Sechin spoke about the main trends in the global energy market

On February 6, Rosneft Chief Executive Officer Igor Sechin made a presentation at the India Energy Week forum in Bangalore (India). Vedomosti collected the brightest theses – about the destruction of the global energy market, the formation of prices for Russian raw materials and that BP, remaining a shareholder of Rosneft, may revise its strategy towards traditional energy sources.

During his speech, Sechin drew attention to the fact that the actions of the United States, trying by any means to maintain its hegemony, destroyed the single energy market. “Today, there is no single global energy market,” he stated.

As a result, according to Sechin, all the principles of market trade were destroyed: market pricing, contract law were canceled, and logistics chains, which “took decades” to create, were destroyed.

He cited the reformatting of the European gas market as an example. Sechin recalled that “at first, Europe was forced to abandon long-term contracts, they demanded to ensure the transition to spot pricing.” This, against the backdrop of a forced green transition, underinvestment in traditional energy, has led to an unprecedented rise in prices. “And when, with the help of sanctions and pressure, the Russian competitor was eliminated from the European market, the Americans offered to return to long-term contracts that guarantee the return on investment. We are talking about banal unfair competition,” he stressed. According to Bloomberg, the refusal of Russian gas has cost Europe about 1 trillion euros, recalled the head of Rosneft.

Sechin stressed that the main factor of volatility in the oil and gas market is the unprecedented sanctions pressure. Also, according to him, the reason for the volatility may be “the growth of freight, the tax system, insurance rates.”

At the same time, he recalled that the fundamental cause of the energy crisis is the underinvestment of the industry against the backdrop of growing consumption and the insufficient rate of reproduction of the resource base. OPEC’s annual report indicates that $12 trillion in investment is needed by 2045 to meet growing demand for oil alone.

According to the head of Rosneft, at the same time, non-market intervention regarding the price of Russian oil should be taken calmly, since “specialists can solve these issues.”

According to Sechin, the reference price for Russian oil will be formed in the main markets for its sale. “If Russian oil does not enter the European market, then there is no reference price. Reference prices will be formed where oil volumes actually go,” he said. According to the head of Rosneft, at the first stage, in order to adjust market indicators, it will be necessary to abandon transactions in settled futures. “In general, it is written in Ecclesiastes: “The crooked cannot become straight, and what is not, cannot be counted,” Sechin noted.

Sechin also drew attention to the fact that as a result of the refusal of the accelerated energy transition to green energy, American oil majors focused on the production of traditional hydrocarbons and, by the end of 2022, became leaders in terms of profit and capitalization. “Our shareholder BP, the leader of the green agenda, showed a different dynamic, failing to take advantage of the prevailing market conditions like its competitors,” he said.

According to him, on February 7, in the annual report, BP may adjust its strategy “in favor of conventional production.” The total amount of write-offs already announced by the company is about $38 billion, Sechin noted.

At the same time, according to him, BP has revised the cost of the Rosneft stake they own to $24 billion. I want to assure you that we will work hard to justify the trust of our shareholders,” he stressed.