Priorities for global energy development in the medium term were outlined in the speech by Igor Sechin, CEO of Rosneft, at the Energy Panel of the XXVII International Economic Forum in St. Petersburg.
The head of Rosneft made a presentation “Energy transition and ghost barrels: lose hope, everyone who enters here, not everyone will be included in the bright future of world energy!” His key points were based mainly on accredited scientific research and the current demographic and political situation in the world.
Inefficiency of alternative energies
Igor Sechin recalled the research carried out in 1976 by the then future Nobel Prize winner in Physics, academician Piotr Kapitsa. Based on basic physical principles, the scientist predicted the possibility of a global energy crisis due to the insufficient efficiency of all types of alternative energies.
“As Kapitsa stated, the key characteristic of any type of energy is the density of its energy flow. According to this indicator, such types of fossil fuels as oil (provides 195 W/m2) and gas (482 W/m2) are far ahead of solar energy (6.6 W/m2) and wind energy (1.8 W/m2), which, among other disadvantages, have an uneven or, to put it more scientifically, stochastic nature of energy generation”, said Igor Sechin.
The head of Rosneft noted that, from currently known research, the most promising type of “clean” fuel is hydrogen. “However, there is still no commercially viable production technology, logistics, or even sales markets. We must also take into account the still low efficiency, because in the production of hydrogen energy is consumed in electrolysis. It turns out to be greater than the amount of energy obtained in production, so alternative energy sources cannot yet guarantee either the reliability of the supply or its optimal technical and economic characteristics,” said Igor Sechin.
The illusion of saving the world
Commenting on the climate agenda that is actively pursued today, the head of Rosneft drew attention to the fact that the very statement on the relationship between emissions and climate change requires an objective assessment, without which statements on the priority of the anthropogenic factor in climate change have no basis.
“The defenders of the theory of the anthropogenic factor present the energy transition to us as an illusion of saving the world. Now that we have already accumulated some experience in the implementation of the energy transition, it is clear that neither its goal nor, consequently, its preparation. because it has been developed in accordance with the tasks and needs of humanity, such as infrastructure, financing, the supply of raw materials and the availability of appropriate technologies,” Igor Sechin summarized.
The “green” transition is not supported by profitable sources and its implementation is wishful thinking, leading to disinvestment in traditional energy.
According to the head of Rosneft, despite the fact that in the last two decades around 10 trillion dollars have been invested worldwide in the energy transition, alternative energy sources have not been able to displace hydrocarbon fuels. Today, wind and solar power account for less than five percent of global energy production, while electric vehicles account for about three percent.
During the same period, the consumption of oil, gas and coal increased by a total of 35 percent, and their total share in the global energy balance did not change. In addition, Sechin noted, oil and coal consumption, as well as the use of gas for power generation, reached a new record level in 2023.
At the same time, the energy transition itself is clearly underfunded. Thus, by 2030, to achieve the goals of the Paris Agreement, global spending on climate change must increase to approximately nine trillion dollars a year. This figure is equivalent to almost 10 percent of global GDP and more than three times the world’s annual energy investment.
“The concept of energy transition is based on worldwide discrimination,” where partners can sacrifice each other’s interests at any time. “In relation to developing countries, the situation is even more unacceptable when, under the pretext of a “green” transition, the construction of a “green” neocolonialism is being implemented in practice. The energy transition, that is, the announced energy transition program, is a legendary and powerful sanctions barrier for 88 percent of the Earth’s population, for everyone who is not part of the “golden billion.” In reality, these are unannounced sanctions that are being applied in the meantime,” said Igor Sechin.
The combination of energy shortages as a result of the energy transition and a wide range of direct sanctions, as well as unfair competition, caused an imbalance in the market, said the head of Rosneft, citing the restrictions imposed by the United States as an example. United States on Venezuela, Iran and Russia. Sechin added that these sanctions “affected a total of almost 18 million barrels of oil per day and helped the United States capture a significant share of the market.” As a result, energy resources have become America’s leading export.
