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Topic: Energy
Region: Russia
Type: News
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On June 26, 2017 Viktor Katona, Oil Supply Specialist at the largest Hungarian oil and gas company MOL Group and Russian International Affairs Council (RIAC) expert, held a lecture titled “Not Only Oil: The Hydrocarbon Market in the Era of Change” at the Library on Argunovskaya.

V. Katona discussed the hydrocarbon market, which stands among the most important topics of contemporary economic discourse, with a focus on Russia’s position and development. He divided the presentation into three parts: the sanctions and their effect on the Russian market, the world price of oil, and the role of gas in Russia’s future.

On June 26, 2017 Viktor Katona, Oil Supply Specialist at the largest Hungarian oil and gas company MOL Group and Russian International Affairs Council (RIAC) expert, held a lecture titled “Not Only Oil: The Hydrocarbon Market in the Era of Change” at the Library on Argunovskaya.

V. Katona discussed the hydrocarbon market, which stands among the most important topics of contemporary economic discourse, with a focus on Russia’s position and development. He divided the presentation into three parts: the sanctions and their effect on the Russian market, the world price of oil, and the role of gas in Russia’s future.

He first discussed the impact of sanctions on the development of Russian energy, claiming that the sanctions themselves did not cause significant damage to Russia’s energy industry, but contributed instead to the balancing of industry towards the state. Modern technologies, which are currently underdeveloped in Russia, have been affected by sanctions. This entails a number of consequences. For example, deep-sea, arctic, and slate projects may suffer to a large extent, since their implementation requires use of foreign technologies. Although Russia tries to find substitutes for the import of equipment, cooperation with foreign companies often proves to be more profitable. When launching new projects, the services and equipment of Russian partners are much more expensive.

Katona further identified a number of issues in the oil sector, particularly highlighting the prevailing role of the state in its development and functioning. The Article 2 of the Russian Federal Law "On Subsoil" indicates that only state companies can operate on subsoil plots of federal significance, which in turn limits the development potential of other, smaller competitors. Moreover, the federal share in this sector grew to 52% of oil production in 2016 (56% including Tatneft). These facts, however, cannot be considered conclusive, since the effect of oil production on the country's economy during the crisis is unclear. Having national leaders in the oil sector still remains an open question.

The world price of oil, V. Katona further argued, will not experience rapid growth in the coming years. In particular, the market will return to a balanced position in the first quarter of 2018. Despite many frightening forecasts, this expert believes the US shale oil does not represent a threat to Russia. American shale oil production is growing rapidly, and is projected to continue growing over the following year. Nonetheless, American shale oil does not compete on the Russian or Saudi oil markets. It is more likely that the US, in this respect, will find a competitor in Asia.

V. Katona’s other important argument is that gas is in long-run more promising than oil for Russia. Over the years, there has been a steady increase in gas reserves in Russia. An appropriate market for gas still needs to be found. V. Katona sees huge prospects for export. The implementation of new gas projects opens up more opportunities for potential exports. Particularly interesting projects are developing in Eastern Siberia, which should in future provide the Power of Siberia pipeline.

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  1. In your opinion, what are the US long-term goals for Russia?
    U.S. wants to establish partnership relations with Russia on condition that it meets the U.S. requirements  
     33 (31%)
    U.S. wants to deter Russia’s military and political activity  
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    U.S. wants to dissolve Russia  
     24 (22%)
    U.S. wants to establish alliance relations with Russia under the US conditions to rival China  
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