Prospective investments

Demand for energy will rise by 30 percent through 2040 as global economic output doubles and prosperity expands across the world. Extending its annual long-term energy forecast to 2040 for the first time, ExxonMobil CEO Rex Tillerton projects that global demand for gas in 2040 will be about 60 percent higher than it was in 2010.

Russia as the world’s biggest gas producer and exporter has the opportunity to raise investments into the industry, experts believe. The developed transport infrastructure is one of the main reasons for this, CEO of the Russian branch of Pace Energy Services Armen Bagdalov says.

"Russia has a huge pipeline network, which links Siberia to Western Europe. The recently launched Nord Stream pipeline system which carries Russia’s oil and gas to Germany is a part of it. Although Europe is an enormous consumer market, demand for gas will be mainly growing in Asia – in China, in particular. This grants Russia a competitive advantage over Qatar that is not able to deliver its gas to the Asian states."

The 21st century is a century of natural gas, the head of the National Energy Security Foundation Konstantin Simonov says.

"All experts are perfectly aware of this. The gas will not be cheap, because the world is reaching the stage when natural gas will be produced from difficult to access deposits."

Apart from projects in Siberia, the significance of the Arctic deposits is also rising. That is why the Russian part of the shelf is of such an importance. It is very promising from investors’ point of view, Konstantin Simonov says.

"The Arctic will be vital for gas and oil output. According to some Western experts’ studies, major gas deposits with up to 80 percent of gas are located in the Russian part. It is especially impressing as the area has not been properly explored yet."

The most prominent project of the Arctic is the Shtokman field which is to be developed as early as 2016. Russia’s largest gas producer Gazprom will implement this multibillion project in close cooperation with Norway’s Statoil and France’s Total. The output from this field will be piped through the Nord Stream. Thus, Russia proves the importance of foreign investment. This country invites foreign partners to take part in the most important projects and receives necessary technology in exchange.

In the coming future, the Russian authorities are planning to ease foreign investments in the Russian oil sector by slashing taxes. This will disarm even die-hard skeptics, says Konstantiv Simnov.

"Russia is often blamed for a highly politicized oil and gas sector. Yet the situation in the countries competing with Russia is much more troublesome, both in the Middle East and South America. In Russia foreign investors have nothing to lament about. Many of them have been working here for 20 years and more. When we are talking about investment climate improvements, we imply, first and foremost, taxation, geologic exploration and licensing."

The main rivals also regard Russia’s gas industry to be the most attractive for investments. That is why Qatar Petroleum has recently announced its interest in taking a stake in LNG project in the West Siberian Yamal peninsula. The project is developed by Russian private gas producer NOVATEK.

By Chernitsa Polina

The Voice of Russia, December 13, 2011