Russian State Oil Company: "BP and Others All-In on Renewable Energy... Could Trigger Oil Price Surge"

Kashimaro Rosneft Vice Chairman "Ontological Crisis on the Supply Side"

[Asia Economy Reporter Naju-seok] Russian energy companies have criticized European energy firms' efforts to transform into renewable energy companies. They argue that if energy companies reduce investments related to oil, oil prices are bound to skyrocket.

Crude oil storage tanks at the Cushing Oil Hub in the Cushing area of Oklahoma, USA.
[Image source=Yonhap News]

On the 28th (local time), Didier Casimiro, Vice Chairman of Rosneft, Russia's state-owned oil company, criticized the recent investment moves of European energy companies. He warned that due to reduced oil-related investments by energy companies, once the COVID-19 crisis passes and crude oil demand recovers, it could lead to a shortage in oil supply.

In reality, crude oil wells become depleted after a certain period of extraction, so new well development must take place. Continuous investment is necessary, but as energy companies reduce oil-related investments, new well development and resource exploration activities are declining. Considering that crude oil demand before COVID-19 was about 100 million barrels per day, new wells capable of producing 3 to 5 million barrels per day must be developed annually.

Vice Chairman Casimiro said, "They (European energy companies) are trying to withdraw from their core business," adding, "Someone has to step up and take responsibility." He claimed, "This is an existential crisis from the supply side," and "an existential threat that could cause price volatility."

European energy companies such as BP and Royal Dutch Shell are rapidly shifting their investment focus from oil-related businesses to renewable energy businesses. Public opinion and investor pressure to address climate change have been major factors driving this business direction change. However, above all, the judgment that oil demand will inevitably decline has greatly influenced the shift in business direction. A Shell official said, "The reduction in oil consumption is now just a matter of time," adding, "It is only a question of whether it starts in the 2020s or the 2030s."

Moreover, with crude oil demand sharply declining due to COVID-19, there are also forecasts that the oil peak (the point at which oil production reaches its highest level) will be brought forward.

This content was produced with the assistance of AI translation services.