Evidently, in the future, there will be some moment when all global energy will be mainly renewable, or, maybe, by 90% or 95%. It’s a question of time. Some experts are thinking about 2050, some experts are thinking about 2070, the global energy and the energy of the leading countries will be almost completely energy. Speaking about the current process, evidently, as far as China is a large country, there are very large resources of solar energy and wind energy, therefore they develop it very, very fast. First of all, solar and wind, while, geothermal energy also has a very good prospective in some regions of China, not on all territory, but in some regions, of course. Because for Fukushima tragedy lead to more costly nuclear energy, so, measures for the safety of nuclear energy will be more severe, restrictions will be harder, and, therefore, expenses on the reconstruction of nuclear power plants during exploitation, during work of nuclear plants will be higher.

Therefore, price competitions between nuclear energy and renewable energy or some other sources will be a bit shifted in favor of renewable energy. Then, it depends on the situation in a country. In some country, the shift could be significant, in another country, it should be smaller. I hope we will see that in the near future. Moreover, I would like to highlight that this shift will be not only in countries which are in seismological zones. The risk of earthquakes is rather high, and the risk of tsunamis is very high. But around the whole globe, restrictions and more severe standards for nuclear plants will be applied to all countries, including France, in particular, which is not in a seismology risk zone.

I’d like to highlight that Russia also will be covered by this more severe new standard. It’s difficult to say how more severe it will be, we will see it in 1, 2 or, maybe 3 years in the future, but it’s certainly a trend that the cost of nuclear energy will be higher. And, therefore, nuclear energy will lost a bit of competition with other energy sources, first of all, of course, with low carbon development, because low carbon development is simultaneously new technologies development. Yesterday, our Prime Minister, Mr. Putin, spoke about new technologies and energy efficiency a lot, a lot, a lot. He didn’t use low carbon development, but, actually, he spoke about absolutely the same.

Article written by Aleksei Kokorin, Climate and Energy Programme Director of the World Wildlife Fund (WWF) Russia.

Source: www.english.ruvr.ru

After the signing ceremony in London, with Energy Secretary Chris Huhne and Rosneft chairman Igor Sechin in attendance, BP’s chief executive Bob Dudley said the deal “underlines our long term, strategic and deepening links with the world’s largest hydrocarbon-producing nation.” Rosneft’s president Eduard Khudainatov said it would allow his company to “utilise the experience and expertise of BP”.

But in Washington, where BP has few friends after the catastrophic oil spill in the Gulf of Mexico last year, some members of Congress expressed concern at the possible implications for US security.

At the start of the year, Russia opened its first oil pipeline to China, exporting 300,000 barrels a day.

The Eastern Siberia-Pacific Ocean pipeline will enable the Kremlin to command higher international oil prices as it now supplies both east and west.

Source: www.tribunemagazine.co.uk

In the global energy market, rapidly changing due to a number of factors, such as the rise of Brazil and the shale gas revolution, Russia has been doing well so far, even beating Saudi Arabia to the title of the world’s biggest oil producer, according to some estimates.

But Russian Prime Minister Vladimir Putin has said that the country’s oil industry would need more than 8.6 trillion roubles ($280bn; £180bn) of investment during the next 10 years.

Otherwise, it is estimated, oil extraction levels in Russia could fall 20% by 2020.

“It is important we create conditions for investment growth in technical upgrades of the fuel and energy system, and stimulate fuel companies to use new technologies which can provide greater returns in oil and gas production,” Russian President Dmitry Medvedev told the country’s Security Council earlier this week.

Both officials and ecologists have been saying that many Russian oil and gas pipelines and refineries are either reaching the end of their serviceable life or have even surpassed the mark, while ageing oil fields make companies think of how much it could cost to discover new ones.

Could this situation put Russia in danger of losing a significant chunk of the global energy market?

Common problems?

The importance of serviceable life data must not be over-estimated, according to Anatoly Dmitrievsky, director of the Oil and Gas Research Institute of the Russian Academy of Sciences.

He told the BBC that the Russian norms regulating depreciation periods were much stricter than the ones in the west.

He added that while more than 50% of Russia’s known oil reserves had indeed been extracted, “we still have not found about 60% of oil reserves in Russia, and have discovered only 25% of gas reserves”.

According to the government’s estimates, Russia’s known gas reserves stand at 165 trillion cubic metres.

Elena Anankina, credit analyst at Standard & Poor’s, says that many Russian oil companies have oil reserves that will last 20 years, which is longer than what their western rivals have.

Mark Spelman, head of strategy at the technology consulting firm Accenture, believes that there is no long-term risk of Russia losing its position as a leading exporter of oil and gas.

Many experts point out that most challenges Russia is facing are not unique, as a number of other oil producers have seen a decline in output or require large investment.

For example, says Mr Spelman, while Brazil has got significant oil reserves, many of them are offshore, and there could be a long delay in exploring them due to the Gulf of Mexico oil spill earlier this year.

‘Artificial profits’

But there is no denial that the Russian oil and gas industries are in clear need of modernisation.

According to the Kremlin documents, quoted by the Russian news agency RIA Novosti, 80% of the oil refining industry’s infrastructure is worn out.

The situation in the gas and electricity industries is said to be only a little bit better.

But Mr Dmitrievsky says that when talking about the need to modernise the oil refining industry, experts and officials often mean a gradual replacement of old technologies with new ones, rather than a need to fix worn out parts of the system.

Many refineries, he argues, were built in the 1950s-1960s, and the cheapest and simplest technology was used to refine oil.

