EMEA News
Russia Emerging as "Preeminent Energy Super Power": Croft
One thing has remained clear in Russia's relationship with the Organization of the Petroleum Exporting Countries (OPEC): although it supports the cartel's production cutback initiative, the former Soviet Union steadfastly refuses to follow any drumbeat other than its own, and as a result analysts are this week predicting that it will soon emerge as the world's top energy leader.
That is the contention of Helima Croft, global head of commodity strategy for RBC Capital Markets, who said in a research note that president Vladimir Putin is advancing his interests in the oil market by putting his country in the midst of geopolitical tension gripping oil-producing nations such as Venezuela, Iran, and Iraq.
She stated, "Russia looks set to capitalize on this chaos, having emerged as the preferred partner of stressed petrostates; Moscow may yet close out 2017 as the preeminent energy super power."
Indeed, RBC believes Venezuela will turn to Russia to avoid defaulting on $3.5 billion of debt from state oil giant Petroleos de Venezuela SA, due in October and November; also, Rosneft has stakes in five Venezuelan oil fields and designs on nine more.
RBC also forecasts that if the U.S. proceeds with restoring sanctions against Iran, it will discourage European and Asian energy firms from doing business with the Islamic republic - thus clearing a path for Rosneft to thrive.
As for Iraq, RBC notes that "Rosneft has become the largest buyer of Kurdish crude, has signed preliminary deals for production sharing contracts for five oil blocks, and has agreed to finance the expansion of the ITP pipeline."
Meanwhile, in public at least, Putin has run contrary to Alexander Novak, Russia's energy minister who has repeatedly stated it is too early to discuss any OPEC cutback extension, by conceding that the oil deal could last until the end of next year.
On Wednesday he told an energy forum in Moscow attended by several OPEC oil ministers, "Everyone is interested in a stable market; what we did with OPEC, I believe, is beneficial for all the global economy.
"When we decide on whether to extend or not, we will decide on the time frame; but on the whole, if speaking about a possible extension, this should be at least until the end of 2018."
Khalid al-Falih, energy minister for Saudi Arabia, and other OPEC ministers have indicated the deal could be extended, but only by a few months and not until the end of 2018.
Of course, Putin has become a master of Western-style feel-good political statements that hardly reflect the situation at hand, and the reality is Russia continues to race headlong toward global energy supremacy: also on Wednesday, Kirill Molodtsov, deputy energy minister, said the country's production of hard-to-recover oil will rise by about 5.4 percent this year to 39 million tonnes - this despite Western sanctions against the Russian oil industry over the conflict in Ukraine.
Earlier this week, Novak stating that there's no need to talk about additional oil output cuts prompted UBS Group AG to insist that crude prices have to be maintained and letting the deal expire "is not an option."
