The 21st World Petroleum Congress in Moscow – Responsibly Energising a Growing World

“ Given the constantly growing world’s population, the availability of accessible, safe and reliable energy sources will become the key factor in improvement of economic development and welfare of manhood.”
Dr Pierce Riemer, Director General of the World Petroleum Council

Every three years the World Petroleum Council hosts its global Congress. Back in 1971 the Congress was held in Russia and now 40 years later we were back and a lot has changed. With over 55,000 m2 exhibition space, 5000 attendees and more than 500 CEO’s, presidents and government ministers attending, the 21st World Petroleum Congress was the largest global oil and gas event held in 2014. From the 15th to the 19thof June,Moscow became the world’s oil and gas capital. Often called “the Olympics of the oil and gas industry”, the Congress providedexcellent opportunities for networkingand building international cooperation and a unique chance to learn about the latest scientific and technological advances in the global oil and gas industry. DEVELOPMENT OF THE GLOBAL OIL INDUSTRY One of the most respected experts in the field of petrochemistry and refining, Academician Salambek Khadzhiev, confirmed that the programme reflected the current status and development prospects for the global petroleum industry. The issue concerning the development of Arctic Shelf hydrocarbon resources was prominently included in the programme, as well as a number of issues relevant to Russian industry and science, regarding refining and petrochemistry. “It is important for Russia to discuss new technologies for downstream processing with global oil and gas experts, as this remains one of the most pertinent problems for this country. But Russia has the opportunity to turn this gaparound to its advantage: today, new processes are being developed – more effective and less ecologically damaging than those which have been launched in the US and Western Europe in recent decades,” said Academician Khadzhiev in his conclusions. Responsibly Energising a Growing World The Congress addressed this ambitious goal by debating all aspects of energy supply and energy use. As the world population increases, access to affordable, safe and reliable sources of energy will be a key factor in promoting economic development and well-being for humankind. Oil and natural gas will continue to be the world’s leading energy resource for the foreseeable future. Meeting future demand in a sustainable and socially responsible manner will require massive investments, leading edge technologies, the highest skilled human resources, and superior ethical business practices. Producers, consumers, governments and societies need to cooperate responsibly to develop all energy resources. To do so, the industry has to energise its professionals; in particular youth, to become even more innovative in ensuring future growth. TAX BURDEN Tax burden was an issue many agreed upon. In his opening remarks Rosneft chief executive Igor Sechin highlighted that the main reason why oil and gas costs so much is that theproduction costs are very high. The tax burden for oil and gas projects is sometimes double that of other industries despite the fact that this energy is needed.India's Minister of Petroleum & Natural Gas, Dharmendra Pradhan proposed that transparent regulatory policies and business climates that favour investment in technology are key to industry continuing to commercially exploit oil and gas. The Deputy Prime Minister, Russian Federation, Arkady Vladimirovich Dvorkovich agreed that there is a need to reduce tax and other fiscal burdens – relative to conventional hydrocarbons – if nations want to ensure that their unconventional resources (shale and tight oil plays) attract interest and investment. New Frontiers The easy to extract oil continues to diminish and enhancedoil recovery [EOR] is being implemented to increase revenues from ageing fields. Unconventional exploration and production provide solutions for additional resources, including shale gas, oil sands, ultra-deepwater and the Arctic. With the Congress being held in Russia, this was a major topic for the event. According to the US Geological Survey, the area north of the Arctic Circle has an estimated 90 billion barrels of undiscovered, technically recoverable oil, 1,670 trillion cubic feet of technically recoverable natural gas, and 44 billion barrels of technically recoverable natural gas liquids in 25 geologically defined areas thought to have potential for petroleum. Canada, Norway, Russia and the United States are all looking at developing their resources in that region. Rex Tillerson, Chief Executive of ExxonMobil, told delegates the industry must expand into new areas balanced with “wise environmental stewardship.” Thisinvolves managing mobile pack ice and icebergs, permafrost, remoteness, extremely low temperatures, storms, icy waves and low visibility in an ecologically sensitive environment, according to Jed Hamilton, a senior consultant at Exxon Mobil’s Upstream Research unit.

