Igor Sechin gives keynote speech at Special Session of XVII Verona Eurasian Economic Forum
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Igor Sechin, the CEO of Rosneft Oil Company, has given the keynote speech, entitled “Farewell to Illusions. Global Energy in the Thucydides Trap” at the XVII Verona Eurasian Economic Forum 2024 in the city of Ras Al Khaimah in the United Arab Emirates.
Taking part in the Special Session were the UAE’s minister of industry and advanced technology, and head of ADNOC, Dr Ahmed Al Jaber, the UAE’s minister of economy, Abdulla bin Touq Al Marri, Bahrain’s minister of oil and environment, Mohammed bin Mubarak bin Dainah, the executive director of Reliance Industries, Panda Madhusudana Siva Prasad, Azerbaijan’s minister of economy and chairman of SOCAR’s supervisory board, Mikayil Jabbarov, chairman of the board of directors and CEO of ONGC, Arun Kumar Singh, president and chairman of the management board of VTB Bank, Andrey Kostin, ex-head of the International Energy Agency and a recognised global energy expert, Nobuo Tanaka, SOCAR president Rovshan Najaf, member of the board of the Russan Union of Industrialists and Entrepreneurs Dmitry Alexandrovich Pumpyansky, Manpower Projects CEO Donald Morema and senior partner Ratsitagangga Tshilidzi, and president of the Conoscere Eurasia Association, Antonio Fallico.
The session moderators were Academician of the Russan Academy of Sciences and President of the Institute of World Economy and International Relations of the Russan Academy of Sciences, Alexandr Dynkin, and leading analytical expert at Italy’s RAI TV channel, Alessandro Cassieri.
In his speech, Sechin noted that the global energy sector has become a tool of the USA’s hybrid war, and reminded his listeners that this situation was described by the outstanding Ancient Greek historian Thucydides in his “History of the Peloponnesian War”. He described the classic trap, in which the fear of a hegemon as alternative global centres of strength arise inevitably leads to war with them.
Sechin listed some convincing examples of the ongoing rise in demand for fossil fuels. Thus, the inevitable rise in living standards in the developing world to even half of the level enjoyed by the “golden billion” will require an almost two-fold increase in oil output. And Sechin noted that the world is far from peak demand for fossil fuels.
He also noted that the West is making a mistake with its policy of squeezing Russia out of the energy market – this will inevitably lead to a collapse in the global economy. The aggregate value of Russia’s natural wealth is $100 trillion, enabling it to ensure reliable energy supplies to its foreign partners over the long term.
A TOOL OF THE USA’S HYBRID WAR
Exploiting its status as global hegemon, the USA is attempting to create special conditions for its own economy at the cost of other market players, including its allies, Sechin stated.
“This war has already started and is unfolding in different ways in different theatres. In some places, it’s a hot war, and in others, it’s a hybrid war: in the fields of technology, climate, finance, trade and culture. Unfortunately, today’s global energy sector is no exception and has become a target and a tool in this hybrid war”, Sechin stressed.
He went on to note the obvious fact that the USA has been unable to fulfill its self-declared role as leader and ensure the required conditions for maintaining a just global order. “America has lost its leadership in research and technology, industry and the financial sphere - something that was hard to imagine just 20-30 years ago”, Sechin stressed.
The USA’s domination in the economy and trade is declining, and its former unchallenged influence on global political affairs is being eroded, Sechin noted.
THE WORLDS IS FAR FROM PEAK DEMAND FOR FOSSIL FUELS
According to forecasts by the Bank of America, economic growth in the developing countries and the development of data processing centers will lead to an annual growth in energy consumption of up to 9 million barrels of oil equivalent per day, on top of the current level of 300 million barrels, and next year, generation of electricity from renewal sources could increase by 2 million barrels of oil equivalent per day. Consequently, the role of oil and gas in the global energy balance is not only not declining, but is actually increasing.
