Russian Energy Week Forum
October 2, 2019
15:30
Moscow
Russian Energy Week Forum
Vladimir Putin took part in a plenary meeting of the Russian Energy Week International Forum. The Russian leader addressed the participants and answered their questions.
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Excerpts from transcript of Russian Energy Week International Forum plenary meeting
President of Russia Vladimir Putin: Friends, ladies and gentlemen,
I would like to heartily welcome all of you at the Russian Energy Week Forum in Moscow.
As usual, the forum’s participants and guests include heads of the world’s leading companies and industry associations, ministries and agencies, as well as respected professionals and experts. All of you determine the future of the global energy sector.
It is good to see a record number of participants this year. This means that the forum is gaining in popularity. It has attracted 10,500 participants, over 200 companies from 80 countries.
We are confident that this interest is based on a desire to cooperate and to build up trust, which serves to boost the technical and technological progress of the fuel and energy sector and to ensure the world’s energy and environmental security.
We see that the scale and interdependence in global energy is growing alongside its vulnerability, and that instability in some parts of the world affects supply and demand worldwide. We have just talked with the OPEC Secretary General about this.
It is especially important in this context to make use of all the available mechanisms to balance the market and find mutually acceptable solutions based on respect for the interests of all sides.
A good example of this dialogue is the OPEC+ oil production cut pledge, the first ever case of cooperation between OPEC and non-OPEC countries.
By working together, we have achieved a result that satisfies both oil producers and consumers. The deal has created conditions for the further development of the oil sector and for launching new long-term projects.
Russia remains a responsible party to the OPEC+ deal. We are convinced that cooperation will continue to develop. I am referring not only to oil production volumes but also to close cooperation in the introduction of new hydrocarbon production, processing and transportation technologies and the resolution of environmental issues.
Analysts believe that energy consumption will be growing in the next few years, primarily in the countries of the Asia-Pacific Region and in the traditional markets, such as Europe.
Reliability and predictability of supply are most important in this respect. It is necessary to follow rules that are free of politically tainted and dishonest competition where restrictions on energy companies or their partners are introduced under far-fetched pretexts.
But even under these conditions we demonstrate a responsible, businesslike approach in relations with our long-standing partners in Europe. We are convinced that regardless of how emotions and passions boil, or what dirty tricks are used against us, it is necessary to be guided by fundamental principles of pragmatism, reliability and a vision of a common future. We intend to act, and will act, in this vein.
Russia ensures stable, failsafe gas supplies to Europe. We continue implementing large infrastructure projects, such as the Turkish Stream and NordStream-2.
The marine section of the Turkish Stream is completed and work continues on the surface sections. NordStream 2 is also on schedule: over 82 kilometres of the route have already been laid.
I would like to emphasise that we implement all these projects jointly with our European partners, and they are exclusively commercial. I would like to stress again that there is no political background behind these.
The task of these projects is to diversify gas supply routes and remove transit risks, thereby enhancing Europe’s energy security. This is exactly why the logic of normal business relations prevails over attempts to keep energy hostage to political differences.
Naturally, we receive new impetuses to develop cooperation with those that do not support this logic – the logic of dishonest competition. The demand for hydrocarbons is growing in Asia, more quickly than in Europe.
Russia has already become the largest petroleum exporter to China. In the past decade, our shipments of petroleum to China have grown four and half times; exports of petroleum products have doubled.
We are set to launch the Power of Siberia gas pipeline by the end of the year. It will become a part of the eastern route for Russian natural gas distribution.
We are also developing new and vast markets and areas with our foreign partners. We are working in lucrative niches like liquefied natural gas.
Let me note that the number of LNG-consuming countries has increased five times since the beginning of the century. Demand has almost doubled. According to some estimates, LNG will account for half of all world gas trade in five to ten years.
With a view of these trends, we are exploring the resource base in the Arctic, developing the Northern Sea Route and our transit fleet, sorry, our transport fleet. It is actually a transit fleet as well, so it is not really a slip of the tongue. We are expanding the distribution geography of Russian hydrocarbons.
Russia’s share in the global LNG market has more than doubled to 9 percent thanks to the Yamal LNG project. It does not look like much for Russia yet the progress is noticeable.
Jointly with French, Japanese and Chinese companies, we are pursuing the Arctic LNG project that will yield another 20 million tonnes of gas a year.
