Igor Sechin, the head of the Russian oil company Rosneft (ROSN.MM), said on Saturday that the world is facing an acute oil shortage in the long term due to underinvestment due to the pursuit of alternative energies, while the demand for oil continues to rise.
Russia, which relies heavily on revenues from oil and gas sales, is committed to reducing greenhouse gas emissions, but is lagging behind many countries in developing renewable energy sources such as solar, wind and hydrogen.
Rosneft is the second largest oil explorer in the world after Saudi Aramco. It produces more than 4 million barrels of oil every day.
Sechin, a close ally of President Vladimir Putin, told an online meeting of the Economic Forum in St. Petersburg that due to “many uncertainties” and slow vaccination programs in some countries, it is difficult to predict when the global economy will move away from COVID-19. Pandemic would rebound regions.
“Long-term stability of the oil supply is at risk due to underinvestment,” he said.
One of the reasons for the underinvestment is that energy companies are trying to increase shareholder earnings through share buybacks and dividend increases, he added.
He expected some bottlenecks to occur from the second half of 2021.
Sechin also warned that new government subsidies and tax breaks for companies for a rapid decarbonization of the economy would put a heavier burden on national budgets and make alternative energies more expensive.
Meanwhile, a court order to tighten CO2 cuts for Shell (RDSa.L) is a new form of risk for oil companies, he said.
A Dutch court ruled last month that the Anglo-Dutch company must cut its global greenhouse gas emissions, which were around 1.6 billion tonnes of CO2 equivalent in 2019, by 45% by 2030. read more
Sechin also cited an energy crisis in Texas last February as an example of over-reliance on alternative energy sources. Continue reading
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