Igor Sechin also recalled other methods used by the United States after the invasion of Iraq in 2003. Since then, this country’s income from oil exports, which represented up to 95 percent of the budget, has gone to the United States. “This gives the US administration complete control over Iraq’s financial system,” said the company’s director.
According to the head of Rosneft, the White House takes a different approach towards Russia: the United States seeks to reduce Russia’s oil revenues, which involves “squeezing maritime exports of Russian oil from the world market.”
Another barrier of sanctions is the prohibition of access to technologies, said Igor Sechin. This is the introduction by the United States of protection rights on goods and equipment in the field of renewable energy from China, which is a world leader in this field.
“Ghost” barrels and oil demand
“The formation of reserves that we observe from both Western and Middle Eastern companies may be an expectation of serious changes in the market. The presence of “ghost barrels” that can have a large-scale impact on the market neutralizes the impact of voluntary production reduction. the quotas assumed by the main OPEC participants. This is also reflected in the market prices, which fell after the recent decision of the ministers of the participating countries,” Igor Sechin noted.
According to him, the Gulf countries are actively increasing excess production capacity, establishing distribution channels and investing in assets in consuming countries.” At the same time, four key member countries of OPEC – Saudi Arabia, the United Arab Emirates, Kuwait and Iraq – already have significant excess production capacity of 5.6 million barrels per day, equivalent to 13 percent of current OPEC+ production.” Some time ago, these countries announced plans to further increase capacity. According to experts, until 2027 its total free capacity will increase by almost 2 million barrels per day,” added the director of Rosneft.
At the same time, Igor Sechin believes that the volatility and unpredictability of the energy market may increase in connection with the upcoming presidential elections in the United States, where the choice of voters depends, among other things, on the increase in one’s cost. gallon of gasoline. “Thus, the average price is 3.6 dollars per gallon, and in some states, such as California, 5.4 dollars,” said Igor Sechin.
Regulation of the industry could change if a particular candidate wins the US election. “Emerging risks give reason to assume the possible existence of a plan B in case of a special period for each major participant,” said the head of Rosneft. Sechin also noted that large American companies are pursuing merger deals with other producers, increasing their production capacities to ensure profit and dividend growth, while production growth remains behind the scenes as it requires capital expenditures. capital, which must be guaranteed with high prices.
According to Igor Sechin, the American financial system is an active instrument of unfair competition. Financial restrictions apply worldwide, as the US financial system is the foundation of the global financial infrastructure. However, in recent years, the use of the dollar as an economic weapon and the uncontrolled growth of the US public debt have initiated the de-dollarization process, said Igor Sechin.
He recalled that since 2001 the proportion of the dollar in international gold and foreign exchange reserves has decreased from 71 to 58 percent. The crisis of confidence in the dollar as a reserve currency, Sechin noted, leads to the fact that the central banks of developing countries give preference to other defensive assets, including gold, the share of which in gold and foreign exchange reserves is almost has doubled in recent years. last ten years.
One of the factors that undermines confidence in the dollar, according to Sechin, is the uncontrolled growth of the US public debt, which transfers the problems of the financial sector to the energy market and the rest of the world. “Over the past 20 years, the United States has aggressively used the special status of the dollar to finance massive loans. As a result of this policy, the US government’s debt-to-GDP ratio approached 100 percent last year to combat liquidity. During the bubble, the US Federal Reserve was forced to increase interest rates from a level close to zero to 5.5 percent,” explained the CEO of Rosneft.
The head of Rosneft noted that today there are no real measures to limit the growth of public debt.
Igor Sechin also evaluated the possible price of oil in the medium term. He recalled that the recent OPEC+ decision was not followed by a stabilization of oil prices and their growth, but, on the contrary, a decrease. “This suggests that the market takes into account other factors that affect the global industry and yet, whatever the price, it must guarantee profitability on the capital invested and take into account the interests of both consumers and producers” said Igor Sechin. Then the stability necessary for energy security will be guaranteed.
“But we must also understand that there is an alternative. And the alternative is reflected in the quote: ‘Abandon hope, all who enter here,’ is written on the gates of hell,” Igor Sechin noted. “Therefore, we must be responsible and seek compromises and consensus based on objective approaches,” concluded the head of Rosneft.
