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Russia inescapable for Western oil giants

Russia is key to helping satisfy Western energy demand, oil giants BP and ExxonMobil stressed here on Monday, as Europe faced up to potential supply disruptions over the Ukraine crisis.

“I think the fact that Europe depends on Russian gas and Russia depends on European revenues creates an important link and I do believe that energy can act as a bridge,” BP chief executive Bob Dudley told a major energy conference in Moscow.

“The interdependence of suppliers and consumers is a force of stability in a very turbulent world,” he added.

The comments from US national Dudley came as Russia on Monday moved to cut natural gas supplies to Ukraine over unpaid debts and warned Europe of possible supply disruptions if Kiev siphons off gas destined for the West, as happened in disputes in 2006 and 2009.

BP has insisted that it remains committed to Russia’s state oil giant Rosneft, despite the latter’s chief executive Igor Sechin being named among officials facing US sanctions over Russia’s stance on Ukraine.

On Monday, Dudley joined Sechin and ExxonMobil chief executive Rex Tillerson in addressing the World Petroleum Congress, a key forum in the energy sector calendar.

“At ExxonMobil we’re optimistic about areas for potential development in Asia, Latin America, North Africa, parts of Europe and here in Russia,” Tillerson told delegates.

Rosneft has struck a series of energy production deals with companies ranging from US titan ExxonMobil to Norway’s Statoil and Italy’s ENI.

At the same time, a number of Western firms are believed to be reviewing their commitments to Russia after Washington and Brussels slapped sanctions on the Kremlin and the local economy took a turn for the worse.

Tillerson’s presence in Moscow came despite US media reporting that Washington had discouraged American attendance at the Congress.

While Western energy companies are looking to Russia to help them secure new sources of oil and gas to meet rising global demand, Russian firms are benefiting from their partners’ technological expertise, especially in the field of uncovering energy from shale rock.

– Russia key: OPEC –

“Russia has a long history of providing energy to the world, and Russia is a truly global energy power with the largest combined oil and gas reserves as well as the highest combined production of oil and gas,” OPEC Secretary General Abdullah El-Badri told the World Petroleum Congress.

“Russia will be a central element to our global energy future,” he added. Oil producing cartel OPEC pumps out about one third of the world’s crude and its dozen member nations are in direct competition with Russia.

Speaking in Moscow, Dudley on Monday pointed to “limited growth of the global economy”.

He told delegates: “This is not an age of expansion… We need to set strict limits on capital spending and really focus on safe, reliable, efficient operations and a very careful selection of projects.”

BP currently retains a near-20 percent stake in Rosneft after the British firm sold its 50 percent holding in joint venture TNK-BP to the Russian company.

Looking back, BP said in its annual Statistical Review of World Energy that global energy demand accelerated last year “but, reflecting the weakness of the global economy, growth of 2.3 percent remained slightly below the historical average”.

Energy consumption in emerging economies grew below the long-term average rate, rising by 3.1 percent on slower growth in China.

Consumption in the mature economies of the OECD grew by a higher-than-average rate of 1.2 percent owing entirely to strong growth in the United States — the world’s biggest consumer of crude oil, BP added.