Vladimir Putin: Russia will strive to consolidate its global leadership in the energy sector

Plenary session of Russian Energy Week International Forum.
Photo: Kremlin.ru

Vladimir Putin addressed the plenary session of the 8th Russian Energy Week International Forum, Kremlin informs.

The theme of this year’s forum is Building the Energy of the Future Together.

Held in Moscow between October 15 and 17, Russian Energy Week brings together representatives from 85 countries, including government officials, senior corporate executives from energy companies, as well as experts and researchers. The business programme includes over 60 events.

Russian Energy Week is a key international platform for discussing pressing matters pertaining to the development of the fuel and energy complex and fostering multilateral energy cooperation in a multipolar world.

Photo: Kremlin.ru

President of Russia Vladimir Putin:

Good afternoon, ladies and gentlemen, friends,

Welcome to the 8th Russian Energy Week International Forum. You have already had a chance to do some networking here and exchange views. I doubt that I can tell you anything you do not know already. Still, allow me to share my position with you on several key matters.

It goes without saying that we are pleased to once again welcome to Moscow the heads of major international companies, specialists, and industry experts for a substantive dialogue on developing the energy sector.

This dialogue is of particular importance amid dynamic and profound shifts in the global market. In fact, energy companies and service providers, energy producers and consumers, and even entire countries are going through this exact stage in their development.

In my remarks, I would like to elaborate on some of the main trends in the present-day energy sector. Of course, I will not fail to share our perspective regarding the challenges the global and Russian fuel and energy sectors face.

The first major challenge is the restructuring of global energy relations. In many ways, this is a natural and objective process: new centres of economic growth emerge, and energy consumption in these regions increases accordingly. At the same time, we are also witnessing an artificial disruption of the energy system, driven by the aggressive and assertive actions of certain Western elites.

As is well known, many European countries, for example, have refused to purchase Russian energy supplies under political pressure. I have already noted the consequences of such decisions for these countries, particularly in terms of their economic and industrial potential.

The repercussions of these actions are evident within the European Union, including a decline in industrial output, rising prices due to more expensive imported oil and gas, and a reduction in the competitiveness of both European goods and the broader economy.

According to Eurostat, industrial production in the eurozone in July of this year remained 1.2 percent below 2021 levels. Germany, often referred to as the engine of the European economy, has also experienced a continued decline, with industrial output in July falling by 6.6 percent compared to the 2021 average.

However, the focus today is not on European challenges, but on the global energy market as a whole. As I previously noted, energy supply chains are undergoing an objective transformation, with logistics increasingly shifting towards the Global South – dynamic countries in the Asia-Pacific, Africa, and Latin America. This shift involves more reliable routes, the development of new hubs and ports designed to meet both current and future demands of energy consumers.

Energy demand is undoubtedly growing: the global economy continues to expand year after year, despite various challenges. While the pace of growth may fluctuate, overall demand remains positive. For instance, global oil consumption is projected to reach 104.5 million barrels per day this year, over a million more than last year.

The primary drivers of this growth are the rapidly expanding petrochemical industry, which is outpacing global GDP growth, and the transport sector. Many earlier plans to phase out internal combustion engines have realistically been delayed, meaning petrol-powered vehicles remain in widespread use and will continue to be for the foreseeable future. While the adoption of electric motors is indeed increasing, electricity still needs to be generated, it does not simply appear from a wall socket. It has to be produced using heating oil, coal, and other energy sources.

Russia maintains its position as a leading oil producer despite the mechanisms of unfair competition used against us. We account for about ten percent of global oil production and expect to produce 510 million tonnes of oil this year. This is approximately one percent less than last year. However, colleagues, I would like to point out that we are doing this in accordance with the agreement reached within OPEC Plus. In other words, it is a voluntary reduction.

The Russian oil sector is working steadily and making plans for the future. Our companies are not only reliably supplying the domestic market and developing oil refining but, taking into account the complicated situation beyond Russia’s borders, they are acting flexibly and have managed to develop new supply and payment channels. In the past, our oil and petrochemical exports mostly focused on one customer, the EU, whereas now the geography has expanded significantly.

As I have said, Russia continues to cooperate within OPEC Plus. Based on mutual interests, we are acting in concert with our partners to balance the global oil market. I would like to point out that this is being done for both producers and consumers.

