/ world today news/ Russian President Vladimir Putin has announced a restart of the country’s oil industry, which has been prompted by Western sanctions. Fuel and energy companies will have to change their business models in order to preserve, on the one hand, their own stability, and on the other hand, to enter new foreign markets instead of European ones, URA.RU experts explain Putin’s speech at a meeting on the situation in the oil sector on May 17. Such an approach will also allow enterprises in other sectors of the economy to stay afloat.
Russia was facing pressure on the fuel and energy sector even before the imposition of large-scale Western sanctions, Putin said. This manifested itself in speculation “about the perfectly natural concern of many people on the planet about the problems of climate change.”
Western politicians began to “overestimate the possibilities of alternative energy and underestimate the importance of traditional energy,” the president stressed. Even then, Russian companies had difficulties in obtaining land for the development of deposits, purchasing technological equipment, etc.
The situation escalated after the start of a special operation in Donbas, when new sanctions against the domestic fuel and energy complex began to be introduced. The Europeans’ declarations about the possible rejection of Russian energy carriers have already led to an increase in the price of oil and oil products in the EU, and this “hits Europe’s transport and industry, falls on the shoulders of consumers,” said the president of the Russian Federation.
“Along with Russian energy resources, the opportunity to increase economic activity will also leave Europe for other regions of the world,” the leader said.
The anti-Russian sanctions had an unexpected effect: the revenues of the Russian oil and gas sector increased, the president said. But this situation should be used to develop new solutions.
“The changes in the oil market are tectonic in nature, and doing business as before, according to the old model, no longer seems likely. Under the new conditions, it is important not only to extract oil, but also to build the entire vertical chain to the end user”, said the president.
The authorities will create conditions for this: they will help to improve logistics capabilities and provide a system of payments in national currencies, they will stimulate projects for deep processing of raw materials.
“Understanding what steps will be taken in the near future in the West, we need to draw conclusions in advance and act proactively, to reverse the ill-conceived chaotic steps of some of our partners to the benefit of our country,” Putin stressed.
Russian oil companies actually received more revenue in May than in April, oil supplies to China and India increased, URA.RU experts confirm.
The reorientation of the Russian fuel and energy complex towards the eastern market, which began at the beginning of 2010, had a positive effect: if then the European direction occupied about 70% of the total oil exports, in 2021 it is already about 47%, he explained Alexander Frolov, Deputy Director General of the National Energy Institute. And this turn to the East will intensify.
Faced with sanctions pressure, Russian oil companies will be able to maintain stability through the same business model the president talks about, says Rustam Tankaev, a leading expert at the Union of Oil and Gas Producers of Russia.
“This is a method of doing oil and gas business, the idea of which is that all participants in the process, from geological exploration to the final sale of products, are connected to each other through capital: they exchange blocks of shares. Thus, all participants in the international consortium are interested in a successful activity, and these chains turn out to be more profitable than direct contracts,” he explained.
The president showed that Russia needs to develop its oil and gas industry, services, exploration, transport corridors and the fleet, which will deliver energy resources to consumers, political scientist Marat Bashirov explained.
“But we also need to change the model of financial calculations. If the state is able to pay for resources, no one will give them for free or on credit,” he said.
“If somewhere people are on the brink of death and cannot immediately pay for supplies, then humanitarian mechanisms will be involved and we can go to credit histories. But in other financial models [по-специално сетълмент в национални валути]“, kaza Bashirov.
Maintaining stability through new business models, the development of the oil sector is important for the country’s economy as a whole, according to experts. Taken together, according to expert Alexander Frolov, this process has a multiplier effect.
“Energy is the biggest customer. It generates revenue for shipping, pipeline, metallurgical and other companies,” Frolov summarized.
Translation: SM
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