No surprise, then, that 40% of all refined products produced in Russia are heavy products, such as fuel oil, according to Ms Anankina.

She says that most Russian refineries do not have the necessary equipment to produce a lighter product mix and, compared to international peers, have a higher share of cheaper fuel oil and a lower share of expensive petrol.

The paradox, though, is that while Russian heavy products are cheaper than the oil they are produced from, it is economically viable to sell them abroad.

The answer lies in the Russian system of export duties: they are almost twice as high for oil than for oil products, Ms Anankina explains.

“We are talking about some artificial profits here, i.e. profits created by the peculiarity of the tax system,” she says.

High taxes also often discourage companies from investing in new oil fields, while many existing ones have been providing less and less oil.

The government seems to have recognised the problem, as it has been working on changing the tax system, hoping to give a boost to the modernisation process.

Money and know-how

In order to succeed in upgrading its existing energy infrastructure and exploring its offshore and onshore fields, Russia will need some expertise and support from the west, says Mr Spelman.

He believes that Russia is “extremely pragmatic” and the government understands the need to attract foreigners to its oil and gas sectors.

In turn, Mr Dmitrievsky suggests that while Russia has enormous scientific potential in the energy sector, there is something else that might be missing.

“Do we need brains? Yes. But we need practitioners more,” he says.

He compared this situation to Russia’s car industry, where the same models have been slightly modified and produced for decades, because of inability to replace assembly lines with ones capable of producing newer models.

Mr Dmitrievsky believes that attracting money is important, but the main task is to attract some technologies that could help Russia retain its leading position in the global oil and gas market.

It will soon become clear whether the government shares this view.

Head of Russia’s Security Council, Nikolai Patrushev, has said that Russia’s new energy security doctrine will be drawn next year.

Source: www.bbc.co.uk

The agreements, which allow producers to recoup investment costs before the government gains a share of profits, may be used for hard-to-extract oil deposits or to encourage investment in poorly explored areas, Energy Minister Sergei Shmatko told Russia’s parliament today, in remarks confirmed by Irina Yesipova, his spokeswoman.

Prime Minister Vladimir Putin, during his presidency, criticized accords held by Shell, Exxon Mobil Corp. and Total SA for allowing foreign companies to benefit at the expense of Russia.

OAO Gazprom, Russia’s natural-gas export monopoly, agreed to buy control of Sakhalin-2 from Shell and Japan’s Mitsui & Co. and Mitsubishi Corp. in 2006 after regulators threatened to close the $22 billion project.

The Energy Ministry has sought lower taxes for oil projects, clashing with the Finance Ministry, which aims to collect additional taxes from the nation’s biggest source of export revenue to narrow a budget gap.

Russia aims to keep oil output around 10 million barrels a day for decades, Putin said in October. The target will involve developing new deposits and regions as existing fields go into decline.

The state regulator overseeing the Exxon-led Sakhalin-1 production-sharing agreement approved spending of $2.7 billion for this year, Shmatko said. The budget is less than the $3.5 billion that Exxon requested, the Vedomosti newspaper reported Dec. 1, citing unidentified people close to the operator and a state oversight body.

Source: www.bloomberg.com

Despite being the world’s two resource giants, with a combined 63% of world oil and gas reserves and 39% of world oil and gas production, Russia and the Middle East have until recently had a surprisingly weak commercial relationship. Whilst Russia has participated in OPEC meetings as an observer and Russia and the Middle East have a common platform in the gas sector via the Gas Exporting Countries Forum, the amount of bilateral investment between the two regions oil and gas industries has been limited thus far.

Part of the reason for the lack of a deep commercial interplay between Russia and the Middle East is historical. In the past the Arab world has focused on its relationship with the West for inward and outward investment. This may be because for a long time the West was the Arab world’s largest customer for oil exports. As a result Arab investments abroad tended to be focused in the West in industries such as the oil supply chain (refining etc.), real estate, industrial projects and financial securities. However, Russia only took its first steps to integrate with the global economy in the 1990s. It was then that this other energy world superpower become a viable target for investment by Middle Eastern companies. Joint Arab-Russian investment appetite was still limited during this period due to the uncertainty of Russia’s economic and political direction. Since the beginning of the 21st century, with the increased stability of the Putin era, it is quite evident that the ambition of Russian businesses and their aspirations are similar to those of Middle Eastern businesses and that cross-investment should be possible and desirable.

It is in this new environment that Crescent Petroleum and Rosneft realised the benefit of greater energy business cooperation between Russia and the Middle East. Both are leading E&P players in their respective geographic provinces and they understand the power of mutually beneficial alliances. Rosneft is Russia’s leading oil company and is amongst the world’s major national oil companies, with deep technical expertise and financial strength. Meanwhile, Crescent has long-standing relationships and business development expertise in the Middle East. Crescent and Rosneft value their respective strengths and saw the opportunity to create mutually beneficial joint investments.

The Rosneft-Crescent partnership is the first major alliance in the energy sector between two of the world’s largest oil and gas producing regions, Russia and the Middle East, but the world’s energy needs and common interests of Russia and the Middle East mean it is unlikely to be the last. Jafar says “We believe the world’s energy challenges can only be met by deep partnerships between key industry players which will ensure that necessary investments are channelled into adding new productive capacity to the global oil and gas system. As the world’s two largest energy resource holders, deeper cooperation between Russia and the Middle East will be an essential part of this process. We hope our alliance with Rosneft will become a platform for Russia to create a tangible link with the Middle East.”

Source: www1.albawaba.com