The participants of the greatest global petroleum and gas event have discussed all aspects of energy supply and utilization

Nearly 72% of resources in Barents Sea remain undiscovered with a potential 8 billion barrels of oil equivalent (BOE) still to be discovered. Russia and Norway are leading the field and Nicholas Alan Maiden, SVP of Exploration at Norway’s Statoil, thinks that the billion dollar drilling activity is reflective of the conditions and value of wells in the region. “The Arctic offers tremendous potential to meet future global energy demand and we need to do this in a safe and responsible fashion,” Hamilton said.Statoil already have a dedicated Arctic operations unit, and the company announced it will be going ahead with plans to build its own Arctic Offshore Drilling rig to “explore and develop the Arctic basin in a safe, sustainable and cost-effective manner.”The Norwegian Petroleum Directorate, announced that it has plans to award11 to 15 licenses in the Barents Sea over 2014-15. Of the 113 Russian offshore blocks, 67 are in the Arctic. Rosneft has already partnered with ExxonMobil, Eni and Statoil.“Abnormally high reservoir pressure and good porosity in the Russian Arctic fields generally bodes well. Russia needs to cooperate with oil majors to tap the potential. The findings could be as surprising as US shale, the scale of which took everyone, including the Americans by surprise,” explained Vasily Bogayavlensky, Deputy Director of the Oil and Gas Research Institute at the Russian Academy of Sciences.But Bogayavlensky admitted general knowledge and studies of the Arctic were in his opinion very poor.

The majority of Congress participants has identified tax levy as one of the biggest issues

Financing the oil and gas industry The oil and gas Industry will need $1 trillion per year over the next 20 years, a steep requirement made more challenging by the complexity of projectswhich requires a diverse mix of financing models required from private equity to local banks. BP chief executive Bob Dudley warned that governments of countries with oil and gas resources need to recognise that oil companies currently have constrained capital, and so need to introduce the right business environments and incentives in order to attract companies to exploit the resources. Countries that fail to do so will see large projects fail to materialise, and will have to import hydrocarbons rather than move towards self-sufficiency. Russia’s Deputy Energy Minister for Oil and Gas, Kirill Molodtsov, acknowledged that the Russian government is aware of the capital constraints on oil companies and is actively seeking ways to properly stimulate investment in its oil and gas resources. Russia can see the possible impact that the switch to renewables in Europe and the expansion of LNG could have on its oil and gas industry. In the Global Launch of the BP Statistical Review of World Energy 2014, which for the first time took place outside BP company premises,Christof Rühl, BP’s chief economist, introduced a general review and outlook for the industry. The US tight oil boom and the North American unconventionals drive in general were mainly behind a growth in OECD oil demand in 2013. Supply disruptions – in places like Libya, Iraq and Iran – were counterbalanced almost barrel-for-barrel by the rise in US oil production last year. The industry’s “éminencegrise”, Daniel Yergin, saw positive signs of development in other parts of the Americas. Mexico has taken inspiration from the North American tight oil boom and is aggressively looking to open up its resources to international operators – oil production in Texas alone currently outstrips that of all of Mexico. He pointed out that the US unconventionals boom was not driven by large oil companies, but by small independents, entrepreneurs who tried and tested totally new technology. The event closed to great acclaim with a rousing Closing Ceremony after a week of high-level presentations, discussions, debates and networking on the general consensus that it had been another world-class Congress for the World Petroleum Council. Minister Novak passed the baton to the host of the next World Petroleum Congress, Turkey, who will be organising the 22nd WPC in Istanbul in 2017.

Mr Kirill Kravchenko, the Chief Executive Officer of NIS, attended 21^st World Petroleum Congress in Moscow, where he spoke about transformation from petroleum into energy companies

The largest ever oil and gas exhibition The World Petroleum Congress was supplemented by the World Petroleum Exhibition (WPE) showcasing the industry and its key players on the global level. Covering 55,000 sq.m., the exhibition is the largest ever in the WPC history as well as the largest oil and gas event ever to be held in Russia. More than 3000 global operators, contractors, suppliers and services presented their companies and strategic operations in front of over 20,000 visitors.