Low extraction costs and attractive logistics make Russian LNG projects some of the world’s most competitive and allow us to expect long-term growth in our share of this dynamic market.
We are set – this number might have already been given here during the roundtable discussions – to reach 120–140 million tonnes of LNG a year by 2035.
Colleagues,
A focus on the environment and climate, an emphasis on the responsible development of the industry to decrease its impact on the environment, have become a salient trend in the world energy industry.
We certainly factor in these considerations while modernising and increasing the potential of the fuel and energy complex. Let me note that a week ago, on September 23, we took the decisions necessary to ratify the Paris Climate Accords.
Today, Russia has one of the purest, low carbon energy balances in the world. I would like to emphasise this because many people do not know this. Over a third of our energy generation is produced by hydroelectric power stations and nuclear power plants, and another 50 percent by gas.
In the past few years, we have put 800 megawatts of capacity into service based on renewable energy sources. Almost half of this was put into operation last year. Facilities with a total capacity of 4,700 megawatts are under construction or in the design stage.
We are supporting low carbon facilities. Long-term power delivery contracts are signed on projects for wind, solar or hydroelectric power generation.
Electricity from renewable sources receives preference on the retail market in this country. There is a mandatory standard for priority purchases by system organisations. These are real instruments for supporting this energy sector.
We hope that the adopted measures will promote domestic research and development and the flow of investment in this high-technology sector of Russian power engineering, and will guarantee capital return and high profits on invested funds.
Needless to say, it is necessary to pay special attention to increasing the efficiency of production and the use of energy resources. Digital technology must be used on a broader scale in resource production and energy generation and transmission.
There is a vast reserve in energy consumption. According to some estimates, all-round introduction of smart grids could allow the world to cut its energy losses by a quarter.
Russia is actively using digital solutions in energy networks. We have launched projects on smart grids in Kaliningrad, Ufa and Belgorod. Depending on the results, we will use this experience in other cities and regions in the Russian Federation.
Friends,
Today, the world energy industry is facing serious challenges and ambitious tasks. Detailed professional discussions are scheduled for Russian Energy Week.
Each of you has opinions on the issues in this area. But all of us are interested in the confident, steady and eco-friendly development of the energy industry. We understand its importance for the sustainable growth of the global economy and the improvement of living standards in all parts of the world.
Sharing these trends, Russia invites other states to cooperate. We are open to creative and constructive energy partnerships in the interests of a stable and predictable common future.
Thank you for your attention.
Keir Simmons: Mr President, thank you very much, and I plan to try to explore in more detail some of the issues that you have raised, including the environment, the question of growth, pipelines – a number of those issues, but let us begin, if I may, with a supply side challenge. You met with President Rouhani in the past few days, and again, I think, last week. What have you learned from those meetings, what is your view of the Iran situation?
Vladimir Putin: We met yesterday. We spoke about energy and cooperation in energy supplies, and we discussed the entire range of issues in Russian-Iranian relations.
It is well known that Iran possesses great potential and is a major player on the world energy market but, unfortunately, due to the US Administration’s sanctions policy, Iran cannot take full advantage of its potential.
In my opinion, this is harmful for the world economy and the world energy industry in general because it restricts the stable performance of this sector, which is extremely important for the world economy.
When there is no stability, there is no investment, or at least no proper volume of investment. Prices are unstable, which in the long run hurts both energy producers and consumers.
However, Russia supports Iran in every possible way and seeks to minimize the negative risks not only for Iran but also for the world energy market. We have certain agreements with our European partners that want to build up relations with Iran one way or another, including in the sphere of energy.
Let us remember that resolution of all these issues is closely associated with global politics and security issues. Iran’s commitment to the principles of the Joint Comprehensive Plan of Action is a very important and critical issue, something that is on the world political agenda today.
We strongly rely on having these agreements retained and on eventually normalising the situation around Iran, which will positively affect the world energy sector.
Keir Simmons: We have senior representatives from both Saudi Arabia and Iran in the audience, so the question though appears to be whether President Rouhani would be prepared to meet with President Trump. Did you gain from your meeting with President Rouhani any indication about whether that is a meeting that might be possible?
Vladimir Putin: You had better ask President Rouhani and President Trump. Our position is that dialogue is always better than confrontation. This was graphically illustrated by a firm, well-considered, entirely pragmatic and correct decision taken by president Trump in a meeting with the North Korean leader Kim Jong-un. A more or less marked end to the tensions followed immediately.
