Putin will discuss with the Commission on energy industry development and implementation of investment projects

MOSCOW, October 27. /Corr. Maria Todorova/. The President of Russia Vladimir Putin will hold on Tuesday a meeting of the presidential Commission on strategy of development of fuel and energy complex (FEC) and ecological safety.

According to the press service of the Kremlin, “to discuss issues of development of energy in current conditions and forecast based on reserves, the level of demand, consumption and prices of major energy resources”. In addition, the meeting will consider prospects of realization of investment projects and measures to reduce dependence on imports of equipment in the industry.

“There are many questions on the agenda”, – told reporters the President’s press Secretary Dmitry Peskov, noting that the presidential Commission on the fuel and energy sector was not going for a long time (since June 2014 – approx.).

According to Peskov, prior to the event Putin held a videoconference chat with the head of “Gazprom” Alexey Miller and the organizers of the first seam welding of the main gas pipeline “Ukhta – Torzhok – 2” in Komi.

According to information, the speakers on the main topic of the meeting of the Commission shall be the head of Zarubezhneft, head of the working group on fuel and energy complex of the Commission Sergey Kudryashov, Deputy Minister of Finance Anton Siluanov and Minister of economic development Alexei Ulyukayev.

What to do with oil prices?

Despite the fall in world oil prices from $115 per barrel in June 2014 to $75 in November 2014, the Organization of countries-exporters of oil (OPEC) on 27 November last year, has maintained production quotas at 30 million barrels a day. This decision dropped the price of oil. Since then, oil prices fell by 33%, decreasing to current level of $47,5 per barrel. OPEC continued its policy of maintaining quotas in June 2015.

However, some members are dissatisfied with these decisions and call for cuts in oil production. Venezuela initiated the meeting of representatives of OPEC and countries outside OPEC, including Russia, on 21 October in Vienna to discuss new approaches to the oil market to find its equilibrium price. But any decisions it was not accepted.

Following the meeting, the head of the international cooperation Department of the Ministry of energy of the Russian Federation Ilya Galkin said that the price situation on the oil market does not allow to maintain the necessary level of production. During the meeting, the equilibrium price was not discussed, Galkin explained, but “began to consider the problems of the long investment cycles in the oil industry”. “Come to that, because a serious concern is manifested in all countries, the current market situation makes it difficult to support the investment process even for compensation of decreasing production. This two factors – the price level and volatility”, – said the representative of the Russian Federation.

The President of “Rosneft” Igor Sechin on the Eurasian forum in Verona then expressed the view that OPEC has completely ceased to perform the role of regulator, since the meeting of 21 October did not bring any decisions. According to him, “on the global oil market balancing, which was previously OPEC, moved to the regional market of the USA”.

Questions about fees and payments in rubles

When discussing the basic question of the Commission on global macroeconomic situation and its impact on the oil industry of the Russian Federation, will definitely emerge the questions of oil on the taxation of the industry in 2016, said the source. Until recently, in the government there were disputes about the time freeze export duties. The energy Ministry insisted that the fee was frozen for 8 months. But last week, first Deputy Prime Minister Igor Shuvalov said that all debates in the government on the budget is finalized and the mode which offered the Ministry of Finance on export duty, will be extended for the whole year.

According to sources, the oilers are likely to challenge this issue on the presidential Commission.

It is also possible that the meeting will discuss the calculations in rubles for oil exports. Earlier sources said about this I want to tell the Secretary of the Commission, the President of “Rosneft” Igor Sechin and the head of the Bank of Russia Elvira Nabiullina.

The discussion around “Gazprom”

In mid-October, first Deputy energy Minister Alexei Teksler said that the energy Ministry will not raise to the presidential Commission on fuel and energy complex question on division of “Gazprom” and does not believe that this is on the agenda.

However, according to the discussion at the meeting of the topic selection of the transport component from the structure of “Gazprom” into a separate company could be held with the filing of the Federal Antimonopoly service. As previously stated the head of FAS Igor Artemyev, the question of division of “Gazprom” initiated by the head of “Rosneft”, although he before, for 10 years, has been the subject of discussion.

Market participants in the face of independent producers, including Rosneft, insist on the allocation of transportation assets of Gazprom into a separate company that, in their opinion, will increase the transparency of tariff setting for gas transportation.

Energy Minister Alexander Novak also noted previously that the Commission may be proposals of “Rosneft” on the liberalization of pipeline gas exports.

Implementation of investment projects

With regard to another theme of the meeting, the previously Russian oil companies have repeatedly stated that a major strategic investment projects in conditions of low oil prices will not be frozen.

However, given that this issue has been raised at the presidential Commission on fuel and energy complex, it is possible that the company will announce the postponement of its projects.