EBRD: Cooperation Avenues in the Russian Oil and Gas Sector
- Aida Sitdikova (The European Bank for Reconstruction and Development)
- Document ID
- World Petroleum Congress
- 21st World Petroleum Congress, 15-19 June, Moscow, Russia
- Publication Date
- Document Type
- Conference Paper
- 2014. World Petroleum Council
- 0 in the last 30 days
- 44 since 2007
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The paper focuses on EBRD’s mandate and objectives in the oil & gas sector in the context of the new Energy Strategy adopted by the Bank in December 2013. The right balance between the three pillars of energy affordability, sustainability and security relies on a market-based approach promoted by EBRD as the best optimization tool for solving the coordination and resource allocation problem in the energy sector. The paper further reviews the key themes of the Bank’s engagement in the Russian oil & gas sector: from supporting private participation and market-enabling infrastructure to resource efficiency, diversification and decarbonisation of the Russian energy sector. Recent global developments in the unconventional oil & gas and possible implications for the domestic sector are reviewed from the perspective of possible financing opportunities for the sector efficiency improvements. Finally, the Bank’s close engagement and support of transition to a lower carbon energy sector in Russia is presented in the context of the successful projects targeting gas flaring reduction and possibilities for a domestic emissions trading scheme.
EBRD: mandate and presence in the oil & gas sector
Central to EBRD’s mandate is support of transition to market-oriented economies in an environmentally sound and sustainable way. In this context the oil & gas sector and its unique characteristics present both constraints and opportunities for the Bank’s engagement. Support of private operators is at the heart of our mandate. Private sector participation is essential for improvements in efficiencies, strengthening markets and addressing operational challenges of the oil & gas industry. At the same time the Bank’s Energy Strategy is guided by the principles of energy affordability, security and sustainability. The right balance between these three pillars relies on a market-based approach as the best optimization tool for solving the coordination and resource allocation problem of balancing security, sustainability and affordability.The Bank’s operational and investment response across the EBRD region, from Vladivostok to Casablanca, is in supporting and harnessing market forces to deliver sustainable, secure and affordable energy. In Russia, similar to the Bank’s other countries of operation, the market-based approach is often constrained by the shrinking universe of small and medium private clients, general consolidation trends in the oil & gas sector and increased state participation oil and gas extraction, transportation and distribution. The pervasive issues of not fully developed and liberalized energy markets, institutional inefficiencies and not cost-reflective prices coupled with unaccounted environmental costs and high carbon intensity levels pose hurdles for the sector efficiency and growth. The liberalisation of the gas sector remains challenging given the monopoly in the downstream segment, depressed domestic tariffs and constrained third-party access to the natural gas network.
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