They have a long way to go before resolving these issues, which we are well aware of, but still this is a move in the right direction. The same can be said of direct contacts between Iran and the United States and between the Iranian President and the US President.
As far as I know, a similar attempt was made by France at the UN General Assembly in New York. Unfortunately, there was no meeting because Iran believes it cannot engage in this dialogue as it is not on an equal footing given the sanctions imposed on it. It seems to me that Iran definitely wants to bring the situation back to normal, including normalising its relations with the United States.
Keir Simmons: And yet at the same time we have the attack on Saudi Aramco. How do you understand that attack in the context of what you are explaining, which is suggesting that Iran wants to negotiate?
Vladimir Putin: We condemnactions like these, no matter who is behind them. This is a destructive event that had serious implications for the global energy market. However, I do not think those who really planned and carried out these actions achieved their goals.
Yes, indeed, there were market fluctuations. Indeed, Saudi Arabia sustained heavy losses – they had to cut oil production by 50 percent, as they could not refine the oil after the refineries were damaged.
But these were short-term fluctuations. You and I know that the global markets recovered almost within a week, and today the price of a barrel of Brent crude is below $60.
Therefore, these actions did not produce the effect that those who implemented them were seeking; however, these actions hurt the global economy, consumers included. I would like to repeat that we condemn these actions but we are against shifting the blame to Iran because there are no grounds for this.
Yesterday we also discussed this issue with President Rouhani. His position is that Iran does not hold itself responsible for this incident as it has nothing to do with it, and Iran believes it is somewhat strange that some countries put the blame on them while there is no evidence for this and the international investigation of the incident has not been completed.
Keir Simmons: Just to be clear: so you accept Iran’s explanation, do you, because US intelligence certainly believes that Iran was responsible?
Vladimir Putin: US intelligence serves the country’s foreign policy. But they have not provided any proof so far. We spoke to the Saudi authorities, and I personally talked to the Crown Prince.
As I understood from what he said, Saudi Arabia is seeking unassailable proof regarding the involvement of whatever country in this incident. So far, no one has produced hard evidence. Let us be guided by facts, rather than emotions.
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Keir Simmons: Mr President, let’s talk about gas pipelines. The Power of Siberia, the pipeline from Russia to China, is about to open. It has been described as a pipeline between the world’s biggest producer of energy to the world’s biggest consumer of energy. When you negotiate with the Chinese, people suggest that you find yourself in a weak position, that the Chinese are able to negotiate prices with you from a stronger position. Is that a fair description or not a fair description?
Vladimir Putin: Those who don’t want these projects to be implemented are saying this. The competitors of Russia and China who want to introduce certain disagreements into our relations, including in this sphere, are saying this. And this is nonsense.
We have conducted complicated talks over many years. In effect, our Chinese friends are tough negotiators, but we have found an optimal solution that meets the interests of China and Russia.
Thirty-eight billion of deliveries a year is a large volume. The Power of Siberia pipeline can pump even more, and China needs greater volumes. For this reason, we are now negotiating the possibility of building a west-bound version of the same route. We are moving ahead gradually and calmly. We can see the needs of the Chinese economy.
Mr Dudley has just noted the pace of Chinese [economic] growth. Yes, the country is adjusting its growth rates. In my opinion, such adjustments are something natural, considering the overall state of the global economy. In fact, it is also slowing down a bit. Over the past five years, such rates have totalled over 3.5 percent per year, on the average [3.6, 3.4 and 3.8 percent]. And the forecast is that such growth will persist, but that it could be at a slower pace. The rates are subsiding, and this is an obvious fact. Therefore China is no exception here, but the country is growing much faster than all other countries. China needs energy resources, and Russia has such resources. This is an absolutely natural partnership, and it will continue.
Keir Simmons: Does it make it more difficult to negotiate with China, because of your difficult relationship with America?
Vladimir Putin: Our relations with China have never developed in the context of relations with anyone else, including third countries. We never direct our relations with other countries against someone else. Instead of opposing someone, we always support something, including our interests. Of course, we cannot help but take into account global developments, these things are absolutely obvious, but we are working in line with positive, rather than negative, developments.
Of course, all the current developments in trade and economic relations between the United States and China cannot help but influence the global economy one way or another, as well as growth rates in China and even in the United States itself. The United States is also affected by its own anti-China measures. And, of course, we are taking all this into consideration.
