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Russia ready to join decision to limit crude production — Putin

According to Putin, the oversupply that the hydrocarbons market is facing now is the result of an unprecedented inflow of investment in the sector spurred by high oil prices over the past ten years

ISTANBUL, October 10. /TASS/. Russia is ready to join the decision on freeze or reduction of crude production, which is important for keeping stability on the oil market, President Vladimir Putin said at the World Energy Congress in Istanbul on Monday.

"In the current situation we consider the freeze or even reduction of crude production to be probably the only correct decision to keep the sustainability of the whole global energy (market)," Putin said, adding that the move will help the market to regain equilibrium.

"Russia is ready to join the joint efforts to limit (crude) production and urges other oil exporters to do the same," he said, adding that he hopes the OPEC meeting in November will result in "certain agreements."

According to Putin, the oversupply that the hydrocarbons market is facing now is the result of an unprecedented inflow of investment in the sector spurred by high oil prices over the past ten years. Also, he said, the development of tight oil recovery methods coupled with easier access to financing have enabled oil producers to shift to development of new reserves, which were previously considered as unprofitable. "All this has helped a number of (oil)-importing countries to boost their own production capacities and as a result the market has faced serious factors of oil glut and a sharp fall of prices," the president said.

Also, he said, the current low oil prices have caused "the most sustained decline of investment activity in the sector in 45 years." According to Putin, capital spending in oil production has dropped by almost $0.5 trillion in two years and the decline in investment in geological exploration has caused "the smallest oil reserves growth in 70 years."

"We’ve been witnessing a massive revocation of investment decisions on projects, which are now considered as economically unviable," he said, adding that "if these trends persist the lack of financing will become chronic and the global excessive production of energy resources will inevitably turn into a deficit and new unpredictable price shocks and will eventually hurt both producers and consumers." In this respect, Russia welcomes the decision to freeze or reduce crude production, Putin said, adding that particular agreements reached in this sector with OPEC will give "a positive signal to markets and investors" and "will help subdue speculative activity and avoid new price fluctuations."

Use of sanctions to restrain energy sector

Putin stressed that the attempts to restrain the development of the energy sector by political instruments, in particular, by using unilateral sanctions, were inadmissible and did not add to stability on world oil markets.

"I would like to emphasize that the attempts to restrain the development of the energy sector by other countries’ political ambitions whatsoever are inadmissible," Putin told the 23rd world energy congress in Istanbul.

"I mean the trend of using unilateral sanctions, unfounded restrictions for access to investment resources and advanced technologies," Putin said.

"All the same, this does not give the results necessary for the initiators of these ideas," the Russian president said.

The Russian leader noted that in some countries business were given recommendations to curtail profitable projects, give up fuel purchases via the shortest routes and at advantageous prices.

Moreover, the so-called allied solidary and "block discipline" are citied in these countries.

"These actions do not add to stability on world energy markets and the global economy as a whole," the head of the Russian state said.

According to Putin, the initiators of such ideas do not think about their allies and partners but at the same time never make decisions that contradict their own interests.

Russia as a large energy state has contributed and will continue contributing to the long-term and sustainable development of the energy sector, the Russian president said.

The president noted that Russia would continue cooperating in the energy sphere with all stakeholders on the basis of principles of mutually beneficial and equal partnership.

Russia is working on the Nord Stream 2 project, Putin said referring to specific projects underway. "We have talked in detail right now and in the course of preparation for this visit with Turkish partners and President [of Turkey Recep Tayyip] Erdogan; we intend to implement the Turkish Stream," Putin said.

Russia will proactively expand export of hydrocarbons in the eastern direction, to China, Japan, and India, Putin said. "We are building up energy transport capabilities and expanding liquefied natural gas production," he added.

No real grounds to say the hydrocarbons era is close to its end

The Russian leader noted that there are no real grounds so far to say that the hydrocarbons era is close to its end.

"Many people start saying in conditions of the oil prices drop by almost twofold that the hydrocarbons era is approaching its end and time has already come to completely change the focus to alternative energy sources. I believe no real grounds are in place so far to make such far-reaching conclusions, at least for the time being," Putin said.

"The mankind is moving to the "green energy" and this is definitely the main development path, the proper path," the Russian President said. "The demand for renewable energy is growing at a priority rate as compared to energy from conventional sources. Rollout of the state-of-the-art technologies, including such as distributed generation, high-capacity energy storages and the so-called "smart grids" promote acceleration of this process," Putin said.

Consumption of oil and gas will continue growing in parallel, "though not at such high rates as earlier," Putin said. "The demand for energy resources is supported not merely by motorization and energy connectivity in such large countries and economies as China, India and certain other states, but also by continuing penetration of petroleum and gas chemistry products into the most diverse spheres of human life and industrial processes," he added.

Large-scale growth of liquefied natural gas (LNG) production leads to the gas market becoming really global for the first time, with skyrocketing development of related infrastructure, the Russian President said. "According to forecasts, LNG trade volumes will be higher than conventional pipeline gas supplies already in ten years, and interest in LNG procurement will continue growing," Putin said.