22 January 2013

Rising Global Energy Demand: Time for Russian Majors to Find their Voice?

BP last week released its ever thought-provoking annual Energy Outlook 2030. This year’s report again offers insights, predictions and statistics relevant to industry insiders as well as anyone interested in the broader energy discussion.
Rising Global Energy Demand: Time for Russian Majors to Find their Voice?
Among the findings we think are of special note:

  • The world continues to need more energy – BP estimates that global demand will grow 36% between 2011 and 2030.
  • The US will likely surpass Russia and Saudi Arabia as the largest liquids producers in the world (crude and biofuels) in 2013 due to tight oil and biofuels growth but also due to expected OPEC production cuts. Together, these three nations will supply over a third of global liquids production.
  • Russia will remain the world’s largest energy exporter of all fossil fuels with net exports rising 25% in volume terms to 2030.
  • Emerging economies will continue to demand more energy to 2030 – 93% of forecast energy consumption growth is in non-OECD countries. China, India and the Middle East will be responsible for nearly 100% of net demand growth for oil. In contrast, European demand will remain flat. 
  • Demand will be met partly through energy efficiency savings as well as new technologies that tap previously inaccessible energy sources like shale gas and tight oil. Renewables will also make a strong contribution.
  • BP predicts that the US will be energy independent by 2030 and that this process is happening more quickly than expected.
Surprisingly, Russia does not appear as prominently as one might expect in the report. Nothing is mentioned of the vast oil and gas reserves of the Russian Arctic.

Maybe this is not so surprising. Most industry analysts do not see Arctic production coming on stream until 2030 at the earliest. BP does predict, however, that Russia is expected to develop its tight oil resources by 2030 and that it will also remain the largest net exporter of gas – predominantly to Europe.

Though not featured in the report, Russia is also well positioned to supply China and the Far East for years to come due to the recent completion of the East Siberia – Pacific Ocean (ESPO) pipeline, a major Russian artery to Asia. China, the world’s largest consumer of energy, will also be fed energy through the Kazakhstan-China Gas Pipeline which continues to develop.

It would be interesting to see more of Russia and the CIS in next year’s report. Certainly Russian and regional companies could be doing more to enter the international energy debate. There is a strong perception that Russian and CIS-based companies prefer to talk amongst themselves rather than enter global discussions on energy. This is unfortunate because such companies have important information and points of view to share as well as advocate.

Perhaps this will change as further deals are struck with foreign majors and as gargantuan players such as Rosneft find their voices as international thought leaders. Indeed, oil and gas exploration in the Russian Arctic will mean that the energy industry in Russia and the CIS will remain one of the key barometers of the global energy market for decades to come.

By Michael Zdanowski

Related contacts :

Michael Zdanowski
Director, International Projects, Moscow

phone: +7 495 775 0077 / +7 985 974 0813
email: michael.zdanowski@hkstrategies.com