Friendly ambush in Istanbul

Russian energy minister Alexander Novak and Total chief executive Patrick Pouyanne were chatting and smiling before and after a high-profile session at the World Energy Congress in Istanbul last night.

And it is not surprising, as Total is one of the largest international investors in Russia’s oil and gas industry, including at the 16.5mn t/yr Yamal LNG project in the Arctic.

That is why what happened an hour into this otherwise orderly conference session came as a surprise, caused something of a commotion and provoked whispers and excited smiles in the audience — and on stage.

From the start, the conference had been hijacked by two themes. One was all about geopolitics, given the attendance of the presidents of Turkey and Russia – friends turned foes turned friends again in the space of less than a year. The other theme was the attempt by Opec members to agree on ways to implement their recent oil production cap initiative and secure the participation of non-Opec producers.

Russian president Vladimir Putin’s comment two days ago that Russia stands ready to collaborate with an Opec agreement first pushed the oil price higher, before the market started to doubt whether Russian oil companies would follow the government’s suit.

No surprise then that by yesterday, all eyes were on Novak, who was expected to shed more light on Russia’s intentions. And, one hour into the session, Novak decided to refocus this attention on Pouyanne as the head of a major international oil and gas company.

“I would like to ask my friend Mr Patrick Pouyanne… whenever we talk about co-ordinated actions, for some reason only ministers are asked about it, be it Opec or non-Opec countries… Very often ministers cannot tell private companies what to do in the market… We [ministers] are always asked the same question, and I want to pose it to the head of one of the world’s largest companies — to stabilise the market, are you ready to… decrease or freeze your output? Or is it just for ministers to deal with?” Novak asked with a smile.

Some in the audience started nodding, looking forward to Pouyanne’s answer.

“As a company myself, I am driven by maximising revenues. It is my objective. Then I am also working in producing countries, and if a policy is decided by the president of Russia or by Opec, we will obviously apply this policy,” Pouyanne said.

“Unfortunately, we are quite selfish, I would say. And for the time being, I am very proud to announce every quarter to my investors that my production is growing by 4-5pc [a year]. It is true that I do not participate in the stabilisation of the market. By the way, I am growing [production] more in gas thanks to Russia than in oil. But if Opec decides – I am a big investor in Abu Dhabi, for example – and if some quota is decided, we will apply the quota. I think there is a level of policy makers… and there is a level of entrepreneurs and investors,” he said.

And Pouyanne saved the most pointed reminder for governments for last. The budgets of many oil producing countries depend heavily on oil revenues as a spin through, say, Opec statistical data illustrate.

“We are partners with them, we are working in all these countries and, by the way, we are paying a lot of taxes in all these countries. So, I think we deserve our part of the partnership.”

World Energy Congress in Istanbul

World Energy Congress in Istanbul

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