Igor Sechin: Energy Should Not Be Subject to Sanctions

By Bojan Soc, June 17, 2014

"The tax burden on the main producing countries in the world is as before 1.5 to 2 times higher than the tax burden in other sectors of the economy despite the fact that the oil industry is one of the main consumers of equipment and services and generates a multiplying effect that is so important to economic growth", Rosneft President Igor Sechin said today during the plenary session of the 21st World Petroleum Congress which is being held in Moscow June 15 to 19.

In the opinion of the leader of Russia's biggest oil company, the conditions for conducting oil and gas business in various countries need to be evened and stabilized not only to improve the effectiveness of the oil sector but to improve the world economy overall. "In the future, we could be talking of course about evening the conditions under which the oil sector functions compared to other sectors of the economy. This would attract additional investment to the sector and have a multiplying effect", Sechin added.

In his presentation, the head of Rosneft noted that price forming on the oil market was subject to the influences of a number of external factors like the budget requirements of the producing country and systemic manipulation of the energy market. "Because of this, the question arises of what the referential price is, and how much a price considered to be a market price is justified. Discussion around these issues is constant".

Sechin also touched upon the issue of sanctions which in his opinion can be viewed as an instrument of competition. "A situation forms when because of sanctions, political risks begin to increase the risk of conducting business and that is also a manifestation of systemic manipulation. We propose that energy, like food, should, because of its strategic importance in any economy and for people's quality of life, should in principle not be subject to any kind of sanctions at all", he said.

Sechin said that new mechanisms were needed to soften such problems and that this should be based on interaction between companies and experts. "When political risks create volatility on the markets, exchanges of information on the condition of national oil and oil product reserves need to be stepped up and cushioning mechanisms need to be created making use of regional reserves. It would also be possible to set up an inter-corporation conflict study group compose of internationally-recognized experts whose opinions would be taken into consideration when reviewing cases of market manipulation", Sechin said.

Copyright, Oil&Gas Eurasia, 2014.