From the point of view of the global energy industry, the visit of the American Secretary of State, Rex Tillerson, to Moscow could be seen as his separation from the global energy agenda – his life cause.
After all, at the heart of discussions between the world’s biggest oil and gas corporation CEO; Russian president, Vladimir Putin; and his colleague, Sergey Lavrov, were ideas for normalising bilateral relations, which have been brought down to possibly the lowest-ever level.
In fact, however, we know that President Trump declared economic pragmatism and the observance of American interests as the priority of his policy. Having proclaimed the normalisation of economic ties the first Russian-American priority in the short-term, the US and Russian presidents apparently set a truly pragmatic trend for future interactions between the two energy superpowers during their first telephone conversation in January of this year.
Looking at the visit within the global energy market context, Exxon has been working in Russia for more than 20 years and is the key partner of Russian giant, Rosneft. Being in possession of correspondingly 20% and 30% of the Sakhalin-1 project, Rosneft and Exxon initiated a close cooperation on the POBEDA (Victory) deposit in the Kara Sea, containing 130 million tonnes of oil and almost 500 billion cubic metres of gas.
On the eve of the historic Tillerson visit to Moscow, the new ExxonMobil CEO, Darren Woods, had high-level meetings in the Russian capital, which seem to have covered the energy constituent of the bilateral relations. Â Woods, as successor to Tillerson, had multiple issues to discuss in Moscow, related to the future of the energy sector of both countries. The meeting with President Putin is the indicator of the significance of those issues.
So, a softening or lifting of sanctions that clearly contradict the interests of both companies and nations, is in the common interest. If President Trump declares pragmatism the main principle of his policies, simple steps to overwhelm the heritage of past times would be logical and understandable.
Being CEO of a huge commercial company, Woods could have first of all discussed economic aspects of the present and future cooperation with Russian companies. I am sure that both Exxon and Rosneft are interested in the continuation of this cooperation, architected with the active participation of the present Secretary of State. Politically motivated sanction regimes represent a real hindrance for this development, however.
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To summarise, although there were no announcements on the agenda for the Woods meetings in Moscow, my guess is that those projects were at the centre of discussions. In addition to the projects already mentioned, the strategic partnership of Rosneft and Exxon in the Chukchi and Laptev Seas could have been discussed as well. It is quite probable that these issues would be discussed within the framework of the working group that both sides agreed to establish in order to move the bilateral relations forward.
I have known Tillerson since 2002, when we were co-organisers of the two Russian-American energy summits in Houston and Saint Petersburg. Now, as the founder of the $3bn investment Fund Energy, I have to doubt that the pragmatic stand of the present chief of the American diplomacy in sanctions issues will be promoted by his successor, whom we had the honour of welcoming in Moscow.
The outline of the new US energy strategy, which is available on the White House website, is a very energising document, reflecting the will of the Trump administration to promote an active development of the oil and gas branch in the US in order to satiate both domestic and foreign markets with American hydrocarbons, shale oil and gas.
Major US energy players realise that recklessly explosive growth of energy commodities exports that are not based on analysis of the global energy outlook and expected returns will stunt the country’s energy sector, both shale and regular. And this analysis would inevitably bring the decision-makers of the new administration around to the idea of a dialogue with market players possessing considerable experience in talks with OPEC.
In 2001, I led the Russian delegation to the 117th OPEC session, where the first ever OPEC+ production cut was agreed. Now, we would need a broader consensus on production coordination – with the aim of maintaining stability in oil markets, and to make American hydrocarbons exports profitable, among other things. It is feasible, believe me.
The historical conversion of the US into an active oil exporter will create a necessity for a broader international dialogue between the producers and users of gas. Russia, as a major oil and gas exporter, is ready to facilitate this dialogue, with active American participation.
Russia is the player that possesses the right qualities and is ready to discuss energy matters with the US, just as our nations did 15 years ago, when we were involved in the bilateral energy dialogue that was proclaimed by presidents Bush and Putin.
Knowing Tillerson as a very pragmatic energy diplomat whose outstanding abilities are now required on a new level, I am sure that the creation of a positive framework for the new Russian-American energy dialogue is the development that he would prefer to the present state of events, which is negatively influenced by the politically motivated sanctions.
The US has considerable investment and managerial potential; Russia has very lucrative hydrocarbons production projects to offer. So, it would clearly reflect the effectiveness of the new American pragmatic line if the energy cooperation would start from this basis for the benefit of our nations. And, in my opinion, the visit of Tillerson to Moscow – proceeded by Woods’s intensive talks – will be remembered as the very professionally planned new beginning of this dialogue.
Recent history shows us that, in US-Russia relations, there is no energy discussion without politics. And there is no politics without a profound energy dialogue, regardless of what’s on the agenda. The creation of the joint working group is definitely a step in the right direction and will help to make these conversations as productive as possible.
