25 June 2014

Russia Relishes Being the Center of the Energy Universe

By Tai Adelaja, Senior Account Manager, PBN H+K Strategies, Moscow

Known as the “Olympics of the oil and gas industry,” the 21st World Petroleum Congress attracted more than 5,000 delegates to Moscow last week – the group’s largest gathering ever.
Russia Relishes Being the Center of the Energy Universe

Hosted every three years by a member country, the WPC brings together the leading policymakers, operators, technology developers, academics and experts in the global oil and gas industry.

The congress, which this year was organized around the theme of “Responsibly Energizing a Growing World,” is the only international event of its type. Up to 600 speakers and over 500 ministers, ambassadors and chief executives from around the world discussed and exchanged ideas about how to ensure the petroleum industry continues to galvanize world development and growth in a responsible way.

Western energy majors such as ExxonMobil’s CEO Rex Tillerson and BP’s CEO Bob Dudley both talked up the prospects of a glorious future for the oil and gas industry, while predicting big investments for the industry in Russia.

Their prime focus was on how to develop Russia’s Arctic oil riches, despite technical and other challenges.

“The climatic conditions are probably the most visible challenge,” said Tim Dodson, the executive vice president of Statoil.

“Ice, snow, cold and darkness all contribute to an environment that can be both hostile and beautiful,” Dodson said, adding that “to unlock the full potential of the Arctic and also to make Arctic projects commercially viable and globally competitive, we need new technology and innovative business models.”

According to Oleg Mikhailov, Vice President for Oil and Gas Production at Bashneft, a more daunting challenge lurks in the remoteness of the region.

“If you envision full-scale development of the Arctic, you have to envision moving millions of tons of supplies to one of the most remote regions of the world,” Mikhailov said.

Yet, Western oilmen including Dodson still largely see the Russian Arctic as the new Promised Land for oil companies in Russia. “The Arctic is one of the very few remaining areas with the potential to make huge discoveries,” Dodson told participants.

For some participants however, the creeping shale gas revolution, a theme studiously avoided by industry executives at the congress, poses a more significant threat in terms of the competitiveness and stability of major exporters of conventional oil and gas.

The absence of many oil and gas executives from the United States – the world’s largest producer of cutting-edge energy technology – also seemed to cast a shadow over this year’s gathering.

Despite all the real and potential problems, the enthusiasm among Russian officials and energy executives was palpable.

“The petroleum industry remains one of the most dynamically developing sectors of the world economy,” Alexander Novak, Russia’s Energy Minister assured delegates at the opening ceremony.

“This Congress provides a fine opportunity for specialists from various countries to comprehensively examine and discuss matters regarding the extraction, development and transportation of oil and gas, including projects in the Arctic,” Novak added.