We can report the results of these joint efforts. First of all, they concern the volume of market supply and the price situation. These parameters satisfy both oil producers and oil consumers, which allows the industry to launch new investment projects and, more importantly, create conditions for a more predictable development of the global economy. Predictability in the oil market is probably the most important element of this sector of the global economy.

As for the global gas market, the supply chains are changing as well, for objective reasons. Gas consumption has been growing steadily in the Asian-Pacific region, the Middle East and Latin America, where as the demand for gas in Europe remains below the 2019 level. Why is the demand for this primary energy source low? The reason is that industrial production is decreasing, the need for gas is lower compared to previous levels.

In other words, it might seem that the refusal of some European countries to buy Russian gas and the explosions at the Nord Stream pipelines have cut off our access to traditional markets and dealt a blow to a vital sector of our fuel and energy industry. I must admit that our gas exports initially slumped, but they have subsequently resumed growth. They have not fully recovered yet, but there is an obvious increase.

The EU’s gambit has only accelerated the shift of our supply direction towards more promising and reliable buyers – states that respect their interests and act rationally based on their national interests.

Our gas companies are reliable suppliers to these markets, just as they have always been in the past with respect to all other destinations. We are working with our partners as a team to expand the export potential of the Russian gas industry which, in addition to pipeline gas, includes LNG shipments.

We are increasing domestic consumption, which is critically important, including at gas chemical plants under construction in the Volga Region, Siberia, and the Russian Far East. We are expanding gas deliveries to urban and rural areas. Over the past five years alone, about 100,000 kilometres of gas distribution pipelines have been built. As a result, gas supply levels stand at nearly 75 percent and will certainly continue to grow. To be more specific, gas supply rates stand at 74.7 percent, up 6.1 percentage points compared to 2019.

The social gas infrastructure development programme is underway. Over the past four years, nearly one million households have been connected to pipeline gas and this number is expected to increase by another two million in the future. Gas pipelines have been brought to 1,393,000 plots of land, with nearly 989,000 connections completed.

Notably, Russia possesses unparalleled gas reserves. We keep production at a high level, but it is essential to keep working on replenishing our resource base, including through the development of hard-to-recover reserves.

Earlier this year, I instructed the Government to draft a special programme on this matter in the Yamalo-Nenets Autonomous Area, the focal point of our gas industry. I am asking our colleagues to complete this work within the established timeframe and to proceed with the implementation of the programme.

A few words about the coal sector. Despite negative forecasts by certain experts, coal still holds a significant share in the global energy balance. However, clear regional differences can be observed: while Western markets are curtailing the demand for coal, Asian countries are increasing its consumption.

Of course, the economic efficiency of coal-based power generation is the key factor to consider. However, given the shift of global business activity towards the Asia-Pacific region the coal market can be expected to remain large and significant for decades to come.

True, like any other market, it is ruled by cycles. Currently, coal producers have to deal with lower prices, and we are supporting our companies and their workforces by way of loan restructuring, among other measures.

I would like the Government to continue keeping the situation under control and to fine-tune support mechanisms in conjunction with the business community. However, the coal industry itself should also work to enhance its own efficiency and competitiveness.

Colleagues,

The second major global trend is the growing significance of the electric power sector.

Global electricity generation is projected to double over the next 25 years, with roughly 85 percent of this additional demand arising from countries outside the so-called developed economies, primarily in the Global South.

Russia’s energy system ranks among the largest in the world. Our power generation facilities have a total installed capacity of nearly 270 GW, and this extensive infrastructure operates with high reliability and efficiency.

At the same time, we are facing local electricity shortages, particularly in regions where large industrial, transport, and logistics projects are underway. Addressing these shortages will require the expansion of the power grid, the modernisation of generating equipment, and the commissioning of new power plants.

I would like to emphasise that the costs incurred by energy companies should not be automatically passed on to consumers through higher tariffs. More flexible approaches are needed, including regulatory innovations, demand management measures, and mechanisms to encourage investment in the fuel and energy sector. I expect the Russian Government to put forward proposals on these matters, which we will review and discuss in a dedicated meeting in the near future.

I would like to reiterate the instructions regarding the development of the retail electricity market. Its conditions and tariff structure must serve the interests of both generating companies and consumers, including businesses, organisations, and individuals. I urge the Government to finalise the Concept for the Development of Competitive Retail Electricity and Capacity Markets as soon as possible.

