Troika Dialog Moscow Forum: Disputes over Russian oil

In the second of a series of blogs from the Troika Dialog Investment Forum in Moscow, panelists disagree about almost everything to do with the present and future of Russian oil.

It was a disparate group of panelists, from economists to CEOs, and from both the public and private sectors, but discussing strategic questions about oil, there was little agreement on anything at all.

The baseline projection by Christof Ruehl, chief economist at BP, that global oil consumption will grow at a compound rate of 0.6% per year to 2030, and that 90% of additional demand will come from India and China, was immediately disputed.

Dmitry Konov, the CEO of Russian petrochemical firm SIBUR, pointed out that consumption is likely to moderate as it runs into capacity constraints.

Some estimates for growth in Indian car demand would imply there are not enough roads in India today to even park – much less convey – half the expected number of vehicles, he charged. He also expects higher energy demand in the emerging world to be balanced by slowing consumption in developed countries.

Clashes arose again over specific Russian tax policies. Sergey Kudryashov, Russia’s deputy energy minister, claimed the targeted tax reductions on the Vankor, Verkhnechonsk and Talakan fields have “worked their magic”, boosting overall output after a decline in 2008.

But Bashneft CEO Alexander Korsik said the targeted solutions would not ultimately work because the state cannot do a better job of picking the winning fields than oil companies themselves. He would prefer a universal system of lower brownfield taxation. His colleague, Alexander Dyukov of Gazprom Neft, added that the system should evolve toward profit-based (not revenue-based) taxes.

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