“Thanks to fossil fuels, the global energy system has become the foundation of modern life. Over the past 200 years, the use of hydrocarbons has made energy more accessible, and this, together with improvements in healthcare and human nutrition, has led to an increase in life expectancy from 30 to 70 years, while the share of the global population living in extreme poverty has fallen from 90% to 10%, Sechin said.
Sechin also listed a number of qualities that make oil, gas and coal irreplaceable in modern life. For example, fossil fuels are easy to transport and can be sent where they are most required at virtually any time. The volume of energy that can be moved 1,000 miles for 1 US dollar is up to 4.4 MWh for pipeline oil and up to 1.2 MWh for pipeline gas, but only 0.2 MWh for hydrogen.
“Developing a study by the great Russian scientist Petr Leonidovich Kapitsa, experts at Mckinsey and researchers from Western universities have confirmed that fossil fuels also have a high energy flow density”, stressed Sechin. On ths metric, diesel outperforms hydrogen by almost 30 times, and gas surpasses wind and solar energy by 270 and 70 times, respectively.
“Oil accounts for over 30% of global energy consumption, coal for 25%, and gas for 22%, and it looks like we are still far from peak demand for fossil fuels”, Sechin noted.
THE “GREEN” DOLLAR IS FLEEING THE “GREEN” AGENDA
“Green” economy companies are not capable of achieving their targets on time. “In real life, business is voting with its money, while the “green” dollar is fleeing the “green “agenda like the plague”, Sechin stated.
According to Sechin, over the past three years enthusiasm amongst Western stock markets for the renewable energy sector has virtually disappeared. Shares of companies that produce “clean” fuel have fallen by several times in two years.
The reasons behind this investor sentiment are the inability of “green” economy companies to achieve their goals on time, due, amongst other things, to cost increases, delays in receiving government loans and the lack of access to new funds.
Oil giants such as Chevron, bp and Shell are halting alternative fuel projects. “I am particularly happy about the decision to give up production of jet fuel from used cooking oil”, Sechin noted.
“Denmark’s biggest energy company, Orsted, is cancelling plans to build a methanol plant due to low demand”, Sechin said;
The “green transition” has had a detrimental impact on the position of Swedish storage battery manufacturer Northvolt. The company has failed in its bid for leadership in ths sector. Despite the $15bn dollars of state funds allocated to Northvolt, it has failed to become the flagship of the European battery manufacturing and has filed for bankruptcy.
Moreover, the feverish demand for electric cars in the West is now coming to an end, because buyers are disappointed in them. According to Sechin, there are 1.5bn internal combustion vehicles on the world’s roads today, while electric car penetration averages just 3% of the target level set for 2050.
“The electric car boom in the West is coming to an end: due to a lack of demand, the leading manufacturers are forced to sell at a loss, and in the USA the cost of used electric vehicles has fallen by 25% in less than two years”, Sechin sad,
One of the reasons behind falling demand for electric cars, Sechin said, is that the creation of additional generation capacity, networks and charging infrastructure is not synchronized with the electrification of the vehicle fleet. “And this has already turned into a headache for electric car owners”.
In Sechin’s opinion, in the future, new electric cars will compete for access to electricity with data processing centers which, by as early as 2030 will require over 1,000 terawatt hours of electricity.
“An additional and significant challenge will be transitioning freight, air and waterborne transport to electricity. To achieve the energy transition goals, by 2050 the number of electric trucks s has to grow by over 100 times to just over 40 million. This is hardly realistic”, Sechin added.
THE ENERGY TRANSITION AS A SANCTIONS BARRIER
The energy transition program is a powerful sanctions barrier for 88% of the world’s population, Sechin believes.
In his words, the unhealthy hype being artificially whipped up around the topic of climate change is leading to blatant abuses. “For example, according to a recent investigation by Oxfam, the World Bank has failed to provide proper reporting on almost $41bn of climate project expenditure”, Sechin said,
At the same time, entire countries are not against turning a profit on the energy transition. “Recently, the Foreign Affairs journal, one of the USA’s key foreign policy mouthpieces, suggested combining the fight against climate change with the promotion of American economic interests by supporting “green” technologies in developing countries via a new type of Marshall Plan”, said Sechin,
“According to the new Marshall Plan, to restore its global leadership and acquire technological sovereignty, the USA should oblige developing countries to buy American technology and equipment for the “green” transition in exchange for American financial aid”, said Sechin. The USA wants to incentivize its partners to combat climate change by applying import duties.