I emphasise once again: where energy is affordable, modern production will take root, new economic sectors will grow, and capital, technology, and skilled personnel will be attracted. This, in fact, is evident to everyone.

During a meeting in Vladivostok in September, we discussed the development of the fuel and energy balance for Russia’s Far Eastern Federal District. This comprehensive document identifies the optimal energy sources for each region, including coal, gas, fuel oil, and water resources, and establishes long-term energy supply volumes for the Far East.

I urge the Government to clarify the role of fuel and energy balances in the country’s strategic planning documents and, in coordination with our colleagues from the regions, to prepare such balances for all federal districts. On this basis, a modern system for the digital management of regional energy supply should be developed. I emphasise once again that this system must build on the use of different fuel and energy resources that are the most effective for each region of our country.

Next, I have already said that Russia’s energy balance is one of the greenest in the world, which our Russian colleagues have most likely mentioned here. In other words, the largest share of energy produced in Russia, or more precisely, 87 percent, has an extremely low, or zero, carbon footprint. I am referring to gas and nuclear power generation, renewable energy and hydropower generation.

Our companies are using green or durable power generation systems both in Russia and abroad. For example, Russian scientists, engineers and managers have helped implement over 400 hydropower projects in 55 countries. RusHydro, our leading company in this sphere, is building hydropower plants and water infrastructure in strict compliance with environmental safety standards and the norms of prudent water use.

Rosatom, which is another high-tech leader, has substantial experience as well. It accounts for about 90 percent – 90 percent! – of the global market of nuclear power plants, with 110 power units built to the Russian design around the world.

Russia is the only country in the world with competencies across the entire chain of nuclear generation. When implementing projects abroad, we not only build facilities but also work jointly with our partners to create the future of the energy industry and related sectors and to form a solid national personnel, research and technological basis for the development of states as a whole.

It is on this basis that we are building nuclear power plants in Egypt, Bangladesh and Turkiye. We intend to further develop our cooperation in the nuclear industry with Global South countries and within BRICS. We are working very actively in this sphere.

Experts believe that nuclear generation will become one of the main pillars of the future global energy balance. By 2050, the capacity of nuclear power plants across the world will almost double. Russia plans to launch nuclear power plants with the capacity of over 29 GW within the next decade and a half, including small nuclear power plants, which no other country is currently building. They may have such plans, but they remain on paper. In practice, Russia is the only country that is building them. We will build nuclear power plants in the Far East and Siberia.

I would like to emphasise that nuclear generation has an important role to play in producing power for consumers whose role is expected to increase dramatically in the future. I am referring to electric vehicles, industrial robots and automated customer service systems.

There is a growing demand for electricity in the digital economy, including AI and blockchain development tools, and data storage and processing. According to estimates, energy consumption at data centres around the world is comparable to electricity consumption of heavy industry.

Obviously, the areas I have mentioned represent a powerful development factor. To a great extent, they determine the countries’ global competitive ability, effectiveness of national economies and the quality of life. It means that our development plans for the Russian fuel and energy sector must take all these trends into account. It is what we try to do.

Among other things, I propose setting up local generation facilities – stations using locked-up resources as professionals call them – to fuel digital economy and data centres. Transportation of these locked-up resources is expensive and time-consuming, meaning it is more efficient to use them in the same location where they are produced.

I ask the Government to submit proposals on organising this sort of model. One of the tasks is to consider using advanced clean coal power generation to meet the needs of the digital infrastructure, data storage and processing centres, and so on. These facilities, located directly in our coal-producing regions, provide modern workplaces and help diversify local economies.

Friends,

Now, to the third aspect of the modern energy sector, or challenge, to be exact, that global market actors face. It is the technological sovereignty of the countries producing oil, gas and other energy resources. I am certain that you have discussed this during your meetings.

We have seen how the elites in the Western countries refused to maintain and service the equipment supplied to Russia for the fuel and energy industry in an instant. They officially refused to comply with their obligations. That was yet another confirmation of the fact that they are unreliable partners and their actions are directly bound to the political situation and sometimes, this political situation is used for dishonest competition.

Clearly, commercial entities – I am talking about Western companies – were forced to do that, frankly speaking. They had to do that under the pressure of their ruling political elites.

