Moscow. April 15. The world does not stop the political and energy redistribution. Currently the middle East continues to be the epicenter of these events. About prospects of development of situation in the world and the middle East region, including Syria, about the place of Russia in these processes, about the expectations from the meeting of representatives of oil-producing countries in Doha your opinion of the Agency “Interfax” has shared a Russian politician, former Minister of fuel and energy (1993-1996), Chairman of the Board Union of oil and gas Industrialists of Russia, Chairman of the Board of Directors of the company “Soyuzneftegaz” Yuri Shafranik.
– As recent political events in the middle East have influenced energy sector?
Energy world over the last 6-8 years has changed dramatically. This has been influenced by the shale revolution in the U.S., and the growing consumption of hydrocarbons in China. However, in most countries the energy market significant change is felt and realized very late.
Has changed not only the map energy flows, occurred geopolitical changes. If Saudi Arabia was a priority in the U.S. as a stabilizing main supplier of oil to the largest consumer, today she’s gone in the eyes of American power almost to the tenth place. The global energy market has changed not only because of the shale revolution, and not even in the sanctions case, and in the technological breakthrough and economic conditions. A technological breakthrough immediately changed the attitude of America, which has all its power sent, as she had always done, to ensure the competitiveness of their companies, their interests. And immediately the U.S. in the middle East, a new priority is Iran that has shifted the preference remains on the second plan.
We also slid down the scale of priorities of energy cooperation, and recognized it immediately. The U.S. position has an impact on Russian-European relations – an active energy dialogue with Europe ceased.
– How do you assess the prospects of oil-producing countries meeting in Doha on April 17? Will there be agreement to freeze production? Will it affect the price?
– My position since the Soviet Union has not changed – we need to have a dialogue with OPEC, but it is not necessary to enter the organization. This does not mean that we have to maneuver, no, need to be understood by the country to OPEC. This organisation has good infrastructure and Analytics services on the basis of going world’s oil leaders. It is necessary to cooperate and to be clear – to show where interests coincide and where not.
I am not for negotiations and for dialogue today about oil prices, oil production volumes. That dialogue will play a positive role. But we need to understand exactly what the analysis on all the world’s leading companies and major producing countries (OPEC and Russia) shows that if production and reduced several countries, it is insignificant. But in General, total and leading companies and countries-leaders in the production of hydrocarbons extracted oil more (according to the IEA, supply exceeds demand by 2 million barrels per day).
But in the period from 2002 to 2012 demand often also exceeds demand and the price of oil grew.
For 2016 I would recommend the state to take into account the price not above $40 a barrel, between $35 and $40. Although to predict the price is almost impossible, because there are many factors that affect it. And the ratio of supply and demand it is only one, sometimes not even the main factor, but geopolitics is the second, and also not main. (Global Finance now, of course, stronger impact).
For 2017 I would in any case not recommended to pledge above $45. In this case, for a certain growth in 2017 and maybe even 2018, I expect a certain decline in the area of the 2019-2020 period. But it is certainly not a dogma, because life in oil prices is a colorful coloring, that is difficult to predict. Thus, at one and the same picture look 10 people, and everyone sees it differently, because the shades depend on the angle of view.
– Meeting in Doha on April 17, right? Will it be effective without Iran? Will the decisions of this meeting will affect the price?
– Meeting, of course, necessary. Will it come to Iran or not this is the 55th question. Production increases now, all major producers, except Angola, Venezuela and Algeria. And not even the most important now Iran and Iraq. Iran is a potential opportunity, and Iraq is a reality. So, in 2014, Iraq produced 3.2 million barrels of oil a day, and in 2015, 3.9 million b/d, and now 4.3 million barrels per day. In Iran, meanwhile, was 2.8 million b/d, began to 2.87 million b/d. while in Saudi Arabia it was 9.6 million b/d, and was of 10.1 million b/d.
Decisions that radically affect the market, from the meeting in Doha. The aim is to increase the price of oil certainly has, but it is secondary. Now for all major exporters, the main question is: how to preserve their market share. And Russia has no right to lose the market, and, consequently, to reduce production.
– What do you think, does Russia have any preferences when returning to oil and gas projects in Iran?
– Iran is, of course, and great potential for gas. But in order to work there, it is necessary not only to remove the sanctions, but also to make this area stable for at least 25 years, and then you can decide on the construction of a gas pipeline via Turkey to Europe.
Russian companies, of course, must be present in Iran. I think that we he did the right thing, helping Iran out of the sanctions. But to say that Iran will become a rival of gas, I wouldn’t, because it’s all in perspective. However, it is desirable to realize this potential together, finding mutually beneficial forms of cooperation, as competitors will not doze off.
In any project of Iran – the state self-sufficient, to wait from it for any very favorable conditions naive. Therefore, anyone who wants to work there, need to prepare for state control and tough competition from Iranian and foreign companies. Of course, our advantage is that we in Iran are among the States that it is good. But it is the political aspect.
As military action in Syria affected the oil installations? How fast can recover?
No matter how often destroyed, in a few months all can be recovered with a favourable economic and political conditions. If I’m the oilers and will come with money, quick scheme collect all the necessary equipment exactly one month, and then I’m going to bring the project to mind. Some facilities bring out, make simplified, throw on the ground, and then I’m going to build. Remember Kuwait. When it bombed, everyone thought it was for decades, and have been for a year and a half. Therefore, we are not talking about the decade, takes months up to a year from the beginning of stabilization.
– How do you see the situation in Syria after the announcement of the armistice? What is the most important?
