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The President spoke about Russia’s energy sector development strategy and measures to attract foreign investment to the sector. There was also discussion on development prospects for the global oil markets, and global and regional energy security issues.

Mr Putin congratulated scientists Vladimir Fortov and Akira Yoshino on winning the 2013 Global Energy Prize.

The President also decorated the heads of ENI and Exxon Mobil with the Order of Friendship for their big contribution to developing cooperation in the energy sector.

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Speech at round table of Energy Club Summit: Reshaping Global Oil Markets

President of Russia Vladimir Putin: Good afternoon, friends and colleagues,

I am very happy to welcome you to the St Petersburg International Economic Forum. Without a doubt, energy has always been one of the key strategic sectors in the world economy and very much remains so today.

If we look at the global landscape of the energy sector overall, we can see noticeable, I would even say momentous changes. The demand for oil and gas has risen – in China alone, oil consumption has increased by 30 percent in the last five years. The role of gas is also growing, including shale gas.

The “oil track” has new extraction technologies that are greatly expanding the volume of accessible reserves of this highly important energy resource, and this increase in supply means greater competition among producers. The structure and geography of supply streams is changing. All this is noticeably transforming the configuration of the global markets.

Overall, it is clear that the situation in global energy is a true challenge for all of us, first and foremost for you – those who are working in this sector – and we must rise to this challenge. We can do this most efficiently if we combine our efforts.

As you know, Russia is one of the world leaders in gas, oil and petroleum product exports, and contributes significantly to ensuring global and regional energy security. We value our deserved reputation as a trustworthy and responsible partner in energy resource markets.

Today, our fuel and energy industry is entering a new stage in its evolution, due to the development of new types of resources – continental shelf reserves, high viscosity oils and shale oils, and extraction at polar latitudes.

”Russia is one of the world leaders in gas, oil and petroleum product exports, and contributes significantly to ensuring global and regional energy security. We value our deserved reputation as a trustworthy and responsible partner in energy resource markets.“

The sector’s development is also tied to new projects in Russia’s Far East and in the Arctic. The volume of new resources is very high – I would even say colossal: Bazhenovskaya Suite alone has around 22 billion tonnes.

In recent months, we have done a great deal of work: measures have been proposed to provide tax incentives for developing tight oil reserves and a new taxation system for projects on the continental shelf. But the difficulty and importance of resolving these challenges require coordinated actions, cooperation between producers, reciprocal steps pertaining to exchanging assets, jointly implementing projects, localising and licensing technologies. This is precisely the policy we intend to follow in Russia.

The first steps in this direction are already being taken. Rosneft and ExxonMobil have created a research and development centre for Arctic technologies. I will take this opportunity to also congratulate the winners of the Global Energy Prize awarded today. This year, it was awarded to Japanese scientist Akira Yoshino and Russian researcher Vladimir Fortov. I must note that basic research in the field of energy is what lays the foundation for the future of energy security in our nation and the world overall.

Today, several new documents were signed at this forum on partnerships between Rosneft and international oil and gas companies ExxonMobil, Statoil and Eni (I am happy to see our old friends here today and to greet them), as well as an agreement on technological partnership with General Electric and agreements on the principles of supplying LNG.

This is basically a new era in cooperation the essence of which, as regards our interaction with strategic partners, is to move away from just importing raw materials to establishing full-fledged cooperation in production and technology.

The effects of the financial crisis led to a change in the global economic map: there are new points of growth. I think this has been most true in the Asia-Pacific region in recent and will continue to be so in upcoming years. However, this also increasingly applies to the Russian Federation’s domestic market. For our oil and gas companies, domestic market is already comparing to export supplies. I am confident the companies which are investing in expanding domestic production in Russia will secure for their business significant growth for many decades to come.

”Recently, we have observed an increase in global competition in energy. I believe that in these conditions, we should all strive to reduce the level of politics involved in energy supplies and allow market participants themselves to choose business partners.“

Recently, we have observed an increase in global competition in energy. This can be seen clearly at the corporate level as well: a new wave of mergers and acquisitions, as well as the emergence of new leaders, is underway all over the world. I believe that in these conditions, we should all strive to reduce the level of politics involved in energy supplies and allow market participants themselves to choose business partners. The goal of the nations’ leadership is to promote all the necessary conditions for this kind of process.

This year, an important event happened in Russia’s oil sector: Rosneft oil company acquired from Russian investors and British Petroleum 100% of their stake in TNK-BP. In turn, BP increased its share of Rosneft to 19.75 percent. I believe that this mutually beneficial swap of assets in the fuel and energy industry is a good foundation for moving forward.

At the same time, we should not underestimate regulation factors in both energy and related markets. Their steady development will be directly dependent on pricing transparency, effective monetary policy and harmonising the tax environment, all in a wide range of regions and countries around the world. Most of the biggest projects in energy may take decades and are highly capital-intensive, which requires predictable business conditions.

The issue of coordination in energy is up in the air, if you will. However, no established idea for creating a coordinating authority on a global platform currently exists. So it seems we ought to get started on this work. We could possibly set a council or a forum that would bring together interests-based working groups or sections of, for example, consumers, producers, infrastructure operators, regulators and so on. Such a forum or council could engage in overall coordination. We will suggest that our G20 partners consider how it could be organised.

Friends, colleagues, I would like to conclude my speech on a positive note: I want to present Russian Federation state awards to the CEOs of several leading global energy companies. I want to once again congratulate our colleagues and thank them for the great input they are making to developing energy sector, strengthening international cooperation in this highly important area; it is no exaggeration to say that its steady development plays a significant role in general progress and directly affects the wellbeing of our planet’s peoples.

I want to thank you for your cooperation with your Russian partners. I wish all of you, your colleagues and your companies that are operating in Russia new successes.

Thank you for your attention.