Rosneft's Sechin warns of "acute" oil shortage amid energy transition
The influential head of Russia's largest oil company Igor Sechin has warned that "acute" shortages of oil and gas supply could emerge, as the drive towards cleaner energy takes its toll on investment in hydrocarbons.
Sechin was speaking at the St Petersburg International Economic Forum (SPIEF), which was dominated by announcements of new partnerships between Russian and international companies on developing cleaner energy and reducing emissions. Russia is not envisaging any drastic changes to its energy mix in the coming decades to meet climate goals. But its oil and gas producers are beholden to climate-conscious investors and customers internationally.
Still, as Russian energy minister Nikolay Shulginov recently said, Russia is "in no rush to part with hydrocarbons." Sechin has meanwhile pointed to the risk that underinvestment in conventional fuels poses to long-term energy stability.
"The long-term stability of oil supply is at risk due to underinvestment," he said during a panel session at SPIEF. "This is due to both requirements of various stakeholders to completely cease investments in the petroleum sector and the aspirations of majors to increase shareholder value and shareholder returns through stronger dividend payouts and share buyback."
Russian president Vladimir Putin also spoke at the forum on June 4. He said the notion that Russia was not concerned with climate change was a "myth" but he warned against the shift towards carbon neutrality becoming a tool for "unfair competition." Russia is a major exporter of oil and gas to Europe, where authorities are drawing up plans to impose a carbon tax on imports.
The Russian leader also extolled the environmental benefits of natural gas.
An unprecedented number of energy transition-related deals were announced at SPIEF, reflecting the growing attention that Russia's oil industry is paying to its environmental, social and governance scores.
Gazprom Neft signed memoranda of understanding (MoUs) to help Russian steelmakers Severstal and Evraz decarbonise their operations with the use of blue hydrogen. The parties will work together in producing, transporting and creating uses for the fuel. Gazprom Neft may also share its experience in CO2 injection and storage, to reduce emissions. In addition, Gazprom Neft will co-operate with close partner Shell on the use of hydrogen and carbon capture and storage at their joint facilities.
Novatek formed a similar decarbonisation pact with Severstal. It also agreed a preliminary deal to buy renewable energy from Finland's Fortum to power its Vysotsk LNG plant in northwest Russia, in order to low its Scope 2 emissions. Fortum also agreed on clean energy supplies in Russia to the MMK steelmaker, Baker Hughes and Shell. Novatek signed a MoU with France's Total on decarbonisation, hydrogen and renewables at their Yamal LNG and Arctic LNG-2 projects.
Gazprom meanwhile held a meeting with Germany's Uniper where the topic of producing hydrogen from natural gas was raised. Shulginov also reported that his ministry had discussed co-operation in hydrogen with Air Liquide. Rosneft agreed to cooperate with Baker Hughes in carbon management, while Lukoil agreed with the US services group on introducing advanced technologies to detect and reduce emissions and improving energy efficiency.