But global and Chinese economic growth continues despite all these negative developments, and this amounts to absolutely natural cooperation, and it has absolutely natural development prospects. In this context, we even comprehend rising energy-resource consumption volumes in China. We understand this, the Chinese side understands this, and Chinese regions that are hard-pressed for energy resources also understand this. Specialists have calculated all this long ago, and cooperation continues in line with this objective data.
Keir Simmons: In terms of your relationship with the United States, though, when you met with President Trump in Helsinki, he said that you had taken your first steps towards a brighter future. Are you disappointed with the way things have developed since then, because it has not been a brighter future in relations between Russia and America, has it?
Vladimir Putin: Of course, it is not the case yet, you are absolutely right. But we believe that common sense and fundamental interests, I would like to emphasise this, it is the fundamental interests of the United States that will play a role, and relations between Russia and the United States will return to normal. But it is not yet the case, it is true.
We can also see that President Trump’s position, in any case, as it is publicly formulated, is not changing towards Russia. He wants to restore bilateral relations, and we welcome this, and we will use every opportunity to ensure that these plans are realised.
Keir Simmons: Do you think your relationship with President Trump has backfired on Russia a little though, because, effectively, by being so close to President Trump you are in the middle of a deeply divisive political battle in the United States. Has that been politically beneficial for you to have what is clearly such a close relationship with the President of the United States?
Vladimir Putin: We got dragged into many political squabbles in the United States even before I met President Trump. Firstly, we have never been close friends, and it is still the case. We have a good working relationship, as I see it, stable and trust-based relations, but the close relations between President Trump and me never affected the internal political squabbles in the United States. I would like to emphasise this again. All the scandals within the United States sparked before I even met Mr Trump, so what does this closeness have to do with them? There was no closeness.
And now we can see something else. We can see what is happening in the States. The slightest pretext is being used to attack President Trump. The most recent one is Ukraine, and the related battles over relations with Ukraine and with President Zelensky. Where do we come in? This once again confirms that we had nothing to do with it in the first place, and they were just looking for reasons to attack the newly elected President. It became clear that there was no conspiracy between Russia and the Trump team and Trump himself. This was proved even by Mr Mueller during his inquiry. But now they have found another reason. It involves Ukraine. I repeat, this only underscores that Russia has nothing to do with this at all. So, there was no closeness, and there is none still. And this does not affect the internal political processes in the United States in any way.
Keir Simmons: Robert Mueller did not find that there was no Russian attempts to intervene in the American elections, though. He found that he could find no evidence of collusion. In July, he gave evidence to Congress, in which he said it was not a single attempt to intervene in the American elections, ‘they are doing it as we sit here, and we expect them to do it during the next campaign’, referring to 2020. So, Robert Mueller says that Russia did try to intervene in the American elections and that Russia is attempting to do the same in the general election for 2020.
Vladimir Putin: Highly likely. Oh yes, we have already heard that. He failed to find any evidence of our collusion with Trump in the past, but expressed concern that we might do this in the future. That is funny. Or it would be funny if it were not so sad. Because everything that we see now in US domestic politics destroys Russian-American relations. And I am also sure it is doing harm to the United States as well.
As a result of what happened – and for no reason whatsoever, as we can see now, we are witnessing it – we were compelled to close some of our projects with ExxonMobil. ExxonMobil would have been making a good profit now working with Rosneft, implementing major projects that would benefit both companies as well as the global energy sector, but we had to close them. Now, who benefited from that? Nobody, because everyone lost. Because political motivation or using domestic political instruments, extending them to international relations, or worse, to the economy, does no good inside the United States and is detrimental to international affairs.
Keir Simmons: Let me just ask you again though the second part of that question. Is Russia, as Robert Mueller alleged, attempting to influence the 2020 elections in the United States?
Vladimir Putin: I’ll tell you a secret: yes, we will definitely do it. Just to keep you amused. (Applause.) But do not tell anyone, all right?
Keir Simmons: Do you want to use this opportunity to clearly state that Russia is not doing that?
Vladimir Putin: Well, we have problems of our own. We are busy addressing our domestic problems, which are our biggest priority. We are tackling huge tasks in the economy and social policy, and we have formulated national projects in individual sectors. We are investing unprecedented funds in the attainment of our national development goals. Do we have time to interfere in any foreign elections?
