Investments in renewable energies have not been effective, according to Rosneft CEO Igor Sechin. He was speaking at the 15th Verona Eurasian Economic Forum in Baku on Thursday.
Sechin said investments in the renewable energy, which amounted to $2.6 trillion over the past seven years, have led to underinvestment in the oil and gas sector and is the main reason for the current energy crisis, not the war in Ukraine.
“Huge investments in renewable energy, which exceeded an enormous $2.6 trillion over the past seven years, have not paid off – the share of renewable sources has grown by only 3 percentage points over the same period. This is the reason for underinvestment in conventional energy and the current state of the global energy market,” Sechin explained.
According to the Rosneft boss, green energies cannot replace oil and gas because the technology for a such a transition does not exist yet:
”Currently, there are no technologies necessary for a truly efficient transition from traditional to zero-carbon energy.”
He added that if the current underinvestment persisted, the global energy deficit may soar seven-fold by 2030.
“With the current investment trends persisting, the global energy deficit observed in 2022 will soar seven-fold by 2030. It is necessary to increase investments in traditional energy by an average of $100 bln per year by 2030, including by $44 bln in the oil sector, to liquidate this deficit,” Sechin said.
Investments in the oil and gas sector should rise by 20% by 2030, he advised.
No Rules Anymore
Sechin also criticised oil and gas price caps, saying politics was destroying the single energy market, and there are no longer any rules on the energy market.
“The high volatility that has been observed over the last decade has now become limitless. The trends that we have outlined earlier and the ones that may arise unexpectedly, acting independently, without absorbing each other, are completely destroying the foundations of law, private property and the market like a hollow-charge projectile,” he emphasized.
The price caps not only undermine market fundamentals but are also an attack on the sovereign rights of countries to their resources:
“Introducing caps is an attack not only on market fundamentals, but also on the fundamentals of sovereignty, meaning the idea is actually to abolish the sovereign rights of countries to their own resources because ‘right’ countries, which lack resources, need them more than ‘wrong’ ones.”
“The US itself is, of course, not affected by any sort of restrictions,” he added.
Noting that gas prices in the US are 80% lower than in Europe, Sechin said there was increasing awareness in Europe that the US is the main beneficiary of the energy problems of its European allies.
“Cutting” Russia Out of World Economy “Absurd and Illusory”
According to the Rosneft CEO, the idea of “cutting” Russia out of the world economy is “absurd and illusory”. The West underestimates the scale and the contribution of the Russian economy. Russia cannot be excluded because its share in the supply of basic raw materials reaches up to 15%.
“The extent and role of the Russian economy in the global division of labor has traditionally been underestimated by the West. The two percent share of global gross domestic product is a myth. If we don’t take the exchange rate into account, but rather the purchasing power parity, the Russian economy is already four to five percent “If we take into account the share of services, it’s already up to 70 percent of the GDP of the US. Services are important, but not if you don’t have energy sources and food. Russia’s share in supplies of the most important raw materials is up to 15 percent.”