- Pavel Yurievich, as you know, with the onset of summer in Russia and around the world, the demand for fuel traditionally increases. Is there enough fuel inside the country today to avoid a sharp rise in gasoline prices? Can we talk about the presence of a deficit or a surplus of gasoline on the market?
- The issue of fuel supply is one of the priorities for us.
We have weekly headquarters meetings with all industry participants, including the stock exchange and the Federal Antimonopoly Service.
On a daily basis, we monitor the sufficiency of fuel supply to the domestic market, monitor price levels and other factors that may affect the situation.
Now, indeed, due to the season, the demand has slightly increased.
In some regions, fuel consumption has increased by up to 5% relative to the normal level for this time of year.
This is due to the fact that international air traffic is still limited, so more people spend their holidays in the country and more often choose a car to get to their holiday destination.
In principle, the increase in consumption was expected.
We have prepared for this, and at the moment the demand is fully met by the capacities of operating oil refineries (refineries) and oil companies.
Now the market is fully supplied, there is no shortage.
- That is, you should not expect price jumps at gas stations, as was the case in 2018?
- There is no likelihood of a repeat of those events, because now the situation is different.
Since then, a fairly large number of measures have been taken, including the modification of the damper mechanism, which allowed the refinery to bring the economy to a normal level.
In addition, as I have already noted, in order to prepare for the current season, additional reserves of gasoline and diesel have been created, which fully cover the additional demand.
Pavel Sorokin - on the situation on the Russian fuel market
Nevertheless, in order to hedge against any unforeseen events, including in the global market, which are always possible, we are working on a number of other measures and always keep them ready.
- What measures are you talking about?
- For example, recently a proposal has been made to temporarily ban the export of gasoline.
This is a last resort measure.
Nobody will use it just like that, but, if necessary, it will allow redirecting additional volumes of fuel to the domestic market.
However, I would like to emphasize that now the situation does not require such radical decisions.
- According to the forecast of the Central Bank, by the end of 2021, inflation in Russia will be 4.7-5.2%. How can gasoline prices change?
- In general, our task is to ensure the rate of growth of prices at gas stations does not exceed inflation.
This is exactly the landmark that we keep in mind.
Therefore, the measures that were taken in 2020 and at the beginning of 2021 will allow the growth in gas station prices to stay within this forecast range.
- Amid the coronavirus pandemic, one of the most memorable events of 2020 was the April collapse of oil prices to negative values. Do you think this situation can happen again sometime in the future?
- It should be noted that the fall in prices to negative values occurred only in one, separately taken market.
As we remember, the quotes of the WTI mark in the USA went into negative territory.
At that time, the oil storage facilities were overflowed, and on the day of the fulfillment of the contract for the supply of oil, the holders of such contracts were not ready to accept the raw materials and began to refuse their obligations.
Theoretically, this situation could be repeated in the future if a number of factors develop and we observe a similar situation in the market.
Pavel Sorokin - on the fall in oil prices to negative values
The most important thing in industries such as energy, where there is a very long cycle of investment projects, is predictability.
Companies need to make production plans.
Therefore, creating a predictable situation is one of the main tasks of OPEC +.
I think that cooperation within the framework of this partnership will allow avoiding a new fall in prices to a negative level.
- In 2020, Russia's oil revenues fell by almost 40%. How can the indicators change in 2021? Should we expect a return to the pre-crisis level?
- In fact, this is a purely mathematical question, because, in fact, income depends on two factors - the volume of production and the level of prices.
In 2020, both of these indicators dropped significantly relative to the level of 2019.
Prices fell on the back of weakening global demand, and production fell as part of OPEC +'s efforts to stabilize the market.
The decline in production was unprecedented.
At some stages, oil production declined by 20% in all OPEC + countries.
Multiplying one by the other, we get a drop in oil revenues by almost 40%.
Now prices have already recovered and are at a fairly high level.
This contributes to an increase in the oil industry's revenue
At the same time, oil production is still 10% below the level of 2019.
Thus, according to our estimates, in 2021 oil revenues may be 12-15% lower than the level of 2019.
However, it is still too early to make more accurate forecasts.
Pavel Sorokin - on the restoration of oil and gas revenues
- In May, the news that
Finland at the beginning of the year reduced imports of Russian Urals oil by almost a quarter as part of a plan to switch to renewable energy was actively discussed
.
In your opinion, is such a serious decrease in the volume of purchases really connected only with the climate agenda, or can there be other reasons, including political ones?
Is there a threat that other countries will follow Finland's example?
- Here it is important to look not at one specific country, but at the world as a whole.
Global oil consumption is now growing.
First of all, this is due to the recovery from the pandemic.
Moreover, according to our forecasts, demand will continue to grow in the next 5-7 years.
This will happen due to the rapid economic development in Asia, as well as the growing fuel consumption in the United States.
As for Finland, the country is not the largest consumer of our oil.
Nevertheless, in fact, in some states the situation with the transition to "green" energy in the coming years will go faster than in others.
At the same time, one cannot simply give up oil overnight and explain this by the climate agenda.
Each individual country simply varies its reserves depending on market conditions, price differences between individual brands and demand for petroleum products.
I think that it is the current market conditions that have a greater short-term effect than any long-term climate trend.
Pavel Sorokin - on the decline in purchases of Russian oil by Finland
- In the long term, how can the transition of an increasing number of countries to green energy affect the Russian oil industry? Are we ready for this?
- If we talk about green energy, in the direction of which Europe and the whole world are now heading, then, naturally, this will have an impact on oil consumption in the world.
Following this, the offer will also be tightened.
Against this background, the use of hydrocarbons will decline in the future.
Nevertheless, the share of oil and gas in the global energy balance over the next 20 years will decrease from the current 60% to 50%.
Therefore, the question here will be more about who will remain competitive, increase the efficiency of their sector, reduce costs and remain in the market.
We feel confident enough in this respect.
We have competitive stocks, professional companies that invest in technology and expertise.
Therefore, we believe that regardless of how the “green” course develops, we will retain our place in the market.
- Today Russian energy companies are actively digitalizing their production. Are there any rough estimates of how digitalization of the industry can speed up or optimize processes?
- The main point of digitalization is to eliminate or minimize errors associated with the human factor, as well as to increase the speed of decision making.
Now a lot of work is underway to equip various installations with sensors for collecting information.
We are also building systems that can collect and process this information.
For example, in the oil and gas industry, digitalization can speed up the processing of seismic data, which is sent to geologists to make decisions about where and how to drill, how promising a field might be.
Based on the results of such pilot projects, it is clear that as a result, it is possible to accelerate the field launch time by 30-40%.
That is, it can be done 2-3 years faster.
Moreover, the accuracy of well placement is increased up to ten times.
All this has a very significant effect on the economics of projects: the process goes faster and with fewer errors.
If we talk specifically about the operational component, then in terms of the use of submersible and drilling equipment, the increase in efficiency, according to the most conservative estimates, is 15-30%.
It can also have a very significant positive impact on the company's activities.
We are now working with the Ministry of Digital Science to develop a law on industrial data, which will help systematize information and create an ecosystem in which data exchange will be simplified. This should significantly increase the efficiency of using artificial intelligence in the industry.