We are closely following the developments in the global economy and politics, of course. Our colleagues have talked just now about global oil reserves. They used to amount to over 300 billion, or more precisely 301 billion tonnes, but the current figure is only 236 billion. It is a concrete figure that has a bearing on us. We are talking about the development of the global economy. As I said, it has increased by some 3.5 percent over the past five years. This is what is of interest to us and what we pay attention to.
Our largest partner in Europe is Germany, but, overall, the EU is the largest trading partner for us. We are interested in what will happen there. We see that the German economy has reported negative growth for two quarters in a row. I believe the Volkswagen scandal is mostly to blame for this. It is true that the economy is seriously influenced by developments in the German automobile industry. This is what interests us.
As for elections, we have no interest in them at all. We will work with anyone who is elected, with any president who is elected by the American people. If they elect Mr Trump, we will work with him. If not, we will work with whoever is elected.
Despite all the problems and difficulties, Mr Trump has implemented a tax reform, which has maintained the United States’ economic growth at a high level. US imports have increased.
Under President Obama, Russian-US trade dropped from $30 billion to $20 billion and even $18 billion. Over the first two years of President Trump’s term, it grew to $25 billion. This is what we look at and take into account. Of course, we also look at the players in the political infighting in the United States, but interfering in it? It is not worth the effort. What do we need it for? It is not in our interests, and it is against the principles and practice of Russia’s foreign policy.
Keir Simmons: It is important to this audience clearly, because facing the American Congress right now are bills and amendments that increase sanctions, and many of them are directed at the energy industry, including legislation that would affect NordStream 2, and legislation that would attempt to prevent any investment in any pipeline from Russia. In that context, let me ask you, is there anything that you think Russia, is there any mistake that you think Russia has made in its relationship with the United States? Is there anything that you would have done differently, looking back now and looking at the situation you are now in?
Vladimir Putin: We have not made a single, absolutely not a single destructive move in relations with the United States. If you disagree, say so, but please substantiate your opinion with facts. We have taken an unprecedented…
Keir Simmons: But in an interview with the Financial Times, you seem to suggest that you predict the end of liberal democracy and that was interpreted as you celebrating a success over the United States and the western way of doing things.
Vladimir Putin: This is not a correct interpretation of what I have said, or rather it is a very loose one. This is how the problem is interpreted by those who want to believe that this is how we formulate our policy, that we do it as you said. I did not say what you have just said. I did not. Where did you get it? This happens very frequently, when one notion is replaced with another. First the replacement, and then criticism based on this false information.
I said in an interview with The Financial Times that the liberal model has no right to claim domination and to believe that it is the only correct model in the world. No, the world is much more diverse; it is developing comprehensively, and one and the same model cannot be forced on everyone without distinction. This is what I said then, and I am ready to repeat it here.
Take Asia. Look at how it is developing, how it is growing. Look at the Asian countries’ history and culture. How can Western patterns as they are used in the United States and Europe be applied to Asian development? No, this would stifle any development there. There would be chaos, just as it happened in Libya and Iraq when those western countries attempted to reproduce their liberal pattern there. And it could have been even worse.
That is what I said. I did not say that the liberal model has no right to exist. Did I say that? No, of course, not. If it works well, let it work. But it has lost all flavour even where it still works, and the enforcement of this model often comes across resistance even in the countries where it has been widely used for years.
Take some European countries. Why are they talking about the migration crisis all the time? The migration crisis is a result of this liberal model. They simply take everything too far. It would be better to invest in the developing economies, so as to cut short the growth of poverty. Let us advocate this process in the World Trade Organisation. Let us stop subsidising agriculture in the West and open up our markets to agricultural products from the developing countries. Let us invest the necessary funds in them, giving the people an opportunity to work and live in their home countries, making a living for their families. You do not want to do this? Then you will have migrants. The liberal model does not allow for stopping the inflow of migrants. And the result is discontent among the people and a growth of extreme views and far-right movements. This is what I said. I still believe this.
Meeting with heads of relevant agencies and international energy organisations
October 2, 2019
14:15
Moscow
Meeting with heads of relevant agencies and international energy organisations.
At the Russian Energy Week Forum, Vladimir Putin met with heads of relevant agencies from other countries and international energy organisations. Attending the meeting was Energy Minister of Russia Alexander Novak.
Earlier, the President sent a message of greetings to the participants of the forum.