“This confirms the view that the declared energy transition program is, in essence, a disguised and powerful sanctions barrier for 88% of the world’s population, for everyone who does not belong to the “golden billion”, Sechin stated.
GLOBALIZATION HAS FAILED TO ENSURE STABILTIY
Globalization has exacerbated inequality and failed to ensure stability, believes Sechin. He noted that over the past 45 years, the redistribution of wealth from the developing countries to the developed world has amounted to $16 trillion.
One vivid example of this, he said, is the so-called “structural reforms” carried out in Ukraine under the aegis of the IMF and the World Bank. “These reforms are a pre-condition for the provision to Ukraine of financial aid, which is secured against strategically important assets, such as agricultural land”, he said,
As a result, Ukraine has agreed to lift its moratorium on the sale of agricultural land. “As of today, over 9 million hectares, or one third of all arable land, are in private hands. Moreover, amongst the 10 biggest landowners there is just one Ukrainian company. The other nine are all incorporated abroad, Sechin noted.
Amongst the biggest Western holders of Ukrainian agricultural land and state debt, Sechin listed the well-known US financial giants Blackrock, Vanguard, NCH Capital and Kopernik Global Investors, French company BNP Paribas Asset Management, and the Sovereign Wealth Fund of Saudi Arabia.
“It’s obvious that despite repeated promises, the globalization being conducted by the USA and its satellite has exacerbated inequality and failed to ensure stability. In his day, Karl Marx wrote “Where there is equality, there is no profit”, Sechin said,
Sechin also believes that maintaining the dollar’s position at its former level will hardly be possible. “Back in 1960, the Belgian-American economist Robert Triffin predicted the risks of long-term domination of the US dollar. In his “Triffin dilemma”, he pointed out that the role of the dollar as the international reserve currency is impossible without a constant deficit in the US balance of payments, which supports the liquidity of the financial system and promotes global economic growth. An increase in the US balance of payments deficit, in turn, leads to a surplus of dollars in the world and undermines trust in the America currency, thereby directly jeopardizing its status”, Sechin noted.
RUSSIA IS THE GUARANTOR OF GLOBAL ENERGY SECURITY
In his report, Igor Sechin emphasized the fallacy of the policy of forcing Russia out of the energy market - this would lead to the collapse of the global economy. The total value of Russia's natural resources is worth 100 trillion dollars (almost twice as much as in the United States), which imposes a huge responsibility on our country and ensures the reliability of supplies to foreign partners in the long term, Igor Sechin noted.
The Head of Rosneft highlighted the special role of the Arctic in the development of Russia's resource potential. 80% of the world's Arctic oil and gas reserves are concentrated in the Russian latitudes. “The Arctic should be completely free from conflicts and foreign interference, taking into account the strategic importance of this region for the energy security of the whole Eurasia,” Igor Sechin said.
At the same time, the CEO of Rosneft rejected groundless accusations against Russia of undermining the foundations of the energy market. “Over the past 10 years, it is our country and its partners who have made the greatest contribution to stabilizing the global energy market, often sacrificing their own strategic interests,” Sechin said.
Igor Sechin recalled that in 2016, OPEC's share of the oil market fell to 36%. But Russia, together with its partners, created OPEC+ with a 55% share, which helped stabilize the market and protect the interests of producers. The decisions of OPEC+ have also significantly supported the American shale companies, which, according to the head of Rosneft, by that time had already “blown away more than 300 billion dollars of their shareholders' capital and accumulated debts of almost 200 billion dollars more”.
OPEC+ allowed the United States to pay off its debts, increase production, invest in R&D, and turn the U.S. into a leading energy exporter.