But the fact remains: Western technology and equipment for the fuel and energy industry may at any time become unavailable for geopolitical reasons – unavailable not only to Russia but to any other energy supplier that the West may consider an inconvenient competitor or simply a country that is not easy to deal with. We all must consider this reality of today’s world. I think everybody understands that.

This means that we should actively change the status of energy-producing countries from equipment buyers to technological leaders and build full-fledged energy sovereignty at the national level – from resource production and processing to product delivery.

You know, the Russian fuel and energy sector is well on its way to achieving technological leadership. In fact, it has become a powerful driver for our entire domestic industry and science. Our government agencies, energy companies, enterprises, and research institutes are all collaborating – discussing these issues and coordinating specific steps. By the way, just here, on the sidelines of Energy Week, a meeting of the Coordinating Council for Import Substitution of Oil and Gas Equipment was held.

This progress is reflected in the experience of our companies – I spoke with CEOs of some of them. Now, let’s be frank, initially some engaged in what we might call reverse engineering. But then they moved forward very quickly. And do you know what happened next? They see their former partners in Europe, who were once dominant here, being forced to downsize. Russia was a core market for them – one of their most important markets, not the most important, but one of the core ones for selling high-tech products.

When they were forced to leave this market, their production lines became unprofitable. They started laying off staff and began to lose their technological edge. Meanwhile, our specialists are driving growth and becoming technological leaders because our domestic market allows us to manufacture products at a good cost-effective level. Furthermore, we are now finding partners all over the world who are purchasing this equipment from Russian companies. Yesterday, they were buying from Europe; today, increasingly, they are buying from us – and this trend will continue. So, what was the result of their actions? In trying to punish Russia, they ultimately outmanoeuvred themselves. A classic case of cutting off your nose to spite your face, a totally absurd situation, but that is the current reality.

Today, domestic companies already cover the bulk of Russia’s drilling demand. We are expanding the production of extraction equipment and upstream chemistry, and we are rolling out our own technological solutions for field and infrastructure support. While previously, as I mentioned, much of this work was done by foreign contractors, it is now increasingly handled by our own Russian specialists.

Russia possesses enormous engineering potential and a significant body of scientific and practical knowledge in the fuel and energy sector. This expertise has stood the test of time and has proven its effectiveness in our harsh natural and climatic conditions. We have the skills, experience, and know-how to develop even the most complex energy sectors and to extract hard-to-recover reserves, which is especially crucial for the oil industry. And we will do this not only independently, but also in partnership with friendly states that clearly understand the geopolitical risks.

Russia stands for promoting comprehensive technology cooperation among energy producing countries while ensuring that these ties are immune to sanctions and external pressure. I am speaking about a genuine sense of partnership based on sharing knowledge, experience and creating industrial alliances. Moreover, all the stakeholders involved in this effort must benefit from this partnership.

As for equipment, you know the way things stand. I have just mentioned this, and I referred to nuclear energy. Russia is indeed second to none in this domain. We do not depend on anyone. Everything we make in the nuclear sector, we make it in Russia. And we will achieve the same level of self-reliance in all energy-related sectors, which also applies to oil and gas equipment.

Colleagues,

We have been increasingly hearing from business leaders and experts that the world is entering an era of energy realism. The reckless and I would even say irresponsible steps by some of the Western elites created a situation where the parameters of energy transition or the focus on comparing pollution from various kinds of fuel were relegated to the background. At the same time, access to fuel and energy, the availability of power grids and pipelines, and power grid capacity are playing an increasingly important role.

Against this backdrop, ensuring that extraction operations and reserves benefit from smart management practices while promoting technological development and advancing on the environmental agenda is becoming an imperative for supplying the domestic market, achieving the national development goals, as well as delivering on our international commitments. We have always acted this way, and of course, will continue to honour our obligations – this is one of our unquestionable priorities.

Russia is aware of the objectives and challenges it faces and will strive to consolidate its global leadership in the energy sector, while also promoting partnerships for building a fair and sustainable global energy model in the interests of future generations.

I do hope that holding the Russian Energy Week will serve as a meaningful contribution to our combined efforts. I wish all the participants and guests of this forum every success and all the best. You have surely had many useful meetings, conversations and discussions already. If so, this makes us happy. This means that the goals we had when inviting you to Russia were achieved.

Thank you for your attention. Thank you very much.

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