– The main task now is to close off the border with Turkey. This is necessary not only to Syrian government, but perhaps to a greater extent Europe, which is faced with the problem of refugees from the Middle East.
Try to solve the problem of refugees with Turkey serving actually as a blackmailer, that’s one thing. But if Europe helped, having at least political support to the efforts of the Syrian authorities, the army in the tightly overlapping Syrian-Turkish border, it immediately significantly reduce the flow of refugees and multiple, dozens of times, would weaken the role of the blackmailer.
– A blackmailer in what respect?
– In terms of “money for people and people for money”, what plan?
– Back to the previous question… the Second, not less important task is to proceed to a lifting of the unilateral economic sanctions imposed against Syria by the European Union, the United States and several middle Eastern countries.
– Start cancel we can do right now with those areas in Syria that have joined the cessation of hostilities. We are talking about joined the peace process as the territories controlled by the Assad government, and not controlled by them.
The ongoing peace process must be strengthened. And as soon as sanctions are lifted, someone money will start to invest, the projects will be implemented, business will come to life. People will have hope. To some extent it will relieve tension and help to stop their flight to Europe.
So, now it Europe, I think, should be very interested in the lifting of the sanctions on territories that are included in the peace process. And what they are there political overtones, it is not now so important.
– And what is our interest in Syria?
– Syria is of great interest to us, and our presence there is necessary, because this country – like with few resources – was the key to the whole situation in the middle East.
The participation of Russian aerospace forces in Syria were perfectly reasonable, helped to intensify the fight against DAISH (Arabic name is prohibited in the Russian Federation the terrorist group ISIL), with Turkey and all became clear that also a positive thing.
– This is the right strategy from the perspective of a long-term perspective, betting on President Bashar al-Assad?
– Syria has always been our good partner. Today, the government represents power in the person of the President and the Parliament. We collaborate with them.
– What are the chances of the return of foreign and particularly Russian companies in Libya? When this might happen and how quickly Libya can augment production to prewar levels?
– With Tunisia, with Libya and most importantly, began the “Arab spring”. Before I believed and now believe that these events will affect all the middle East for 25 years. This does not mean that all this time there will be a war, it means instability. For the past 5 years.
From all other States Libya is the country-specific: the power structure there has been arranged through the representation of the tribes, and for anything in the near future just so the tribes among themselves do not agree. So if you say that stabilization will come in a year or two, then this must be forgotten. All this will be delayed not less than a decade.
Of course, I want to believe that within 10 years people will calm down, there will be a stabilizing factor. But in the next two or three years I don’t see anyone you could recommend to invest money there.
– And what are our prospects in Iraqi Kurdistan?
– The state has done everything possible to cooperate with the Iraqi Kurdistan. We there are a few small companies and “Gazprom Neft”. The prospects are definitely there, but it should be considered how economically beneficial their implementation.
– What needs to be done in Russia to ensure that even in conditions of low oil prices to feel comfortable?
– One of the most important tasks is to saturate the domestic market with cheap electricity, cheap gas, cheap oil (Americans for 10 years, kept stable electricity prices in 2 times reduced the price for gas for industrial consumers).
We need to create a good investment climate that will increase the effectiveness of projects. The investor comes after the cheap gas. For example, negotiations are underway with two major Chinese companies. Show them today’s cheap gas for 25 years, and everything comes from chemical projects. We need the petrochemical industry, polymers and composites.
In addition to feel comfortable not going to work unless we can achieve the development of oilfield services. I’ve been saying about the need to strengthen three or four service companies, but not the state (heavy monsters devouring the budget), namely, the national. Under those, I mean a large public company, backed by Russian capital. It needs to form a group of investors, not one or two individuals who one day can leave (with a capital) abroad. If the consolidation of such companies will be supported at the highest level, investors are certainly there. I am certain that a controlling stake of such companies must be owned by Russian capital (not the state), and their partners and minority shareholders can be foreigners.
The main thing is not to “not let go”, and to observe the priorities of national interests. And, then, to count money. And they are in the oil and gas sector are, rather, leave it at the service: well drilling – facilities – capital repairs of equipment. It is therefore important to build and strengthen these three main trends of our own production, our own brands equal Schlumberger and Weatherford, are not inhibiting the activity of foreign firms, but competing with them. Suppose that a quarter of Russian service market may be occupied by foreign partners. Let, as they say, hold master classes. But it is inconceivable that they flooded the market. Then all the technological development will only take place abroad.
– In your opinion, should be a separate private service companies or those structures required to be part of vertically integrated oil companies?
– All must be effectively and diversely. For example, Vladimir Bogdanov the best, most efficient company – “Surgutneftegaz” and he his drilling. But one will hardly repeat his example, because it’s Bogdanov. Vagit Alekperov created drilling company “Eurasia” and sold it, but it solves all the problems of “LUKOIL”. “Company” has grown into a large company with high economic efficiency.
In General, if you look at the most technologically developed countries, and this, when we talk about the oil and gas industry, the US and Norway, the service has been as a separate industry with a large range of different services. The increasing sophistication of exploration and production makes it increasingly narrow specialization necessary condition to enhance economic efficiency, which is especially important in the period of low prices.
Of course, that level of service to raise for the sake of economic development of the country and not just the oil and gas industry, you need to act, for example, the Shell company that came and picked Russian contractors. And those who were selected, did a great job to their training corresponded to the world level. Therefore, all Russian companies must make a choice of contractors – Russian or Western (but with localization in Russia) – and in a few years to make them competitive in the country and abroad.
This is not an easy task, but without solving this problem it is useless to hope for the development of the industry and the economy as a whole.