According to Igor Sechin, the favorable political environment shall further support the U.S. energy industry. There is a belief in US business circles that the success of Donald Trump's second presidential term requires, inter alia, bringing an additional three million bpd of oil to the market. But those barrels, Igor Sechin noted, could “come out not just from the U.S." - OPEC+ production cuts have created significant spare capacity that could be used for political purposes.
THE POTENTIAL OF EURASIAN COOPERATION IS ENORMOUS
In closing remarks, the Head of Rosneft emphasized that the discussion of the XVII Verona Eurasian Economic Forum is devoted to the peculiarities of integration processes of the Eurasian space, with due regard for national interests, built on trust, respect and sustainability.
“I am convinced that the potential of our cooperation is enormous, and we are only at the beginning of its realization,” Igor Sechin noted and cited the first President of the United Arab Emirates, Sheikh Zayed Al Nahyan: “Unity is the path to strength, honor, invulnerability and common good.”
Igor Sechin wished productive work to all Forum participants, and personally thanked Sheikh Mohammed bin Zayed Al Nahyan, President of the UAE, and Sheikh Saud bin Saqr Al Qasimi, Emir of Ras Al Khaimah, for their hospitality and informative content of the event program.
BALANCE IS NECESSARY
The heads of major energy companies and leading market experts took part in a Special Session dedicated to ensuring global energy security at the XVII Verona Eurasian Economic Forum.
During the discussion, Reliance Industries CEO Panda Madhusudana Shiva Prasad said that a balance is needed between affordability, energy security and sustainable development.
“Despite criticism of the hydrocarbon sector, energy remains crucial and necessary for a plethora of industries including fertilizers, plastics, pharmaceuticals and medical delivery systems. Therefore, while climate action is urgently needed, we cannot simply abandon the current hydrocarbon-based system,” he emphasized.
According to Nobuo Tanaka, former executive director of the International Energy Agency, countries need to have a diversified basket of energy resources in the current environment. Newly emerging areas of activity, among which are the establishment of data centers, require large amounts of energy. “Therefore, from a pragmatic point of view, we need to utilize all energy sources,” he added.
ONGC Chairman and CEO Arun Kumar Singh in his address said that the need and demand for power in India is growing at 8-9% per annum, which is higher than the growth of the economy, and the demand for power will only get stronger.
“Now all the growth is coming from developing countries. They need affordable energy resources. If oil and gas are expensive, developing countries have no choice but to turn to solar power. If prices are affordable, India can consume 8-9 million barrels per day,” Arun Kumar Singh said.
Andrey Kostin, President-Chairman of the Management Board of VTB Bank, said it was time to create a financial infrastructure parallel to the Western one. “I mean the system of settlements, and the financial transfer system, and the exchange - stock exchange, as well as for trading in grain, oil, gas, gold. It is also necessary to create our own credit rating agencies that would be recognized by the BRICS countries. Such a system will not appear immediately, but we must move in this direction. And I believe that the best financial center for the development of such infrastructure are the United Arab Emirates, which joined BRICS this year,” Kostin said.
Dmitry Pumpyansky, a member of the Board of the Russian Union of Industrialists and Entrepreneurs, emphasized during the discussion that Russia indeed has huge hydrocarbon reserves, a significant part of which is located in the north of the country.
“For example, just the large-scale Vostok Oil project alone is one of the most advanced and most promising in the world and has a colossal resource base. “Vostok Oil” will more than provide our country and many countries with hydrocarbons for many years to come. Proximity to the Northern Sea Route is a significant advantage of the project and opens up wide opportunities for supplies to the markets of the Asia-Pacific region,” said Dmitry Pumpyanskiy. According to him, the implementation of the project will give an impetus to the development of related industries, such as machine building, metallurgy, power generation, and road construction.
PRESENTATION TO I.I. SECHIN'S REPORT AT THE XVII VERONA EURASIAN ECONOMIC FORUM
Rosneft Information Division
Rosneft Oil Company
December 5, 2024