is being currently being transformed and new sources of energy are emerging. Huge sources of resources are concentrated in the Far East. More than 16% of natural gas reserves are located here despite the fact that only 6% of them have undergone a geological study. This region has great prospects and opportunities for the development of the oil, gas, coal, and electricity industries”, Russian Minister of Energy Alexander Novak said in his speech.

Novak added that the President’s goal of rapidly developing the Far East would be impossible without cooperation with APR countries. “Cooperation with the countries of the Asia-Pacific region is a priority for us today because this market is developing at a faster pace and energy consumption will grow twice as fast as the world average: 60% of the world’s population resides in APR countries”, he said.

Novak also noted the importance of cooperation with Western partners, in particular with the United States. “The energy world is global. Russia and the United States are the largest energy powers. There will be a meeting tomorrow with U.S. Energy Secretary Rick Perry, which will provide an opportunity to discuss our further cooperation. We have difficult relations in the energy industry, but we believe that such meetings are useful for assessing the current situation”, Novak said.

Asked about the situation with world oil prices, Novak noted that the situation on the market has stabilized in general. “The agreement signed in 2016 on restricting oil production between OPEC countries and 11 other countries was the right decision. The past two years have shown that the market has rather quickly emerged from the crisis. However, production has not recovered in all countries – there has been a reduction in Mexico and Venezuela”, Novak said, noting that with Iranian oil market being taken off the market, it is essential to closely monitor the situation and make the right decisions.

The minister noted that the next meeting of the OPEC+ ministerial monitoring committee will be held on 23 September in Algeria, where they will discuss how to balance supply and demand for oil in the third and fourth quarters of 2018 and the first half of 2019.

Describing the situation in the Russian energy sector, Novak noted there has been progress in all areas. “Over the past 5 years starting from 2012, oil exports have doubled to 80 million [tonnes], or 1,600 barrels per day. For gas, the growth rate remains at a low level, but with the introduction of the Yamal LNG project, we will double supplies. A strategy has been adopted to increase LNG exports to 550 million tonnes, with APR countries accounting for 70% of this consumption”, he said. He noted that growth in LNG supplies will enable Russia to fill a niche and increase its share on the global market to 20%. 

“We believe that the coal industry also has potential. Energy consumption will grow at a high rate, and all sources of energy will be utilized”, Novak said.

Novak added that scientific and technological progress is one of the key issues in energy supply today. “We can only predict what scientists will invent in the near future, but the long-term forecast is extremely difficult. The industry will develop very quickly, and much will depend on new technologies, machine learning, and artificial intelligence”, Novak said.

The panel session ‘New Energy Markets: The Far Eastern Vector’ was also attended by Deputy Chairman of the Gazprom Management Board Alexander Medvedev, Sovcomflot President and CEO Sergey Frank, NOVATEK First Deputy Chairman of the Management Board Lev Feodosyev, State Grid Corporation of China Chairman Yinbiao Shu, and Japan Oil, Gas and Metals National Corporation Chairman and Chief Executive Officer Tetsuhiro Hosono.

The energy agenda, which was broadly represented at the EEF 2018, will be continued during the Russian Energy Week International Forum in Moscow on 3–6 October, during which representatives of the government and energy leaders will be able to discuss all aspects of the energy industry as well as the latest technologies that Russia can export. REW 2018 guests will also have an opportunity to learn about proven strategies on the global oil and petrochemical markets and discuss whether the coal industry will continue to drive growth in the economies of developing countries. In addition, the Forum organizers will hold sessions dedicated to the pressing issue of alternative energy and renewable energy sources.